Dow jumped up 461 closing at the highs, advancers over decliners 4-1 & NAZ shot up 110 to a new record. The MLP index rose 6+ to 170 & the REIT index went up again, up 7+ to 378. Junk bond funds were flattish & Treasuries dropped in price. Oil was off 1+ to the 38s & gold jumped 22 to 1705 (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 budget deficit soared to $1.9T for the first 8 months of the fiscal year, as federal revenues plummeted & spending surged to help blunt the economic pain of the coronavirus pandemic. In May, the gap between what the gov spent & what it collected hit $424B, more than twice what it was one year ago, the Congressional Budget Office said. The nonpartisan agency estimated that revenue in May totaled $175B -- down $58B from last year, the direct result of a decline in wages & overall economic activity. Federal spending climbed 53% last month to $598B, largely because of the massive gov response to the virus outbreak & the related economic lockdown. "That increase stems from the economic disruption caused by the 2020 coronavirus pandemic and from the federal government’s response to it," the CBO said. The deficit for fiscal 2020 is expected to hit $3.8T, a record, according to a projection from the Committee for a Responsible Federal Budget. The current record for a fiscal year deficit is $1.41T, set in 2009. So far, Congress has passed 4 massive stimulus packages totaling nearly $3T to blunt the economic pain from the virus outbreak. Dems & Reps widely agree that another aid package is necessary, but are divided about what should be included in the legislation. Some options currently under consideration at the White House include a payroll tax cut, liability protections for businesses reopening during the outbreak, tax deductions or write-offs for individuals who take a vacation during a defined period of time & a back-to-work bonus for unemployed Americans returning to their jobs.
China's exports & imports fell in May as the coronavirus & trade tensions with the US weighed on demand at home & abroad. Exports fell 3.3% compared to a year earlier to $207B & imports dropped 16.7% to $144B, the Chinese customs agency said. The plunge in imports drove the country's trade surplus up sharply to $63B. The surplus with the US reached $28B & climbed $18B with the EU. The fall in exports came after a surprise 3.5% rise the previous month. The forecast expected the decline, attributing Apr's rise to orders placed before virus restrictions hit overseas economies, & predicted that American & European customers would also cancel other orders. Chinese exports to the US totaled $37B, about the same as the $35.5B in exports to the EU. However, its imports from the EU were $17B, nearly twice the $9B from the US.
Assistant to the Pres for trade & manufacturing policy Peter Navarro said that the economic recovery from the coronavirus pandemic is "in full swing" outside of urban areas. Navarro specifically touted the progress that he saw during Pres Trump's visit ti Maine on Fri. "You saw jobs created from Bangor to Guilford to Pittsfield all the way over to the Bath Iron Works and Brunswick," Navarro said. "This is what happens when you get away from our major metropolitan areas into the rest of the country." He noted that if you compare the progress in Maine to DC, it's a "tale of two cities." "D.C. right now is a burned-out shell and the second-worst mayor in America, Muriel Bowser, is largely responsible for that," Navarro said. "She waited till all 50 states to reopen this place and it's not open." Bowser has been in a feud with Pres Trump since pushing back on his decision to deploy National Guard & active duty military to the DC area. Navarro said the rioting & looting in major metropolitan areas last week & the week before impacted almost 2M jobs, hindering a quick economic recovery from the pandemic. "When you have an arsonist burn out a small business, that's a hundred jobs that are destroyed, not just inside the enterprise, but along the supply chain," he added. He argued that these cities' officials should be focused on reopening instead of "turning our major metropolitan areas into theme parks for arsonists and looters." While he is confident in Pres Trump's ability to rebuild the economy, he stressed the importance of getting major metropolitan areas back to work. "This president built this economy up in three and a half years, the most beautiful economy in history," he said. "We can do it again, but we're going to need our metropolitan areas to get back to work, and when I look around at this city with Muriel Bowser, it's not happening anytime soon."
The worst US downturn since the depression is now officially a recession, according to the National Bureau of Economic Research (NBER). Though it seemed a foregone conclusion, the NBER, the official arbiter of recessions, made the declaration as the nation tries to recover from the coronavirus pandemic. “The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions,” the NBER's Business Cycle Dating Committee said. “Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.” In making the declaration, the committee determined that a “clear peak in monthly economic activity” occurred in Feb. The peak in quarterly activity happened in Q4-2019. As a rule of thumb, recessions are thought to entail 2 consecutive qtrs of negative GDP growth. However, that isn't always the case, & it's generally the NBER's decision to determine recessions. The committee noted that “a significant decline in economic activity spread across the economy, normally visible in production, employment & other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough.” US GDP fell 5% in Q1 & is likely to post the worst decline in history for Q2 — possibly more than 50%. The recession brings to an end the longest expansion in US history, which the NBER dated as lasting 128 months, nearly 11 years. That growth seemed poised to continue until the declaration of the coronavirus as a pandemic a move that triggered 95% of the US economy being put into shutdown & sent the unemployment rate, which had been at a 50-year low, soaring to 14.7%, its worst in post-World War II history.
Gold prices rose off a 2-month low, recouping about ½ of what they lost in the previous session, as investors wagered that stimulus from central banks will remain in place for the foreseeable future, bolstering the case for bullion, despite some strength in the US stock market. The moves higher for gold come after the commodity closed Fri's trade lower & notched a sharp weekly slide, following an unexpected rise in US jobs for May & a drop in the nation's unemployment rate to 13.3% from 14.7%, pushing prices for the haven metal to their lowest finish since Apr. Aug gold climbed $22 (1.3%) to settle at $1705 an ounce, after finishing last week's trade at the lowest level since early Apr & notching a weekly decline of 3.9% based on the most-active contracts. On Fri, prices lost 2.6%.
Gold prices end at perch above $1,700 as investors bet on continued central-bank stimulus
Crude-oil futures turned lower as investors focused on the prospect of increased output from some countries, even after OPEC & allied nations agreed Sat to extend a production cut of nearly 10M barrels of oil a day thru the end of Jul. Overall compliance to the production-cut deal, which was a sticking point headed into the gathering, has been a consistent worry. Gulf OPEC producers, which pledged voluntary production cuts of 1.18M barrels per day that began in Jun, have no plans to extend those reductions beyond this month. Those were in addition to the agreement between OPEC & their allies (OPEC+). A fear of a ramp-up in output from North American shale-oil producers as prices of crude climb, a refusal by Mexico to adhere to production cuts & a report that Libya has restarted production at its largest oil field, have also undercut optimism about an extension of the historic output-cut agreement. The combination of Mexico & Libya could contribute an additional 400K barrels a day of crude. West Texas Intermediate crude for Jul lost $1.36 (3.4%) to settle at $38.19 a barrel after trading as high as $40.44. On Fri, the front-month WTI contract finished with a weekly gain of 11.4%. Global benchmark Brent oil for Aug, meanwhile, retreated $1.50 (3.6%) to $40.80 a barrel. Prices for the front-month contract had touched an intraday high of $43.41, after posting a weekly gain of 11.8% on Fri. Both grades of oil finished Fri at their highest levels since Mar 6 & booked a 6th consecutive weekly gain in anticipation of the pact from the major oil-producing giants. OPEC+ concluded a videoconference meeting on Sat, adopting measures aimed at cutting the excess production depressing prices as global aviation remains largely grounded due to the coronavirus pandemic. The curbed output represents some 10% of the world's overall supply.
While the bulls are still in command of a rising stock market, nervous investors are buying gold. NAZ soared to a new record & the Dow is where it was late last year & needs just 2K to set a new record. More curious, the current rally occurs while the economy is in a recession. Go figgah!!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The US budget deficit soared to $1.9T for the first 8 months of the fiscal year, as federal revenues plummeted & spending surged to help blunt the economic pain of the coronavirus pandemic. In May, the gap between what the gov spent & what it collected hit $424B, more than twice what it was one year ago, the Congressional Budget Office said. The nonpartisan agency estimated that revenue in May totaled $175B -- down $58B from last year, the direct result of a decline in wages & overall economic activity. Federal spending climbed 53% last month to $598B, largely because of the massive gov response to the virus outbreak & the related economic lockdown. "That increase stems from the economic disruption caused by the 2020 coronavirus pandemic and from the federal government’s response to it," the CBO said. The deficit for fiscal 2020 is expected to hit $3.8T, a record, according to a projection from the Committee for a Responsible Federal Budget. The current record for a fiscal year deficit is $1.41T, set in 2009. So far, Congress has passed 4 massive stimulus packages totaling nearly $3T to blunt the economic pain from the virus outbreak. Dems & Reps widely agree that another aid package is necessary, but are divided about what should be included in the legislation. Some options currently under consideration at the White House include a payroll tax cut, liability protections for businesses reopening during the outbreak, tax deductions or write-offs for individuals who take a vacation during a defined period of time & a back-to-work bonus for unemployed Americans returning to their jobs.
US deficit soars to $1.9T in 8 months
China's exports & imports fell in May as the coronavirus & trade tensions with the US weighed on demand at home & abroad. Exports fell 3.3% compared to a year earlier to $207B & imports dropped 16.7% to $144B, the Chinese customs agency said. The plunge in imports drove the country's trade surplus up sharply to $63B. The surplus with the US reached $28B & climbed $18B with the EU. The fall in exports came after a surprise 3.5% rise the previous month. The forecast expected the decline, attributing Apr's rise to orders placed before virus restrictions hit overseas economies, & predicted that American & European customers would also cancel other orders. Chinese exports to the US totaled $37B, about the same as the $35.5B in exports to the EU. However, its imports from the EU were $17B, nearly twice the $9B from the US.
China's exports and imports fall amid coronavirus woes
Assistant to the Pres for trade & manufacturing policy Peter Navarro said that the economic recovery from the coronavirus pandemic is "in full swing" outside of urban areas. Navarro specifically touted the progress that he saw during Pres Trump's visit ti Maine on Fri. "You saw jobs created from Bangor to Guilford to Pittsfield all the way over to the Bath Iron Works and Brunswick," Navarro said. "This is what happens when you get away from our major metropolitan areas into the rest of the country." He noted that if you compare the progress in Maine to DC, it's a "tale of two cities." "D.C. right now is a burned-out shell and the second-worst mayor in America, Muriel Bowser, is largely responsible for that," Navarro said. "She waited till all 50 states to reopen this place and it's not open." Bowser has been in a feud with Pres Trump since pushing back on his decision to deploy National Guard & active duty military to the DC area. Navarro said the rioting & looting in major metropolitan areas last week & the week before impacted almost 2M jobs, hindering a quick economic recovery from the pandemic. "When you have an arsonist burn out a small business, that's a hundred jobs that are destroyed, not just inside the enterprise, but along the supply chain," he added. He argued that these cities' officials should be focused on reopening instead of "turning our major metropolitan areas into theme parks for arsonists and looters." While he is confident in Pres Trump's ability to rebuild the economy, he stressed the importance of getting major metropolitan areas back to work. "This president built this economy up in three and a half years, the most beautiful economy in history," he said. "We can do it again, but we're going to need our metropolitan areas to get back to work, and when I look around at this city with Muriel Bowser, it's not happening anytime soon."
Coronavirus recovery 'in full swing' outside urban areas: Navarro
The worst US downturn since the depression is now officially a recession, according to the National Bureau of Economic Research (NBER). Though it seemed a foregone conclusion, the NBER, the official arbiter of recessions, made the declaration as the nation tries to recover from the coronavirus pandemic. “The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions,” the NBER's Business Cycle Dating Committee said. “Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.” In making the declaration, the committee determined that a “clear peak in monthly economic activity” occurred in Feb. The peak in quarterly activity happened in Q4-2019. As a rule of thumb, recessions are thought to entail 2 consecutive qtrs of negative GDP growth. However, that isn't always the case, & it's generally the NBER's decision to determine recessions. The committee noted that “a significant decline in economic activity spread across the economy, normally visible in production, employment & other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough.” US GDP fell 5% in Q1 & is likely to post the worst decline in history for Q2 — possibly more than 50%. The recession brings to an end the longest expansion in US history, which the NBER dated as lasting 128 months, nearly 11 years. That growth seemed poised to continue until the declaration of the coronavirus as a pandemic a move that triggered 95% of the US economy being put into shutdown & sent the unemployment rate, which had been at a 50-year low, soaring to 14.7%, its worst in post-World War II history.
The U.S. entered a recession in February, according to the official economic arbiter
Gold prices rose off a 2-month low, recouping about ½ of what they lost in the previous session, as investors wagered that stimulus from central banks will remain in place for the foreseeable future, bolstering the case for bullion, despite some strength in the US stock market. The moves higher for gold come after the commodity closed Fri's trade lower & notched a sharp weekly slide, following an unexpected rise in US jobs for May & a drop in the nation's unemployment rate to 13.3% from 14.7%, pushing prices for the haven metal to their lowest finish since Apr. Aug gold climbed $22 (1.3%) to settle at $1705 an ounce, after finishing last week's trade at the lowest level since early Apr & notching a weekly decline of 3.9% based on the most-active contracts. On Fri, prices lost 2.6%.
Gold prices end at perch above $1,700 as investors bet on continued central-bank stimulus
Crude-oil futures turned lower as investors focused on the prospect of increased output from some countries, even after OPEC & allied nations agreed Sat to extend a production cut of nearly 10M barrels of oil a day thru the end of Jul. Overall compliance to the production-cut deal, which was a sticking point headed into the gathering, has been a consistent worry. Gulf OPEC producers, which pledged voluntary production cuts of 1.18M barrels per day that began in Jun, have no plans to extend those reductions beyond this month. Those were in addition to the agreement between OPEC & their allies (OPEC+). A fear of a ramp-up in output from North American shale-oil producers as prices of crude climb, a refusal by Mexico to adhere to production cuts & a report that Libya has restarted production at its largest oil field, have also undercut optimism about an extension of the historic output-cut agreement. The combination of Mexico & Libya could contribute an additional 400K barrels a day of crude. West Texas Intermediate crude for Jul lost $1.36 (3.4%) to settle at $38.19 a barrel after trading as high as $40.44. On Fri, the front-month WTI contract finished with a weekly gain of 11.4%. Global benchmark Brent oil for Aug, meanwhile, retreated $1.50 (3.6%) to $40.80 a barrel. Prices for the front-month contract had touched an intraday high of $43.41, after posting a weekly gain of 11.8% on Fri. Both grades of oil finished Fri at their highest levels since Mar 6 & booked a 6th consecutive weekly gain in anticipation of the pact from the major oil-producing giants. OPEC+ concluded a videoconference meeting on Sat, adopting measures aimed at cutting the excess production depressing prices as global aviation remains largely grounded due to the coronavirus pandemic. The curbed output represents some 10% of the world's overall supply.
Oil ends lower as extension of OPEC+ output cuts fail to stem oversupply worries
While the bulls are still in command of a rising stock market, nervous investors are buying gold. NAZ soared to a new record & the Dow is where it was late last year & needs just 2K to set a new record. More curious, the current rally occurs while the economy is in a recession. Go figgah!!
Dow Jones Industrials
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