Dow rose 18, decliners over advancers 5-4 & NAZ fell 40. The MLP index slid back 2+ to the 246s. Junk bond funds went up in price & Treasuries closed a little weaker. Oil continued higher as traders evaluate uncertainties in the Mideast & gold was flattish at 1345 (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)
Even with Pres Trump & the markets calling for lower interest rates, the Fed is not likely to make a move when it meets next week, though it is expected to smooth the way for a rate cut later in the summer. The timing of a Fed rate cut, the first in more than a decade, is up for debate. But such a move has become more of a given in markets, after May's weak jobs data & softer-than-expected consumer price inflation. A growing number of economists & investors are expecting a midsummer rate cut, at the Jul 30-31 meeting. There are also those who expect the Fed to wait until Sep, considering more data before cutting rates. Then there are even a few who expect no cut at all this year. The Fed is expected to tilt its message toward lower rates, with officials lowering their interest rate forecasts in the “dot plot,” a chart that anonymously reflects each Fed official's rate forecast. Economists are also expected to reduce their outlook for economic growth & acknowledge weaker inflation.
The Fed is likely to drop ‘patient’ word next week, clearing way for July cut, economists say
The Univ of Mich said its consumer-sentiment index in Jun fell to a reading of 97.9 from 100 in May. A reading of 99 was expected. The index for expectations dropped sharply as consumers raised concerns about tariffs. At the time of the survey, there was the possibility of tariffs being levied against Mexico, as well as the existing 25% tariffs on $200B worth of Chinese goods. Negative mentions of tariffs were spontaneously made by 40% of all consumers in early Jun, up from 21% in May & the prior high of 35% in Jul 2018. Buying plans for large household durable goods actually rose on buy-in-advance price rationales. Unaided references to buy-in-advance price rationales were mentioned in early Jun by 19%, up from 12% in May, & just below the 21% level in Mar 2018, when tariffs on washing machines were first announced. The index of current conditions however rose slightly, reflecting the continued low unemployment rate & wage gains. The sentiment reading was by no means catastrophic but illustrative of the worries about trade. The Univ of Mich said the reading was consistent with a 2.5% rise for household consumption in the year ahead. It added that consumers anticipated the lowest long-term inflation rate in history of survey, of just 2.2%, an important consideration for the Federal Reserve heading into next week's meeting. The Fed considers anchoring inflation expectations vital for helping to keep prices stable.
Small US business advocates & owners are increasingly pushing back on tariffs. The National Federation of Independent Business said about 1/3 of its membership has reported somewhat or significant negative impacts as a result of recent trade policy changes with Mexico, Canada or China. Another recent poll from BizBuySell, an online business for sale marketplace, surveyed more than 1700 small business owners & found 43% say China tariffs will increase business costs, & of that group 64% plan to increase prices to stay afloat. The poll also found that nearly 2/3 of small business owners have considered switching to suppliers outside of the US & of that group more than ½ are looking for a US-based supplier. What's more, 1 in 5 businesses said they did not believe they could survive if Chinese tariffs last more than one year. The Intl Trade Administration says the extra duties , known as antidumping & countervailing duties, are there to protect American businesses being negatively affected by Chinese dumping. US companies petitioned the Commerce Dept for relief from “unfairly traded” quartz surfaces from China, which totaled some $460M in imports in 2017.
Main Street feels the pinch from China tariffs
US oil futures scored back-to-back session gains today, as attacks on oil tankers near the Strait of Hormuz a day earlier raised risks to the global flow of crude oil. Prices, however, ended the week lower on persistent worries that trade tensions will lead to a slowdown in energy demand. Jul West Texas Intermediate oil rose 23¢ (0.4%) to settle at $52.51 a barrel. Prices fell 2.7% for the week, their 3rd weekly loss in 4 weeks.
Gold futures gave up much of their earlier gains, with strength in the $ prompting prices for the precious metal to post only a modest gain for the session, down significantly from their highest intraday level in 14 months. Prices eased back from the session's best levels with the dollar gaining on the week, putting pressure on $-denominated gold prices. Gold for Aug delivery inched higher to settle at $1344 an ounce. Most-active contract prices settled at their highest in a week, but were still a tad lower than last Fri's settlement of $1346. Prices had climbed to as high as $1362 during today's session, which was the highest intraday since Apr 2018.
On this summer like Fri, little was decided in the stock market. The Dow was in the red until the last 2 hours when buyers brought it into the black. NAZ was lower all day. The Fed meeting will get a lot of attention next week. Investors will pay close attention to every word in the Fed press release, looking for clues about a possible rate cut. At the same time safe haven investments are popular with many investors.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Even with Pres Trump & the markets calling for lower interest rates, the Fed is not likely to make a move when it meets next week, though it is expected to smooth the way for a rate cut later in the summer. The timing of a Fed rate cut, the first in more than a decade, is up for debate. But such a move has become more of a given in markets, after May's weak jobs data & softer-than-expected consumer price inflation. A growing number of economists & investors are expecting a midsummer rate cut, at the Jul 30-31 meeting. There are also those who expect the Fed to wait until Sep, considering more data before cutting rates. Then there are even a few who expect no cut at all this year. The Fed is expected to tilt its message toward lower rates, with officials lowering their interest rate forecasts in the “dot plot,” a chart that anonymously reflects each Fed official's rate forecast. Economists are also expected to reduce their outlook for economic growth & acknowledge weaker inflation.
The Fed is likely to drop ‘patient’ word next week, clearing way for July cut, economists say
The Univ of Mich said its consumer-sentiment index in Jun fell to a reading of 97.9 from 100 in May. A reading of 99 was expected. The index for expectations dropped sharply as consumers raised concerns about tariffs. At the time of the survey, there was the possibility of tariffs being levied against Mexico, as well as the existing 25% tariffs on $200B worth of Chinese goods. Negative mentions of tariffs were spontaneously made by 40% of all consumers in early Jun, up from 21% in May & the prior high of 35% in Jul 2018. Buying plans for large household durable goods actually rose on buy-in-advance price rationales. Unaided references to buy-in-advance price rationales were mentioned in early Jun by 19%, up from 12% in May, & just below the 21% level in Mar 2018, when tariffs on washing machines were first announced. The index of current conditions however rose slightly, reflecting the continued low unemployment rate & wage gains. The sentiment reading was by no means catastrophic but illustrative of the worries about trade. The Univ of Mich said the reading was consistent with a 2.5% rise for household consumption in the year ahead. It added that consumers anticipated the lowest long-term inflation rate in history of survey, of just 2.2%, an important consideration for the Federal Reserve heading into next week's meeting. The Fed considers anchoring inflation expectations vital for helping to keep prices stable.
U.S. consumer sentiment in June declines on tariff
Small US business advocates & owners are increasingly pushing back on tariffs. The National Federation of Independent Business said about 1/3 of its membership has reported somewhat or significant negative impacts as a result of recent trade policy changes with Mexico, Canada or China. Another recent poll from BizBuySell, an online business for sale marketplace, surveyed more than 1700 small business owners & found 43% say China tariffs will increase business costs, & of that group 64% plan to increase prices to stay afloat. The poll also found that nearly 2/3 of small business owners have considered switching to suppliers outside of the US & of that group more than ½ are looking for a US-based supplier. What's more, 1 in 5 businesses said they did not believe they could survive if Chinese tariffs last more than one year. The Intl Trade Administration says the extra duties , known as antidumping & countervailing duties, are there to protect American businesses being negatively affected by Chinese dumping. US companies petitioned the Commerce Dept for relief from “unfairly traded” quartz surfaces from China, which totaled some $460M in imports in 2017.
Main Street feels the pinch from China tariffs
US oil futures scored back-to-back session gains today, as attacks on oil tankers near the Strait of Hormuz a day earlier raised risks to the global flow of crude oil. Prices, however, ended the week lower on persistent worries that trade tensions will lead to a slowdown in energy demand. Jul West Texas Intermediate oil rose 23¢ (0.4%) to settle at $52.51 a barrel. Prices fell 2.7% for the week, their 3rd weekly loss in 4 weeks.
U.S. oil prices settle higher for the session, down for the week
Gold futures gave up much of their earlier gains, with strength in the $ prompting prices for the precious metal to post only a modest gain for the session, down significantly from their highest intraday level in 14 months. Prices eased back from the session's best levels with the dollar gaining on the week, putting pressure on $-denominated gold prices. Gold for Aug delivery inched higher to settle at $1344 an ounce. Most-active contract prices settled at their highest in a week, but were still a tad lower than last Fri's settlement of $1346. Prices had climbed to as high as $1362 during today's session, which was the highest intraday since Apr 2018.
Gold futures finish with a modest gain after an earlier rise to a 14-month high
On this summer like Fri, little was decided in the stock market. The Dow was in the red until the last 2 hours when buyers brought it into the black. NAZ was lower all day. The Fed meeting will get a lot of attention next week. Investors will pay close attention to every word in the Fed press release, looking for clues about a possible rate cut. At the same time safe haven investments are popular with many investors.
Dow Jones Industrials
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