Dow sank 285 decliners over advancers 3-2 & NAZ was off 88. The MLP index fell 1+ to the 229s & the REIT index jumped up 3+ to the 407s (another record). Junk bond funds were little changed & Treasuries remained in strong demand. Oil fell 1 to the 54s & gold shot up 22 to 1552 (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)
US manufacturing sector contracts for first time in 3 years
United Auto Workers members overwhelmingly granted union leaders authorization to strike during contract negotiations this year with General Motors (GM), Ford (F) & Fiat Chrysler (FCAU), if needed. The union announced about 96% of members at each of the automakers supported the action. That's slightly down from negotiations 4 years ago, when workers at GM & FCAU supported a strike by 97% & Ford at 98%. GM will lead negotiations, which are expected to be the most contentious in at least a decade amid a slowdown in auto sales, a volatile trade environment & a widening federal probe into union corruption that led to UAW Pres Gary Jones’ home being searched last week by federal officials. Jones has not been charged as part of the multiyear probe, which has led to the convictions of 8 union & company officials affiliated with FCAU. Charges were also filed last month against Michael Grimes, a former UAW official assigned to the union's GM department, for allegedly receiving $2 million in kickbacks from UAW vendors. The “strike authorization vote” is part of the union’s constitution & viewed as a rudimentary step in the negotiations. The voting results are historically almost unanimous in support of the authorization. The vote does not mean there will or will not be a strike. Jones, in a release announcing the voting results, said no one goes into collective bargaining wanting a strike, but it is a “key tool in the toolbelt as our bargaining team sits across from the company.” This year's negotiations will set the wages & benefits for 158K auto workers & lay out the investment plans in the coming years for the companies. Current contracts expire Sep 14, however it’s common for that deadline to be pushed back weeks, if not months.
Auto union workers overwhelmingly vote to authorize strikes at GM, Ford, Fiat Chrysler
Gold futures rallied back to their highest level in more than 6 years, as a decline in Aug US manufacturing contributed to worries about the domestic economy. Trade-related tensions, global growth concerns & the threat of the market being roiled by a disorderly exit by Britain from the EU also drew investors to the haven metal. The Institute for Supply Management’s manufacturing index fell to 49.1% in Aug. Any reading below 50% indicates worsening conditions. This is the first contraction in 35 months. Gold for Dec added $26.50 (1.7%) to settle at $1555 an ounce, the highest finish since Apr 2013. That was the first gain for the most-active contract in 4 sessions. It finished last week down 0.5%, but 6.3% higher in Aug. Legislation seeking to delay the date of the UK's departure from the EU is set to be put forward in Parliament later today. If the bill goes thru, UK Prime Minister Boris Johnson is expected to respond by pushing for a general election on Oct 14. Also yesterday, it was reported that the US & China were struggling to reach an agreement on a schedule for trade talks, signaling that a trade resolution remained uncertain. Gold & precious metals broadly have benefited from investors' fear that a litany of problems across the globe, including Brexit & trade wars, could disrupt markets & world-wide economies.
Construction spending edged up a seasonally adjusted 0.1% in Jul after a sharp drop the previous month, the Commerce Dept said. The forecast expected a 0.3% advance. Spending was 2.7% lower than 12 months ago, the gov said. The Commerce Dept revised data all the way back to Jan 2008.
Oil futures settled lower as the latest round of tariffs in the US-China trade war contributed to worries over the global economy & demand for crude. Oct West Texas Intermediate oil fell $1.16 (2.1%) to settle at $53.94 a barrel, the lowest front-month contract settlement since Aug 26.
This was a brutal start for a new month of trading. Even with the storm off Florida, the markets are mainly concerned with intl relations (i.e especially US-China). These are tough times, not helped by the manufacturing data shown above. In the markets, 2 sectors are doing well, REITs & utilities, known for their higher yields. The prospect of rate cuts by the Fed are making them attractive for investors looking for income.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US manufacturing sector has hit a snag, contracting for the first time in 3 years, raising fresh concerns about the health of the US economy. The ISM Manufacturing Index fell to 49.1% in Aug, down from 51.2% in Jul, as the US-China trade war continued to cause uncertainty. "Respondents expressed slightly more concern about
U.S.-China trade turbulence, but trade remains the most significant
issue, indicated by the strong contraction in new export orders,” said
Timothy Fiore, chair of the Institute for Supply Management. The
reading was the first time in 35 months that the index fell below the
expansion/contraction line of 50%. It has been weakening over the
past 4 months. “Respondents
continued to note supply chain adjustments as a result of moving
manufacturing from China. Overall, sentiment this month declined and
reached its lowest level in 2019." Readings for new orders, production & employment fell, while inventories increased, the report said. A contracting manufacturing sector could convince
the Federal Reserve to cut interest rates when it concludes a 2-day
meeting on Sep 18. At last month's Jackson Hole Symposium, Fed Chair Jerome Powell noted that
trade policy uncertainty seemed to be "playing a role in the global
slowdown and in weak manufacturing and capital spending in the United
States." The Fed on Jul 31 cut its benchmark interest rate for the first time in over a decade & said it would be open to more rate cuts if needed. Traders are currently pricing in a 90.4% chance the Fed
lowers rates by 25 basis points to 1.75-2% at the conclusion of its upcoming meeting this month. Over in Europe, the manufacturing sector is in worse shape.
US manufacturing sector contracts for first time in 3 years
United Auto Workers members overwhelmingly granted union leaders authorization to strike during contract negotiations this year with General Motors (GM), Ford (F) & Fiat Chrysler (FCAU), if needed. The union announced about 96% of members at each of the automakers supported the action. That's slightly down from negotiations 4 years ago, when workers at GM & FCAU supported a strike by 97% & Ford at 98%. GM will lead negotiations, which are expected to be the most contentious in at least a decade amid a slowdown in auto sales, a volatile trade environment & a widening federal probe into union corruption that led to UAW Pres Gary Jones’ home being searched last week by federal officials. Jones has not been charged as part of the multiyear probe, which has led to the convictions of 8 union & company officials affiliated with FCAU. Charges were also filed last month against Michael Grimes, a former UAW official assigned to the union's GM department, for allegedly receiving $2 million in kickbacks from UAW vendors. The “strike authorization vote” is part of the union’s constitution & viewed as a rudimentary step in the negotiations. The voting results are historically almost unanimous in support of the authorization. The vote does not mean there will or will not be a strike. Jones, in a release announcing the voting results, said no one goes into collective bargaining wanting a strike, but it is a “key tool in the toolbelt as our bargaining team sits across from the company.” This year's negotiations will set the wages & benefits for 158K auto workers & lay out the investment plans in the coming years for the companies. Current contracts expire Sep 14, however it’s common for that deadline to be pushed back weeks, if not months.
Auto union workers overwhelmingly vote to authorize strikes at GM, Ford, Fiat Chrysler
Gold futures rallied back to their highest level in more than 6 years, as a decline in Aug US manufacturing contributed to worries about the domestic economy. Trade-related tensions, global growth concerns & the threat of the market being roiled by a disorderly exit by Britain from the EU also drew investors to the haven metal. The Institute for Supply Management’s manufacturing index fell to 49.1% in Aug. Any reading below 50% indicates worsening conditions. This is the first contraction in 35 months. Gold for Dec added $26.50 (1.7%) to settle at $1555 an ounce, the highest finish since Apr 2013. That was the first gain for the most-active contract in 4 sessions. It finished last week down 0.5%, but 6.3% higher in Aug. Legislation seeking to delay the date of the UK's departure from the EU is set to be put forward in Parliament later today. If the bill goes thru, UK Prime Minister Boris Johnson is expected to respond by pushing for a general election on Oct 14. Also yesterday, it was reported that the US & China were struggling to reach an agreement on a schedule for trade talks, signaling that a trade resolution remained uncertain. Gold & precious metals broadly have benefited from investors' fear that a litany of problems across the globe, including Brexit & trade wars, could disrupt markets & world-wide economies.
Gold rallies back to highest in over 6 years as ISM manufacturing marks lowest reading since 2016
Construction spending edged up a seasonally adjusted 0.1% in Jul after a sharp drop the previous month, the Commerce Dept said. The forecast expected a 0.3% advance. Spending was 2.7% lower than 12 months ago, the gov said. The Commerce Dept revised data all the way back to Jan 2008.
Construction spending inches up in July after June drop
Oil futures settled lower as the latest round of tariffs in the US-China trade war contributed to worries over the global economy & demand for crude. Oct West Texas Intermediate oil fell $1.16 (2.1%) to settle at $53.94 a barrel, the lowest front-month contract settlement since Aug 26.
U.S. oil prices drop 2% to lowest in a week
This was a brutal start for a new month of trading. Even with the storm off Florida, the markets are mainly concerned with intl relations (i.e especially US-China). These are tough times, not helped by the manufacturing data shown above. In the markets, 2 sectors are doing well, REITs & utilities, known for their higher yields. The prospect of rate cuts by the Fed are making them attractive for investors looking for income.
Dow Jones Industrials
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