Dow dropped 115 (session low with selling into the close), decliners over advancers 3-2 & NAZ fell 37. The MLP index pulled back 1+ to the 255s & the REIT index retreated 1+ to the 389s. Junk bond funds barely budged in price & Treasuries were in strong demand. Oil gave back 1+ to the 56s & gold shot up 13 to 1424 (a new 6 year high), 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)
Fed's Beige Book reports positive outlook, despite trade uncertainty
Gold futures finished sharply higher, sending prices to a fresh 6-year high, as the $ weakened & traders weighed expectations for a US interest-rate cut. Prices climbed further in electronic trading, following the release of the Federal Reserve’s Beige Book—the central bank's periodic examination of the US economy. The report said the economy is expanding at roughly same “modest” pace as indicated in the last survey. The report followed news yesterday that Fed Chair Powell reiterated in a speech that the economic outlook hasn't improved since the last FOMC meeting in Jun, setting the stage for an interest-rate cut. Ahead of the Beige Book release, Aug gold trading rose $12.10 (0.9%) to settle at $1423 an ounce, after closing 0.2% lower Tues. Prices for the most-active contract posted their highest finish since May 2013. In electronic trading shortly after the Beige Book, the contract traded at $1427. A recent round of stronger-than-expected US economic data had earlier dented expectations for more aggressive interest rate cuts in coming months by the Fed. The expectation for lower rates can provide a lift to the precious yellow metal because it doesn't offer a yield.
Gold futures climb to a fresh six-year high
Shares of Bank of America (BAC) seesawed toward a gain, as the bank lowered its full-year outlook for net interest income, but still expected growth in the face of anticipated interest rate cuts & slowing economic growth. The consumer & investment bank also reported before the open a 2nd-qtr profit that beat expectations, but net interest income that came up a bit shy. Meanwhile, sales & trading revenue fell 10%, as fixed income, currencies & commodities revenue declined 8%, a 4th straight quarterly decline, & equities revenue tumbled 13% after plunging 22% in Q1. CFO Paul Donofrio cut 2019 NII growth outlook to 2%, assuming stable interest rates. Assuming the Federal Reserve cuts interest rates twice this year, which is what the “forward” rate curve is anticipating, the NII growth would be about 1%. 3 months ago, BAC cut its NII growth outlook to “roughly” 3% this year in a stable rate environment. Regarding concerns over the economic outlook, CEO Brian Moynihan said that “solid” consumer activity was pointing to continued growth, just at a slower pace. The stock finished up 27¢.
If you would like to learn more about BAC, click on this link:
club.ino.com/trend/analysis/stock/BAC?a_aid=CD3289&a_bid=6ae5b6f7
As earnings season begins, buyers are largely staying away from stocks. They prefer gold. At the macro level, the ceiling for federal debt (over $22T) must be raised & there is pressure to do it by Fri (when congress takes another vacation). Given the dysfunctional congress, that objective is very touchy. But it's needed to avoid even bigger problems. The biggest banks have reported earnings, next comes earnings from from traditional corps & they are considered to be iffy.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US economy expanded at a modest pace from
mid-May thru early Jun, with little change from the prior reporting
period, 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. The report, prepared by the Federal
Reserve Bank of St Louis, was based on information collected thru
Jul 8. “The outlook generally was positive for the coming
months, with expectations of continued modest growth despite widespread
concerns about the possible negative impact of trade-related
uncertainty,” the report said. Despite
the relatively healthy economy, Federal Reserve Chair Jerome Powell
suggested the central bank is poised to cut interest rates during the
upcoming FOMC meeting, which will end on Jul 31. Traders are pricing in a 100% chance of easier monetary policy,
with most traders forecasting a 25 basis point cut. Still,
manufacturing production remained generally flat, with some firms in
the Northeast reducing their number of workers. Tariff uncertainty &
trade policy continued to weigh on the industry. Employers
also continued to complain about the tight labor market & the lack of
available workers. Contacts across the country experienced difficulty
filling open positions, particularly in construction, information
technology & health care.
Fed's Beige Book reports positive outlook, despite trade uncertainty
US crude oil stockpiles fell more than expected last week, while gasoline & distillate inventories rose sharply, the Energy Information Administration (EIA) said,
due to the impact of the first major hurricane to hit the Gulf of
Mexico this season. Crude & gasoline futures
turned lower after the report. US crude fell 39¢ per barrel to $57.24 a barrel, while gasoline
futures traded down 0.45¢ to $1.8867 a gallon. Barry, which came ashore Sat in central
Louisiana as a Category 1 hurricane, prompted oil companies to shut
nearly 74% of production at Gulf of Mexico platforms ahead
of the storm, the US offshore drilling regulator said. Offshore oil production remained cut by 58% on Tues. US
crude production dropped 300K barrels per day last week
to 12M bpd, according to the EIA, a decline that analysts
attributed to the storm. Crude inventories fell 3.1M barrels last week, more than expectationed for a decrease of 2.7M barrels. Stocks at the Cushing, Oklahoma, delivery hub for US crude futures fell by 1.35M barrels. Net US crude imports were marginally higher, rising 44K bpd, while exports alone fell about ½M bpd. Most
refineries in southeastern Louisiana kept running thru the storm
except for Phillips 66's 253K-bpd Alliance, Louisiana, refinery,
which the company began restarting on Mon. Total
US refinery crude runs fell 171K. Refinery
utilization rates fell by 0.3 percentage point to 94.4% of total
capacity.
US crude oil stockpiles drop amid Barry, fuel posts large builds
Gold futures finished sharply higher, sending prices to a fresh 6-year high, as the $ weakened & traders weighed expectations for a US interest-rate cut. Prices climbed further in electronic trading, following the release of the Federal Reserve’s Beige Book—the central bank's periodic examination of the US economy. The report said the economy is expanding at roughly same “modest” pace as indicated in the last survey. The report followed news yesterday that Fed Chair Powell reiterated in a speech that the economic outlook hasn't improved since the last FOMC meeting in Jun, setting the stage for an interest-rate cut. Ahead of the Beige Book release, Aug gold trading rose $12.10 (0.9%) to settle at $1423 an ounce, after closing 0.2% lower Tues. Prices for the most-active contract posted their highest finish since May 2013. In electronic trading shortly after the Beige Book, the contract traded at $1427. A recent round of stronger-than-expected US economic data had earlier dented expectations for more aggressive interest rate cuts in coming months by the Fed. The expectation for lower rates can provide a lift to the precious yellow metal because it doesn't offer a yield.
Gold futures climb to a fresh six-year high
Shares of Bank of America (BAC) seesawed toward a gain, as the bank lowered its full-year outlook for net interest income, but still expected growth in the face of anticipated interest rate cuts & slowing economic growth. The consumer & investment bank also reported before the open a 2nd-qtr profit that beat expectations, but net interest income that came up a bit shy. Meanwhile, sales & trading revenue fell 10%, as fixed income, currencies & commodities revenue declined 8%, a 4th straight quarterly decline, & equities revenue tumbled 13% after plunging 22% in Q1. CFO Paul Donofrio cut 2019 NII growth outlook to 2%, assuming stable interest rates. Assuming the Federal Reserve cuts interest rates twice this year, which is what the “forward” rate curve is anticipating, the NII growth would be about 1%. 3 months ago, BAC cut its NII growth outlook to “roughly” 3% this year in a stable rate environment. Regarding concerns over the economic outlook, CEO Brian Moynihan said that “solid” consumer activity was pointing to continued growth, just at a slower pace. The stock finished up 27¢.
If you would like to learn more about BAC, click on this link:
club.ino.com/trend/analysis/stock/BAC?a_aid=CD3289&a_bid=6ae5b6f7
As earnings season begins, buyers are largely staying away from stocks. They prefer gold. At the macro level, the ceiling for federal debt (over $22T) must be raised & there is pressure to do it by Fri (when congress takes another vacation). Given the dysfunctional congress, that objective is very touchy. But it's needed to avoid even bigger problems. The biggest banks have reported earnings, next comes earnings from from traditional corps & they are considered to be iffy.
Dow Jones Industrials
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