Dow fell 23, advancers barely ahead of decliners & NAZ dropped 35.. The MLP index was off pennies to 257 & the REIT index lost 1 to 390. Junk bond funds fluctuated & Treasuries were sold. Oil dropped 1+ to the 57s (more below) & gold pulled back 8 to 1405.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Chicago Fed Pres Charles Evans said that low inflation along with economic uncertainty indicate a need for up to two rate cuts before the end of 2019. Evans added that 2 rate cuts may not even be enough over the longer run as the Fed grapples with consistently low inflation as well as tensions over trade & a slowing global economy. He would advocate multiple rate cuts, which market participants are widely expecting. “Unless I had great reason to think that that would somehow create a lot of inflation, yes, I think that’s right,” he added. “I think on the basis of inflation alone, I could feel confident in arguing for a couple of rate cuts before the end of the year.” Evans spoke shortly after Fed Chair Jerome Powell said (above) that the central bank remains committed to sustaining the economic expansion & will “act as appropriate” to see that thru. The language has generally been interpreted as a tip toward a rate cut coming at the Jul 30-31 FOMC policy meeting.
Fed’s Charles Evans says he’d be comfortable with ‘a couple’ rate cuts before the end of the year
Pres Trump turned up fresh pressure on China over trade with the US, as he vowed to “take a look” into allegations that Google's (GOOGL) work with Beijing is treasonous. He addressed China on 2 fronts, saying during a cabinet meeting at the White House that there’s a “long way to go” on a trade pact with Beijing, & tweeting that his administration would look into concerns raised by investor Peter Thiel about GOOGL's relationship to the Chinese gov. Trump's trade remarks, during which he also raised the threat of tariffs on an extra $325B of Chinese goods “if we want.” GOOGL said: “As we have said before, we do not work with the Chinese military. We are working with the US gov, including the Dept of Defense, in many areas including cybersecurity, recruiting and health care.”
The chief of the Dallas Federal Reserve said inflation is likely to remain low because of vast changes in the economy wrought by new technologies that have severed the historical link between wages & prices. It used to be that wages rose in a good economy & businesses passed rising labor costs onto consumers thru higher prices. “That was true historically. Not today,” Dallas Fed Pres Robert Kaplan said. “Wages and prices are different processes.” Kaplan said businesses have very little ability to pass on higher labor or other costs to customers because of stiff competition. They are just as likely to absorb lower profits when costs rise so they don't lose market share. The low rate of inflation is one of several reasons the Fed is widely expected to reduce a key interest rate by the end of Jul. The central bank is also worried that ongoing trade fights that have damaged the global economy could start to weigh more heavily on the US. Kaplan suggested that any rate cut would probably be “tactical” & limited in impact. The cost of borrowing is already very low, he noted, & getting access to capital is the least of worries for most businesses. Companies, for their part, have moved to shore up profits & cope with tight labor markets by investing more in technology such as robots, artificial intelligence and automation, he added. These forces are also acting as a cap on inflation by reducing the cost of production. Kaplan said the low cost of capital, borrowing money, is helping to fuel the adoption of new technologies, a process he doesn't seem slowing anytime soon. There's a downside to rapid technological adoption. he said. While it might be good for companies & the broader economy, it's not good for the workers who are displaced. Gov must do a better job of educating its citizens & offering training in vocational skills to help them to succeed in a rapidly changing post-industrial economy. The US trails many other countries in those areas.
Shares of Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, fell, despite the company reporting Q2 results that soundly beat expectations. Revenue fell to $20.562B from $20.83B in the year-earlier quarter, but beat estimate of $20.293B. EPS rose to $2.08 from $1.45 a year ago, lifted by a pretax gain of $2B in the qtr from the sale of JNJ's Advanced Sterilization Products business. Adjusted EPS was $2.58, topping expectation of of $2.46. The company also boosted its 2019 sales outlook to $80.8-81.6B from $80.4-81.2B. However, the strong Q2 wasn't enough to keep the stock from falling as JNJ's legal issues are overshadowing its positive earnings results. Sales from the company’s consumer business rose to $3.544B from $3.504B a year ago, while the company’s pharmaceuticals segment brought in $10.529B, up from $10.354B a year ago. Sales from the medical devices unit fell to $6.489B from $6.972B a year ago. This comes as JNJ goes to battle against the state of Oklahoma over its alleged role in contributing to the opioid crisis there. The state filed suit against the company, saying its aggressive marketing practices contributed to the state's widespread problem with opioid addiction & overdose. JNJ's main opioid products are the fentanyl patch Duragesic & Nucynta, a tapentadol pill it sold in 2015. The stock dropped 2.21.
If you would like to learn more about JNJ, click on this link:
club.ino.com/trend/analysis/stock/JNJ?a_aid=CD3289&a_bid=6ae5b6f7
Oil prices turned lower, falling by about $2 a barrel as Pres Trump said progress has been made with Iran, signaling tensions could ease in the Mideast. Brent crude futures were down $2.56 (3.7%) at $63.86 a barrel, after hitting a session high of $67.09. West Texas Intermediate crude futures fell by $2.46 (4.2%) to $57.09 a barrel after the US benchmark hit a session high of $60.06 earlier in the day. Trump, who made the remarks in the White House, did not give details about the progress, but Secretary of State Mike Pompeo said at the meeting Iran had said it was prepared to negotiate about its missile program. Tension between the US & Iran over Tehran's nuclear program have previously lent support to oil futures, given the potential for a price spike should the situation deteriorate. Uncertainty about China's economic prospects also pressured prices lower after data yesterday showed that growth in the country slowed to 6.2% from a year earlier, the weakest pace in at least 27 years. Additionally, US oil companies yesterday began restoring some of the nearly 74% of production that was shut at platforms in the Gulf of Mexico because of Hurricane Barry. Workers were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to resume.
Oil drops more than 3% after State Secretary Pompeo says Iran is ready to negotiate about its...
Trump's comments about China trade after bank rearnings came in mixed cooled enthusiasm for stocks today. All day the Dow stayed close to its record reached yesterday. Early signals on earnings provide more worries for traders who are already have low epxectations. However, safe haven gold & Treasuries also pulled back.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Federal Resrve Chair Jerome Powell reiterated that policymakers at the central bank will “act
as appropriate” in order to sustain the record-long economic expansion
in the US, once again setting the table for an interest rate cut at
the end of the month. In prepared remarks, Powell laid out the case for easier
monetary policy, most notably uncertainties surrounding trade
developments, the US debt ceiling & Brexit, as well as concerns
about softening global growth. Inflation also
remains muted, undershooting the Fed's 2% target this year. In
May, the core PCE price index rose slightly to 1.6%. "Many
FOMC participants judged at the time of our most recent meeting in June
that the combination of these factors strengthens the case for a
somewhat more accommodative stance in policy," he said. "We are
carefully monitoring these developments and assessing their implications
for the U.S economic outlook and inflation, and will act as appropriate
to sustain the expansion." Powell's speech comes on the heels of his 2-day
testimony last week, during which he warned of "greater
uncertainty" to the economic outlook. "Based on
incoming data and other developments, it appears that uncertainties
around trade tensions and concerns about the strength of the global
economy continue to weigh on the U.S. economic outlook. Inflation
pressures remain muted," he said in prepared remarks to the House
Financial Services Committee. Traders
continue to price in a 100% chance of a reduction in the
benchmark federal funds rate -- which is currently 2.25-2.50% -- at the Fed's upcoming Jul 31 meeting, with most
traders expecting a 25 basis point cut. Powell also noted that the Fed needs to pay
greater attention to the rest of the world, highlighting the growing
importance of the interconnectedness of other countries' economic,
financial & political environments. "We have
seen how monetary policy in one country can influence economic and
financial conditions in others through financial markets, trade, and
confidence channels," he said. "Pursuing our domestic mandates in this
new world requires that we understand the anticipated effects of these
interconnections and incorporate them into our policy decisionmaking." In
mid-Jun, Mario Draghi, the pres of ECB, said
the body was prepared to cut interest rates & provide extra stimulus
if the economy needed it. Draghi said during a speech that
“further cuts in policy rates ... remain part of our tools.”
POWELL WARNS OF ECONOMIC 'UNCERTAINTIES,' PAVING WAY FOR JULY RATE CUT
Chicago Fed Pres Charles Evans said that low inflation along with economic uncertainty indicate a need for up to two rate cuts before the end of 2019. Evans added that 2 rate cuts may not even be enough over the longer run as the Fed grapples with consistently low inflation as well as tensions over trade & a slowing global economy. He would advocate multiple rate cuts, which market participants are widely expecting. “Unless I had great reason to think that that would somehow create a lot of inflation, yes, I think that’s right,” he added. “I think on the basis of inflation alone, I could feel confident in arguing for a couple of rate cuts before the end of the year.” Evans spoke shortly after Fed Chair Jerome Powell said (above) that the central bank remains committed to sustaining the economic expansion & will “act as appropriate” to see that thru. The language has generally been interpreted as a tip toward a rate cut coming at the Jul 30-31 FOMC policy meeting.
Fed’s Charles Evans says he’d be comfortable with ‘a couple’ rate cuts before the end of the year
Pres Trump turned up fresh pressure on China over trade with the US, as he vowed to “take a look” into allegations that Google's (GOOGL) work with Beijing is treasonous. He addressed China on 2 fronts, saying during a cabinet meeting at the White House that there’s a “long way to go” on a trade pact with Beijing, & tweeting that his administration would look into concerns raised by investor Peter Thiel about GOOGL's relationship to the Chinese gov. Trump's trade remarks, during which he also raised the threat of tariffs on an extra $325B of Chinese goods “if we want.” GOOGL said: “As we have said before, we do not work with the Chinese military. We are working with the US gov, including the Dept of Defense, in many areas including cybersecurity, recruiting and health care.”
Trump turns up trade pressure on China as he threatens Google probe
The chief of the Dallas Federal Reserve said inflation is likely to remain low because of vast changes in the economy wrought by new technologies that have severed the historical link between wages & prices. It used to be that wages rose in a good economy & businesses passed rising labor costs onto consumers thru higher prices. “That was true historically. Not today,” Dallas Fed Pres Robert Kaplan said. “Wages and prices are different processes.” Kaplan said businesses have very little ability to pass on higher labor or other costs to customers because of stiff competition. They are just as likely to absorb lower profits when costs rise so they don't lose market share. The low rate of inflation is one of several reasons the Fed is widely expected to reduce a key interest rate by the end of Jul. The central bank is also worried that ongoing trade fights that have damaged the global economy could start to weigh more heavily on the US. Kaplan suggested that any rate cut would probably be “tactical” & limited in impact. The cost of borrowing is already very low, he noted, & getting access to capital is the least of worries for most businesses. Companies, for their part, have moved to shore up profits & cope with tight labor markets by investing more in technology such as robots, artificial intelligence and automation, he added. These forces are also acting as a cap on inflation by reducing the cost of production. Kaplan said the low cost of capital, borrowing money, is helping to fuel the adoption of new technologies, a process he doesn't seem slowing anytime soon. There's a downside to rapid technological adoption. he said. While it might be good for companies & the broader economy, it's not good for the workers who are displaced. Gov must do a better job of educating its citizens & offering training in vocational skills to help them to succeed in a rapidly changing post-industrial economy. The US trails many other countries in those areas.
Fed’s Kaplan says inflation likely to stay low even with economy near ‘full employment’
Shares of Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, fell, despite the company reporting Q2 results that soundly beat expectations. Revenue fell to $20.562B from $20.83B in the year-earlier quarter, but beat estimate of $20.293B. EPS rose to $2.08 from $1.45 a year ago, lifted by a pretax gain of $2B in the qtr from the sale of JNJ's Advanced Sterilization Products business. Adjusted EPS was $2.58, topping expectation of of $2.46. The company also boosted its 2019 sales outlook to $80.8-81.6B from $80.4-81.2B. However, the strong Q2 wasn't enough to keep the stock from falling as JNJ's legal issues are overshadowing its positive earnings results. Sales from the company’s consumer business rose to $3.544B from $3.504B a year ago, while the company’s pharmaceuticals segment brought in $10.529B, up from $10.354B a year ago. Sales from the medical devices unit fell to $6.489B from $6.972B a year ago. This comes as JNJ goes to battle against the state of Oklahoma over its alleged role in contributing to the opioid crisis there. The state filed suit against the company, saying its aggressive marketing practices contributed to the state's widespread problem with opioid addiction & overdose. JNJ's main opioid products are the fentanyl patch Duragesic & Nucynta, a tapentadol pill it sold in 2015. The stock dropped 2.21.
If you would like to learn more about JNJ, click on this link:
club.ino.com/trend/analysis/stock/JNJ?a_aid=CD3289&a_bid=6ae5b6f7
J&J stock falls despite earnings beat and guidance boost
Oil prices turned lower, falling by about $2 a barrel as Pres Trump said progress has been made with Iran, signaling tensions could ease in the Mideast. Brent crude futures were down $2.56 (3.7%) at $63.86 a barrel, after hitting a session high of $67.09. West Texas Intermediate crude futures fell by $2.46 (4.2%) to $57.09 a barrel after the US benchmark hit a session high of $60.06 earlier in the day. Trump, who made the remarks in the White House, did not give details about the progress, but Secretary of State Mike Pompeo said at the meeting Iran had said it was prepared to negotiate about its missile program. Tension between the US & Iran over Tehran's nuclear program have previously lent support to oil futures, given the potential for a price spike should the situation deteriorate. Uncertainty about China's economic prospects also pressured prices lower after data yesterday showed that growth in the country slowed to 6.2% from a year earlier, the weakest pace in at least 27 years. Additionally, US oil companies yesterday began restoring some of the nearly 74% of production that was shut at platforms in the Gulf of Mexico because of Hurricane Barry. Workers were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to resume.
Oil drops more than 3% after State Secretary Pompeo says Iran is ready to negotiate about its...
Trump's comments about China trade after bank rearnings came in mixed cooled enthusiasm for stocks today. All day the Dow stayed close to its record reached yesterday. Early signals on earnings provide more worries for traders who are already have low epxectations. However, safe haven gold & Treasuries also pulled back.
Dow Jones Industrials
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