Dow went up 50, advancers slightly ahead of decliners & NAZ slid back 2. The MLP index was little changed in the 248s. Junk bond funds rose in price & Treasuries were purchased again. Oil was steady in the 57s & gold shot up 12 to 1412 (more below).
AMJ (Alerian MLP Index tracking fund)
US stocks move higher on trade optimism
The Supreme Court announced that it will not yet hear a challenge to Pres Trump's tariffs on steel imports into the US. The news was announced in an order with no noted dissents. The court's decision not to hear the case leaves in place a Mar decision from the US Court of Intl Trade which allowed for Trump's tariffs. The case was brought by a group of companies in the steel industry who say they are harmed by the 25% tariffs on steel imports that Trump ordered early last year. Those tariffs have collected approximately $4.5B so far, the group wrote in a brief with the top court, a figure that “significantly understates the irreparable and ongoing harm” to their businesses. The plaintiffs, which include the American Institute for International Steel, are arguing that the law Trump invoked to impose the tariffs effectively granted him too much leeway to circumvent Congress, a violation of the Constitution's separation of powers. The law, Section 232 of the Trade Expansion Act of 1962, imposes no meaningful limits on the pres's authority, they argued. Congress has rebuked the president over his use of tariffs, but has so far not taken meaningful legislative action to limit his authority. The Trump administration urged the top court not to take the case & argued that the pres has wide-ranging authority over foreign affairs & national security matters.
Pres Trump is threatening to impose “major” new sanctions against Iran, ramping up the pressure on the Islamic Republic at a time when its economy is straining under the weight of financial restrictions. 6 oil tankers & a US spy drone have been attacked since May either in or near the Strait of Hormuz — the world's busiest transit lane for seaborne oil shipments that separates Iran from its neighboring Gulf states. The flurry of attacks has escalated tensions between DC & Tehran. On Sat, Trump tweeted that he would impose additional sanctions against Iran in a bid to prevent the country obtaining nuclear weapons. The US already has sanctions on Iran's oil industry & other sectors. Trump added that economic pressure would be maintained unless Iran's leadership changed course. Tensions between the US & Iran have spiked since May 2018, when Trump withdrew from the 2015 nuclear deal & reinstated sweeping sanctions on the country. The US has also bolstered its military presence in the Middle East & blacklisted Iran's Revolutionary Guard as a terrorist organization. Iran's oil exports, the gov's main source of revenue, have been hit hard by US sanctions. The US has applied financial restrictions to nearly 1K Iranian entities, including banks, individuals & vessels tied to the country's shipping & energy sector. In May, the White House prohibited the purchase of Iranian iron, steel, aluminum & copper. The Trump administration has also revoked waivers that allowed 8 countries, including China & India, to import Iranian oil despite US sanctions. The US is aiming to completely cut off Iranian oil exports in order to force Tehran to abandon support for militant groups in the Middle East & renegotiate the landmark nuclear accord. Trump approved military strikes against Iran late Thurs in retaliation for the downing of an unmanned American drone, before abruptly reversing his decision, saying the expected casualty toll from a US strike would have been disproportionate to Iran's downing of an unmanned American spy drone.
Iran is already in a ‘very dangerous’ economic position as US prepares major new sanctions
Gold prices resumed a push higher, as flows into the precious metal continued on improved prospects for easier monetary policy from the Federal Reserve & other central banks. Aug gold rose $10 (0.7%) to $1410 an ounce, trading near the session high of $1,414. On Fri, gold settled above $1400 an ounce, the first time for a most-active contract since 2013. Prices for the metal gained 4.1% last week. Gold’' gains last week came after a Fed meeting in which the central bank held rates steady but spoke of “uncertainties” over the US economic outlook. The ECB & Bank of England also made dovish comments during the week. Precious metals like gold tend to attract buyers in a low interest-rate climate. But geopolitical tensions between the US & Iran & uncertainties on the global trade front have also lured investors into gold, seen as a haven investment in times of political & economic uncertainty. Global equities rose cautiously today after China's state-run Xinhua News Agency said that China's Pres Xi Jinping will attend the G-20 summit in Japan this week, giving the first official confirmation of his attendance at the meeting, where he has been expected to talk on the sidelines with Pres Trump. Over the weekend Trump said he would impose new sanctions on Iran starting today, days after calling a halt to airstrikes on the country which shot down a US military drone. But he also suggested the 2 countries will eventually have a positive relationship, toning down harsher rhetoric he has employed for much of his presidency.
Not much to do for traders as summer begins. Overseas markets were marking time. The US trade talks & Iran tensions should get most of the attention by investors. Meanwhile, the popular stocks averages are at or very close to record highs while nervous investors continue to buy gold & Treasuries. That relationship can not last.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 57.36 | -0.07 | -0.1% |
| GC=F | Gold | 1,410.00 | +9.90 | +0.7% |
Stocks are trading higher to start the week as investors are looking toward the upcoming US-China trade talks to help reduce tensions of a trade war that is damaging the global economy. Optimism about an interest rate cut & talks
between the US & China, helped the S&P 500 index hit a record
high last week. Later this week, Pres Trump & Chinese Pres Xi Jinping are expected to meet at the G-20 summit in Japan. Tensions between the US & Iran remain after Tehran shot down an American drone last week. Trump
said yesterday he was not seeking war with Iran after a senior Iranian
military commander warned any conflict in the Gulf region could spread
uncontrollably & threaten the lives of US troops. Asian markets started the week with
gains. China's Shanghai rose 0.2%, Hong Kong's Hang Seng inched higher & Japan's Nikkei also a smidgen. In Europe, London's FTSE added 0.2%, Germany's DAX fell 0.5% & France's CAC was off a tad.
US stocks move higher on trade optimism
The Supreme Court announced that it will not yet hear a challenge to Pres Trump's tariffs on steel imports into the US. The news was announced in an order with no noted dissents. The court's decision not to hear the case leaves in place a Mar decision from the US Court of Intl Trade which allowed for Trump's tariffs. The case was brought by a group of companies in the steel industry who say they are harmed by the 25% tariffs on steel imports that Trump ordered early last year. Those tariffs have collected approximately $4.5B so far, the group wrote in a brief with the top court, a figure that “significantly understates the irreparable and ongoing harm” to their businesses. The plaintiffs, which include the American Institute for International Steel, are arguing that the law Trump invoked to impose the tariffs effectively granted him too much leeway to circumvent Congress, a violation of the Constitution's separation of powers. The law, Section 232 of the Trade Expansion Act of 1962, imposes no meaningful limits on the pres's authority, they argued. Congress has rebuked the president over his use of tariffs, but has so far not taken meaningful legislative action to limit his authority. The Trump administration urged the top court not to take the case & argued that the pres has wide-ranging authority over foreign affairs & national security matters.
Supreme Court won’t hear challenge to Trump’s steel tariffs
Pres Trump is threatening to impose “major” new sanctions against Iran, ramping up the pressure on the Islamic Republic at a time when its economy is straining under the weight of financial restrictions. 6 oil tankers & a US spy drone have been attacked since May either in or near the Strait of Hormuz — the world's busiest transit lane for seaborne oil shipments that separates Iran from its neighboring Gulf states. The flurry of attacks has escalated tensions between DC & Tehran. On Sat, Trump tweeted that he would impose additional sanctions against Iran in a bid to prevent the country obtaining nuclear weapons. The US already has sanctions on Iran's oil industry & other sectors. Trump added that economic pressure would be maintained unless Iran's leadership changed course. Tensions between the US & Iran have spiked since May 2018, when Trump withdrew from the 2015 nuclear deal & reinstated sweeping sanctions on the country. The US has also bolstered its military presence in the Middle East & blacklisted Iran's Revolutionary Guard as a terrorist organization. Iran's oil exports, the gov's main source of revenue, have been hit hard by US sanctions. The US has applied financial restrictions to nearly 1K Iranian entities, including banks, individuals & vessels tied to the country's shipping & energy sector. In May, the White House prohibited the purchase of Iranian iron, steel, aluminum & copper. The Trump administration has also revoked waivers that allowed 8 countries, including China & India, to import Iranian oil despite US sanctions. The US is aiming to completely cut off Iranian oil exports in order to force Tehran to abandon support for militant groups in the Middle East & renegotiate the landmark nuclear accord. Trump approved military strikes against Iran late Thurs in retaliation for the downing of an unmanned American drone, before abruptly reversing his decision, saying the expected casualty toll from a US strike would have been disproportionate to Iran's downing of an unmanned American spy drone.
Iran is already in a ‘very dangerous’ economic position as US prepares major new sanctions
Gold prices resumed a push higher, as flows into the precious metal continued on improved prospects for easier monetary policy from the Federal Reserve & other central banks. Aug gold rose $10 (0.7%) to $1410 an ounce, trading near the session high of $1,414. On Fri, gold settled above $1400 an ounce, the first time for a most-active contract since 2013. Prices for the metal gained 4.1% last week. Gold’' gains last week came after a Fed meeting in which the central bank held rates steady but spoke of “uncertainties” over the US economic outlook. The ECB & Bank of England also made dovish comments during the week. Precious metals like gold tend to attract buyers in a low interest-rate climate. But geopolitical tensions between the US & Iran & uncertainties on the global trade front have also lured investors into gold, seen as a haven investment in times of political & economic uncertainty. Global equities rose cautiously today after China's state-run Xinhua News Agency said that China's Pres Xi Jinping will attend the G-20 summit in Japan this week, giving the first official confirmation of his attendance at the meeting, where he has been expected to talk on the sidelines with Pres Trump. Over the weekend Trump said he would impose new sanctions on Iran starting today, days after calling a halt to airstrikes on the country which shot down a US military drone. But he also suggested the 2 countries will eventually have a positive relationship, toning down harsher rhetoric he has employed for much of his presidency.
Gold continues rally, pushing further past $1,400
Not much to do for traders as summer begins. Overseas markets were marking time. The US trade talks & Iran tensions should get most of the attention by investors. Meanwhile, the popular stocks averages are at or very close to record highs while nervous investors continue to buy gold & Treasuries. That relationship can not last.
Dow Jones Industrials
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