Dow rose 8, decliners ahead of advancers 3-2 & NAZ fell 26. The MLP index was off pennies in the 248s. Junk bond funds edged higher & Treasuries were in demand, bringing higher prices. Oil climbed in the 57s on Mideast tensions & gold jumped 21 to 1421 (6 year high).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Pres Trump signed an exec order to impose “hard-hitting” sanctions against Iran days after Tehran shot down a US spy drone over the Strait of Hormuz amid rising tensions between the 2 countries. Trump said the order will target Iran's supreme leader, Ayatollah Ali Khamenei, & associates with additional financial sanctions. He added that he would "love to negotiate a deal" with Iran, believes the country has a "great future' and the "people of Iran are great people." “We will continue to increase pressure on Tehran,” Trump said during remarks inside the Oval Office. “Never can Iran have a nuclear weapon.” “We do not seek conflict with Iran or any other country. I can only tell you we cannot ever let Iran have a nuclear weapon," he added. Trump said “a lot of restraint has been shown by the U.S.” when it comes to Iran in the face of recent events. “But that doesn’t mean we’re going to show it in the future,” the pres added. The order comes amid rising tensions between the US & Iran, including last Thurs when an Iranian surface-to-air missile brought down a $100M US surveillance drone, claiming that the unmanned aircraft was in the country's airspace. US officials have denied Tehran's allegations. Trump said Fri he called off a military strike on Iran with just minutes to spare, although the US did carry out a cyberattack on the Islamic Republic. “We were cocked & loaded to retaliate last night on 3 different sights when I asked, how many will die,” Trump tweeted. “150 people, sir, was the answer from a General. 10 minutes before the strike I stopped it, not proportionate to shooting down an unmanned drone.” Trump also announced on Twitter over the weekend that he would be imposing sanctions against Iran. Today, the pres said the sanctions were "bound to happen" & that the drone incident was a factor, but not the sole reason he was signing the exec order.
Dallas Fed Robert Kaplan called on his fellow central bankers to continue to be patient as economic events unfold before making changes to interest rates. In an essay, Kaplan said he is watching factors such as the US-China trade tensions as well as decelerating global growth & whether they will lead to “a material deterioration” of domestic activity. “At this stage, I believe it is too early to make a judgment on this question,” he wrote. “These heightened uncertainties have intensified over the past seven weeks, and it is certainly possible that events could occur in the near future which would substantially reduce these uncertainties.” Thus, as it pertains to policy, “I believe it would be wise to take additional time and allow events to unfold as we consider whether it is appropriate to make changes to the stance of U.S. monetary policy.” Kaplan is a nonvoting member this year of the FOMC. However, he is allowed input at meetings & occupies one of the “dots” on the Fed's chart of individual members' expectations for where rates are headed over the next several years. His remarks come just days after the committee held the line on rates but provided indication that future cuts are forthcoming if conditions weaken. Markets are counting on possibly 3 rate cuts before the end of the year, with the first in late Jul. Despite market expectations, Kaplan said he is concerned about making policy too lose now. “I am concerned that adding monetary stimulus, at this juncture, would contribute to a build-up of excesses and imbalances in the economy which may ultimately prove to be difficult and painful to manage,” he wrote. Companies in Kaplan's district are reporting issues with tariffs, with more than ½ saying the duties imposed by Pres Trump on steel, aluminum & many products from China are increasing input costs & causing a reduction in capital spending plans. But he said the economy otherwise looks strong while inflation may not be as weak as the Fed's preferred gauge suggests at just 1.5%, short of the Fed's 2% goal.
Fed’s Kaplan says it’s ‘too early’ to decide if interest rates need to be cut
The Dow lost much of the early gains (closing close to the lows) & market breadth turned negative. Nothing serious. There is very little desire to commit money ahead of the important G-20 meeting this week. In addition the stakes in the US-Iran dispute were raised, adding worries about global oil supplies. These are nervous times, but investors have been taking it all in stride. At least so far.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Pres Trump signed an exec order to impose “hard-hitting” sanctions against Iran days after Tehran shot down a US spy drone over the Strait of Hormuz amid rising tensions between the 2 countries. Trump said the order will target Iran's supreme leader, Ayatollah Ali Khamenei, & associates with additional financial sanctions. He added that he would "love to negotiate a deal" with Iran, believes the country has a "great future' and the "people of Iran are great people." “We will continue to increase pressure on Tehran,” Trump said during remarks inside the Oval Office. “Never can Iran have a nuclear weapon.” “We do not seek conflict with Iran or any other country. I can only tell you we cannot ever let Iran have a nuclear weapon," he added. Trump said “a lot of restraint has been shown by the U.S.” when it comes to Iran in the face of recent events. “But that doesn’t mean we’re going to show it in the future,” the pres added. The order comes amid rising tensions between the US & Iran, including last Thurs when an Iranian surface-to-air missile brought down a $100M US surveillance drone, claiming that the unmanned aircraft was in the country's airspace. US officials have denied Tehran's allegations. Trump said Fri he called off a military strike on Iran with just minutes to spare, although the US did carry out a cyberattack on the Islamic Republic. “We were cocked & loaded to retaliate last night on 3 different sights when I asked, how many will die,” Trump tweeted. “150 people, sir, was the answer from a General. 10 minutes before the strike I stopped it, not proportionate to shooting down an unmanned drone.” Trump also announced on Twitter over the weekend that he would be imposing sanctions against Iran. Today, the pres said the sanctions were "bound to happen" & that the drone incident was a factor, but not the sole reason he was signing the exec order.
Trump signs executive order to impose ‘hard-hitting’ sanctions on Iran
Dallas Fed Robert Kaplan called on his fellow central bankers to continue to be patient as economic events unfold before making changes to interest rates. In an essay, Kaplan said he is watching factors such as the US-China trade tensions as well as decelerating global growth & whether they will lead to “a material deterioration” of domestic activity. “At this stage, I believe it is too early to make a judgment on this question,” he wrote. “These heightened uncertainties have intensified over the past seven weeks, and it is certainly possible that events could occur in the near future which would substantially reduce these uncertainties.” Thus, as it pertains to policy, “I believe it would be wise to take additional time and allow events to unfold as we consider whether it is appropriate to make changes to the stance of U.S. monetary policy.” Kaplan is a nonvoting member this year of the FOMC. However, he is allowed input at meetings & occupies one of the “dots” on the Fed's chart of individual members' expectations for where rates are headed over the next several years. His remarks come just days after the committee held the line on rates but provided indication that future cuts are forthcoming if conditions weaken. Markets are counting on possibly 3 rate cuts before the end of the year, with the first in late Jul. Despite market expectations, Kaplan said he is concerned about making policy too lose now. “I am concerned that adding monetary stimulus, at this juncture, would contribute to a build-up of excesses and imbalances in the economy which may ultimately prove to be difficult and painful to manage,” he wrote. Companies in Kaplan's district are reporting issues with tariffs, with more than ½ saying the duties imposed by Pres Trump on steel, aluminum & many products from China are increasing input costs & causing a reduction in capital spending plans. But he said the economy otherwise looks strong while inflation may not be as weak as the Fed's preferred gauge suggests at just 1.5%, short of the Fed's 2% goal.
Fed’s Kaplan says it’s ‘too early’ to decide if interest rates need to be cut
Optimism among US manufacturers slipped in Q2 from last year's record highs, according to the industry’s top trade group, as trade tensions with China & Mexico dampen economic forecasts. Nearly
80% of firms have a positive outlook for their operations,
according to the National Association of Manufacturer's quarterly
survey, down from nearly 90% in Q1. Optimism
peaked at 93% last year, a record in the survey's 20-year
history as the GOP-led tax cuts fueled a bustling economy. “Clearly,
optimism is still strong among manufacturers, but you can’t overlook
the fact that trade uncertainties are causing concern for
manufacturers,” said NAM Chief Economist Chad Moutray, who conducted the
survey. Key
to improving the outlook, is approving USMCA, completing a
trade deal with China& Pres Trump removing his threat to impose
tariffs on auto imports to the US. Driving much of the concern is the ongoing trade
discussions with China, as well as the uncertain future of a new trade
deal with Canada & Mexico. Among the 689 respondents to the survey, 56% said they were concerned about trade, while 50% listed
rising raw material prices as a worry. Mexico
on Wed ratified the US–Mexico–Canada Agreement (USMCA),
but it remains unclear when the House plans
to bring the measure up for a vote. Dems are concerned over the
labor provisions & pharmaceutical protections in the deal meant to
replace the North American Free Trade Agreement. On
the China front, Trump & Pres Xi Jinping will meet at the
upcoming G20 summit in Japan. Top US & China trade officials are
expected to restart trade negotiations prior to that gathering. The
White House, however, is still eying tariffs on an additional $300B in shipments from Beijing, a move that corp America is
warning could lead to higher prices for consumers. Companies
flocked to DC this week to push back against the new
duties, telling the administration that it will be difficult to source
many goods outside of China & warning that shifting production back to
the US is unlikely to produce many new jobs. While economists have largely downplayed the
threat of an economic recession, US firms are warning that a slowdown
is approaching. The economy added 75K jobs
in May, much smaller than experts expected. And manufacturing jobs,
which had been a source of significant growth in recent years, slowed to
an increase of 3K positions last month. The
Federal Reserve is strongly hinting that it will cut interest rates
this year, a move that is likely to spur renewed growth.
US manufacturers blame trade wars for slip in record-level optimism
The Dow lost much of the early gains (closing close to the lows) & market breadth turned negative. Nothing serious. There is very little desire to commit money ahead of the important G-20 meeting this week. In addition the stakes in the US-Iran dispute were raised, adding worries about global oil supplies. These are nervous times, but investors have been taking it all in stride. At least so far.
Dow Jones Industrials
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