Dow dropped 196 (not far from the lows), decliners over advancers better than 2-1 & NAZ lost 68. The MLP index was off 2+ to the 263s & the REIT index added 1+ to the 347s. Junk bond funds continued mixed & Treasuries rose again. Oil inched up pennies in the 65s & gold gave back 4 to 1270 (not seen in 6 months).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Saudis propose 1 million barrels a day oil output hike ahead of OPEC meeting
A record 47 million people are expected to travel for the US July Fourth holiday: AAA
It is still unclear whether the Trump tax cut will lead to stronger economic growth in the longer run, said Minneapolis Fed President Neel Kashkari. "I think maybe it is still too soon to see what long-term effect the tax cut is going to have," Kashkari said during a discussion at the African Development Center of Minneapolis. While business leaders "are more optimistic than I had expected," they are also saying that lower tax rates have not led them to make new investments, at least not yet, Kashkari said. "When I ask them, is this actually leading you to invest more? Usually, the answer is 'well, not yet, we want to see how things go'," Kashkari said.
The Philadelphia Fed's manufacturing index slowed sharply to a reading of 19.9 in Jun from 34.4 in May. The forecast called for a reading of 28. The index had jumped 11.2 points in May, but gave up all of the increase in Jun. Any reading above zero indicates improved conditions. The new-orders index fell sharply by almost 23 points to 17.9 & the shipments index rose 2.9 points to 25.8. Expectations for activity in the next 6 months fell for the 3rd straight month. The survey's price indicators fell modestly from May. Economists had been optimistic about manufacturing but there are growing concerns about the prospect of a broader trade war with China. The Empire State factory index, released last week, rose to an 8-month high of 25 in Jun from 20.1 in May. The 2 regional manufacturing reports are of interest to traders primarily because they are seen as an early forecast of the national Institute for Supply Management factory survey due in two weeks. In May, the ISM factory index rose to 58.7 from 57.3 in Apr.
The number of Americans losing their jobs fell for the 4th week in a row in mid-Jun, keeping the rate of layoffs near levels last seen in the early 1970s. Initial jobless claims declined 3K to 218K in the latest week, in line with the forecast. New applications for unemployment benefits were essentially flat. Although the gov reported a small decline, it had revised new claims from the prior week up to 221K from an original 218K reading. The more stable monthly average of new claims dropped by 4K last week to 221K, settling just slightly above a 45-year low. Continuing claims, meanwhile, rose 22K to 1.72M. These claims represent how many people are already collecting unemployment benefits. They are also near a 45-year bottom. The good news is that most people who want a job can find one. Unemployment is at an 18-year low & job openings are at a record high. Companies are looking for more skilled workers, however, & they are picky in who they hire. That’s why the rate of hiring hasn't kept up with the increase in job openings.
Just another dreary day in the stock market which has become common in the last couple of weeks. Only 5 gainers in the Dow. Selling finally hit the tech stocks & NAZ pulled back from its record close yesterday. The outlook remains grim. Immigration issues, which have dominated attention this week, look like they will drone on for some time. As a result, the bulls remain in hiding.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
OPEC got closer to clinching a deal to supply the world with more oil after Saudi Arabia proposed the 14-member oil cartel & its allies increase production by a combined 1M barrels per day (bpd). Oil ministers have been laying the
groundwork all week for tomorrow's biannual meeting in Vienna
where OPEC is expected to ease supply constraints that have been in
place since Jan 2017. The world is likely to
face a large deficit of oil in H2, Saudi Energy
Minister Khalid al-Falih warned. As a result, OPEC needs to
substantially raise output to prevent a market squeeze, he said. "We will release supply … One million (bpd) sounds like a good target to work with," Falih told reporters. Industry sources said the actual increase is likely
to total around 2/3 of Saudi Arabia's lofty target. That's
because some OPEC members would be unable to sufficiently ramp up crude
production. Analysts say supply increases are more likely to be 600-800K bpd. Still, that is substantially lower than the
1.5M-bpd increase sought by Russia, which is not a member of
OPEC but has been coordinating policy with the group for the last 18
months. OPEC's agreement with
Russia & other producers to limit oil output has helped to clear a
global supply overhang that weighed on prices for years. But with crude
futures recently soaring to multi-year highs on strong demand, dwindling
output from Venezuela & renewed US sanctions on Iran, energy
ministers are worried about the market overheating. Major oil importers like India have also expressed alarm at the rising cost of crude. "Our customers have
spoken loudly and we need to listen to them," Falih said. He warned that rising oil prices could soon drag on crude
demand.
Saudis propose 1 million barrels a day oil output hike ahead of OPEC meeting
The National Association of Manufacturers (NAM)
said its quarterly survey of members revealed a record level
of optimism following the passage of tax reform. The
Manufacturers' Outlook Survey for Q2 showed
that 95.1% of manufacturers have a positive outlook for their
businesses, the best result in the survey’s 20-year history. “A
large part of that is because of the tax cuts and that’s what we hear
from our manufacturers,” NAM CEO Jay Timmons said. “We’ve
been working for 30 years to enact comprehensive tax reform and
regulatory relief,” he added. “We’ve got that done and now we’re seeing
the results from it.” The industry association also found that US
manufacturers are planning to increase investments by 4.1% over the next
12 months, along with a 3.1% increase in hiring, the largest increases
since the NAM began tracking manufacturers' plans. Wages are expected
to get a 2.7% boost, the highest since 2001. Projected sales growth of 5.7% matched the 2nd-highest reading in survey history. “This
is not an accident at all,” Timmons said. “This is fueled by the
history-making tax reform that was passed six months ago.” A large majority of manufacturers, aided by tax
cuts, plan to increase investments, hire more workers and increase wages & benefits, Timmons added. “The fact is, we’re just getting started,” he said. The NAM survey comes amid escalated traded tensions between the US & China, the
world's two largest economies. Large manufacturers were most optimistic
about exports, expecting 1.9% growth over the next 12 months. Small & medium-sized firms forecast a 1.3% increase.
Manufacturers are more optimistic than ever before
US travelers will hit the roads, rails &
airports in record numbers this Fourth of July holiday, despite higher
gasoline prices, the nation's largest automotive advocacy group said. 46.9M Americans will travel
50 miles over the upcoming Jul 4 holiday, the 5th
consecutive annual increase & highest travel volume since the group
began tracking data 18 years ago, according to the American
Automobile Association (AAA). The holiday period is defined this year from Jul 3-8. Gas prices have fallen a bit
since the 2018 high of $2.97 a gallon set over Memorial Day weekend, the
last weekend in May. The national average gas price was $2.87 yesterday, up 59¢ from a year ago. Despite higher prices,
automobile travel is expected to increase for the 4th straight year,
rising 5.1%, nearly 2M more than in 2017, to 39.7M travelers. Air travel volume will
increase to 3.76M passengers, 7.9% more than last year. With the holiday falling on a Wed, air travel is helped by
enabling more flexibility to fly either before or after the holiday. US gasoline demand,
which accounts for roughly 10% of global demand, hit record highs
last year thanks in part to a strong summer driving season.
A record 47 million people are expected to travel for the US July Fourth holiday: AAA
It is still unclear whether the Trump tax cut will lead to stronger economic growth in the longer run, said Minneapolis Fed President Neel Kashkari. "I think maybe it is still too soon to see what long-term effect the tax cut is going to have," Kashkari said during a discussion at the African Development Center of Minneapolis. While business leaders "are more optimistic than I had expected," they are also saying that lower tax rates have not led them to make new investments, at least not yet, Kashkari said. "When I ask them, is this actually leading you to invest more? Usually, the answer is 'well, not yet, we want to see how things go'," Kashkari said.
Fed's Kashkari says long-term effect of Trump tax cut is still unclear
The Philadelphia Fed's manufacturing index slowed sharply to a reading of 19.9 in Jun from 34.4 in May. The forecast called for a reading of 28. The index had jumped 11.2 points in May, but gave up all of the increase in Jun. Any reading above zero indicates improved conditions. The new-orders index fell sharply by almost 23 points to 17.9 & the shipments index rose 2.9 points to 25.8. Expectations for activity in the next 6 months fell for the 3rd straight month. The survey's price indicators fell modestly from May. Economists had been optimistic about manufacturing but there are growing concerns about the prospect of a broader trade war with China. The Empire State factory index, released last week, rose to an 8-month high of 25 in Jun from 20.1 in May. The 2 regional manufacturing reports are of interest to traders primarily because they are seen as an early forecast of the national Institute for Supply Management factory survey due in two weeks. In May, the ISM factory index rose to 58.7 from 57.3 in Apr.
Philly Fed manufacturing index slows to 19-month low in June
The number of Americans losing their jobs fell for the 4th week in a row in mid-Jun, keeping the rate of layoffs near levels last seen in the early 1970s. Initial jobless claims declined 3K to 218K in the latest week, in line with the forecast. New applications for unemployment benefits were essentially flat. Although the gov reported a small decline, it had revised new claims from the prior week up to 221K from an original 218K reading. The more stable monthly average of new claims dropped by 4K last week to 221K, settling just slightly above a 45-year low. Continuing claims, meanwhile, rose 22K to 1.72M. These claims represent how many people are already collecting unemployment benefits. They are also near a 45-year bottom. The good news is that most people who want a job can find one. Unemployment is at an 18-year low & job openings are at a record high. Companies are looking for more skilled workers, however, & they are picky in who they hire. That’s why the rate of hiring hasn't kept up with the increase in job openings.
Jobless claims drop for the fourth week in a row
Just another dreary day in the stock market which has become common in the last couple of weeks. Only 5 gainers in the Dow. Selling finally hit the tech stocks & NAZ pulled back from its record close yesterday. The outlook remains grim. Immigration issues, which have dominated attention this week, look like they will drone on for some time. As a result, the bulls remain in hiding.
Dow Jones Industrials
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