Dow declined 179 (closing near the lows), decliners over advancers 4-3 & NAZ slumped 120. The MLP index fell 1+ to the 246s. Junk bond funds were sold & Treasuries remained strong with the yield on the 10 Treasury still below 2%. Oil slid back pennies in the 57s & gold finished up 10 to 1428 (but off session highs).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Most American CFO's are in agreement: An economic downturn is looming on the horizon. However, they're divided on how severe that impending growth slowdown could be, & how long it may last, according to a new study conducted by Deloitte Global CFO Program Leader, which found that only 24% of CFOs expect better North American economic conditions in 2020 – a multi-year low. A whopping 97% expect the US economy to cool within the next 2 years. The pessimism about the strength of the economy is a direct result of the year-long trade war between the US & China, which seems unlikely to be resolved anytime soon, as well as political turmoil amid congressional gridlock. Pres Trump & Chinese Pres Xi Jinping will meet in Japan during the G-20 summit this weekend in the midst of the prolonged trade spat, although Trump's Commerce Secretary Wilbur Ross tempered expectations for a trade deal during a recent interview. “The most that might come is new ground rules for discussion and some sort of schedule for when detailed technical talks might resume,” he said. About 80% of respondents said they think that when the economic downturn comes, it will be mild & that the economy will manage to shake off long-lasting impacts; however, they were split on whether the slowdown will be short or prolonged. CFOs have been forecasting an economic recession for most of the year, as early as Dec. As recently as Jun, 48.1% of CFOs in the US were betting the nation would enter a recession by Q2-2020 & about 69% believe a recession should start by the end of next year, according to the Duke University & CFO Global Business Outlook.
Pres Trump slammed Iran, saying any Iranian attack on Americans would be met with “great and overwhelming force” & “obliteration.” Trump’s comments came a day after he announced fresh sanctions on the Islamic Republic in the wake of its downing of an unmanned US drone last week. Iranian Pres Hassan Rouhani responded to the new sanctions by calling them “outrageous and idiotic” and saying the White House was suffering from a “mental illness.” Trump called that response a “very ignorant and insulting statement.” “Iran leadership doesn’t understand the words “nice” or “compassion,” they never have,” Trump wrote. “Sadly, the thing they do understand is Strength and Power, and the USA is by far the most powerful Military Force in the world, with 1.5 Trillion Dollars invested over the last two years alone.” In another tweet, Trump said that any Iranian attack on Americans would be met with “great and overwhelming force” & “obliteration.” The latest confrontation comes amid rising tensions between DC & Tehran since the administration's decision to withdraw from the 2015 Iran nuclear agreement in May 2018. Last week, US officials said an Iranian surface-to-air missile shot down an American military surveillance drone over the Strait of Hormuz. Iran said the aircraft was over its territory. Hours later, Trump said Iran made a “very big mistake” by shooting down the spy drone. On Thurs, he approved military strikes on Iran before calling them off, saying the attack would have been disproportionate to Iran's downing of an unmanned American surveillance drone. The downing of the drone came a week after the US blamed Iran for attacks on two oil tankers in the Persian Gulf region. 4 tankers were attacked in May. Iran denies involvement.
Trump says an Iranian attack on anything American will be met wi…
New-home sales ran at a 626K seasonally adjusted annual rate in May, the Commerce Dept said. The forecast was for a 669K pace. Sales fell 7.8% compared to Apr, but that month's number was revised up. May sales were 3.7% lower than a year ago. At the current pace of sales, it would take 6.4 months to exhaust available supply, slightly more than the 6 months that's normally considered a market evenly balanced between supply & demand. The median price of a new home sold in May was $308K, 2.7% lower than a year ago. Sales fell 7.8% compared to Apr, but that month's number was revised up. May sales were 3.7% lower than a year ago. At the current pace of sales, it would take 6.4 months to exhaust available supply, slightly more than the 6 months that’s normally considered a market evenly balanced between supply & demand. The median price of a new home sold in May was $308K, 2.7% lower than a year ago. The housing market isn’t looking all that robust right now. sales have flatlined for nearly a year. 0While existing-home sales perked up in May, it remains to be seen if that trend can be sustained. The data on new residential construction are based on small sample sizes & notoriously prone to hefty revisions in later months. YTD sales are 4.0% higher than the same period a year ago.
Powell's comments were not well received by investors who are looking for lower interest rates. This is a short term story & a rate cut is still expected next month. More important are rising tensions with Iran & trade talks with China this week. There was profit taking in gold after its run. However demand continues to be strong by negative thinking investors who want these safe haven investments, not risky stocks. At the same time, the bulls have been able to keep the Dow about 1% below its record high.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Federal Reserve Chair Jerome Powell seemed to
take a subtle swipe at Pres Trump during a speech, warning of “short-term political pressure” that can damage the
central bank’s independence. “Congress
chose to insulate the Fed this way because it had seen the damage that
often arises when policy bends to short-term political interests,”
Powell said.
“Central banks in major democracies around the world have similar
independence.” His speech comes on the
heels of last week's FOMC
policy-setting meeting, during which Trump urged the Fed to lower
interest rates. However, policymakers voted 9-1 to keep the benchmark
federal funds rate steady at 2.25-2.5%, although
heavily implied there could be a rate cut this year. The president took to Twitter on Mon to
reiterate his frustration with the central bank, & Powell, whom
he has reportedly considering firing (in an interview,
Trump maintained that he had the power to fire Powell, but said he had
“no plans to do anything”). “We are on course
to have one of the best Months of June in US history. Think of what it
could have been if the Fed had gotten it right,” Trump wrote. “Thousands
of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they
stick, like a stubborn child, when we need rates cuts, & easing, to
make up for what other countries are doing against us. Blew it!” But
Powell stressed the importance of an independent central bank during
the speech, which investors were closely watching for signals that the
Fed may cut rates during its Jul meeting. Still,
Powell gave no additional signs that a benchmark federal funds rate
reduction is coming within the next 6 weeks, although he did say that
risks to the Fed's economic outlook have grown. “The
crosscurrents have reemerged, with apparent progress on trade turning
to greater uncertainty and with incoming data raising renewed concerns
about the strength of the global economy,” he said. “Our contacts in
business and agriculture report heightened concerns over trade
developments.”
Powell, facing Trump pressure, warns about danger of 'short-term' policy interests
Most American CFO's are in agreement: An economic downturn is looming on the horizon. However, they're divided on how severe that impending growth slowdown could be, & how long it may last, according to a new study conducted by Deloitte Global CFO Program Leader, which found that only 24% of CFOs expect better North American economic conditions in 2020 – a multi-year low. A whopping 97% expect the US economy to cool within the next 2 years. The pessimism about the strength of the economy is a direct result of the year-long trade war between the US & China, which seems unlikely to be resolved anytime soon, as well as political turmoil amid congressional gridlock. Pres Trump & Chinese Pres Xi Jinping will meet in Japan during the G-20 summit this weekend in the midst of the prolonged trade spat, although Trump's Commerce Secretary Wilbur Ross tempered expectations for a trade deal during a recent interview. “The most that might come is new ground rules for discussion and some sort of schedule for when detailed technical talks might resume,” he said. About 80% of respondents said they think that when the economic downturn comes, it will be mild & that the economy will manage to shake off long-lasting impacts; however, they were split on whether the slowdown will be short or prolonged. CFOs have been forecasting an economic recession for most of the year, as early as Dec. As recently as Jun, 48.1% of CFOs in the US were betting the nation would enter a recession by Q2-2020 & about 69% believe a recession should start by the end of next year, according to the Duke University & CFO Global Business Outlook.
CFOs think an economic downturn is coming - but they're split on its severity
Pres Trump slammed Iran, saying any Iranian attack on Americans would be met with “great and overwhelming force” & “obliteration.” Trump’s comments came a day after he announced fresh sanctions on the Islamic Republic in the wake of its downing of an unmanned US drone last week. Iranian Pres Hassan Rouhani responded to the new sanctions by calling them “outrageous and idiotic” and saying the White House was suffering from a “mental illness.” Trump called that response a “very ignorant and insulting statement.” “Iran leadership doesn’t understand the words “nice” or “compassion,” they never have,” Trump wrote. “Sadly, the thing they do understand is Strength and Power, and the USA is by far the most powerful Military Force in the world, with 1.5 Trillion Dollars invested over the last two years alone.” In another tweet, Trump said that any Iranian attack on Americans would be met with “great and overwhelming force” & “obliteration.” The latest confrontation comes amid rising tensions between DC & Tehran since the administration's decision to withdraw from the 2015 Iran nuclear agreement in May 2018. Last week, US officials said an Iranian surface-to-air missile shot down an American military surveillance drone over the Strait of Hormuz. Iran said the aircraft was over its territory. Hours later, Trump said Iran made a “very big mistake” by shooting down the spy drone. On Thurs, he approved military strikes on Iran before calling them off, saying the attack would have been disproportionate to Iran's downing of an unmanned American surveillance drone. The downing of the drone came a week after the US blamed Iran for attacks on two oil tankers in the Persian Gulf region. 4 tankers were attacked in May. Iran denies involvement.
Trump says an Iranian attack on anything American will be met wi…
New-home sales ran at a 626K seasonally adjusted annual rate in May, the Commerce Dept said. The forecast was for a 669K pace. Sales fell 7.8% compared to Apr, but that month's number was revised up. May sales were 3.7% lower than a year ago. At the current pace of sales, it would take 6.4 months to exhaust available supply, slightly more than the 6 months that's normally considered a market evenly balanced between supply & demand. The median price of a new home sold in May was $308K, 2.7% lower than a year ago. Sales fell 7.8% compared to Apr, but that month's number was revised up. May sales were 3.7% lower than a year ago. At the current pace of sales, it would take 6.4 months to exhaust available supply, slightly more than the 6 months that’s normally considered a market evenly balanced between supply & demand. The median price of a new home sold in May was $308K, 2.7% lower than a year ago. The housing market isn’t looking all that robust right now. sales have flatlined for nearly a year. 0While existing-home sales perked up in May, it remains to be seen if that trend can be sustained. The data on new residential construction are based on small sample sizes & notoriously prone to hefty revisions in later months. YTD sales are 4.0% higher than the same period a year ago.
New-home sales fall to a 5-month low
Powell's comments were not well received by investors who are looking for lower interest rates. This is a short term story & a rate cut is still expected next month. More important are rising tensions with Iran & trade talks with China this week. There was profit taking in gold after its run. However demand continues to be strong by negative thinking investors who want these safe haven investments, not risky stocks. At the same time, the bulls have been able to keep the Dow about 1% below its record high.
Dow Jones Industrials
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