Dow slid back 27 (above session lows), decliners over advancers about 5-4 & NAZ gave back 8. The MLP index fell 1+ to the 257s & the REIT index retreated 2+ to the 381s. Junk bond funds edged higher & Treasuries also went up in price. Oil continued lower in the 63s & gold was off 4 to 1291 (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)
Gold prices fell, hurt by a stable $ & steady Treasury yields as investors monitored the latest signals on global trade talks. Gold for Jun delivery, the most-active futures contract, fell 0.3% to $1291 a troy ounce. Prices have recently pared nearly all of their 2019 advance & are about 4.2% below their Feb 10-month highs, hurt by a stable $ & recent recovery in Treasury yields.
Factory production in NY state picked up somewhat in Apr but remained “fairly subdued,” the NY Fed said. The NY Fed's Empire State business conditions index rebounded to a reading of 10.1 from a nearly 2-year low of 3.7 in Mar. The forecast called for a reading of 10. The new-orders index rose 4.5 points to 7.5 in Apr, while shipments inched up 0.9 point to 8.6. Inventory levels picked up while inflation pressures cooled & optimism about the longer term waned in Apr. The index for future business conditions dropped 17 points to 12.4 in Apr, its lowest level in more than 3 years. Manufacturing has struggled this year, in part because of a slowdown in manufacturing in China. The Empire State index has averaged 6.6 this year, down from 19.8 in 2018.
Empire State manufacturing index called ‘subdued’ as outlook component slumps to three-year low
Oil futures started the week on a softer note, when prices headed lower on the heels of multiweek gains as a Russian official reportedly questioned his country's participation in the OPEC-led production cut deal on concerns over market share. West Texas Intermediate (WTI) for May delivery, the US benchmark crude, on the New York Mercantile Exchange fell 68¢ (1.1%) to $63.21 a barrel. It rose last week, marking a 6th-straight weekly gain. On Sat, Russian Finance Minister Anton Siluanov was quoted by the TASS news agency as saying, “There is a dilemma. What should we do with OPEC: should we lose the market, which is being occupied by the Americans, or quit the deal?” Siluanov said such a move could drive the price of oil to $40 a barrel or below. US crude production remained in record territory, at 12.2M barrels a day last week, according to data from the Energy Information Administration. OPEC & its allies, primarily Russia, agreed to reduce output by 1.2M barrels a day for 6 months beginning Jan 1. OPEC & its allies are set to meet near the end of Jun. The reduction in output has been credited with helping to fuel a sharp rally that’s taken WTI, up by around 40% so far this year, while Brent has soared nearly 32%. Oil futures peaked in Oct before suffering a brutal Q4 selloff.
Oil retreats as Russia reportedly questions output cuts on concerns over market share
The early earnings reports by big banks failed to garner enthusiasm from investors. With an abundance of numbers, it is always difficult to understand these reports. But sluggish revenues was disturbing. Tomorrow Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, reports & traders are keeping their fingers crossed, hoping for the best.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Gold prices fell, hurt by a stable $ & steady Treasury yields as investors monitored the latest signals on global trade talks. Gold for Jun delivery, the most-active futures contract, fell 0.3% to $1291 a troy ounce. Prices have recently pared nearly all of their 2019 advance & are about 4.2% below their Feb 10-month highs, hurt by a stable $ & recent recovery in Treasury yields.
Gold Falls With Treasury Yields, Dollar Steady
Factory production in NY state picked up somewhat in Apr but remained “fairly subdued,” the NY Fed said. The NY Fed's Empire State business conditions index rebounded to a reading of 10.1 from a nearly 2-year low of 3.7 in Mar. The forecast called for a reading of 10. The new-orders index rose 4.5 points to 7.5 in Apr, while shipments inched up 0.9 point to 8.6. Inventory levels picked up while inflation pressures cooled & optimism about the longer term waned in Apr. The index for future business conditions dropped 17 points to 12.4 in Apr, its lowest level in more than 3 years. Manufacturing has struggled this year, in part because of a slowdown in manufacturing in China. The Empire State index has averaged 6.6 this year, down from 19.8 in 2018.
Empire State manufacturing index called ‘subdued’ as outlook component slumps to three-year low
Oil futures started the week on a softer note, when prices headed lower on the heels of multiweek gains as a Russian official reportedly questioned his country's participation in the OPEC-led production cut deal on concerns over market share. West Texas Intermediate (WTI) for May delivery, the US benchmark crude, on the New York Mercantile Exchange fell 68¢ (1.1%) to $63.21 a barrel. It rose last week, marking a 6th-straight weekly gain. On Sat, Russian Finance Minister Anton Siluanov was quoted by the TASS news agency as saying, “There is a dilemma. What should we do with OPEC: should we lose the market, which is being occupied by the Americans, or quit the deal?” Siluanov said such a move could drive the price of oil to $40 a barrel or below. US crude production remained in record territory, at 12.2M barrels a day last week, according to data from the Energy Information Administration. OPEC & its allies, primarily Russia, agreed to reduce output by 1.2M barrels a day for 6 months beginning Jan 1. OPEC & its allies are set to meet near the end of Jun. The reduction in output has been credited with helping to fuel a sharp rally that’s taken WTI, up by around 40% so far this year, while Brent has soared nearly 32%. Oil futures peaked in Oct before suffering a brutal Q4 selloff.
Oil retreats as Russia reportedly questions output cuts on concerns over market share
The EU approved its terms for
negotiating a new trade deal with the US, but set up a
possible show-down with the US by refusing to include agricultural
products in the talks. Making public the
mandate for the EU's executive commission to conduct negotiations on
their behalf, the bloc's member countries said that the new deal will
focus exclusively on eliminating tariffs on industrial goods. EU
Trade Commissioner Cecilia Malmstrom said the commission wants to wrap
the talks up within 6 months & that she would contact her US
counterpart Robert Lighthizer later today to work out when formal
negotiations might begin. "We are now ready to
move ahead into the next phase of EU-U.S. relations," Malmstrom told
reporters in Brussels. "If we agree to start, I think it can go quite
quickly. There are sensitivities, absolutely, but we can manage this
quite quickly." The commission's term in office expires at the end of
Oct. The
trade talks are the result of a preliminary deal reached last Jul by
European Commission Pres Jean-Claude Juncker & Pres Trump as Brussels sought to head off a looming trans-Atlantic
trade war after Trump slapped tariffs on imports of EU steel &
aluminum. The US has long wanted
more access to the EU's protected market for farm products. But William
Reinsch, a former US trade official now at the Center for Strategic & Intl Studies, said that Trump "gave agriculture away" in
his meeting with Juncker, agreeing to focus US-EU talks on
non-automotive industrial products. Leaving out
agriculture is likely to hobble the negotiations at the outset, Reinsch
said. But he added that "there are ways out of the mess" - the 2
sides could agree, for instance, to tackle farm trade in a later round
of talks. Trump imposed tariffs of 25%
on steel imports & 10% on imported aluminum from the EU on Jun
1. He said the move was to protect US national security interests,
but the Europeans claim it is simply protectionism & breaks global
trade rules. In response, the EU introduced
"rebalancing" tariffs on about €2.8B worth ($3.2B) of
US steel, agricultural & other products. Trump
has held out the threat of slapping auto tariffs on European cars
should the trade talks fail to progress. Malmstrom has previously warned
that the EU would break off any trade negotiations if he does. Asked
whether US Congress would accept any deal that does not involve
agriculture, Malmstrom said: "This is limited, but still meaningful,
win-win negotiations that we are offering and that was agreed between
the two presidents." Before Trump came to
office, the Europeans had been trying for 3 years to conclude a more
wide-ranging Trans-Atlantic Trade & Investment Pact (TTIP) with the US. The pact was meant to lift trade
barriers between the world's biggest trading partners, spark
sorely-needed economic growth & create new jobs. Malmstrom underlined
that the terms of that draft agreement are obsolete & that TTIP, as it
is known, is now officially "in the freezer."
EU moves to limit focus of trade talks with US
The early earnings reports by big banks failed to garner enthusiasm from investors. With an abundance of numbers, it is always difficult to understand these reports. But sluggish revenues was disturbing. Tomorrow Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, reports & traders are keeping their fingers crossed, hoping for the best.
Dow Jones Industrials
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