Dow climbed 131 (150 below session highs), advancers over decliners about 3-2 & NAZ jumped 74 to 10.1K. The MLP index lost 2+ to the 145s & the REIT index continued down 1 to 348. Junk bond funds were bid higher & there was a little selling in Treasuries. Oil slid back under 41 & gold rose 17 to 1783 , last seen in 2012 (more on both below).
AMJ (Alerian MLP Index tracking fund)
Companies are taking on debt so they can stay in business until the coronavirus pandemic ends but this isn't a precursor for a dangerous asset bubble forming, said St Louis Fed Pres James Bullard. “Bubbles are always an issue, and I do keep my eye on it, but I am just not seeing things that are on the same magnitude as what happened in the late 1990s, the so-called dot com bubble that blew up on us and then the much more serious housing bubble in the mid-2000s,” Bullard said. He said that firms were taking on debt to make sure they can “survive and thrive” in a time of low revenue. “So far so good, but we will certainly watch this closely,” he added. Bullard said the Fed’s bond-buying wasn't undermining capitalism by protecting zombie firms. Firms that were viable before the coronavirus are figuring out how to run their businesses in ways to keep everyone healthy. The pandemic was throwing a curve ball to a few businesses, but “most” firms will be up & running after Jul, he added. There is constant market chatter about bubbles forming as the Fed has cut its benchmark interst rate to near zero & purchased more than $2T in Treasury debt & agency mortgage backed securities to repair damaged financial markets.
Fed’s Bullard doesn’t see signs a damaging asset bubble is forming
Senior White House economic adviser Larry Kudlow said that China has "picked up its game" on trade, including addressing US concerns over the theft of intellectual property. "That's been our view," Kudlow said. "They've actually picked up their game. It's not just commodity buying, although that is picking up too. It's some of the structural issues, like IP theft." His comments came one day after Peter Navarro, Pres Trump's trade adviser, said that the trade deal between the world's 2 largest economies is "over." Trump, Kudlow & Navarro have walked back those comments, with the pres tweeting today that the trade deal is "fully intact." "If you're in the arena, if you're doing the media stuff a lot, you're going to let one or two get away," Kudlow said. "I think it's happened to all of us. I've known Peter Navarro a long time. He's a very smart guy. He's working hard for the president. I think he misspoke, and then I think he straightened it out. The trade deal is on, no question about it." In a later statement, Navarro said his comments "had been taken wildly out of context." "They had nothing at all to do with the Phase I trade deal, which continues in place," he said. "I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world." Relations between China & the US have iced over since the COVID-19 pandemic began earlier this year, with the 2 nations engaging in a vicious war of words. The feud over the virus has spilled into a broader fight over trade & technology.
Gold futures climbed toward their highest settlement in more than 7 years as low interest rates, US-China tension & a weakening $ provided a runway higher for bullion. White House trade adviser Peter Navarro said last evening that the trade agreement with China, signed in Jan, had been terminated. He later said his comments were “wildly” taken out of context & the phase-one pact remained in force. Pres Trump also tweeted that the agreement was intact. Aug added $15 (0.8%) to settle at $1782 an ounce, after rising 0.8% yesterday. Prices marked the highest settlement for a most-active contract since 2012. The flash US service sector purchasing managers index rose to a 4-month high of 46.7 in Jun from 37.5 in the previous month, IHS Markit said. The flash manufacturing sector purchasing managers index rose to a 4-month high of 49.6 from 39.8 in May. Though an improvement, the readings remain slightly below 50, which indicates worsening conditions. Gains for the yellow metal have come despite a rebound in equities amid the gradual restart of business activity in the wake of the coronavirus pandemic, but investors have expressed worry that the rebound for riskier assets has come too far too fast, with cautious investors viewing gold as a hedge against a reset of equity bullishness. Monetary stimulus from global central banks, including the Federal Reserve, & extremely low or negative interest rates for the foreseeable future, also helped to raise the appeal of precious metals that don't offer a coupon.
Oil prices gave up earlier gains to finish lower, with conflicting gov statements on the status of US.-China trade deal and a rise in COVID-19 cases feeding uncertainty over the outlook for energy demand. White House trade adviser Peter Navarro stoked confusion among investors overnight when he said that the trade agreement was “over” last evening. Trump then tweeted that the deal was “fully intact.” China is one of the world's biggest importers of oil and news of Sino-American relations can have a seismic impact on global asset prices. Meanwhile, new US coronavirus cases are showing an alarming increase with 28 states showing increasing trends this past week. West Texas Intermediate crude for Aug, on its first full trading day as a front-month contract, fell 36¢ (0.9%) to settle at $40.37 a barrel. Prices had traded as high as $41.63. Global benchmark Brent oil for Aug fell 45¢ (1%) to settle at $42.63 a barrel, following a 2.1% gain a day earlier. Yesterday, both contracts settled at their highest since early Mar. For the month so far, prices trade higher on signs that global economies are reviving after many businesses were shutdown around the world for a couple of months to combat the spread of the coronavirus pandemic.
Oil futures end lower as U.S.-China trade tensions, rise in COVID-19 cases feed demand uncertainty
The Dow is back where it was 3 weeks ago on the way up. Some call that consolidation. However in the last week, it's up 1K. That's an impressive gain. Meanwhile gold is at the upper end of its sideways trend, looking to break out to its record highs in the low 1900s. That's always a troubling sign when stocks & safe haven gold rally simultaneously.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 37.72 | -0.47 | -1.2% |
| GC=F | Gold | 1,725.80 | +20.70 | +1.2% |
The US added more than 31K new Covid-19 cases
as of yesterday as the 7-day average of daily new cases continues to grow & the number of hospitalizations also increases in states like
Arizona & Texas, according to
Johns Hopkins University. The nation's 7-day average of daily new Covid-19 cases
increased more than 30% compared with a week ago & cases are growing by 5% or more in 26
states across the US, including Arizona, Texas, Florida & Montana. Some of these states reported record-high single-day increases in coronavirus cases last week as they ramped up testing & moved forward with their phased reopening plans. Dr
Scott Gottlieb, former commissioner of the Food & Drug
Administration, said that states that are seeing major spikes in
new cases are heading into a “pivotal week” that could determine whether “they’re tipping over into exponential growth or not.” Texas,
Arizona & California are among the number of states mostly across the
American South & West that have seen a dramatic increase in cases
over the past few weeks as they started reopening their economies. As of yesterday, California is seeing a 7-day average of 4.1K daily new cases. This number has
risen by more than 32% since one week ago. While this figure is a
big uptick, it does not change the overall trend line as the 7-day
average of daily new cases has already been on the rise for the past 2
weeks. “The problem is with exponential growth everything looks sort of OK until all of a sudden it doesn’t,” Gottlieb said. Meanwhile 16 states & DC reported declines in cases including, New York, New Jersey & Connecticut. Coronavirus hospitalizations, like new cases & deaths, are an
important measure of the outbreak as it helps health officials gauge how
severe it may be. Hospitalizations from Covid-19 were rising in
16 states. Texas has been reporting days of record spikes in hospitalizations & daily increases in Covid-19 cases in
recent weeks. There are 3100 currently
hospitalized in Texas based on a 7-day moving average, which is a
43% increase compared with a week ago. Texas Gov Greg Abbott said that “additional measures are going to be necessary” if these metrics continue to climb at current rates into Jul. “The
way hospitalizations are spiking, the way that daily new cases are
spiking — surely the public can understand that if those spikes
continue, additional measures are going to be necessary to make sure we
maintain the health & safety of the people of the state of Texas,”
Abbott said in response to whether he would consider rolling back some
of the state's reopening guidelines.
Companies are taking on debt so they can stay in business until the coronavirus pandemic ends but this isn't a precursor for a dangerous asset bubble forming, said St Louis Fed Pres James Bullard. “Bubbles are always an issue, and I do keep my eye on it, but I am just not seeing things that are on the same magnitude as what happened in the late 1990s, the so-called dot com bubble that blew up on us and then the much more serious housing bubble in the mid-2000s,” Bullard said. He said that firms were taking on debt to make sure they can “survive and thrive” in a time of low revenue. “So far so good, but we will certainly watch this closely,” he added. Bullard said the Fed’s bond-buying wasn't undermining capitalism by protecting zombie firms. Firms that were viable before the coronavirus are figuring out how to run their businesses in ways to keep everyone healthy. The pandemic was throwing a curve ball to a few businesses, but “most” firms will be up & running after Jul, he added. There is constant market chatter about bubbles forming as the Fed has cut its benchmark interst rate to near zero & purchased more than $2T in Treasury debt & agency mortgage backed securities to repair damaged financial markets.
Fed’s Bullard doesn’t see signs a damaging asset bubble is forming
Senior White House economic adviser Larry Kudlow said that China has "picked up its game" on trade, including addressing US concerns over the theft of intellectual property. "That's been our view," Kudlow said. "They've actually picked up their game. It's not just commodity buying, although that is picking up too. It's some of the structural issues, like IP theft." His comments came one day after Peter Navarro, Pres Trump's trade adviser, said that the trade deal between the world's 2 largest economies is "over." Trump, Kudlow & Navarro have walked back those comments, with the pres tweeting today that the trade deal is "fully intact." "If you're in the arena, if you're doing the media stuff a lot, you're going to let one or two get away," Kudlow said. "I think it's happened to all of us. I've known Peter Navarro a long time. He's a very smart guy. He's working hard for the president. I think he misspoke, and then I think he straightened it out. The trade deal is on, no question about it." In a later statement, Navarro said his comments "had been taken wildly out of context." "They had nothing at all to do with the Phase I trade deal, which continues in place," he said. "I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world." Relations between China & the US have iced over since the COVID-19 pandemic began earlier this year, with the 2 nations engaging in a vicious war of words. The feud over the virus has spilled into a broader fight over trade & technology.
Kudlow to Varney: China has 'picked up its game' on trade, agreement is still on
Gold futures climbed toward their highest settlement in more than 7 years as low interest rates, US-China tension & a weakening $ provided a runway higher for bullion. White House trade adviser Peter Navarro said last evening that the trade agreement with China, signed in Jan, had been terminated. He later said his comments were “wildly” taken out of context & the phase-one pact remained in force. Pres Trump also tweeted that the agreement was intact. Aug added $15 (0.8%) to settle at $1782 an ounce, after rising 0.8% yesterday. Prices marked the highest settlement for a most-active contract since 2012. The flash US service sector purchasing managers index rose to a 4-month high of 46.7 in Jun from 37.5 in the previous month, IHS Markit said. The flash manufacturing sector purchasing managers index rose to a 4-month high of 49.6 from 39.8 in May. Though an improvement, the readings remain slightly below 50, which indicates worsening conditions. Gains for the yellow metal have come despite a rebound in equities amid the gradual restart of business activity in the wake of the coronavirus pandemic, but investors have expressed worry that the rebound for riskier assets has come too far too fast, with cautious investors viewing gold as a hedge against a reset of equity bullishness. Monetary stimulus from global central banks, including the Federal Reserve, & extremely low or negative interest rates for the foreseeable future, also helped to raise the appeal of precious metals that don't offer a coupon.
Gold prices climb to highest finish since 2012 on softer dollar, trade jitters
Oil prices gave up earlier gains to finish lower, with conflicting gov statements on the status of US.-China trade deal and a rise in COVID-19 cases feeding uncertainty over the outlook for energy demand. White House trade adviser Peter Navarro stoked confusion among investors overnight when he said that the trade agreement was “over” last evening. Trump then tweeted that the deal was “fully intact.” China is one of the world's biggest importers of oil and news of Sino-American relations can have a seismic impact on global asset prices. Meanwhile, new US coronavirus cases are showing an alarming increase with 28 states showing increasing trends this past week. West Texas Intermediate crude for Aug, on its first full trading day as a front-month contract, fell 36¢ (0.9%) to settle at $40.37 a barrel. Prices had traded as high as $41.63. Global benchmark Brent oil for Aug fell 45¢ (1%) to settle at $42.63 a barrel, following a 2.1% gain a day earlier. Yesterday, both contracts settled at their highest since early Mar. For the month so far, prices trade higher on signs that global economies are reviving after many businesses were shutdown around the world for a couple of months to combat the spread of the coronavirus pandemic.
Oil futures end lower as U.S.-China trade tensions, rise in COVID-19 cases feed demand uncertainty
The Dow is back where it was 3 weeks ago on the way up. Some call that consolidation. However in the last week, it's up 1K. That's an impressive gain. Meanwhile gold is at the upper end of its sideways trend, looking to break out to its record highs in the low 1900s. That's always a troubling sign when stocks & safe haven gold rally simultaneously.
Dow Jones Industrials
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