Dow dropped 170 with selling in the last 2 hours of trading & closing at session lows, decliners over advancers about 2-1 & NAZ crawled up 14. The MLP index fell 2+ to 149 & the REIT index lost 5+ to the 359s. Junk bond funds fluctuated & Treasuries rose in price. Oil pulled back to the 37s & gold was off 1 to 1735 (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)
China is giving the US “every indication” it plans on living up to a historic trade agreement earlier this year despite headwinds from the COVID-19 pandemic, according to Trade Representative Robert Lighthizer. Beijing has already purchased $10B, or more, of US farm goods after last week's $500M soybean purchase. The trade agreement calls on Beijing to buy $40-50B of US agriculture products over the next 2 years. “The way I keep track of things is I have 2017, which is like their best year ever, and then where they are now in purchases on a monthly basis versus that,” Lighthizer told the House Ways & Means Committee. Lighthizer, who was responding to a question about Beijing's commitments to its agreement to buy US cotton, said purchases were already north of $1B, which is “way above” where they were in 2017. While noting that there is still a “fair amount” of cotton purchases to go, Lighthizer said the purchases to date are a “particularly important” indicator that Beijing remains committed to the trade deal as China's apparel industry has suffered amid the pandemic. Lighthizer added that although the trade deal didn't start until Feb 14 & exclusions didn't begin until Mar, he expects China to “make their commitments” to the US for the calendar year. The trade pact that the 2 countries reached in Jan called on Beijing to purchase an additional $200B of American goods over the next 2 years, in addition to making reforms to halt intellectual property theft & currency manipulation and promote cooperation in financial services. Aside from the agricultural purchases, Beijing must buy an additional $40B in services, $50B in energy & up to $80B worth of manufacturing. In return, the US reduced tariffs imposed by Pres Trump on some goods, but kept duties on $375B worth of merchandise. That's a significant number of levies, he noted, that reflects the desire to rebalance trade as well as the intertwined & interdependent relationship the US & China now have. "Do I think that you can sit down and decouple the United States economy from the Chinese economy now?" Lighthizer asked. "That was a policy option years ago, but I don't think it's a policy or reasonable policy option at this point. I think you will see supply chains come back as a result of U.S. policy." “I expect them to live up to the agreement,” Lighthizer said. “They have indicated they will.”
A coronavirus model once cited by the White House now projects more than 200K Americans could die of COVID-19 by Oct 1, as new cases reach record highs in parts of the country as restrictions put in place to contain the virus are lifted. The revised forecast from Institute for Health Metrics & Evaluation (IHME) at the University of Washington is an increase of 30K deaths since last week's projection. According to the latest model from IHME, deaths from the coronavirus in the US could reach reach 171K-270K, with a likely estimate in between of 201K. The number of daily deaths is expected to rise again in Sep after reaching a plateau in Jun. The institute also projects an increase in the number of hospital beds & ventilators needed starting in Sep. At least 117K have died from the coronavirus in the US & more than 2.1M have been infected, according to data from Johns Hopkins University. “We’re now able to look ahead and see where states need to begin planning for a second wave of Covid-19,” said IHME Director Dr Christopher Murray. “We hope to see our model proven wrong by the swift actions governments and individuals take to reduce transmission.” The research institute predicts higher mobility in at least 20 states by Oct, which increases the risks of transmission & widespread resurgence. As states across the country move further along their reopening guidelines & relax social-distancing measures, they are beginning to see spikes in new cases & hospitalizations. “If the U.S. is unable to check the growth in September, we could be facing worsening trends in October, November, and the following months if the pandemic, as we expect, follows pneumonia seasonality,” Dr. Murray added. On Tues, Arizona, Florida, Oklahoma, Oregon & Texas all reported record increases in new cases after reaching all-time highs last week.
Coronavirus deaths in U.S. projected to surpass 200,000 by October
Gold prices retreated to post a modest loss as the $ strengthened & as stocks across the globe mostly advanced, suggesting some waning appetite for bullion. gold trading of the past several days has been erratic, with the commodity sometimes trading out of sync with its normal correlations with equities & bond yields, which have both been rising over the week—a scenario that should create a headwind for precious metals. Aug gold fell 1 to settle at $1735 an ounce, after the metal rose 0.5% yesterday, notching its first gain in 3 sessions. Gold futures have been trading in a $1670-1770 range for about 2 months despite a sharp fall in the $ against major currencies in that time. For the week thus far, gold is about even.
Oil futures ended lower, but off the days lows as the US gov reported that domestic crude supplies edged higher in the latest week, while oil stockpiles at the nation's storage hub & inventories of gasoline & distillates declined. The Energy Information Administration (EIA) reported that US crude inventories rose by 1.2M barrels last week. That compared with a forecast for a decline of 3.5M barrels. The American Petroleum Institute on yesterday, however, reported a rise of nearly 3.9M barrels. Traders also parsed a monthly report released yesterday from OPEC, which forecasts global oil demand will decline in H2, but at a much slower pace than in H1, which was marked by lockdowns of businesses to limit the spread of COVID-19. Against the backdrop, West Texas Intermediate crude for Jul, the US benchmark, fell 42¢ (1.1%) to settle at $37.96 a barrel. It was trading at $37.52 before the supply data. Global benchmark Brent oil for Aug lost 25¢ (0.6%) at $40.71 a barrel following a 3.1% rise in the previous session. EIA data also showed crude stocks at the Cushing, Okla., storage hub fell 2.6M barrels for the week, but weekly stocks in the Strategic Petroleum Reserve climbed by 1.7M barrels.
Oil prices pare losses as U.S. crude supplies edge higher and product stocks decline
The projection for the virus above is very disturbing. However that contrasts with the NY story, the epicenter for the virus 2 months ago. Its key metrics have fallen over 96% from the peaks while other states are experiencing increases. Fewer than 1500 in NY were hospitalized with the virus yesterday & less than 1% of the nearly 60K people tested for the illness were positive. There were 49 new hospitaliztions for coronavirus (a leading indicator) & 17 deaths (a lagging indicator). It's difficult to understand how NY has had succes in controlling this disease while other states are seeing increases. But even with their difficulties in controlling the virus, the numbers affected are small compared to their populations. Florida reported 2783 new COVID-19 cases yesterday, while Texas reported 4098 cases & Arizona reported 2392. Hopefully the increases will not grow significantly. Investors are watching these trends.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
China is giving the US “every indication” it plans on living up to a historic trade agreement earlier this year despite headwinds from the COVID-19 pandemic, according to Trade Representative Robert Lighthizer. Beijing has already purchased $10B, or more, of US farm goods after last week's $500M soybean purchase. The trade agreement calls on Beijing to buy $40-50B of US agriculture products over the next 2 years. “The way I keep track of things is I have 2017, which is like their best year ever, and then where they are now in purchases on a monthly basis versus that,” Lighthizer told the House Ways & Means Committee. Lighthizer, who was responding to a question about Beijing's commitments to its agreement to buy US cotton, said purchases were already north of $1B, which is “way above” where they were in 2017. While noting that there is still a “fair amount” of cotton purchases to go, Lighthizer said the purchases to date are a “particularly important” indicator that Beijing remains committed to the trade deal as China's apparel industry has suffered amid the pandemic. Lighthizer added that although the trade deal didn't start until Feb 14 & exclusions didn't begin until Mar, he expects China to “make their commitments” to the US for the calendar year. The trade pact that the 2 countries reached in Jan called on Beijing to purchase an additional $200B of American goods over the next 2 years, in addition to making reforms to halt intellectual property theft & currency manipulation and promote cooperation in financial services. Aside from the agricultural purchases, Beijing must buy an additional $40B in services, $50B in energy & up to $80B worth of manufacturing. In return, the US reduced tariffs imposed by Pres Trump on some goods, but kept duties on $375B worth of merchandise. That's a significant number of levies, he noted, that reflects the desire to rebalance trade as well as the intertwined & interdependent relationship the US & China now have. "Do I think that you can sit down and decouple the United States economy from the Chinese economy now?" Lighthizer asked. "That was a policy option years ago, but I don't think it's a policy or reasonable policy option at this point. I think you will see supply chains come back as a result of U.S. policy." “I expect them to live up to the agreement,” Lighthizer said. “They have indicated they will.”
Key crop purchase shows China living up to trade deal: Lighthizer
A coronavirus model once cited by the White House now projects more than 200K Americans could die of COVID-19 by Oct 1, as new cases reach record highs in parts of the country as restrictions put in place to contain the virus are lifted. The revised forecast from Institute for Health Metrics & Evaluation (IHME) at the University of Washington is an increase of 30K deaths since last week's projection. According to the latest model from IHME, deaths from the coronavirus in the US could reach reach 171K-270K, with a likely estimate in between of 201K. The number of daily deaths is expected to rise again in Sep after reaching a plateau in Jun. The institute also projects an increase in the number of hospital beds & ventilators needed starting in Sep. At least 117K have died from the coronavirus in the US & more than 2.1M have been infected, according to data from Johns Hopkins University. “We’re now able to look ahead and see where states need to begin planning for a second wave of Covid-19,” said IHME Director Dr Christopher Murray. “We hope to see our model proven wrong by the swift actions governments and individuals take to reduce transmission.” The research institute predicts higher mobility in at least 20 states by Oct, which increases the risks of transmission & widespread resurgence. As states across the country move further along their reopening guidelines & relax social-distancing measures, they are beginning to see spikes in new cases & hospitalizations. “If the U.S. is unable to check the growth in September, we could be facing worsening trends in October, November, and the following months if the pandemic, as we expect, follows pneumonia seasonality,” Dr. Murray added. On Tues, Arizona, Florida, Oklahoma, Oregon & Texas all reported record increases in new cases after reaching all-time highs last week.
Coronavirus deaths in U.S. projected to surpass 200,000 by October
Gold prices retreated to post a modest loss as the $ strengthened & as stocks across the globe mostly advanced, suggesting some waning appetite for bullion. gold trading of the past several days has been erratic, with the commodity sometimes trading out of sync with its normal correlations with equities & bond yields, which have both been rising over the week—a scenario that should create a headwind for precious metals. Aug gold fell 1 to settle at $1735 an ounce, after the metal rose 0.5% yesterday, notching its first gain in 3 sessions. Gold futures have been trading in a $1670-1770 range for about 2 months despite a sharp fall in the $ against major currencies in that time. For the week thus far, gold is about even.
Gold ends with a loss as the U.S. dollar strengthens, global stocks rise
Oil futures ended lower, but off the days lows as the US gov reported that domestic crude supplies edged higher in the latest week, while oil stockpiles at the nation's storage hub & inventories of gasoline & distillates declined. The Energy Information Administration (EIA) reported that US crude inventories rose by 1.2M barrels last week. That compared with a forecast for a decline of 3.5M barrels. The American Petroleum Institute on yesterday, however, reported a rise of nearly 3.9M barrels. Traders also parsed a monthly report released yesterday from OPEC, which forecasts global oil demand will decline in H2, but at a much slower pace than in H1, which was marked by lockdowns of businesses to limit the spread of COVID-19. Against the backdrop, West Texas Intermediate crude for Jul, the US benchmark, fell 42¢ (1.1%) to settle at $37.96 a barrel. It was trading at $37.52 before the supply data. Global benchmark Brent oil for Aug lost 25¢ (0.6%) at $40.71 a barrel following a 3.1% rise in the previous session. EIA data also showed crude stocks at the Cushing, Okla., storage hub fell 2.6M barrels for the week, but weekly stocks in the Strategic Petroleum Reserve climbed by 1.7M barrels.
Oil prices pare losses as U.S. crude supplies edge higher and product stocks decline
The projection for the virus above is very disturbing. However that contrasts with the NY story, the epicenter for the virus 2 months ago. Its key metrics have fallen over 96% from the peaks while other states are experiencing increases. Fewer than 1500 in NY were hospitalized with the virus yesterday & less than 1% of the nearly 60K people tested for the illness were positive. There were 49 new hospitaliztions for coronavirus (a leading indicator) & 17 deaths (a lagging indicator). It's difficult to understand how NY has had succes in controlling this disease while other states are seeing increases. But even with their difficulties in controlling the virus, the numbers affected are small compared to their populations. Florida reported 2783 new COVID-19 cases yesterday, while Texas reported 4098 cases & Arizona reported 2392. Hopefully the increases will not grow significantly. Investors are watching these trends.
Dow Jones Industrials
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