Dow fell 77 with sellloing into the close, advancers over decliners 5-4 & NAZ went up 95 (good enough for a new record. The MLP index fell 1 to 132 & the REIT index jumped 9 to 355. Junk bond funds were little changed & Treasuries declined in price. Oil continued higher in the 39s & gold pulled back 19 to 1781 (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 construction spending fell for a 2nd month in May with both home building & nonresidential activity declining. The Commerce Dept said May activity dropped by 2.1% following an even larger 3.5% fall in Apr as the construction industry was rocked by the shutdowns triggered by the coronavirus pandemic. Home building dropped 4% with construction of single-family homes down 8.5%. Nonresidential construction dropped 2.4% with office building & the category that covers shopping centers both down. Spending on gov construction projects rose 1.2% in May.
The Federal Reserve on released the minutes from its Jun 9-10 meeting, during which it held interest rates steady & said it expects loose policy to prevail until the economy gets back to normal. Officials also had an in-depth discussion about capping bond yields & strengthening its guidance about where policy will be set in the future. Central bankers on the FOMC voted to hold their benchmark short-term borrowing at 0%-0.25%. That’s where the Fed took the rate in mid-Mar as it sought to provide support for an economy reeling from the coronavirus. Officials at the meeting noted that “the current stance of monetary policy remained appropriate” but said the Fed should strengthen the guidance it provides to markets. The minutes noted a need for “highly accommodative monetary policy for some time” & said the conditions for that should be spelled out clearly. “In particular, most participants commented that the Committee should communicate a more explicit form of forward guidance for the path of the federal funds rate & provide more clarity regarding purchases of Treasury securities & agency [mortgage-backed securities] as more information about the trajectory of the economy becomes available,” the minutes said. Members at the meeting indicate that they would prefer future policy moves tied to inflation, while just “a couple” said they would rather unemployment be the guide. In addition to the rate move, the committee also released its expectations for various data points. The median GDP projection for 2020 was a contraction of 6.5%, followed by a 5% increase in 2021 & 3.5% the following year. “Participants commented that there remained an extraordinary amount of uncertainty and considerable risks to the economic outlook,” the minutes stated. Despite the comparatively bright outlook for 2020, officials noted that the fiscal help Congress provided for households, businesses and state and local govenrnments “might prove to be insufficient.”
Federal Reserve releases minutes for June meeting
The Arizona Dept of Health reported nearly 4900 new coronavirus cases & 88 new deaths, a record single-day jump in both grim markers ahead of VP Mike Pence's visit to the state later in the day. The coronavirus has infected a total of 84K killed 1720 in Arizona. The state's previous single-day high in the number of additional cases was 3593 on Jun 23. While an increase in Covid-19 testing & a potential lag in data reporting of the daily case numbers could account for the rise in positive cases, the number of hospitalizations in Arizona have steadily increased over the past weeks. Arizona reported 2516 currently hospitalized on a 7-day average, a 35% increase compared with a week ago. Arizona is nearing max capacity of intensive care unit beds with 1495 (89%) of the state's ICU beds in use. The number of ventilators being used at hospitals also reached a record high of 795, according to the state's dept of health. Arizona Gov Doug Ducey rolled back the state’s reopening plans & closed all bars, gyms, movie theaters & water parks. He said Arizona will try to restart the businesses in 30 days. “We can’t be under any illusion that this virus is going to go away on its own. Our expectation is that next week our numbers will be worse. It will take several weeks for the mitigation that we have put in place and are putting in place to take effect,” Ducey added.
The coronavirus outbreak across the US is getting worse & could threaten New York's recovery after stringent lockdowns across the state helped suppress the fast-spreading infection, New York Gov. Andrew Cuomo said. “We have to be careful. We have dark clouds on the horizon and we’ve made tremendous progress,” Cuomo added. “We’ve been through Hell and back, but this is not over and this can still rear its ugly head anywhere in this nation and in this state.” Cuomo pointed to states like Texas, Florida & Arizona, which have all seen new cases & hospitalizations surge in recent days, as places that reopened too fast & now have to close again. “Now they’re all singing a different tune,” Cuomo said. “Now they’re all starting to say, ‘We better take this seriously. We better start wearing masks.’ They’re going backwards on their reopening plan.” He cited comments from White House health advisor Dr Anthony Fauci, who projected that the US could surpass 100K new infections per day, as a sign that current reopenings have exacerbated the outbreak. Cuomo criticized local leaders for not enforcing compliance of the state's face covering requirements & social distancing measures. “Citizen compliance is slipping. That is a fact,” Cuomo said. “Look at pictures. Look at any street in Manhattan, go to the East Village, go to the West Side, go to Brooklyn, go to Queens, go to the Bronx, citizen compliance is slipping.”
Cuomo warns of resurgence of coronavirus: ‘We have dark clouds on the horizon’
GM, Fiat Chrysler U.S. auto sales tank in second quarter as coronavirus saps demand
Macy's (M) booked a $3.18B Q1 writedown as the COVID-19 pandemic shuttered stores & curtailed business. The department store chain took a pre-tax, non-cash goodwill impairment charge of $3.1B & a long-lived asset impairment charge of $80M. As a result, Macy's lost $3.58B ($11.53 a share) as revenue plunged 45% from a year ago to $3.02B. On an adjusted basis, the loss was $630M ($2.03 a share). The adjusted results were in-line with the updated preliminary results the company released last month. “The first quarter of 2020 was challenging for the country, the industry and Macy’s,” CEO Jeff Gennette said. “While our stores are re-opened, we expect that the COVID-19 pandemic will continue to impact the country for the remainder of the year,” he added. “We do not anticipate another full shutdown, but we are staying flexible and are prepared to address increases in cases on a regional level.” Macy's has reopened almost all of its stores, which the company says have performed better than anticipated in May & June. Digital sales have been strong across its markets. The stock fell 29¢.
If you would like to learn more about Macy's, click on this link:
club.ino.com/trend/analysis/stock/M?a_aid=CD3289&a_bid=6ae5b6f7
Gold futures settled with a loss after topping $1800 & marking the highest finish since in nearly 9 years a day earlier, as uncertainty about the economic recovery from the coronavirus pandemic underpinned demand for the safe haven. Concerns about the spread of COVID-19 & stimulus from govs & global central banks to limit the harmful impact of the contagion is expected to foster an environment ripe for the rise of gold to further records, gold bulls predict. Aug gold lost $20 (1.1%) to settle at $1779 an ounce after trading as high as $1,807 overnight. A day earlier, it notched the highest finish, at $1800, for a most-active contract since Sep 2011. In Aug 2011, gold futures settled at a record $1891. In H1 (just completed), gold futures based on the most-active contracts rose just over 18%. For Q2, the commodity gained nearly 13% & it climbed almost 3% in the month of Jun. After the settlement for futures prices, an account of the Federal Reserve’s most recent monetary-policy meeting revealed that officials noted that the economy is likely to need support from highly accommodative monetary policy for “some time” & that it's important in coming months to provide”greater clarity” regarding the path for interest rates. In electronic trading shortly after the meeting minutes were released, Aug gold was little changed.
Oil futures ended higher after a gov report showed the largest weekly decline in domestic crude inventories so far this year. The Energy Information Administration (EIA) reported that US crude inventories fell by 7.2M barrels last week. That followed 3 consecutive weeks of increases. The forecast forecast called for a supply decline of 2.7M barrels, while the American Petroleum Institute on yesterday reported a fall of 8.2M barrels. The EIA data also showed crude stocks at the Cushing, Okla., storage hub edged down by about 200K barrels for the week. The decrease in US supplies has injected some optimism in crude markets, which have been whipsawed by anxieties around the growing spread of COVID-19 & the impact of the contagion on crude demand. West Texas Intermediate crude for Aug rose 55¢ (1.4%) to settle at $39.82 a barrel. In H1, prices based on the front-month contracts, were nearly 36% lower. For Q2, however, prices rose nearly 92% from depressed levels. Meanwhile, global benchmark Brent oil for Sep picked up 76¢ (1.8%) to $42.03. Front-month contract prices fell by 38% in H1, but were up nearly 81% in Q2.
Oil futures end higher as U.S. supply marks biggest weekly decline of the year
The economic news was less not cheery & investors wavered today. The Dow remained near break-even after it pulled back from the brief rally at the opening. However, tech stocks are in strong demand, along with gold. That's a strange combination. The virus does not want to admit defeat & finds new ways to make its presence known while the economy struggles to return to its winning ways. The hopes for a V-shaped recovery are all but dashed. It looks like the economy will turn in a mediocre performance in H2 with the unemployment rate expected to be 9½% by year end. That has been a peak rate during last recessions. Gold continues to attract nervous investors.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
US construction spending fell for a 2nd month in May with both home building & nonresidential activity declining. The Commerce Dept said May activity dropped by 2.1% following an even larger 3.5% fall in Apr as the construction industry was rocked by the shutdowns triggered by the coronavirus pandemic. Home building dropped 4% with construction of single-family homes down 8.5%. Nonresidential construction dropped 2.4% with office building & the category that covers shopping centers both down. Spending on gov construction projects rose 1.2% in May.
US construction spending fell 2.1% in May
The Federal Reserve on released the minutes from its Jun 9-10 meeting, during which it held interest rates steady & said it expects loose policy to prevail until the economy gets back to normal. Officials also had an in-depth discussion about capping bond yields & strengthening its guidance about where policy will be set in the future. Central bankers on the FOMC voted to hold their benchmark short-term borrowing at 0%-0.25%. That’s where the Fed took the rate in mid-Mar as it sought to provide support for an economy reeling from the coronavirus. Officials at the meeting noted that “the current stance of monetary policy remained appropriate” but said the Fed should strengthen the guidance it provides to markets. The minutes noted a need for “highly accommodative monetary policy for some time” & said the conditions for that should be spelled out clearly. “In particular, most participants commented that the Committee should communicate a more explicit form of forward guidance for the path of the federal funds rate & provide more clarity regarding purchases of Treasury securities & agency [mortgage-backed securities] as more information about the trajectory of the economy becomes available,” the minutes said. Members at the meeting indicate that they would prefer future policy moves tied to inflation, while just “a couple” said they would rather unemployment be the guide. In addition to the rate move, the committee also released its expectations for various data points. The median GDP projection for 2020 was a contraction of 6.5%, followed by a 5% increase in 2021 & 3.5% the following year. “Participants commented that there remained an extraordinary amount of uncertainty and considerable risks to the economic outlook,” the minutes stated. Despite the comparatively bright outlook for 2020, officials noted that the fiscal help Congress provided for households, businesses and state and local govenrnments “might prove to be insufficient.”
Federal Reserve releases minutes for June meeting
The Arizona Dept of Health reported nearly 4900 new coronavirus cases & 88 new deaths, a record single-day jump in both grim markers ahead of VP Mike Pence's visit to the state later in the day. The coronavirus has infected a total of 84K killed 1720 in Arizona. The state's previous single-day high in the number of additional cases was 3593 on Jun 23. While an increase in Covid-19 testing & a potential lag in data reporting of the daily case numbers could account for the rise in positive cases, the number of hospitalizations in Arizona have steadily increased over the past weeks. Arizona reported 2516 currently hospitalized on a 7-day average, a 35% increase compared with a week ago. Arizona is nearing max capacity of intensive care unit beds with 1495 (89%) of the state's ICU beds in use. The number of ventilators being used at hospitals also reached a record high of 795, according to the state's dept of health. Arizona Gov Doug Ducey rolled back the state’s reopening plans & closed all bars, gyms, movie theaters & water parks. He said Arizona will try to restart the businesses in 30 days. “We can’t be under any illusion that this virus is going to go away on its own. Our expectation is that next week our numbers will be worse. It will take several weeks for the mitigation that we have put in place and are putting in place to take effect,” Ducey added.
Arizona reports record spike in new coronavirus cases and deaths
The coronavirus outbreak across the US is getting worse & could threaten New York's recovery after stringent lockdowns across the state helped suppress the fast-spreading infection, New York Gov. Andrew Cuomo said. “We have to be careful. We have dark clouds on the horizon and we’ve made tremendous progress,” Cuomo added. “We’ve been through Hell and back, but this is not over and this can still rear its ugly head anywhere in this nation and in this state.” Cuomo pointed to states like Texas, Florida & Arizona, which have all seen new cases & hospitalizations surge in recent days, as places that reopened too fast & now have to close again. “Now they’re all singing a different tune,” Cuomo said. “Now they’re all starting to say, ‘We better take this seriously. We better start wearing masks.’ They’re going backwards on their reopening plan.” He cited comments from White House health advisor Dr Anthony Fauci, who projected that the US could surpass 100K new infections per day, as a sign that current reopenings have exacerbated the outbreak. Cuomo criticized local leaders for not enforcing compliance of the state's face covering requirements & social distancing measures. “Citizen compliance is slipping. That is a fact,” Cuomo said. “Look at pictures. Look at any street in Manhattan, go to the East Village, go to the West Side, go to Brooklyn, go to Queens, go to the Bronx, citizen compliance is slipping.”
Cuomo warns of resurgence of coronavirus: ‘We have dark clouds on the horizon’
US vehicle sales in Q2 for General Motors (GM), Toyota (TM) & Fiat Chrysler (FCAU) plunged by more than 30% as the coronavirus caused consumers to stay at home, & dealerships & factories to shutter. The hefty declines are in line with what was expected. Nissan, Hyundai & Porsche also reported significant drops in sales in Q2
compared with a year earlier. US vehicle sales were forecast to fall by 34% in Q2 & the 2nd qtr is expected to be the worst of the year for the automakers due to the pandemic. YTD, GM reported a 34% decline in sales in Q2,
while FCAU said vehicles sold fell 38.6%. TM sales
dropped 34.6% during the last 3 months compared with a year
ago. Both GM & FCAU said full-size pickup truck sales performed
exceptionally well, & overall sales showed signs of recovery,
especially deliveries to retail customers. “GM entered the quarter
with very lean inventories and our dealers did a great job meeting
customer demand, especially for pickups,” Kurt McNeil, GM's US VP, sales operations, said. “Now, we are refilling
the pipeline by quickly and safely returning production to pre-pandemic
levels. Jeff Kommor, head of US sales for FCAU, said retail sales
to consumers have been rebounding since bottoming in Apr, however
fleet sales to govs & businesses have been canceled or delayed. “This
quarter demonstrated the resilience of the U.S. consumer,” Kommor said . “Retail sales have been rebounding since April as the
reopening of the economy, steady gas prices, and access to low-interest
loans spur people to buy.” He added that the company has built “a strong fleet
order book” that will assist its sales in H2.
GM, Fiat Chrysler U.S. auto sales tank in second quarter as coronavirus saps demand
Macy's (M) booked a $3.18B Q1 writedown as the COVID-19 pandemic shuttered stores & curtailed business. The department store chain took a pre-tax, non-cash goodwill impairment charge of $3.1B & a long-lived asset impairment charge of $80M. As a result, Macy's lost $3.58B ($11.53 a share) as revenue plunged 45% from a year ago to $3.02B. On an adjusted basis, the loss was $630M ($2.03 a share). The adjusted results were in-line with the updated preliminary results the company released last month. “The first quarter of 2020 was challenging for the country, the industry and Macy’s,” CEO Jeff Gennette said. “While our stores are re-opened, we expect that the COVID-19 pandemic will continue to impact the country for the remainder of the year,” he added. “We do not anticipate another full shutdown, but we are staying flexible and are prepared to address increases in cases on a regional level.” Macy's has reopened almost all of its stores, which the company says have performed better than anticipated in May & June. Digital sales have been strong across its markets. The stock fell 29¢.
If you would like to learn more about Macy's, click on this link:
club.ino.com/trend/analysis/stock/M?a_aid=CD3289&a_bid=6ae5b6f7
Macy's takes $3.2B coronavirus hit
Gold futures settled with a loss after topping $1800 & marking the highest finish since in nearly 9 years a day earlier, as uncertainty about the economic recovery from the coronavirus pandemic underpinned demand for the safe haven. Concerns about the spread of COVID-19 & stimulus from govs & global central banks to limit the harmful impact of the contagion is expected to foster an environment ripe for the rise of gold to further records, gold bulls predict. Aug gold lost $20 (1.1%) to settle at $1779 an ounce after trading as high as $1,807 overnight. A day earlier, it notched the highest finish, at $1800, for a most-active contract since Sep 2011. In Aug 2011, gold futures settled at a record $1891. In H1 (just completed), gold futures based on the most-active contracts rose just over 18%. For Q2, the commodity gained nearly 13% & it climbed almost 3% in the month of Jun. After the settlement for futures prices, an account of the Federal Reserve’s most recent monetary-policy meeting revealed that officials noted that the economy is likely to need support from highly accommodative monetary policy for “some time” & that it's important in coming months to provide”greater clarity” regarding the path for interest rates. In electronic trading shortly after the meeting minutes were released, Aug gold was little changed.
Gold settles with a loss to start July after the notching the highest finish since 2011
Oil futures ended higher after a gov report showed the largest weekly decline in domestic crude inventories so far this year. The Energy Information Administration (EIA) reported that US crude inventories fell by 7.2M barrels last week. That followed 3 consecutive weeks of increases. The forecast forecast called for a supply decline of 2.7M barrels, while the American Petroleum Institute on yesterday reported a fall of 8.2M barrels. The EIA data also showed crude stocks at the Cushing, Okla., storage hub edged down by about 200K barrels for the week. The decrease in US supplies has injected some optimism in crude markets, which have been whipsawed by anxieties around the growing spread of COVID-19 & the impact of the contagion on crude demand. West Texas Intermediate crude for Aug rose 55¢ (1.4%) to settle at $39.82 a barrel. In H1, prices based on the front-month contracts, were nearly 36% lower. For Q2, however, prices rose nearly 92% from depressed levels. Meanwhile, global benchmark Brent oil for Sep picked up 76¢ (1.8%) to $42.03. Front-month contract prices fell by 38% in H1, but were up nearly 81% in Q2.
Oil futures end higher as U.S. supply marks biggest weekly decline of the year
The economic news was less not cheery & investors wavered today. The Dow remained near break-even after it pulled back from the brief rally at the opening. However, tech stocks are in strong demand, along with gold. That's a strange combination. The virus does not want to admit defeat & finds new ways to make its presence known while the economy struggles to return to its winning ways. The hopes for a V-shaped recovery are all but dashed. It looks like the economy will turn in a mediocre performance in H2 with the unemployment rate expected to be 9½% by year end. That has been a peak rate during last recessions. Gold continues to attract nervous investors.
Dow Jones Industrials
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