Dow plunged 622, decliners over advancers about 7-1 & NAZ declined 284. The MLP index dropped 6+ to the 188s & the REIT index remained down 11+ to the 323s. Junk bond funds were lower & Treasuries pulled back from recent gains. Oil went up to the high 19s & gold gained 15 to 1708 (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)
The US economy will likely need additional stimulus this year as the coronavirus-induced lockdowns trigger a “historic” contraction in the second quarter of this year, according to Dallas Federal Reserve Bank Pres Robert Kaplan. “This is a historic contraction, very severe,” Kaplan said. “We’re going to need stimulus going into the rest of the year and into next year so we can grow faster, so we can work down this unemployment rate. That’s not so much the Fed’s role.” Kaplan's comments come amid a grim backdrop: The Labor Dept said that more than 3.8M Americans filed for unemployment benefits last week, pushing the 6-week total of job losses since states adopted strict stay-at-home measures to 30.2M . Unemployment at this scale hasn’t been recorded since the depression, when the jobless rate peaked at 25%. Unemployment could soar as high as 20% & end the year as high as 8-10%, Kaplan added. Just a few months ago, the jobless rate sat at 3.5%, a ½-century low. GDP, the broadest measure of goods & services produced across the economy, could shrink as much as 30% on an annualized basis this quarter, he said. Although Kaplan said he anticipates growth in Q3 & Q4, he expects the economy will still shrink by about 4.5-5 % for the year overall. To blunt the economic pain, the central bank has taken a range of extraordinary actions, including slashing interest rates to near-zero, purchasing an unlimited amount of Treasuries (quantitative easing) & launching crisis-era lending facilities to ensure that credit flows to households & businesses. It has also said it will buy corp bonds & lend to states & cities. During their 2-day meeting this week, Fed policymakers vowed to continue taking aggressive action to support the economy, including holding interest rates near zero until the US has weathered the crisis, a sentiment that Kaplan echoed. "Rates are going to stay lower for longer and the Fed is going to need to do more in terms of other actions to bridge this period," he said. The central bank chief declined to provide specific policy measures that Congress should consider, but did say policies that protect workers, businesses and households from avoidable insolvency will be "key." "It'll come with a hefty price tag," Powell said this week. "But we would come out of this with less long-run damage to the economy."
National Economic Council director Larry Kudlow said that the US would hold China accountable for the coronavirus pandemic. “On the China business, it’s up in the air. They are going to be held accountable for it. There’s no question about that. How, when, where and why — I’m going to leave that up to the president,” Kudlow said. China has been criticized by the US & other countries for a lack of transparency about the coronavirus outbreak. Trump said yesterday that he was considering slapping new tariffs on China due to the country's handling of the outbreak. The pres also said he thought the virus came from a Chinese lab, but didn't cite evidence to support the claim. Kudlow added that it would be Trump's decision whether to add more tariffs. “With respect to future tariff decisions and other measures, that’s going to be up to the president,” Kudlow said. The US has already imposed tariffs on Chinese imports as the 2 countries have been negotiating a multi-phase trade deal. Kudlow said that China is still working to implement the first phase of the deal, but that the commodity purchases are moving slower than planned due to the pandemic. Kudlow also said that the administration was considering several incentives, including paying moving costs, to bring US companies back to the US from China. The pandemic has led to concern that vital parts of the medical supply chain, including personal protective equipment & pharmaceuticals, is heavily concentrated in China. “We’d like these supply chains to be based here. I think to some extent we’ve seen the importance of that,” Kudlow said. Kudlow again denied reports that the administration was considering refusing to pay gov debt held by China as retaliation for how the country handled the coronavirus. “Full faith and credit of the United States’ debt obligation is sacrosanct. Absolutely sacrosanct,” Kudlow said, adding that the Trump administration did not want to do anything to harm the $'s status as the world's reserve currency.
China will be held accountable for virus, says top White House advisor Kudlow
China is getting back to work — but not back to normal, in a reminder that the health of the world's 2nd largest economy is intertwined with supply & demand chains & political fortunes around the globe, according to a new report. The report is a special, focused survey from the China Beige Book, a unique data-gathering firm that relies on bottom-up reporting from businesses & banks inside China to provide a more transparent look at economic conditions than the official gov versions do. Because it's more targeted than the firm’s regular surveys, this special supplement aims to show “how corporate China is handling the aftermath of the virus,” China Beige Book CEO Leland Miller said. “The answer is, not well.” The good news is that almost all (91%) of the more than 500 Chinese companies surveyed had reopened by late Apr & about ¾ were working on-site again, but just 42% were able to operate at more than ½ their capacity. Worse, demand for goods & services from Chinese companies has plummeted. Foreign orders have fallen more than twice as fast as domestic ones, with orders from the US contracting the most among China's major trading partners. Crucially, 81% of execs at surveyed companies said they're worried about a resurgence of the coronavirus in the next 3 months. And 69% say Apr's tepid pace of economic activity may be “as good as it gets” for the next several months. The responses to this survey suggest the economy is likely still contracting. Yet the Chinese gov has not yet admitted that they’re not likely to hit their 6% GDP growth target for 2020, even though “mathematically that cannot be reached in any scenario,” Miller believes. While Miller expected the official Chinese purchasing managers index for Apr to show gradual improvement, he cautioned that those figures should be read with an extra-fine grain of salt this time. They won't just be massaged to feed an official narrative, but are also, as always, more focused on large enterprises with more exposure to the public sector than the ones in China Beige Book's survey. For that reason, Miller believes the data compiled by his firm show a more holistic view of “the real economy.” The official gov narrative about the economy may start to shift in May,. With the whole world in contraction — the US economy shrank more dramatically in the first 3 months of the year than it had in any qtr since 2008, with an even worse showing expected in Q2 —“the new narrative [for China] can be, at least we’re doing better than everyone else,” Miller said. “They’ll have to move the goalposts, and they can do that by blaming the poor handling of the virus by Trump, or something.”
China’s ‘reopening’ has been rocky, and China Beige Book suggests the party line in Beijing may start to change
Gold futures settled back above the key $1700-an-ounce mark as renewed concerns over the coronavirus pandemic & its effects on the global economy buoyed haven demand for the metal, but prices still posted a loss for the week. Gold for Jun rose $6 (0.4%) to settle at $1700 an ounce, after losing 1.1% a day ago. The metal, based on the most-active contracts, had put in a gain of 6.1% in Apr, but suffered a loss of about 2% this week. Risk-off sentiment prevailed among investors, with downbeat US economic data & losses in the stock market contributing to a rise in gold prices. The Institute for Supply Management said its manufacturing index fell to 41.5% last month from 49.1% in Mar. This is the lowest since 2009. Also markets digested threats from Pres Trump of levying tariffs or retaliating against China for its handling of the outbreak of the novel strain of coronavirus, which was first identified in Wuhan.
Gold prices settle back above the key $1,700 mark, but suffer a weekly decline
US oil futures finished higher to score a weekly gain as the market marked the official start date for production cuts under the recent agreement between major oil producers. US oil futures finished higher to score a weekly gain as the market marked the official start date for production cuts under the recent agreement between major oil producers. Even as the OPEC+ cuts begin, however, traders eyed the latest figures on Apr OPEC member production. OPEC output rose to a 13-month high in Apr as members pumped 30.25M barrels per day, up 1.6M barrels per day from a revised Mar figure. Before the output-cut pact between OPEC+ was reached in Apr, a meeting in early Mar had broken down after OPEC member Saudi Arabia & non-member Russia failed to agree on production cuts. That led to a price war & production increases among the 2 nations. The number of active US rigs drilling for oil has fallen for a 7th week in a row, according to the latest data from Baker Hughes. On Friday, data revealed that the number of active US rigs drilling for oil dropped by 53 to 325 this week. That implies further declines in domestic production. The supply overhang is likely to keep a lid on crude prices in coming weeks & months, though there may be a recovery later in the year as producers slash output & reduce investment in response to the collapse in prices.
U.S. oil prices climb by nearly 17% for the week as OPEC+ production cuts begin
The Apr rally is fading fast. In the next week, Apr economic data will be released & it should bring more bears to the markets. The big jobs report comes on Fri & that will not be pretty. US-China trade relations are being called into question as they are interwoven with coronavirus crisis. Just one of many issues with China is that it consumes a lot of pork & much of that comes from the US. The US is struggling with pork production currently. May is shaping up as a tough market for stocks.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US economy will likely need additional stimulus this year as the coronavirus-induced lockdowns trigger a “historic” contraction in the second quarter of this year, according to Dallas Federal Reserve Bank Pres Robert Kaplan. “This is a historic contraction, very severe,” Kaplan said. “We’re going to need stimulus going into the rest of the year and into next year so we can grow faster, so we can work down this unemployment rate. That’s not so much the Fed’s role.” Kaplan's comments come amid a grim backdrop: The Labor Dept said that more than 3.8M Americans filed for unemployment benefits last week, pushing the 6-week total of job losses since states adopted strict stay-at-home measures to 30.2M . Unemployment at this scale hasn’t been recorded since the depression, when the jobless rate peaked at 25%. Unemployment could soar as high as 20% & end the year as high as 8-10%, Kaplan added. Just a few months ago, the jobless rate sat at 3.5%, a ½-century low. GDP, the broadest measure of goods & services produced across the economy, could shrink as much as 30% on an annualized basis this quarter, he said. Although Kaplan said he anticipates growth in Q3 & Q4, he expects the economy will still shrink by about 4.5-5 % for the year overall. To blunt the economic pain, the central bank has taken a range of extraordinary actions, including slashing interest rates to near-zero, purchasing an unlimited amount of Treasuries (quantitative easing) & launching crisis-era lending facilities to ensure that credit flows to households & businesses. It has also said it will buy corp bonds & lend to states & cities. During their 2-day meeting this week, Fed policymakers vowed to continue taking aggressive action to support the economy, including holding interest rates near zero until the US has weathered the crisis, a sentiment that Kaplan echoed. "Rates are going to stay lower for longer and the Fed is going to need to do more in terms of other actions to bridge this period," he said. The central bank chief declined to provide specific policy measures that Congress should consider, but did say policies that protect workers, businesses and households from avoidable insolvency will be "key." "It'll come with a hefty price tag," Powell said this week. "But we would come out of this with less long-run damage to the economy."
Fed prez warns of 'historic contraction,' says more stimulus likely needed
National Economic Council director Larry Kudlow said that the US would hold China accountable for the coronavirus pandemic. “On the China business, it’s up in the air. They are going to be held accountable for it. There’s no question about that. How, when, where and why — I’m going to leave that up to the president,” Kudlow said. China has been criticized by the US & other countries for a lack of transparency about the coronavirus outbreak. Trump said yesterday that he was considering slapping new tariffs on China due to the country's handling of the outbreak. The pres also said he thought the virus came from a Chinese lab, but didn't cite evidence to support the claim. Kudlow added that it would be Trump's decision whether to add more tariffs. “With respect to future tariff decisions and other measures, that’s going to be up to the president,” Kudlow said. The US has already imposed tariffs on Chinese imports as the 2 countries have been negotiating a multi-phase trade deal. Kudlow said that China is still working to implement the first phase of the deal, but that the commodity purchases are moving slower than planned due to the pandemic. Kudlow also said that the administration was considering several incentives, including paying moving costs, to bring US companies back to the US from China. The pandemic has led to concern that vital parts of the medical supply chain, including personal protective equipment & pharmaceuticals, is heavily concentrated in China. “We’d like these supply chains to be based here. I think to some extent we’ve seen the importance of that,” Kudlow said. Kudlow again denied reports that the administration was considering refusing to pay gov debt held by China as retaliation for how the country handled the coronavirus. “Full faith and credit of the United States’ debt obligation is sacrosanct. Absolutely sacrosanct,” Kudlow said, adding that the Trump administration did not want to do anything to harm the $'s status as the world's reserve currency.
China will be held accountable for virus, says top White House advisor Kudlow
China is getting back to work — but not back to normal, in a reminder that the health of the world's 2nd largest economy is intertwined with supply & demand chains & political fortunes around the globe, according to a new report. The report is a special, focused survey from the China Beige Book, a unique data-gathering firm that relies on bottom-up reporting from businesses & banks inside China to provide a more transparent look at economic conditions than the official gov versions do. Because it's more targeted than the firm’s regular surveys, this special supplement aims to show “how corporate China is handling the aftermath of the virus,” China Beige Book CEO Leland Miller said. “The answer is, not well.” The good news is that almost all (91%) of the more than 500 Chinese companies surveyed had reopened by late Apr & about ¾ were working on-site again, but just 42% were able to operate at more than ½ their capacity. Worse, demand for goods & services from Chinese companies has plummeted. Foreign orders have fallen more than twice as fast as domestic ones, with orders from the US contracting the most among China's major trading partners. Crucially, 81% of execs at surveyed companies said they're worried about a resurgence of the coronavirus in the next 3 months. And 69% say Apr's tepid pace of economic activity may be “as good as it gets” for the next several months. The responses to this survey suggest the economy is likely still contracting. Yet the Chinese gov has not yet admitted that they’re not likely to hit their 6% GDP growth target for 2020, even though “mathematically that cannot be reached in any scenario,” Miller believes. While Miller expected the official Chinese purchasing managers index for Apr to show gradual improvement, he cautioned that those figures should be read with an extra-fine grain of salt this time. They won't just be massaged to feed an official narrative, but are also, as always, more focused on large enterprises with more exposure to the public sector than the ones in China Beige Book's survey. For that reason, Miller believes the data compiled by his firm show a more holistic view of “the real economy.” The official gov narrative about the economy may start to shift in May,. With the whole world in contraction — the US economy shrank more dramatically in the first 3 months of the year than it had in any qtr since 2008, with an even worse showing expected in Q2 —“the new narrative [for China] can be, at least we’re doing better than everyone else,” Miller said. “They’ll have to move the goalposts, and they can do that by blaming the poor handling of the virus by Trump, or something.”
China’s ‘reopening’ has been rocky, and China Beige Book suggests the party line in Beijing may start to change
Gold futures settled back above the key $1700-an-ounce mark as renewed concerns over the coronavirus pandemic & its effects on the global economy buoyed haven demand for the metal, but prices still posted a loss for the week. Gold for Jun rose $6 (0.4%) to settle at $1700 an ounce, after losing 1.1% a day ago. The metal, based on the most-active contracts, had put in a gain of 6.1% in Apr, but suffered a loss of about 2% this week. Risk-off sentiment prevailed among investors, with downbeat US economic data & losses in the stock market contributing to a rise in gold prices. The Institute for Supply Management said its manufacturing index fell to 41.5% last month from 49.1% in Mar. This is the lowest since 2009. Also markets digested threats from Pres Trump of levying tariffs or retaliating against China for its handling of the outbreak of the novel strain of coronavirus, which was first identified in Wuhan.
Gold prices settle back above the key $1,700 mark, but suffer a weekly decline
US oil futures finished higher to score a weekly gain as the market marked the official start date for production cuts under the recent agreement between major oil producers. US oil futures finished higher to score a weekly gain as the market marked the official start date for production cuts under the recent agreement between major oil producers. Even as the OPEC+ cuts begin, however, traders eyed the latest figures on Apr OPEC member production. OPEC output rose to a 13-month high in Apr as members pumped 30.25M barrels per day, up 1.6M barrels per day from a revised Mar figure. Before the output-cut pact between OPEC+ was reached in Apr, a meeting in early Mar had broken down after OPEC member Saudi Arabia & non-member Russia failed to agree on production cuts. That led to a price war & production increases among the 2 nations. The number of active US rigs drilling for oil has fallen for a 7th week in a row, according to the latest data from Baker Hughes. On Friday, data revealed that the number of active US rigs drilling for oil dropped by 53 to 325 this week. That implies further declines in domestic production. The supply overhang is likely to keep a lid on crude prices in coming weeks & months, though there may be a recovery later in the year as producers slash output & reduce investment in response to the collapse in prices.
U.S. oil prices climb by nearly 17% for the week as OPEC+ production cuts begin
The Apr rally is fading fast. In the next week, Apr economic data will be released & it should bring more bears to the markets. The big jobs report comes on Fri & that will not be pretty. US-China trade relations are being called into question as they are interwoven with coronavirus crisis. Just one of many issues with China is that it consumes a lot of pork & much of that comes from the US. The US is struggling with pork production currently. May is shaping up as a tough market for stocks.
Dow Jones Industrials
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