Dow shot up 207, decliners slightly ahead of advancers & NAZ gained 48. The MLP index retreated 3+ to the 245s (extending its longer term sideways trend shown below). Junk bond funds were purchased & Treasuries slid back a little on profit taking. Oil sank 1+ to the 51s (bear market territory) & gold rose 5 to 1333 (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 US economy expanded at a moderate pace in Apr thru mid-May, a slight improvement over the previous period as firms largely shook off the impact of a US-China trade war, according to the Federal Reserve's Beige Book. Almost all of the Fed's 12 districts reported some gains over the past few months, the Fed said in its region-by-region roundup of anecdotal information known as the Beige Book. A few saw moderate gains in activity. The report, prepared by the Federal Reserve Bank of St Louis, was based on information collected thru May 24. The report also suggested that despite uncertainties surrounding trade tensions with China & Mexico, the economic outlook for the coming months remained “solidly positive but modest, with little variation among reporting Districts.” Several respondents reported that some contacts are companies across the country had reported an increase in the length of temporary contracts, as well as less demand for direct hires -- which they believed stemmed from the threat of a trade war with China. The Dallas Federal Reserve, the home to a number of businesses involved in the global trade spat, warned of scattered signs of deceleration in growth. “Outlooks were generally less positive than during the prior reporting period, with tariff and trade negotiations driving up uncertainty,” the Beige Book added. The Beige Book found that employment continued to increase nationwide, but noted that hiring was constrained by a tighter labor market. Some districts cited shortages of both high- & low-skill workers, although competition to hire employees applied some wage pressures across a number of occupations. Policymakers at the central bank will study the report ahead of their Jun 18-19 FOMC meeting. This week, Chairman Jerome Powell suggested the Fed could cut the benchmark federal funds rate if trade uncertainties hurt the US economic outlook. “We do not know how or when these issues will be resolved. We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective,” he said yesterday. Traders do not anticipate the FOMC to cut rates during the Jun meeting, although some think the Fed won't lower rates at all this year.
The new flare-up in trade tensions is a downside risk to the outlook & the Fed is watching developments closely & prepared to act if needed, said Federal Reserve Governor Lael Brainard. "As we go forward and the data comes in we'll just have to see what that means. We'll be prepared to adjust policy to sustain the expansion," Brainard added. She noted consumer spending had been strong.
US oil futures settled sharplylower as a weekly climb of 6.8M barrels in domestic crude supplies lifted total stocks to their highest level in nearly 2 years. Data showing weaker-than-expected growth in private-sector jobs in May also fed concerns over a slowdown in the economy, which could lead to a decline in energy demand. Jul West Texas Intermediate oil fell $1.80 (3.4%) to settle at $51.68 a barrel on the New York Mercantile Exchange. Front-month futures finished at 22% below their most recent high of $66.30 from Apr 23, marking WTI's entry into a bear market.
Gold climbed with the prospect of an interest-rate reduction by the Federal Reserve, amid signs of economic weakness in the US, lifting the metal's price to its highest finish in 3½ months. Futures prices touched highs near $1349 an ounce after a report today on private-sector employment for May from payroll porcessor ADP said employers hired 27K in the month, marking the lowest growth since 2010. Gold for Aug delivery rose $4.90 (0.4%) to settle at $1333 an ounce. Most-active contract prices haven't settled at a level this high since Feb 20. However, prices pared earlier gains to finish off the day's high of $1348 as US benchmark stock indices moved higher in dealings, dulling some of the demand for gold. The precious metal posted a 6th consecutive gain, the longest win streak since an 11-day rally ended Jan 2018. Gold has seen a more than 4% YTD advance & a 1.7% rise so far this month.
The stock averages had a good day, but the advance-decline line was negative even with buying into the close. Not a convincing way to extend yesterday's rally. Demand for safe haven gold & Treasuries remains still strong. As enthusiasm for possible rate cuts fades, economic data for May will get more attention & that looks to be less than impressive. The latest rally continues to be shaky.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres Trump called on Mexico to “step up” to prevent looming tarriffs,
remarks that come as one top White House trade advisor suggested the
planned duties on the country may not take effect on Mon as
scheduled. “If they don’t, tariffs will go on
and if they go high, the companies are going to move back into the
United States,” Trump said. “It’s very simple. The people are going to have to worry
about paying the tax because the companies are going to move back into
the United States, there won’t be any tariffs.” The US is poised to impose 5% tariffs on
shipments from Mexico on Mon & those duties would rise to 25% in Oct if the country does not address Trump's demands to
curb illegal crossings into the US, though it’s unclear exactly what
steps the administration is seeking. As the deadline looms, White House officials & lawmakers were racing to find a solution with Mexican officials. VP Mike Pence, Secretary of State Mike Pompeo & Trade Representative Robert Lighthizer were all expected to meet today with Marcelo Ebrard, Mexico's foreign minister. The country's
top diplomat met on yesterday with House Speaker Nancy Pelosi & several other Dems from the chamber. The
threat of higher import costs, however, may have forced Mexico to take
more concrete steps to block undocumented individuals from traversing
the border, according to White House trade adviser Peter Navarro. “We
believe that these tariffs may not have to go into effect precisely
because we have the Mexicans' attention," he said. "Let’s stay calm
and look at the chess board here." Navarro's comments come after Trump yesterday said the duties were "likely" to take effect. The
potential new tariffs have earned widespread criticism from economists,
industry groups & even Senate Republicans, who are considering taking
action to disapprove of the duties should they be implemented. It
also led to a sell-off stock trading on Mon, though the
markets have largely stabilized & were on the rise on today amid
the positive trade talks & comments from Federal Reserve Chairman
Jerome Powell that suggested an interest rate cut was possible in 2019. As
one of the largest US trading partners, any new tariffs on Mexico
would likely lead to higher production costs for retailers, auto
manufacturers & others, leading to potentially increased prices for
the consumer.
Trump tells Mexico to 'step up' after top trade advisor casts doubt on new tariffs
The US economy expanded at a moderate pace in Apr thru mid-May, a slight improvement over the previous period as firms largely shook off the impact of a US-China trade war, according to the Federal Reserve's Beige Book. Almost all of the Fed's 12 districts reported some gains over the past few months, the Fed said in its region-by-region roundup of anecdotal information known as the Beige Book. A few saw moderate gains in activity. The report, prepared by the Federal Reserve Bank of St Louis, was based on information collected thru May 24. The report also suggested that despite uncertainties surrounding trade tensions with China & Mexico, the economic outlook for the coming months remained “solidly positive but modest, with little variation among reporting Districts.” Several respondents reported that some contacts are companies across the country had reported an increase in the length of temporary contracts, as well as less demand for direct hires -- which they believed stemmed from the threat of a trade war with China. The Dallas Federal Reserve, the home to a number of businesses involved in the global trade spat, warned of scattered signs of deceleration in growth. “Outlooks were generally less positive than during the prior reporting period, with tariff and trade negotiations driving up uncertainty,” the Beige Book added. The Beige Book found that employment continued to increase nationwide, but noted that hiring was constrained by a tighter labor market. Some districts cited shortages of both high- & low-skill workers, although competition to hire employees applied some wage pressures across a number of occupations. Policymakers at the central bank will study the report ahead of their Jun 18-19 FOMC meeting. This week, Chairman Jerome Powell suggested the Fed could cut the benchmark federal funds rate if trade uncertainties hurt the US economic outlook. “We do not know how or when these issues will be resolved. We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2 percent objective,” he said yesterday. Traders do not anticipate the FOMC to cut rates during the Jun meeting, although some think the Fed won't lower rates at all this year.
The new flare-up in trade tensions is a downside risk to the outlook & the Fed is watching developments closely & prepared to act if needed, said Federal Reserve Governor Lael Brainard. "As we go forward and the data comes in we'll just have to see what that means. We'll be prepared to adjust policy to sustain the expansion," Brainard added. She noted consumer spending had been strong.
Fed’s Brainard Says Lower Rates Possible Amid Trade Risks
US oil futures settled sharplylower as a weekly climb of 6.8M barrels in domestic crude supplies lifted total stocks to their highest level in nearly 2 years. Data showing weaker-than-expected growth in private-sector jobs in May also fed concerns over a slowdown in the economy, which could lead to a decline in energy demand. Jul West Texas Intermediate oil fell $1.80 (3.4%) to settle at $51.68 a barrel on the New York Mercantile Exchange. Front-month futures finished at 22% below their most recent high of $66.30 from Apr 23, marking WTI's entry into a bear market.
U.S. oil prices drop, marking their entry into a bear market
Gold climbed with the prospect of an interest-rate reduction by the Federal Reserve, amid signs of economic weakness in the US, lifting the metal's price to its highest finish in 3½ months. Futures prices touched highs near $1349 an ounce after a report today on private-sector employment for May from payroll porcessor ADP said employers hired 27K in the month, marking the lowest growth since 2010. Gold for Aug delivery rose $4.90 (0.4%) to settle at $1333 an ounce. Most-active contract prices haven't settled at a level this high since Feb 20. However, prices pared earlier gains to finish off the day's high of $1348 as US benchmark stock indices moved higher in dealings, dulling some of the demand for gold. The precious metal posted a 6th consecutive gain, the longest win streak since an 11-day rally ended Jan 2018. Gold has seen a more than 4% YTD advance & a 1.7% rise so far this month.
Gold settles at a 3 1/2-month high after ADP report reveals weaker hiring
The stock averages had a good day, but the advance-decline line was negative even with buying into the close. Not a convincing way to extend yesterday's rally. Demand for safe haven gold & Treasuries remains still strong. As enthusiasm for possible rate cuts fades, economic data for May will get more attention & that looks to be less than impressive. The latest rally continues to be shaky.
Dow Jones Industrials
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