Dow rose 69, advancers remained ahead of decliners about 5-4 & NAZ added 17. The MLP index slid back, but staying above 250, & the REIT index shot up 6+to the 388s. Junk bond funds were a little higher & Treasuries advanced in price, taking the yield on the 10 year Treasury down to 1.97% (lowest since Nov 2016). Oil dropped 2+ to the 56s after yesterday's rally (more below) & gold rallied, up 26 to 1415, after yesterday's plunge.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Major automakers posted mixed US sales results for Jun & Q2, with demand still fairly strong for SUVs & pickup trucks while passenger car sales continued a long-running decline. Overall, US auto sales are slowing after a long bull run that has satiated replacement demand. In a significant development for the pickup truck segment, Fiat Chrysler Automobiles's (FCAU) Ram pickup outsold General Motors (GM) Chevrolet Silverado in Q2. GM reports sales on a quarterly basis instead of each month. The Silverado has long held second place behind Ford's (F) F-Series pickup trucks, with Ram often a distant 3rd. But for the first 6 months of 2019, FCAU sold more than 40K additional Ram pickups than the Chevy Silverado. FCAU, GM & Ford escalated a price war in Jun over pickup trucks - one of the few vehicle market segments on the planet that offers substantial profits, which matters at a time when overall US new vehicle sales are expected to fall this year. High interest rates, plus competition from Ms of nearly new, off-lease vehicles have translated into fewer consumers splurging on new cars. FCAU sales rose 2% in Jun, driven by a 56% jump in Ram sales. GM Q2 sales fell 1.5%, with strong sport utility vehicle sales offset by a poor performance for its pickup trucks. The #1 US automaker said sales of its trucks would pick up in Q3 as both its most popular & most affordable versions of the Silverado will hit dealer showrooms. Toyota (TM) reported a 3.5% drop in sales for Jun, led by falling sedan sales. In the last few years, Americans have increasingly shunned passenger cars in favor of larger, more comfortable SUVs & pickup trucks. Nissan's sales plunged nearly 15%, with huge drops for much of its lineup including the best-selling Rogue SUV. After years of relying on steep discounts to increase US market share, Nissan is trying to pull back so it can sell vehicles more profitably. Hyundai reported a 1.5% rise in US sales for Jun, lifted by strong demand for SUVs & trucks.
Automakers post mixed US June sales; SUVs, truck sales stay strong
Oil futures slumped, more than erasing gains from a day earlier that followed word of extended OPEC-led production cuts, with investors unable to shake demand worries tied to a vulnerable global economy & trade negotiations. The expected production extension packed few surprises, failing to offset the clouds forming on the demand side. Aug West Texas Intermediate crude fell $2.84 (4.8%), to settle at $56.25 a barrel. Yesterday, prices settled 1.1% higher on expectations that OPEC would extend its output-cut agreement. It announced the extension after Nymex futures settled. Intl benchmark Sep Brent finished at $62.40, down $2.66 (4.1%). Both crude benchmarks marked the lowest finish for a front-month contract since Jun 19. Futures prices had settled higher yesterday, then held on to most of those gains in electronic trading after Venezuela's oil minister Manuel Fernandez said OPEC will extend its production-cut agreement by 9 months thru Mar 2020. The cartel also fully supports a charter to formalize its alliance with non-OPEC producers. Saudi Energy Minister Khalid al-Falih said OPEC & its allies “enthusiastically came together” to support the charter to formalize their alliance. OPEC & non-OPEC ministers held a separate meeting in Vienna today, confirming the decision extend production curbs to Mar 31, 2020. As for demand, the US & China agreed at the G-20 leaders summit last weekend to restart trade talks, which initially soothed concerns that a trade war may lower energy consumption. But Pres Trump raised fresh fears of a bumpy road ahead on trade when he said any deal with China would need to be “somewhat tilted” in favor of DC. Trade negotiations play out against a backdrop of recent data exposing vulnerabilities in the global expansion. Factory activity slowed across much of Europe, Asia & the US in Jun.
Jun economic stats are coming in underwhelming & now there are more tariff issues to deal with, this time it's with Europe. Jun was an outstanding month for stocks with the popular averages finishing essentially at record levels. Jul is shaping up as a time for retrenchment, especially if earnings disappoint. Buyers today were mostly interested in safe have gold & Treasuries.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The Commerce Dept said
construction spending declined 0.8%, the biggest drop since last
Nov. Data for Apr was revised to show construction outlays rising
0.4% instead of being unchanged as previously reported. The forecast was for construction spending to rise 0.1% in May. Construction spending fell 2.3% on a year-on-year
basis in May. Weak construction spending was
the latest indication that economic growth slowed in Q2
after getting a temporary boost from exports & an accumulation of
inventory. Consumer spending is rising moderately, while the pace of job & wage growth has slowed.
In addition, manufacturing & the housing market are struggling &
the goods trade deficit widened in May. Construction
spending surged in Q1, boosted by increased investment
in roads & highways by state & local governments. Spending
on private construction projects dropped 0.7% in May to the
lowest level since Jan 2017 & that followed a 1.0% decline in
the prior month. Private construction outlays also fell in Mar. Investment
in private residential projects fell 0.6% in May to its weakest
level since Dec 2016, after a 0.6% decrease in Apr.
Private residential construction outlays have now declined for 5
straight months. Homebuilding has remained weak
even as mortgage rates have dropped sharply from last year's high
levels. Spending on residential construction has contracted for 5
straight qtrs. Spending on private
nonresidential structures, which includes manufacturing & power
plants, decreased 0.9% in May after plunging 1.4% in the
prior month. In
May, investment in public construction projects fell 0.9% after
surging 4.5% in Apr. Spending on state & local gov
construction projects slipped 0.6% after jumping 4.3% in
Apr. Outlays on federal gov construction projects tumbled 5.2% in May after rising 7.3% in the prior month.
US construction spending falls; private outlays near 2-1/2-year low
Major automakers posted mixed US sales results for Jun & Q2, with demand still fairly strong for SUVs & pickup trucks while passenger car sales continued a long-running decline. Overall, US auto sales are slowing after a long bull run that has satiated replacement demand. In a significant development for the pickup truck segment, Fiat Chrysler Automobiles's (FCAU) Ram pickup outsold General Motors (GM) Chevrolet Silverado in Q2. GM reports sales on a quarterly basis instead of each month. The Silverado has long held second place behind Ford's (F) F-Series pickup trucks, with Ram often a distant 3rd. But for the first 6 months of 2019, FCAU sold more than 40K additional Ram pickups than the Chevy Silverado. FCAU, GM & Ford escalated a price war in Jun over pickup trucks - one of the few vehicle market segments on the planet that offers substantial profits, which matters at a time when overall US new vehicle sales are expected to fall this year. High interest rates, plus competition from Ms of nearly new, off-lease vehicles have translated into fewer consumers splurging on new cars. FCAU sales rose 2% in Jun, driven by a 56% jump in Ram sales. GM Q2 sales fell 1.5%, with strong sport utility vehicle sales offset by a poor performance for its pickup trucks. The #1 US automaker said sales of its trucks would pick up in Q3 as both its most popular & most affordable versions of the Silverado will hit dealer showrooms. Toyota (TM) reported a 3.5% drop in sales for Jun, led by falling sedan sales. In the last few years, Americans have increasingly shunned passenger cars in favor of larger, more comfortable SUVs & pickup trucks. Nissan's sales plunged nearly 15%, with huge drops for much of its lineup including the best-selling Rogue SUV. After years of relying on steep discounts to increase US market share, Nissan is trying to pull back so it can sell vehicles more profitably. Hyundai reported a 1.5% rise in US sales for Jun, lifted by strong demand for SUVs & trucks.
Automakers post mixed US June sales; SUVs, truck sales stay strong
Oil futures slumped, more than erasing gains from a day earlier that followed word of extended OPEC-led production cuts, with investors unable to shake demand worries tied to a vulnerable global economy & trade negotiations. The expected production extension packed few surprises, failing to offset the clouds forming on the demand side. Aug West Texas Intermediate crude fell $2.84 (4.8%), to settle at $56.25 a barrel. Yesterday, prices settled 1.1% higher on expectations that OPEC would extend its output-cut agreement. It announced the extension after Nymex futures settled. Intl benchmark Sep Brent finished at $62.40, down $2.66 (4.1%). Both crude benchmarks marked the lowest finish for a front-month contract since Jun 19. Futures prices had settled higher yesterday, then held on to most of those gains in electronic trading after Venezuela's oil minister Manuel Fernandez said OPEC will extend its production-cut agreement by 9 months thru Mar 2020. The cartel also fully supports a charter to formalize its alliance with non-OPEC producers. Saudi Energy Minister Khalid al-Falih said OPEC & its allies “enthusiastically came together” to support the charter to formalize their alliance. OPEC & non-OPEC ministers held a separate meeting in Vienna today, confirming the decision extend production curbs to Mar 31, 2020. As for demand, the US & China agreed at the G-20 leaders summit last weekend to restart trade talks, which initially soothed concerns that a trade war may lower energy consumption. But Pres Trump raised fresh fears of a bumpy road ahead on trade when he said any deal with China would need to be “somewhat tilted” in favor of DC. Trade negotiations play out against a backdrop of recent data exposing vulnerabilities in the global expansion. Factory activity slowed across much of Europe, Asia & the US in Jun.
Oil prices drop to 2-week low as global demand worries offset OPEC output-cut extension
Jun economic stats are coming in underwhelming & now there are more tariff issues to deal with, this time it's with Europe. Jun was an outstanding month for stocks with the popular averages finishing essentially at record levels. Jul is shaping up as a time for retrenchment, especially if earnings disappoint. Buyers today were mostly interested in safe have gold & Treasuries.
Dow Jones Industrials
No comments:
Post a Comment