Dow shot up 358 (near session highs in the last 30 mins), advancers over decliners 4-1 & NAZ advanced 95. The MLP index added 1+ to the 124s & the REIT index soared 11+ to the 331. Junk bond funds were mixed & Treasuries remained weak. Oil dropped 3+ to 13 & gold pulled back 9 to 1726 (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 economy could contract 30% in second quarter, warns Trump economic advisor Kevin
Gold prices ended lower, with a cautiously optimistic tone for stocks denting haven-related demand for the yellow metal. Gold for Jun fell $11 (0.7%) to settle at $1723 an ounce, after posting a 2.2% weekly gain & its 4th weekly rise in 5 weeks on Fri. Bullish analysts contend that gold should remain supported even as lockdowns intended to limit the spread of the novel strain of coronavirus are rolled back, given uncertainty over the speed of a subsequent economic rebound. The states of Georgia, Oklahoma & Alaska started loosening restrictions on businesses despite warnings from public-health experts that such moves could be premature. New York Gov Andrew Cuomo said the state will likely begin to reopen the economy in certain areas “with certain precautions after May 15.” Children in Spain were allowed outdoors for the first time in 6 weeks if accompanied by an adult on Sun & the gov will allow Spaniards to leave their homes for walks & exercise starting May 2. Italy & Belgium laid out plans to begin easing some restrictions on May 4, while France aims to begin easing its lockdown on May 11.
Gold prices end lower as easing coronavirus lockdowns spark optimism
European planemaker Airbus issued a bleak assessment of the impact of the coronavirus crisis, telling the company’s 135K employees to brace for potentially deeper job cuts & warning its survival is at stake without immediate action. In a letter to staff, CEO Guillaume Faury said Airbus was “bleeding cash at an unprecedented speed” & that a recent drop of a 3rd or more in production rates did not reflect the worst-case scenario & would be kept under review. The letter was sent to employees late on Fri, days before the company is due to give Q1 results overshadowed by a pandemic that has left airlines struggling to survive & virtually halted jet deliveries since mid-Mar. Airbus has begun implementing government-assisted furlough schemes starting with 3K workers in France, “but we may now need to plan for more far-reaching measures,” Faury said. “The survival of Airbus is in question if we don’t act now,” he added. Industry sources have said a new restructuring plan similar to its 2007 Power8 which saw 10K job cuts could be launched in the summer, but Faury indicated the company was already exploring “all options” while waiting for clarity on demand. People familiar with the matter say Airbus is also in active discussions with European govs about tapping schemes to assist struggling industries, including state-guaranteed loans. It has already expanded commercial credit lines with banks, buying what Faury described as “time to adapt and resize.” To stem the outflow of cash, Airbus this month said it would slash benchmark narrow-body jet production by a 3rd to 40 jets a month. It also issued targets for wide-body jets implying cuts up to 42% compared with previously published rates. “In other words, in just a couple of weeks we have lost roughly one-third of our business,” Faury wrote in the letter. “And, frankly, that’s not even the worst-case scenario we could face.”
US oil futures posted a loss of almost 25% as reignited concerns about a scarcity of places to put an overflow of crude sent the Jun contract to its 2nd-lowest settlement on record. The USO said that it would reduce its holdings of oil futures contracts in specific months. It will now have about 30% of its holdings in the Jul futures contracts. That contributed to a decline in front-month Jun WTI crude, the US benchmark, which lost $4.16 (25%) to settle at $12.78 a barrel. The settlement was the 2nd lowest for the Jun contract after its Apr 21 $11.57 finish, based on data going back to 2011. Today's loss follows a 32.3% decline for all of last week — oil's biggest such decline on record based on most-active contracts — for the commodity & a landmark plunge in the now-defunct May contract, which last Mon ended in negative territory for the first time in the history. Jun Brent crude, the int benchmark, declined by $1.45 (7%) at $19.99 a barrel, following its 24% weekly drop. A decline for both contracts snapped a 3-session win streak to end last week's turbulent trading. The fall for oil comes as a pact by OPEC & other major producers has failed to quell rampant worries about too much crude & a shrinking number of places to put it. Higher prices for contracts for oil in later months also has consequently encouraged further storing of crude & amplified pressures on its price. OPEC & allies, including Russia (OPEC+) are slated to commence cuts equating to 9.7M a barrel a day, about 13% of global production, on May 1 thru Jun, but that is viewed by experts as doing little to address a global glut of historic proportions. Adding to the problems of crude has been the demand shock resulting from the outbreak of the novel strain of coronavirus that has brought global economies to a near standstill, delivering a gut punch to oil producers world-wide. According to reports, countries including Kuwait also have started to cut production ahead of the start of the May 1 for a strong advancement for agreed upon cuts to start.
U.S. oil price drops nearly 25% to finish below $13 a barrel
Buyers kept coming all day, making for a strong advance despite the abundance of gloomy news. It looks like GDP in Q1 will be negative & Q2 is all but guaranteed to be negative with a very strong decline. It's not necessary to wait for official data at the end of Jul to confirm that. The economy is already solidly in a recession (really depression) supported by an endless stream of negative news. Reopening of the economy is encouraging, but that will be done cautiously while everybody is looking over their shoulders to see if the virus returns. The bulls will be challenged to extend this level of optimism for investors.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US economy could contract at its worst rate
since the depression later this year due to the coronavirus
crisis, warned Kevin Hassett, who recently rejoined the Trump
administration as a senior economic advisor. The initial look at GDP for Q1, out n Wed, will be a
negative number, Hassett said. However,
he added the real damage to the economy from the coronavirus will be
revealed further down the road. “You’re looking at something like minus
20% to minus 30% in the second quarter.” The average estimates as of late last week showed a 5.3% decline in Q1 GDP & about a 29% contraction in Q2 In a string of dismal data on economic growth as coronavirus lockdowns took hold, the gov on Fri said orders for durable goods plunged 14.4% in Mar. Hassett said he expects Apr's
unemployment rate, released a week from this Fri, to surge to 16% or
17%. The unemployment rate in March
rose to 4.4% with nonfarm payrolls dropping by 701K as the monthly
data from the gov was only just beginning to show to the collapse
already being revealed in weekly jobless claims. Over 4.4M more Americans applied for first-time jobless claims for the last week, bringing total filings for the past 5 weeks to 26.4M, wiping out all the job gains seen after the last recession. “The puzzle is incomes are staying relatively high and output is going to zero,” Hassett said. “If
the virus does start to go away in a way that makes it so that most
every state feels comfortable that it’s safe to open up, then we really
could be looking at a rapid recovery because the incomes are still
there,” he added.
US economy could contract 30% in second quarter, warns Trump economic advisor Kevin
Gold prices ended lower, with a cautiously optimistic tone for stocks denting haven-related demand for the yellow metal. Gold for Jun fell $11 (0.7%) to settle at $1723 an ounce, after posting a 2.2% weekly gain & its 4th weekly rise in 5 weeks on Fri. Bullish analysts contend that gold should remain supported even as lockdowns intended to limit the spread of the novel strain of coronavirus are rolled back, given uncertainty over the speed of a subsequent economic rebound. The states of Georgia, Oklahoma & Alaska started loosening restrictions on businesses despite warnings from public-health experts that such moves could be premature. New York Gov Andrew Cuomo said the state will likely begin to reopen the economy in certain areas “with certain precautions after May 15.” Children in Spain were allowed outdoors for the first time in 6 weeks if accompanied by an adult on Sun & the gov will allow Spaniards to leave their homes for walks & exercise starting May 2. Italy & Belgium laid out plans to begin easing some restrictions on May 4, while France aims to begin easing its lockdown on May 11.
Gold prices end lower as easing coronavirus lockdowns spark optimism
European planemaker Airbus issued a bleak assessment of the impact of the coronavirus crisis, telling the company’s 135K employees to brace for potentially deeper job cuts & warning its survival is at stake without immediate action. In a letter to staff, CEO Guillaume Faury said Airbus was “bleeding cash at an unprecedented speed” & that a recent drop of a 3rd or more in production rates did not reflect the worst-case scenario & would be kept under review. The letter was sent to employees late on Fri, days before the company is due to give Q1 results overshadowed by a pandemic that has left airlines struggling to survive & virtually halted jet deliveries since mid-Mar. Airbus has begun implementing government-assisted furlough schemes starting with 3K workers in France, “but we may now need to plan for more far-reaching measures,” Faury said. “The survival of Airbus is in question if we don’t act now,” he added. Industry sources have said a new restructuring plan similar to its 2007 Power8 which saw 10K job cuts could be launched in the summer, but Faury indicated the company was already exploring “all options” while waiting for clarity on demand. People familiar with the matter say Airbus is also in active discussions with European govs about tapping schemes to assist struggling industries, including state-guaranteed loans. It has already expanded commercial credit lines with banks, buying what Faury described as “time to adapt and resize.” To stem the outflow of cash, Airbus this month said it would slash benchmark narrow-body jet production by a 3rd to 40 jets a month. It also issued targets for wide-body jets implying cuts up to 42% compared with previously published rates. “In other words, in just a couple of weeks we have lost roughly one-third of our business,” Faury wrote in the letter. “And, frankly, that’s not even the worst-case scenario we could face.”
Airbus says company's 'survival at stake,' sends warning to employees
US oil futures posted a loss of almost 25% as reignited concerns about a scarcity of places to put an overflow of crude sent the Jun contract to its 2nd-lowest settlement on record. The USO said that it would reduce its holdings of oil futures contracts in specific months. It will now have about 30% of its holdings in the Jul futures contracts. That contributed to a decline in front-month Jun WTI crude, the US benchmark, which lost $4.16 (25%) to settle at $12.78 a barrel. The settlement was the 2nd lowest for the Jun contract after its Apr 21 $11.57 finish, based on data going back to 2011. Today's loss follows a 32.3% decline for all of last week — oil's biggest such decline on record based on most-active contracts — for the commodity & a landmark plunge in the now-defunct May contract, which last Mon ended in negative territory for the first time in the history. Jun Brent crude, the int benchmark, declined by $1.45 (7%) at $19.99 a barrel, following its 24% weekly drop. A decline for both contracts snapped a 3-session win streak to end last week's turbulent trading. The fall for oil comes as a pact by OPEC & other major producers has failed to quell rampant worries about too much crude & a shrinking number of places to put it. Higher prices for contracts for oil in later months also has consequently encouraged further storing of crude & amplified pressures on its price. OPEC & allies, including Russia (OPEC+) are slated to commence cuts equating to 9.7M a barrel a day, about 13% of global production, on May 1 thru Jun, but that is viewed by experts as doing little to address a global glut of historic proportions. Adding to the problems of crude has been the demand shock resulting from the outbreak of the novel strain of coronavirus that has brought global economies to a near standstill, delivering a gut punch to oil producers world-wide. According to reports, countries including Kuwait also have started to cut production ahead of the start of the May 1 for a strong advancement for agreed upon cuts to start.
U.S. oil price drops nearly 25% to finish below $13 a barrel
Buyers kept coming all day, making for a strong advance despite the abundance of gloomy news. It looks like GDP in Q1 will be negative & Q2 is all but guaranteed to be negative with a very strong decline. It's not necessary to wait for official data at the end of Jul to confirm that. The economy is already solidly in a recession (really depression) supported by an endless stream of negative news. Reopening of the economy is encouraging, but that will be done cautiously while everybody is looking over their shoulders to see if the virus returns. The bulls will be challenged to extend this level of optimism for investors.
Dow Jones Industrials
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