Dow tumbled 460 (finishing at the lows), decliners over advancers 4-1 & NAZ sank 196. The MLP index was off 3+ to the 255s (continuing its sideways trend in 2019) & the REIT index jumped up 6+ to 378. Junk bond funds fluctuated & Treasuries shot up, bringing lower yields. Oil fell 1+ to the high 58s & gold gained 5 to 1312 as stocks were sold (more on both below).
AMJ (Alerian MLP Index tracking fund
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The federal gov ran a budget deficit of $234B in Feb, the Treasury Dept reported, the biggest monthly shortfall on record. It was wider than the $215B recorded in Feb 2018, as spending rose 8% while receipts climbed 7%. Previously, the largest monthly deficit was $231.7B in Feb 2012. The release of the Feb figures was later than normal due to the gov shutdown. Total spending was $401B in Feb while the gov took in $167B. Drivers of spending in Feb included agriculture & transportation programs. The Treasury said individual withheld & payroll taxes climbed 5% in the month. Refunds dropped 10% in Feb, a month in which the Congressional Budget Office notes the share of total refunds paid varies from year to year. For the fiscal year to date, the budget deficit is up 39% compared to the same period a year ago. The expanding deficit comes as the Congressional Budget Office is projecting a shortfall of $897B for the full fiscal year (4.2% of GDP). That’s up from $779B in fiscal 2018. The CBO sees T-$ deficits beginning in fiscal 2022. Those widening deficits have not scared off bond investors, which have rallied on concerns about US & global growth.
Gold futures settled at a 3-week high to post a gain of 0.7% for the week, with the haven metal finding support as European & US economic data fed global growth concerns & the stock market tumbled. Apr gold climbed by $5 (0.4%) to settle at $1312. That was the highest finish for a most-active contract since Feb 28.
Oil futures fell, with losses fed by worries over a slowdown in global energy demand, but prices climbed for a 3rd straight week on expectations for tighter crude supplies. May West Texas Intermediate oil fell 94¢ (1.6%) to finish at $59.04 a barrel. The contract still rose about 0.4% for the week.
Baker Hughes reported that the number of active US rigs drilling for oil fell by 9 to 824 this week. That followed 4 consecutive weeks of declines, with last week's figure down by just 1. The total active US rig count also declined by 10 to 1016, according to Baker Hughes.
Minneapolis Fed President Neel Kashkari said he was unsure about where the economy is headed & added that his views on the central bank’s monetary policy were also in flux. In a series of tweets, interspersed with pictures of his newborn daughter, Kashkari said was still trying to assess whether the recent slowdown in growth & jobs “was real or just a blip.” He said it would take time & more data to assess. One of the most dovish regional Fed members, Kashkari appears to have won over his colleagues. On Wed, the median forecast of Fed officials was for no more interest rate increase this year & only one in 2020. Another key issue, he said, was that the impact of last year's 4 qtr-point rate increases might still have not impacted the economy. The Minneapolis Fed pres was also unsure about whether the Fed's benchmark fed funds rate was still below the “neutral” level that neither boosted or slowed growth. The Fed's benchmark interest rate is now 2.25-2.5%, slightly below the 2.5% rate that Kashkari said he always thought was neutral. Recent developments have caused him to reconsider this, he added. “The very flat yield curve tells me we are likely close to neutral,” he said. And he added that he “hoped’ the current Fed policy rate was not already “contractionary.” The Minneapolis Fed pres, who is not a voting member of the Fed's interest-rate setting committee this year, said he supported the Fed's decision this week to hold policy steady & set out the timetable for ending its ongoing program to shrink its balance sheet. Central to Kashkari's dovish view is that the labor market still has some “slack” even thought the unemployment rate has sunk to 3.8%. He argued that rising wages have pulled people into the labor force who had not been counted as unemployed. “If wages continue to rise, it is likely more people will choose to work. The official unemployment rate doesn’t capture this,” he said. “Until we see wage growth, net of productivity, pick up and signal future inflation above 2%, I will continue to see slack in the labor market,” he continued. “If inflation is close to or below our [2%] target, and there is no slack, no need to tap the brakes,” he said. Even some modest above-target inflation should not be concerning given that inflation has been below target for years, he noted.
A technical indicator from the bond market gave a possible recession signal, bringing on selling in stocks. A sense of calm should return by Mon. While elements of the economy have been stumbling this year, the economy is pumping out goods & services at record levels. Even with this selling, the Dow is still within 1300 of its Oct record.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund
The federal gov ran a budget deficit of $234B in Feb, the Treasury Dept reported, the biggest monthly shortfall on record. It was wider than the $215B recorded in Feb 2018, as spending rose 8% while receipts climbed 7%. Previously, the largest monthly deficit was $231.7B in Feb 2012. The release of the Feb figures was later than normal due to the gov shutdown. Total spending was $401B in Feb while the gov took in $167B. Drivers of spending in Feb included agriculture & transportation programs. The Treasury said individual withheld & payroll taxes climbed 5% in the month. Refunds dropped 10% in Feb, a month in which the Congressional Budget Office notes the share of total refunds paid varies from year to year. For the fiscal year to date, the budget deficit is up 39% compared to the same period a year ago. The expanding deficit comes as the Congressional Budget Office is projecting a shortfall of $897B for the full fiscal year (4.2% of GDP). That’s up from $779B in fiscal 2018. The CBO sees T-$ deficits beginning in fiscal 2022. Those widening deficits have not scared off bond investors, which have rallied on concerns about US & global growth.
U.S. runs largest monthly budget deficit on record in February
Gold futures settled at a 3-week high to post a gain of 0.7% for the week, with the haven metal finding support as European & US economic data fed global growth concerns & the stock market tumbled. Apr gold climbed by $5 (0.4%) to settle at $1312. That was the highest finish for a most-active contract since Feb 28.
Gold futures end at 3-week high
Oil futures fell, with losses fed by worries over a slowdown in global energy demand, but prices climbed for a 3rd straight week on expectations for tighter crude supplies. May West Texas Intermediate oil fell 94¢ (1.6%) to finish at $59.04 a barrel. The contract still rose about 0.4% for the week.
Oil prices settle lower, but climb for a third straight week
Baker Hughes reported that the number of active US rigs drilling for oil fell by 9 to 824 this week. That followed 4 consecutive weeks of declines, with last week's figure down by just 1. The total active US rig count also declined by 10 to 1016, according to Baker Hughes.
Baker Hughes data show U.S. oil-rig count down for a 5th straight week
Minneapolis Fed President Neel Kashkari said he was unsure about where the economy is headed & added that his views on the central bank’s monetary policy were also in flux. In a series of tweets, interspersed with pictures of his newborn daughter, Kashkari said was still trying to assess whether the recent slowdown in growth & jobs “was real or just a blip.” He said it would take time & more data to assess. One of the most dovish regional Fed members, Kashkari appears to have won over his colleagues. On Wed, the median forecast of Fed officials was for no more interest rate increase this year & only one in 2020. Another key issue, he said, was that the impact of last year's 4 qtr-point rate increases might still have not impacted the economy. The Minneapolis Fed pres was also unsure about whether the Fed's benchmark fed funds rate was still below the “neutral” level that neither boosted or slowed growth. The Fed's benchmark interest rate is now 2.25-2.5%, slightly below the 2.5% rate that Kashkari said he always thought was neutral. Recent developments have caused him to reconsider this, he added. “The very flat yield curve tells me we are likely close to neutral,” he said. And he added that he “hoped’ the current Fed policy rate was not already “contractionary.” The Minneapolis Fed pres, who is not a voting member of the Fed's interest-rate setting committee this year, said he supported the Fed's decision this week to hold policy steady & set out the timetable for ending its ongoing program to shrink its balance sheet. Central to Kashkari's dovish view is that the labor market still has some “slack” even thought the unemployment rate has sunk to 3.8%. He argued that rising wages have pulled people into the labor force who had not been counted as unemployed. “If wages continue to rise, it is likely more people will choose to work. The official unemployment rate doesn’t capture this,” he said. “Until we see wage growth, net of productivity, pick up and signal future inflation above 2%, I will continue to see slack in the labor market,” he continued. “If inflation is close to or below our [2%] target, and there is no slack, no need to tap the brakes,” he said. Even some modest above-target inflation should not be concerning given that inflation has been below target for years, he noted.
Fed’s Kashkari says he’s not sure whether recent slowdown in growth and jobs is real or just a blip
A technical indicator from the bond market gave a possible recession signal, bringing on selling in stocks. A sense of calm should return by Mon. While elements of the economy have been stumbling this year, the economy is pumping out goods & services at record levels. Even with this selling, the Dow is still within 1300 of its Oct record.
Dow Jones Industrials
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