Dow rose 44, decliners over advancers more than 2-1 & NAZ lost 20. The MLP index were fractionally lower in the 263s (extending its sideways trend over recent months) & the REIT index fell 2+ to the 353s. Junk bond funds slid lower & Treasuries declined in price. Oil sank 2+ to the 68s (more below) & gold remained steady at 1241 (near 1 year lows).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.17236399986518913)
Trump, Putin summit: Top economic issues
The Bank of America (BAC) cost-cutting machine hummed along for another qtr. The 2nd-biggest US lender said that Q2 surged 33% to $6.8B, exceeding the $5.92B estimate. Execs said it was the 14th straight qtr the company posted positive operating leverage, or increased profit by turning levers including costs. The bank managed to boost revenue while cutting expenses more than expected. The lender trimmed costs by 5% to $13.3B, beating the $13.5B forecast. Meanwhile, revenue rose 3% to $22.6B, compared with the $22.3B estimate, excluding a year ago-gain tied to a business sale. EPS surged 43% to 63¢, crushing the 57¢ estimate. Still, of all the figures on the bank's income statement for the qtr, the most stark change was a 43% drop in income taxes to $1.7B from $3B, the single biggest factor in the bank's profit increase. The tax cut, which took effect this year, also allowed the company to announce a new $500M technology investment. CEO Brian Moynihan has cleaned up much of the mess he inherited when a predecessor purchased a subprime lender a decade ago. He has since focused on methodically reducing costs while looking for modest profit opportunities, often repeating his mantra of “responsible growth.” The company benefited from a US economy in growth mode, lower taxes after the administration's overhaul, higher interest rates & an environment in which consumers are still repaying loans. "Responsible growth continued to deliver as a driver for every area of the company," Moynihan said. "We grew consumer and commercial loans; we grew deposits; we grew assets within our Merrill Edge business; we generated more net new households in Merrill Lynch; and we supported more institutional client activity." The stock rose 1.23.
If you would like to learn mroie about BAC, click on this link:
club.ino.com/trend/analysis/stock/BAC?a_aid=CD3289&a_bid=6ae5b6f7
Bank of America shares surge more than 4% after earnings top expectations
Oil prices extended early losses, dropping about $3 a barrel, after Treasury Secretary Steve Mnuchin said some crude importers may receive waivers to continue buying supplies from Iran, despite US sanctions on the Middle Eastern country. "We want people to reduce oil purchases to zero, but in certain cases if people can't do that overnight, we'll consider exceptions," Mnuchin said while traveling to Mexico. Mnuchin said the Trump administration wants to avoid roiling global oil markets as it seeks to pressure Iran to make concessions on its nuclear program, ballistic missile tests & its role in regional conflicts. Pres Trump withdrew the US from the 2015 Iran nuclear deal and restored sanctions on Tehran in May. West Texas Intermediate crude oil prices ended the session down $2.95 (4.2%) at $68.06. WTI has fallen for 2 weeks in a row, dropping from a 3½-year high above $75 a barrel. Brent crude oil was down $3.41 per barrel (4.5%) to $71.92, after touching a 3-month low at $71.52. The Trump administration sent oil prices soaring 3 weeks ago after a senior State Dept official told reporters the agency had been pushing Europeans to cut their oil purchases from Iran to zero by Nov 4. The tougher-than-expected deadline raised concerns about shortages of oil at a time when supply & demand are finely balanced. The State Dept later signaled some leeway on the policy & last week, Secretary of State Mike Pompeo said the administration will consider granting sanctions relief to a "handful of countries." The Trump administration now appears to be moving towards the approach followed by Pres Obama when the administration expanded sanctions on Iran, it allowed importers to continue buying Iranian crude so long as the purchasing country's overall imports fell by 20% every 180 days. "The State Department has the ability to issue waivers around significant reductions in the oil markets, that's something that Treasury and State will be doing," Mnuchin said.
US crude sinks 4.2%, settling at $68.06, after Treasury Dept eases market's Iran sanctions fears
IMF: World economy likely to grow 3.9% this year
Stocks had a tough time attracting investors. The Dow spent much of the day going sideways while NAZ was lower, then sank in late day trading. Market breadth continues drab. The Trump-Putin meeting gave the pundits plenty to talk about, but little was accomplished as expected. The recent plunge in oil prices is bleeding thru to regular stocks. On the optimistic side, the Dow was able to hang in above 25K, something that cheers the bulls.
AMJ (Alerian MLP Index tracking fund)
Pres Trump met with Russian Pres Putin, for a summit where some key
economic concerns came into focus. During a
joint press conference, Putin said the pair of world leaders agreed to
take steps to form a healthier business relationship between the 2
countries. “We agreed to create a high-level
working group that would bring together captains of Russian and American
business,” he said. “After all, entrepreneurs and businessmen know
better how to articulate this successful business cooperation…” The press conference followed a 2-hour closed-door meeting, where a few additional economic disagreements may have arose. Trump said he & Putin spent some time talking about the denuclearization of the Korean Peninsula. “After
today, I am very sure that President Putin and Russia want very much to
end that problem, [they’re] going to work with us and I appreciate that
commitment,” Trump said. For the most part, Moscow has refused to go along with global measures to put an economic squeeze on the rogue nation. While
China has by far the most economic influence over Pyongyang, Russia’s
compliance with the intl effort would be beneficial. Russia is
one of the top countries where North Korea imports goods from. Russia was also believed to
have been helping North Korea ship coal last year, in violation of
UN sanctions. Coal exports from Pyongyang have been banned
since Aug 2017 in an effort to cut funding for the country's nuclear
program. Putin & Trump also spoke about working together to regulate oil prices on the intl market. From Putin's perspective, sanction relief has been
another top concern. The US imposed a slew of sanctions on Moscow
beginning in 2014, when Russia annexed the Crimean peninsula from
Ukraine. Additional sanctions were imposed after US intelligence
officials concluded that Russia had interfered in the 2016 presidential
election. In Apr, the Trump administration
designated 7 oligarchs & their 12 companies, along with 17 senior
Russian gov officials for engaging “in a range of malign activity
around the globe.” The world's 2nd largest aluminum company, Rusal,
was among the companies sanctioned at that time. Russian oligarch Oleg
Deripaska, who is also sanctioned, stepped down as director of Rusal &
agreed to reduce his stake in the company in an effort to get the
sanctions against the aluminum giant lifted. While
sanctions were not directly addressed during the press conference,
experts expected private discussions could pave the way for future
negotiations. Trump indicated that the meeting was an initial step toward changing the tone of relations between the 2 countries.
Trump, Putin summit: Top economic issues
The Trump administration brought cases
against China, the EU, Canada, Mexico & Turkey at the
World Trade Organization for retaliating against American tariffs on
imported steel & aluminum. The US
has imposed tariffs of 25% on steel & 10% on aluminum on
the grounds that the imported metals pose a threat to US national
security. China, the EU, Canada, Mexico & Turkey have counterpunched
with taxes on more than $24B worth of US exports. US
Trade Rep. Robert Lighthizer said their retaliation violates the rules
of the Geneva-based WTO, which mediates trade disputes. "Instead
of working with us to address a common problem, some of our trading
partners have elected to respond with retaliatory tariffs designed to
punish American workers, farmers and companies," Lighthizer said. In taxing imported steel & aluminum from some countries in Mar & others in Jun, Pres Trump deployed a
little-used weapon in American trade policy: Under the Trade Expansion
Act of 1962, presidents are empowered to impose unlimited tariffs on
imports that the Commerce Dept asserts are threats to America's
national security. The WTO gives countries
broad leeway to determine national security interests. But there was
long an unwritten agreement that WTO member countries would use the
national-security justification only very sparingly to avoid abuses. Trump's
steel & aluminum tariffs broke that taboo. Now the Commerce
Dept is pursuing another, bigger national-security case against
auto imports. Hearings on the proposed auto tariffs are set for later this week. Separately, Trump is
engaged in a trade war with China over the aggressive tactics Beijing
has used to challenge US technological dominance. According to the
Trump administration, these include outright cybertheft & forcing US
companies to hand over trade secrets in exchange for access to the
Chinese market. Last week, the administration
announced 10% tariffs on $200B worth of Chinese goods,
which won't take effect until at least Sep. Today, China said
that it filed a WTO challenge against those proposed US tariffs.
US challenges China, EU and others at WTO over steel tariffs
The Bank of America (BAC) cost-cutting machine hummed along for another qtr. The 2nd-biggest US lender said that Q2 surged 33% to $6.8B, exceeding the $5.92B estimate. Execs said it was the 14th straight qtr the company posted positive operating leverage, or increased profit by turning levers including costs. The bank managed to boost revenue while cutting expenses more than expected. The lender trimmed costs by 5% to $13.3B, beating the $13.5B forecast. Meanwhile, revenue rose 3% to $22.6B, compared with the $22.3B estimate, excluding a year ago-gain tied to a business sale. EPS surged 43% to 63¢, crushing the 57¢ estimate. Still, of all the figures on the bank's income statement for the qtr, the most stark change was a 43% drop in income taxes to $1.7B from $3B, the single biggest factor in the bank's profit increase. The tax cut, which took effect this year, also allowed the company to announce a new $500M technology investment. CEO Brian Moynihan has cleaned up much of the mess he inherited when a predecessor purchased a subprime lender a decade ago. He has since focused on methodically reducing costs while looking for modest profit opportunities, often repeating his mantra of “responsible growth.” The company benefited from a US economy in growth mode, lower taxes after the administration's overhaul, higher interest rates & an environment in which consumers are still repaying loans. "Responsible growth continued to deliver as a driver for every area of the company," Moynihan said. "We grew consumer and commercial loans; we grew deposits; we grew assets within our Merrill Edge business; we generated more net new households in Merrill Lynch; and we supported more institutional client activity." The stock rose 1.23.
If you would like to learn mroie about BAC, click on this link:
club.ino.com/trend/analysis/stock/BAC?a_aid=CD3289&a_bid=6ae5b6f7
Bank of America shares surge more than 4% after earnings top expectations
Oil prices extended early losses, dropping about $3 a barrel, after Treasury Secretary Steve Mnuchin said some crude importers may receive waivers to continue buying supplies from Iran, despite US sanctions on the Middle Eastern country. "We want people to reduce oil purchases to zero, but in certain cases if people can't do that overnight, we'll consider exceptions," Mnuchin said while traveling to Mexico. Mnuchin said the Trump administration wants to avoid roiling global oil markets as it seeks to pressure Iran to make concessions on its nuclear program, ballistic missile tests & its role in regional conflicts. Pres Trump withdrew the US from the 2015 Iran nuclear deal and restored sanctions on Tehran in May. West Texas Intermediate crude oil prices ended the session down $2.95 (4.2%) at $68.06. WTI has fallen for 2 weeks in a row, dropping from a 3½-year high above $75 a barrel. Brent crude oil was down $3.41 per barrel (4.5%) to $71.92, after touching a 3-month low at $71.52. The Trump administration sent oil prices soaring 3 weeks ago after a senior State Dept official told reporters the agency had been pushing Europeans to cut their oil purchases from Iran to zero by Nov 4. The tougher-than-expected deadline raised concerns about shortages of oil at a time when supply & demand are finely balanced. The State Dept later signaled some leeway on the policy & last week, Secretary of State Mike Pompeo said the administration will consider granting sanctions relief to a "handful of countries." The Trump administration now appears to be moving towards the approach followed by Pres Obama when the administration expanded sanctions on Iran, it allowed importers to continue buying Iranian crude so long as the purchasing country's overall imports fell by 20% every 180 days. "The State Department has the ability to issue waivers around significant reductions in the oil markets, that's something that Treasury and State will be doing," Mnuchin said.
US crude sinks 4.2%, settling at $68.06, after Treasury Dept eases market's Iran sanctions fears
The IMF is keeping its
forecast for global economic growth unchanged at 3.9% this year
despite worries about rising trade tensions & higher oil prices. But
the lending agency is downgrading the outlook for Europe & Japan. The IMF now predicts that the economy
of the 19-country eurozone will grow 2.2% in 2018, down from the
2.4% it forecast in Apr. The fund expects the Japanese economy
to expand 1% this year, downgrading its 1.2% Apr
forecast. The IMF still expects tax cuts to lift US economic growth to 2.9% this year, up from 2.3% in 2017. Citing proliferating trade
conflicts, IMF chief economist Maury Obstfeld warned that "the risk of
worse outcomes has increased" for the world economy.
IMF: World economy likely to grow 3.9% this year
Stocks had a tough time attracting investors. The Dow spent much of the day going sideways while NAZ was lower, then sank in late day trading. Market breadth continues drab. The Trump-Putin meeting gave the pundits plenty to talk about, but little was accomplished as expected. The recent plunge in oil prices is bleeding thru to regular stocks. On the optimistic side, the Dow was able to hang in above 25K, something that cheers the bulls.
Dow Jones Industrials
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