Dow soared 224 (session highs), advancers over decliners a modest 3-2 & NAZ gained a very big 107. The MLP index added 2+ to the 265s & the REIT index remained up slightly in the 356s. Junk bond funds inched higher & Treasuries were slightly lower. Oil was off pennies (more below) & gold went up 2 to 1248.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
China tried to step up pressure on DC in their growing tariff war by suggesting US companies lobby American leaders, while a Korean union warned Pres Trump's threat of higher auto import duties could lead to job losses in Alabama. Beijing & DC have yet to resume negotiations over the dispute that led to tariff hikes on each other's goods last week, said a spokesman for the Chinese Commerce Ministry. "We hope American companies do more to lobby the U.S. government and work hard to safeguard their own interests," said Gao Feng. While some US companies & lawmakers have criticized Trump's tactics, Gao's statement was an unusually direct attempt to rouse domestic American opposition. Beijing frequently rejects foreign comments about its own policies as improper interference in its affairs. His remark about lobbying was missing from an official transcript on the ministry's website, suggesting officials recognized its potential sensitivity. The Trump administration imposed a 25% tariff on $34B of Chinese goods Frid in response to complaints Beijing steals or pressures companies to hand over technology. Beijing responded by imposing similar duties on the same amount of imports from the US. DC announced a 2nd possible round of tariff hikes Tues targeting a wider range of $200B of goods. Beijing vowed "firm and forceful measures" in response, but China's lopsided trade balance means it cannot match the full scale of American tariff hikes. That has prompted concern regulators might expand retaliation to trying to hamper operations of American companies in China. Chinese leaders have tried to deflect criticism by pointing to the benefits of trading with the world's 2nd-largest economy, a theme Gao repeated today. He noted Tesla (TSLA) announcement this week of plans to build a factory in Shanghai. China has a "great potential consumer market that is steadily more open," said Gao. "We will continue to improve the business environment." As for negotiations, he added, "the two sides have not been in touch about re-starting talks." At the heart of the dispute is Chinese policies including "Made in China 2025," a sweeping strategy that calls for state-led development of local champions in robots, biotech & other fields. American officials say such development strategies are based on improperly obtained technology & might threaten US industrial leadership.
Federal Reserve Chairman Jerome Powell said the economy is "in a good place," but that an escalation in tariffs between the US & trading partners could affect that success. "I think, frankly the United States economy is in a good place from a cyclical standpoint close to our maximum employment and stable prices target," Powell said The US economy added 213K jobs during the month of Jun, according to the gov employment report published Fri. While the strong payroll numbers beat expectations & hinted at continued tightness in the labor market, wage gains across the country remain comparatively sluggish. The Fed Chairman's comments also came as the US seeks to ramp up pressure on China to address a prolonged trade deficit & intellectual property abuses, a phenomenon some have worried could hamper domestic or global economic growth. The Trump administration on Tues released a list of 10% tariffs on $200B in Chinese goods, making good on Trump's recent threats to escalate a broadening trade war with Beijing. "The administration says that what it's trying to achieve is lower tariffs. So if it works out that way, then that'll be a good thing for our economy," he added. "If it works out other ways, so that we wind up having high tariffs on a lot of products and a lot of traded goods and services, let's say, and that they become sustained for a long period of time, then yes, that could be be a negative for our economy."
Fed's Powell says economy is in 'good place' but tariffs could change that
The number of Americans filing for unemployment benefits fell more than expected last week, hitting a 2-month low, in a sign that labor market conditions remained robust in early Jul. Initial claims for state unemployment benefits dropped 18K to a seasonally adjusted 214K for the week ended Jul 7, the lowest level since early May, the Labor Dept said. The forecast called for claims falling to 225K in the latest week. Last week's data included the Independence Day holiday, which this year fell on a Wed, which could have thrown off the model that the gov uses to the smooth the claims data for seasonal fluctuations. That probably contributed to the big drop in applications. The 4-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1K to 223K last week. The economy created 213K jobs in Jun. While the unemployment rate increased to 4.0% from an 18-year low of 3.8% in May, that was because more people entered the labor force, a sign of confidence in the job market. The labor market is viewed as being near or at full employment. Layoffs remain low amid a shortage of skilled workers. There were 6.6M unfilled jobs in May. The claims report also showed the number of people receiving benefits after an initial week of aid slipped 3K to 1.74M in the latest week. The 4-week moving average of continuing claims rose 9K to 1.73M.
US weekly jobless claims fall to a two-month low
OPEC's rejuvenated bid to tame crude prices could soon exhaust the world's spare capacity cushion, according to the latest monthly report from the International Energy Agency (IEA). The IEA's report comes shortly after crude had its biggest one-day drop in 2 years, amid heightened US-China trade tensions & persistent global crude supply problems. “The large number of (supply) disruptions reminds us of the pressure on global oil supply. This will become an even bigger issue as rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the expense of the world’s spare capacity cushion, which might be stretched to the limit,” the organization said. “This vulnerability currently underpins oil prices and seems likely to continue doing so,” the IEA added. When spare capacity is high, it acts as a shock absorber to the energy market. But that cushion has shrunk considerably in recent months because of a flurry of outages in Venezuela, Libya & Canada. And with OPEC & Russia now ramping up output, even minor disruptions in key oil-producing countries could cause prices to spike. The IEA said crude production jumped to hit a 4-month high of 31.87M barrels per day in Jun. Meanwhile, spare capacity in the Middle East was thought to be around 1.6M barrels per day in Jul, approximately 2% of worldwide output. OPEC, Russia & several other producers recently agreed to increase output by 1M barrels per day in order to ease oil prices away from 3½-year highs. But many external observers think they will struggle to add that much supply because only a handful of the Middle-East dominated countries have spare capacity. OPEC leader Saudi Arabia ramped up its crude production in Jun to the highest level since the end of 2016, making good on its recent pledge to tame oil prices. The kingdom has faced elevated pressure from the likes of China, India & the US in recent months, with all the big crude importers citing anxiety over rising fuel costs. “The prospect of higher supply from members of the Vienna agreement … Is very welcome if we are going to ensure stability of oil supply to markets over the next few months,” the IEA said. Brent crude had slumped almost 7% in the previous session, amid news Libya is poised to resume oil exports. The announcement of the country's National Oil Corp appeared to signal an end to the tense standoff that had shut down most of the country's oil supply. It’s reopening could see the return of as much as 850K barrels per day of crude flow back into intl markets.
Spare oil capacity could be ‘stretched to the limit’ by OPEC’s supply boost, IEA says
US crude steadied above $70 a barrel after earlier extending Wed's sharp losses as Libya said it would resume oil exports & the market continued to monitor US-China trade tensions. The announcement that Libya's National Oil Corp (NOC) would reopen 4 oil export terminals, ending a standoff that had shut down most of Libya's oil output, a key catalyst for a dramatic sell-off yesterday. The reopening will allow the return of up to 850K bpd of high-quality crude to intl markets. 2 Libyan oilfields will reopen, NOC & industry sources said easing supply concerns that have boosted the market. US light crude ended the session down 5¢ at $70.33 a barrel, after touching a session high of $71.24 & a low of $69.23. The contract fell 5% in the previous session. Benchmark Brent crude oil was up 83¢ (1.1%) at $74.23 a barrel. Yesterday, Brent slumped $5.46 (6.9%). Focusing on bearish factors, the market shrugged off warnings from the IEA that there is potentially a spare capacity crunch.
US crude dips 5 cents, settling at $70.33, as restored Libyan exports offset OPEC supply concerns
The bulls returned & brought the Dow back to where it was 2 days ago. Tech continues strong, little affected by the goings on with trade wars, at least so far. However, market breadth remains weak. The Dow needs only 75 to top 25K, something it has not been able to do convincingly since the sharp decline in late Jan. That represent an important ceiling it needs to crash thru to extend this rally.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
China's retaliatory tariffs on US soybeans,
threatened for weeks & enacted Fri, have driven down prices &
triggered a wave of bargain shopping by importers in other countries
stocking up on cheap US supplies, according to
gov data. Chinese buyers have so far
this year accounted for just 17% of all advanced purchases of the
fall US soybean harvest, down from an average of 60% over the
past decade. They are instead loading up on
Brazilian soybeans, which now sell at a premium of up to $1.50 a bushel
as US soybean futures have fallen 17% over 6 weeks to about
$8.50, their lowest level in nearly a decade. The
price gap has sparked a run on US soybeans by importers from Mexico
to Pakistan to Thailand, according to the Agriculture
Dept data. Even as China has retreated,
all importers' advanced purchases of the next US soybean crop shot up
27% through Jun, at 8M tons, compared to the same
period last year. The purchases are the latest example of how
politics are upending B$ in global trade flows as Pres Trump fights a trade war with China. Beijing
imposed tariffs on $34B worth of US products on Fri, from
soybeans & cotton to automobiles & airplanes, in retaliation for
US tariffs enacted the same day on Chinese goods of equal value. The
decline of China's purchases of U.S soybeans & the jump in those
from other countries amount to a collective bet against any swift
resolution of the escalating trade war between the world's top 2
economies. Even Brazil, the world's top soybean
exporter, is prepping for major purchases of US soybeans to feed its
domestic processors as it diverts more of its own crops to China at
premium prices. Brazil may
import up to 1M tons of US soybeans, with purchases likely
ramping up in Oct. Brazilian
soybean processors, which turn the crop into cooking oil & animal
feed, normally have no need for US soybeans. But soon it may be
cheaper for them to import beans grown thousands of miles away in the
US Midwest than to buy local crops. Grains
merchants who dominate the soybean markets - including Archer Daniels
Midland (ADM), Bunge (BG) & Cargill are working to minimize the
impact of the sudden drop in Chinese demand by diverting cargoes
elsewhere. Representatives
of the US Soybean Export Council have been meeting with buyers in
Asia & Europe to encourage them to buy US soy, said Jim Sutter, CEO
of the US Soybean Export Council. The moves are part of a broader
effort launched this spring to raise demand for soy in countries such as
Indonesia that normally buy from Brazil. "With
the recent price declines that we've seen - wow - soybeans in general
are on sale," Sutter said. "Buyers around the world ought to be stocking
up." The advanced purchases data include
buyers who did not disclose their identity or location, which at 3.9M tons are about 1M tons above normal. Even if all
those purchases came from Chinese buyers, the nation's total share of
the advanced crop purchases would be its lowest in 13 years. China buys 2/3 of the world's soybean exports &, historically, more than ½ of US soybean shipments, worth $12.25B last year. The
council has invited more buyers from countries in Europe, the Middle
East & North Africa to an annual import-export conference next month.
Importers snap up cheap US soybeans as China stops buying
China tried to step up pressure on DC in their growing tariff war by suggesting US companies lobby American leaders, while a Korean union warned Pres Trump's threat of higher auto import duties could lead to job losses in Alabama. Beijing & DC have yet to resume negotiations over the dispute that led to tariff hikes on each other's goods last week, said a spokesman for the Chinese Commerce Ministry. "We hope American companies do more to lobby the U.S. government and work hard to safeguard their own interests," said Gao Feng. While some US companies & lawmakers have criticized Trump's tactics, Gao's statement was an unusually direct attempt to rouse domestic American opposition. Beijing frequently rejects foreign comments about its own policies as improper interference in its affairs. His remark about lobbying was missing from an official transcript on the ministry's website, suggesting officials recognized its potential sensitivity. The Trump administration imposed a 25% tariff on $34B of Chinese goods Frid in response to complaints Beijing steals or pressures companies to hand over technology. Beijing responded by imposing similar duties on the same amount of imports from the US. DC announced a 2nd possible round of tariff hikes Tues targeting a wider range of $200B of goods. Beijing vowed "firm and forceful measures" in response, but China's lopsided trade balance means it cannot match the full scale of American tariff hikes. That has prompted concern regulators might expand retaliation to trying to hamper operations of American companies in China. Chinese leaders have tried to deflect criticism by pointing to the benefits of trading with the world's 2nd-largest economy, a theme Gao repeated today. He noted Tesla (TSLA) announcement this week of plans to build a factory in Shanghai. China has a "great potential consumer market that is steadily more open," said Gao. "We will continue to improve the business environment." As for negotiations, he added, "the two sides have not been in touch about re-starting talks." At the heart of the dispute is Chinese policies including "Made in China 2025," a sweeping strategy that calls for state-led development of local champions in robots, biotech & other fields. American officials say such development strategies are based on improperly obtained technology & might threaten US industrial leadership.
China says US companies should lobby Washington over trade
Federal Reserve Chairman Jerome Powell said the economy is "in a good place," but that an escalation in tariffs between the US & trading partners could affect that success. "I think, frankly the United States economy is in a good place from a cyclical standpoint close to our maximum employment and stable prices target," Powell said The US economy added 213K jobs during the month of Jun, according to the gov employment report published Fri. While the strong payroll numbers beat expectations & hinted at continued tightness in the labor market, wage gains across the country remain comparatively sluggish. The Fed Chairman's comments also came as the US seeks to ramp up pressure on China to address a prolonged trade deficit & intellectual property abuses, a phenomenon some have worried could hamper domestic or global economic growth. The Trump administration on Tues released a list of 10% tariffs on $200B in Chinese goods, making good on Trump's recent threats to escalate a broadening trade war with Beijing. "The administration says that what it's trying to achieve is lower tariffs. So if it works out that way, then that'll be a good thing for our economy," he added. "If it works out other ways, so that we wind up having high tariffs on a lot of products and a lot of traded goods and services, let's say, and that they become sustained for a long period of time, then yes, that could be be a negative for our economy."
Fed's Powell says economy is in 'good place' but tariffs could change that
The number of Americans filing for unemployment benefits fell more than expected last week, hitting a 2-month low, in a sign that labor market conditions remained robust in early Jul. Initial claims for state unemployment benefits dropped 18K to a seasonally adjusted 214K for the week ended Jul 7, the lowest level since early May, the Labor Dept said. The forecast called for claims falling to 225K in the latest week. Last week's data included the Independence Day holiday, which this year fell on a Wed, which could have thrown off the model that the gov uses to the smooth the claims data for seasonal fluctuations. That probably contributed to the big drop in applications. The 4-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1K to 223K last week. The economy created 213K jobs in Jun. While the unemployment rate increased to 4.0% from an 18-year low of 3.8% in May, that was because more people entered the labor force, a sign of confidence in the job market. The labor market is viewed as being near or at full employment. Layoffs remain low amid a shortage of skilled workers. There were 6.6M unfilled jobs in May. The claims report also showed the number of people receiving benefits after an initial week of aid slipped 3K to 1.74M in the latest week. The 4-week moving average of continuing claims rose 9K to 1.73M.
US weekly jobless claims fall to a two-month low
OPEC's rejuvenated bid to tame crude prices could soon exhaust the world's spare capacity cushion, according to the latest monthly report from the International Energy Agency (IEA). The IEA's report comes shortly after crude had its biggest one-day drop in 2 years, amid heightened US-China trade tensions & persistent global crude supply problems. “The large number of (supply) disruptions reminds us of the pressure on global oil supply. This will become an even bigger issue as rising production from Middle East Gulf countries and Russia, welcome though it is, comes at the expense of the world’s spare capacity cushion, which might be stretched to the limit,” the organization said. “This vulnerability currently underpins oil prices and seems likely to continue doing so,” the IEA added. When spare capacity is high, it acts as a shock absorber to the energy market. But that cushion has shrunk considerably in recent months because of a flurry of outages in Venezuela, Libya & Canada. And with OPEC & Russia now ramping up output, even minor disruptions in key oil-producing countries could cause prices to spike. The IEA said crude production jumped to hit a 4-month high of 31.87M barrels per day in Jun. Meanwhile, spare capacity in the Middle East was thought to be around 1.6M barrels per day in Jul, approximately 2% of worldwide output. OPEC, Russia & several other producers recently agreed to increase output by 1M barrels per day in order to ease oil prices away from 3½-year highs. But many external observers think they will struggle to add that much supply because only a handful of the Middle-East dominated countries have spare capacity. OPEC leader Saudi Arabia ramped up its crude production in Jun to the highest level since the end of 2016, making good on its recent pledge to tame oil prices. The kingdom has faced elevated pressure from the likes of China, India & the US in recent months, with all the big crude importers citing anxiety over rising fuel costs. “The prospect of higher supply from members of the Vienna agreement … Is very welcome if we are going to ensure stability of oil supply to markets over the next few months,” the IEA said. Brent crude had slumped almost 7% in the previous session, amid news Libya is poised to resume oil exports. The announcement of the country's National Oil Corp appeared to signal an end to the tense standoff that had shut down most of the country's oil supply. It’s reopening could see the return of as much as 850K barrels per day of crude flow back into intl markets.
Spare oil capacity could be ‘stretched to the limit’ by OPEC’s supply boost, IEA says
US crude steadied above $70 a barrel after earlier extending Wed's sharp losses as Libya said it would resume oil exports & the market continued to monitor US-China trade tensions. The announcement that Libya's National Oil Corp (NOC) would reopen 4 oil export terminals, ending a standoff that had shut down most of Libya's oil output, a key catalyst for a dramatic sell-off yesterday. The reopening will allow the return of up to 850K bpd of high-quality crude to intl markets. 2 Libyan oilfields will reopen, NOC & industry sources said easing supply concerns that have boosted the market. US light crude ended the session down 5¢ at $70.33 a barrel, after touching a session high of $71.24 & a low of $69.23. The contract fell 5% in the previous session. Benchmark Brent crude oil was up 83¢ (1.1%) at $74.23 a barrel. Yesterday, Brent slumped $5.46 (6.9%). Focusing on bearish factors, the market shrugged off warnings from the IEA that there is potentially a spare capacity crunch.
US crude dips 5 cents, settling at $70.33, as restored Libyan exports offset OPEC supply concerns
The bulls returned & brought the Dow back to where it was 2 days ago. Tech continues strong, little affected by the goings on with trade wars, at least so far. However, market breadth remains weak. The Dow needs only 75 to top 25K, something it has not been able to do convincingly since the sharp decline in late Jan. That represent an important ceiling it needs to crash thru to extend this rally.
Dow Jones Industrials
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