Dow finished off 22 but sharply above early session lows, decliners over advanced about 5-4 & NAZ went up 29. The MLP index fell 4+ to the 229s & the REIT index bounced back 5+ to the 393s. Junk bond funds were weak & Treasuries advanced. Oil tumbled over 2 to the 51s (7 month low) & gold skyrocketed 31 to 1516 (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)
club.ino.com/trend/analysis/stock/DIS?a_aid=CD328&a_bid=6ae5b6f7
Gold rose to its highest level in more than 6 years as concerns about the global economy made the precious metal & other traditional safe havens more attractive than riskier assets like stocks. The metal also caught a bid as the number of negative-yielding bonds keeps growing. Gold futures for Dec jumped 2.2% to trade at $1522 per ounce. Today marked the first time since Apr 2013 that gold traded above $1500. The gains brought the metal’s gains to more than 18%, higher than the S&P 500's 14.3% YTD gain. Investors turned to gold at a time when the amount of debt trading at negative yield increases. Currently, there is $15T worth of bonds with negative rates. This makes gold more attractive since it retains its value even in times of slower economic growth. Concerns over the global economy come as the US-China trade war intensified with Chinese authorities allowing the country's currency, the yuan, to depreciate against the dollar while several central banks around the world cut interest rates. On Mon, China allowed the yuan to weaken beyond 7 per $, marking the currency's lowest level against the greenback in more than a decade. That move led to the biggest sell-off of 2019. The People’s Bank of China initially quelled escalation fears yetersday by pegging the yuan at a stronger-than-forecast level relative to the $. However, those worries reemerged after China set the yuan at a weaker-than-expected rate. China's currency moves came after Pres Trump announced last week a 10% tariff on an additional $300B worth of Chinese goods. Investors are fearful about the tariff because the goods being targeted include consumer products ranging from apparel to computers. Trade tensions have helped gold surge this month while stocks have lagged. The precious metal is up more than 5% in Aug. The S&P 500, meanwhile, has dropped more than 4%.
Gold surges above $1,500, now has a better return than stocks this year
Consumer borrowing expanded at the slowest pace in 3 months in Jun, as credit-card debt contracted, according to Federal Reserve data. Total consumer credit increased $14.6B. That's an annual growth rate of 4.3%, down from a 5.3% rate in the prior month. The forecast called for a $16B gain in Jun. Revolving credit, primarily credit cards, fell 0.1% in Jun, after increasing by 8.4% in May & 7.6% in Apr. It’s the first decline in revolving credit since Mar. Non-revolving credit, typically auto & student loans, rose 5.8% in Jun. Non-revolving credit tends to be less volatile than credit-card debt. The data does not include mortgage loans. Overall consumer credit expanded at a 4.9% annual rate in Q2, up from a 4.2% rate in the prior 3 months. If the weakness in credit-card borrowing continues, it could mean that consumers are pulling back from making major purchases. That, in turn, would be big news for the Federal Reserve, where officials are watching the health of the economy closely as the pace of growth slows this year. Healthy consumer spending is the “linchpin” for relatively optimistic for growth this year, Charles Evans, the pres of the Chicago Fed, said. The central bank thinks that consumers have not over-borrowed. Fed Chair Jerome Powell said households “are in very good shape overall.”
Chicago Fed Pres Charles Evans said the Federal Reserve would need to provide more stimulus than it did last week if growing trade tensions lead to a sharper pullback in the US economy. Evans has said he thinks the central bank would need to lower rates by at least another qtr-percentage point, following last week's qtr-point cut, to lift inflation back to the Fed's 2% target.
Oil prices tumbled, aggravating what's been the worst start to any month since 2015 for US-priced crude, as the White House's tussles with major trade partners are seen as a risk to global energy demand. Prices also fell after US inventory data showed an unexpected increase in supplies for last week, halting a run of what had been 7 straight weeks of declines. West Texas Intermediate crude is now off more than 22% from its 2019 settlement high of $66.30 hit on Apr 23, which by most measures, is a return to bear-market territory. Brent has fallen 24% since the late-Apr high-water mark. The contract for Sep delivery shed $2.54 (4.7%) to settle at $51.09 a barrel, nearing a test of the sub-$50 level briefly seen in early Jan. The close is the lowest settlement for the contract since last Jan 14. Oct Brent crude dropped $2.71 (4.6%) at $56.23 a barrel, the lowest finish since Jan 3, eroding the YTD gain to 4.5%. Pres Trump said last week he will slap a 10% tariff on a further $300B in Chinese imports from Sep 1, a move which sent global equity markets into a tailspin before some respite midweek. Oil prices deepened losses when data showed that US crude oil inventories increased by 2.4M barrels from the previous week. The result was not the expected 8th straight weekly drawdown that had been projected. At 438.9B barrels, US crude oil inventories are about 2% above the 5-year average for this time of year. Trade group the American Petroleum Institute had estimated yesterday that inventories dropped by 3.43M barrels last week.
In the opening minutes of trading today, the Dow was down a massive 500. But buyers returned & bid prices up to almost breakeven. The Dow was held back by big losses at DIS & JPMorgan (JPM). NAZ also recovered from opening lows to finish with a respectable gain. Buyers are hoping the Fed will provide stimulus to support stock prices. These are especially tough times for nervous investors which is why gold & Treasuries are in heavy demand..
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Walt Disney (DIS), a Dow stock, missed
estimates for quarterly profit as heavy investments in its digital
portfolio outweighed gains from the worldwide success of "Avengers:
Endgame," sending its shares down 5%. Higher
spending to ramp up ESPN+ as well as for technology & building of
family-friendly video streaming service Disney+ led to higher operating
losses at its direct-to-consumer & intl business. It widened to $553M from $168M a
year earlier. The company has projected that Disney+, which is set to be
launched in Nov, will turn a profit in fiscal 2024. Operating
income from its park experience & consumer products business rose 4%
to $1.7B, but was partly hurt by labor costs & expenses
associated with "Star Wars: Galaxy's Edge" theme park. DIS
recently bought the bulk of Twenty-First Century Fox's TV & film
assets in a $71B deal & is set to launch family-friendly
Disney+ with a slate of new & classic TV shows & movies. Excluding certain
items, EPS was $1.35, below the estimate f or
$1.75. Revenue rose 33% to $20.25B, but missed estimates of $21.47B. The stock tumbled 7.01 (5%).
If you would like to learn more about DIS, click on this link:club.ino.com/trend/analysis/stock/DIS?a_aid=CD328&a_bid=6ae5b6f7
Disney profit misses on higher investments, shares fall 5%
Gold rose to its highest level in more than 6 years as concerns about the global economy made the precious metal & other traditional safe havens more attractive than riskier assets like stocks. The metal also caught a bid as the number of negative-yielding bonds keeps growing. Gold futures for Dec jumped 2.2% to trade at $1522 per ounce. Today marked the first time since Apr 2013 that gold traded above $1500. The gains brought the metal’s gains to more than 18%, higher than the S&P 500's 14.3% YTD gain. Investors turned to gold at a time when the amount of debt trading at negative yield increases. Currently, there is $15T worth of bonds with negative rates. This makes gold more attractive since it retains its value even in times of slower economic growth. Concerns over the global economy come as the US-China trade war intensified with Chinese authorities allowing the country's currency, the yuan, to depreciate against the dollar while several central banks around the world cut interest rates. On Mon, China allowed the yuan to weaken beyond 7 per $, marking the currency's lowest level against the greenback in more than a decade. That move led to the biggest sell-off of 2019. The People’s Bank of China initially quelled escalation fears yetersday by pegging the yuan at a stronger-than-forecast level relative to the $. However, those worries reemerged after China set the yuan at a weaker-than-expected rate. China's currency moves came after Pres Trump announced last week a 10% tariff on an additional $300B worth of Chinese goods. Investors are fearful about the tariff because the goods being targeted include consumer products ranging from apparel to computers. Trade tensions have helped gold surge this month while stocks have lagged. The precious metal is up more than 5% in Aug. The S&P 500, meanwhile, has dropped more than 4%.
Gold surges above $1,500, now has a better return than stocks this year
Consumer borrowing expanded at the slowest pace in 3 months in Jun, as credit-card debt contracted, according to Federal Reserve data. Total consumer credit increased $14.6B. That's an annual growth rate of 4.3%, down from a 5.3% rate in the prior month. The forecast called for a $16B gain in Jun. Revolving credit, primarily credit cards, fell 0.1% in Jun, after increasing by 8.4% in May & 7.6% in Apr. It’s the first decline in revolving credit since Mar. Non-revolving credit, typically auto & student loans, rose 5.8% in Jun. Non-revolving credit tends to be less volatile than credit-card debt. The data does not include mortgage loans. Overall consumer credit expanded at a 4.9% annual rate in Q2, up from a 4.2% rate in the prior 3 months. If the weakness in credit-card borrowing continues, it could mean that consumers are pulling back from making major purchases. That, in turn, would be big news for the Federal Reserve, where officials are watching the health of the economy closely as the pace of growth slows this year. Healthy consumer spending is the “linchpin” for relatively optimistic for growth this year, Charles Evans, the pres of the Chicago Fed, said. The central bank thinks that consumers have not over-borrowed. Fed Chair Jerome Powell said households “are in very good shape overall.”
Consumer credit expands at slower pace in June
Chicago Fed Pres Charles Evans said the Federal Reserve would need to provide more stimulus than it did last week if growing trade tensions lead to a sharper pullback in the US economy. Evans has said he thinks the central bank would need to lower rates by at least another qtr-percentage point, following last week's qtr-point cut, to lift inflation back to the Fed's 2% target.
Fed’s Evans Says Trade Headwinds Could Justify Additional Rate Cuts
Oil prices tumbled, aggravating what's been the worst start to any month since 2015 for US-priced crude, as the White House's tussles with major trade partners are seen as a risk to global energy demand. Prices also fell after US inventory data showed an unexpected increase in supplies for last week, halting a run of what had been 7 straight weeks of declines. West Texas Intermediate crude is now off more than 22% from its 2019 settlement high of $66.30 hit on Apr 23, which by most measures, is a return to bear-market territory. Brent has fallen 24% since the late-Apr high-water mark. The contract for Sep delivery shed $2.54 (4.7%) to settle at $51.09 a barrel, nearing a test of the sub-$50 level briefly seen in early Jan. The close is the lowest settlement for the contract since last Jan 14. Oct Brent crude dropped $2.71 (4.6%) at $56.23 a barrel, the lowest finish since Jan 3, eroding the YTD gain to 4.5%. Pres Trump said last week he will slap a 10% tariff on a further $300B in Chinese imports from Sep 1, a move which sent global equity markets into a tailspin before some respite midweek. Oil prices deepened losses when data showed that US crude oil inventories increased by 2.4M barrels from the previous week. The result was not the expected 8th straight weekly drawdown that had been projected. At 438.9B barrels, US crude oil inventories are about 2% above the 5-year average for this time of year. Trade group the American Petroleum Institute had estimated yesterday that inventories dropped by 3.43M barrels last week.
Oil in bear market as trade spat feeds demand concern, U.S. inventory unexpectedly expands
In the opening minutes of trading today, the Dow was down a massive 500. But buyers returned & bid prices up to almost breakeven. The Dow was held back by big losses at DIS & JPMorgan (JPM). NAZ also recovered from opening lows to finish with a respectable gain. Buyers are hoping the Fed will provide stimulus to support stock prices. These are especially tough times for nervous investors which is why gold & Treasuries are in heavy demand..
Dow Jones Industrials
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