Dow gave back 173 (session lows with selling into the close), decliners over advancers about 3-2 & NAZ declined 54. The MLP index was fractionally higher to the 232s & the REIT index lost 2+ to the 299s on profit taking. Junk bond funds rose in price & Treasuries were purchased on Italian turmoil, taking the yield on the 10 year note down to 1.56%. Oil was steady in the 56s (more below) & gold went up 4 to 1516.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Italy’s gov collapsed, plunging the economically fragile country into deeper political turmoil & triggering a scramble to form a new governing coalition to keep the increasingly popular far-right out of power. Prime Minister Giuseppe Conte announced his resignation in a speech to the Senate, blaming far-right Interior Minister Matteo Salvini for causing a political crisis as Italy looks to draw up a challenging budget to keep its parlous finances on track. Salvini, a rising political force from Europe's insurgent far-right, began pressing for snap elections on Aug 8, in a bid to capitalize on opinion polls that show his nativist League has become Italy's most popular party, with around 36% support. The League has served as the junior coalition partner of the populist 5 Star Movement since summer 2018. Leaders of 5 Star are exploring the only plausible alternative to snap elections the League would likely win: a new coalition gov with their longstanding foes, the mainstream center-left Democratic Party. Talks in coming days could show whether such a coalition is possible or early elections are needed. Italy's power struggle is a symptom of Europe's continuing political upheaval after a decade of crises including the economic depression in the periphery of the eurozone & the pressures of rising immigration from poor & war-torn parts of Africa & the Middle East. European voters' allegiances have become increasingly volatile amid eroding public confidence in the mainstream conservative & social-democratic parties that for decades dominated gov in EU countries. Insurgent movements from the anticapitalist far-left to the nativist far-right have made inroads. The new forces also include ideologically eclectic groups such as 5 Star, which grew out of anticorruption protests, as well as centrist upstarts such as French Pre Emmanuel Macron.
Pres Trump says he's thinking about a temporary payroll tax cut to stimulate the US economy. Speaking to reporters in the Oval Office, Trump said his administration was looking into a potential payroll tax cut & also indexing capital gains to inflation. Earlier in the day, a White House press official denied reports that a remporary payroll tax cut was a possibility, though low-level staffers discussed the idea yesterday. Growth in the American economy appears to be slowing. The nation's GDP grew at an annualized rate of 2.1% in Q2, down from a 3.1% growth rate in the prior qtr, according to the Commerce Dept. Proceeds from the 6.2% payroll tax, which in 2011 was briefly lowered to 4.2% by Pres Obama, are used to fund the Medicare & Social Security programs. A tax cut wouldn't be the first under the Trump administration. In 2017, Congress passed the Tax Cuts & Jobs Act, which reduced the corp tax from 35-21% & lowered personal income taxes for the majority of Americans.
Home Depot (HD), a Dow stock, suppliers are trying to head off some of the increased costs from rising tariffs by moving at least some of their production out of China, execs told investors. “I’m not aware of a single supplier who was not moving some form of manufacturing outside of China,” said Ted Decker, exec VP of merchandising. “So we have suppliers moving production to Taiwan, to Vietnam, to Thailand, Indonesia and even back into the United States.” CEO Craig Menear said the tariffs on Chinese goods are projected to have a “cost impact” on US sales of about 2% ($2B). With suppliers moving at least some of their manufacturing outside of China, that reduces the impact by roughly one percentage point, execs said. HD had also lowered its sales outlook for the year to be up about 2.3% & same-store sales to increase by about 4%. Previously it had called for total sales growth of 3.3% & same-store sales growth of 5%. Decker also said the company can calculate precisely how tariffs will impact every product in its inventory. “We have data of country of origin in potential tariff impact literally down to the SKU, so we know exactly what are on the various lists, when the tariff impacts will hit,” he said. Retailers have been trying to avoid passing the costs of the tariffs down to consumers by diversifying their supply chains to countries outside of China.
Home Depot says suppliers are moving manufacturing out of China to avoid tariffs
Kohl’s (KSS) said a strong start to the back-to-school season & new partnership with Amazon (AMZN) helped it beat earnings expectations during Q2. “We are pleased to report that our business strengthened as we progressed through the second quarter,” CEO Michelle Gass said. “Comparable sales were better than the first quarter and improved during the period, turning positive during the last six weeks of the second quarter with 1% growth.” EPS slid to $1.51, down from $1.76 a year earlier. Net sales fell to $4.17B compared with $4.3B in the previous year. Sales at stores open more than a year fell 2.9%, wider estimates of a 2.5% decrease. KSS announced in Apr plans to accept AMZN returns at all of its stores, growing its partnership with the e-commerce giant in an attempt to increase foot traffic. The relationship began in the spring of 2017, when KSS began selling AMZN gadgets like the Fire TV & Echo Dot. “We are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond,” Gass said. The stock fell 3.32.
If you would like to learn more about KSS click on this link:
club.ino.com/trend/analysis/stock/KSS?a_aid=CD3289&a_bid=6ae5b6f7
Kohl’s second-quarter profits beat expectations, but sales miss the mark
Front-month oil futures contracts settled higher for a 3rd straight session, ahead of gov data that are expected to reveal a weekly decline in domestic crude stockpiles, following back-to-back weekly supply increases. Prices also climbed on Mon, with that rally partly fueled by reports that Yemen's Houthi rebels launched a drone attack over the weekend on one of Saudi Arabia's largest oil fields. West Texas Intermediate crude for Sep delivery tacked on 13¢ (0.2%) to finish at $56.34 a barrel, shaking off earlier losses. The front-month contract, which expired at the end of the day's regular trading session, gained 2.4% yesetrday. The most-active & new front-month Oct WTI contract shed a penny to settle at $56.13. The Oct contract for global benchmark Brent crude edged 29¢ (0.5%) higher at $60.03 a barrel, with prices settling back above $60 for the first time in a week. Analysts expect the EIA tomrrow to report a fall of 3.1M barrels in US crude stockpiles for last week, along with supply declines of 1.6M for gas & 200K barrels for distillates, which include heating oil.
Front-month oil futures settle higher with data expected to reveal a weekly decline in U.S. crude supply
The bulls stayed home & stocks took a breather. But there is plenty going on & Powell will be speaking on Fri. Aug has been a tough month for stocks (shown below) with the Dow down almost 1K. More choppy times lie ahead.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Italy’s gov collapsed, plunging the economically fragile country into deeper political turmoil & triggering a scramble to form a new governing coalition to keep the increasingly popular far-right out of power. Prime Minister Giuseppe Conte announced his resignation in a speech to the Senate, blaming far-right Interior Minister Matteo Salvini for causing a political crisis as Italy looks to draw up a challenging budget to keep its parlous finances on track. Salvini, a rising political force from Europe's insurgent far-right, began pressing for snap elections on Aug 8, in a bid to capitalize on opinion polls that show his nativist League has become Italy's most popular party, with around 36% support. The League has served as the junior coalition partner of the populist 5 Star Movement since summer 2018. Leaders of 5 Star are exploring the only plausible alternative to snap elections the League would likely win: a new coalition gov with their longstanding foes, the mainstream center-left Democratic Party. Talks in coming days could show whether such a coalition is possible or early elections are needed. Italy's power struggle is a symptom of Europe's continuing political upheaval after a decade of crises including the economic depression in the periphery of the eurozone & the pressures of rising immigration from poor & war-torn parts of Africa & the Middle East. European voters' allegiances have become increasingly volatile amid eroding public confidence in the mainstream conservative & social-democratic parties that for decades dominated gov in EU countries. Insurgent movements from the anticapitalist far-left to the nativist far-right have made inroads. The new forces also include ideologically eclectic groups such as 5 Star, which grew out of anticorruption protests, as well as centrist upstarts such as French Pre Emmanuel Macron.
Italian Prime Minister to Resign, Declaring End of Coalition
Pres Trump says he's thinking about a temporary payroll tax cut to stimulate the US economy. Speaking to reporters in the Oval Office, Trump said his administration was looking into a potential payroll tax cut & also indexing capital gains to inflation. Earlier in the day, a White House press official denied reports that a remporary payroll tax cut was a possibility, though low-level staffers discussed the idea yesterday. Growth in the American economy appears to be slowing. The nation's GDP grew at an annualized rate of 2.1% in Q2, down from a 3.1% growth rate in the prior qtr, according to the Commerce Dept. Proceeds from the 6.2% payroll tax, which in 2011 was briefly lowered to 4.2% by Pres Obama, are used to fund the Medicare & Social Security programs. A tax cut wouldn't be the first under the Trump administration. In 2017, Congress passed the Tax Cuts & Jobs Act, which reduced the corp tax from 35-21% & lowered personal income taxes for the majority of Americans.
Home Depot (HD), a Dow stock, suppliers are trying to head off some of the increased costs from rising tariffs by moving at least some of their production out of China, execs told investors. “I’m not aware of a single supplier who was not moving some form of manufacturing outside of China,” said Ted Decker, exec VP of merchandising. “So we have suppliers moving production to Taiwan, to Vietnam, to Thailand, Indonesia and even back into the United States.” CEO Craig Menear said the tariffs on Chinese goods are projected to have a “cost impact” on US sales of about 2% ($2B). With suppliers moving at least some of their manufacturing outside of China, that reduces the impact by roughly one percentage point, execs said. HD had also lowered its sales outlook for the year to be up about 2.3% & same-store sales to increase by about 4%. Previously it had called for total sales growth of 3.3% & same-store sales growth of 5%. Decker also said the company can calculate precisely how tariffs will impact every product in its inventory. “We have data of country of origin in potential tariff impact literally down to the SKU, so we know exactly what are on the various lists, when the tariff impacts will hit,” he said. Retailers have been trying to avoid passing the costs of the tariffs down to consumers by diversifying their supply chains to countries outside of China.
Home Depot says suppliers are moving manufacturing out of China to avoid tariffs
Kohl’s (KSS) said a strong start to the back-to-school season & new partnership with Amazon (AMZN) helped it beat earnings expectations during Q2. “We are pleased to report that our business strengthened as we progressed through the second quarter,” CEO Michelle Gass said. “Comparable sales were better than the first quarter and improved during the period, turning positive during the last six weeks of the second quarter with 1% growth.” EPS slid to $1.51, down from $1.76 a year earlier. Net sales fell to $4.17B compared with $4.3B in the previous year. Sales at stores open more than a year fell 2.9%, wider estimates of a 2.5% decrease. KSS announced in Apr plans to accept AMZN returns at all of its stores, growing its partnership with the e-commerce giant in an attempt to increase foot traffic. The relationship began in the spring of 2017, when KSS began selling AMZN gadgets like the Fire TV & Echo Dot. “We are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond,” Gass said. The stock fell 3.32.
If you would like to learn more about KSS click on this link:
club.ino.com/trend/analysis/stock/KSS?a_aid=CD3289&a_bid=6ae5b6f7
Kohl’s second-quarter profits beat expectations, but sales miss the mark
Front-month oil futures contracts settled higher for a 3rd straight session, ahead of gov data that are expected to reveal a weekly decline in domestic crude stockpiles, following back-to-back weekly supply increases. Prices also climbed on Mon, with that rally partly fueled by reports that Yemen's Houthi rebels launched a drone attack over the weekend on one of Saudi Arabia's largest oil fields. West Texas Intermediate crude for Sep delivery tacked on 13¢ (0.2%) to finish at $56.34 a barrel, shaking off earlier losses. The front-month contract, which expired at the end of the day's regular trading session, gained 2.4% yesetrday. The most-active & new front-month Oct WTI contract shed a penny to settle at $56.13. The Oct contract for global benchmark Brent crude edged 29¢ (0.5%) higher at $60.03 a barrel, with prices settling back above $60 for the first time in a week. Analysts expect the EIA tomrrow to report a fall of 3.1M barrels in US crude stockpiles for last week, along with supply declines of 1.6M for gas & 200K barrels for distillates, which include heating oil.
Front-month oil futures settle higher with data expected to reveal a weekly decline in U.S. crude supply
The bulls stayed home & stocks took a breather. But there is plenty going on & Powell will be speaking on Fri. Aug has been a tough month for stocks (shown below) with the Dow down almost 1K. More choppy times lie ahead.
Dow Jones Industrials
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