Dow retreated 396 (session lows & under 26K)), decliners over advancers 5-2 & NAZ dropped 89 as tech rally loses steam. The MLP index was higher in the 127s & the REIT index dropped 5+ to the 347s. Junk bond funds hardly budged & Treasuries crawled higher on price. Oil slid back pennies, but held above 40, & gold rose 14 to 1808 as it closes in on its recored highs.
AMJ (Alerian MLP Index tracking fund)
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The EU's exec forecasts that the bloc's economy will contract more than previously expected because of the coronavirus pandemic, which has caused lockdowns on business & public life that are only slowly being eased. The 27-nation EU economy is predicted to contract by 8.3% this year, before growing 5.8% in 2021, according to the latest predictions released today. “The road to recovery is still paved with uncertainty," EU Economy Commissioner Paolo Gentiloni said. In the previous forecasts released in May, when most of the continent was under lockdown, the bloc's GDP was forecast to contract by about 7.5% this year & to bounce back by 6% in 2021. The European Commission said the impact on economic activity in 2020 will be worse than expected because “the lifting of lockdown measures is proceeding at a more gradual pace than assumed in our Spring forecast." The group of 19 EU nations that use the € as their currency will see a record decline of 8.7% this year, & grow by 6.1% in 2021, the European Commission said in its updated predictions, called the Summer forecast. In May it had forecast a 7.8% decline this year & growth of 6.3% in 2021.
The US Energy Information Administration (EIA) raised its forecasts for US & global benchmark oil prices & US crude production for this year & next. The EIA lifted its 2020 West Texas Intermediate crude price forecast to $37.55 a barrel, up 6.9% from the Jun forecast. It also expects 2021 prices to average $45.70 in 2021, up 4.1% from the previous forecast. For Brent crude, it raised this year's forecast by 6.5% to $40.50 & next year's by 3.8% to $49.70. The EIA also said it expects domestic oil production to an average 11.6M barrels per day this year, up 0.6% from the previous view, while lifting the 2021 forecast by 1.6% to 11.0M barrels per day. "Changes in supply and demand have shifted global oil markets from an estimated 21 million barrels per day of oversupply in April to inventory draws in June," the EIA said. "EIA estimates June consumption increased by almost 10 million barrels per day from April at the same time that global supply fell by 12 million barrels per day as a result of reduced production from OPEC+ and price-driven declines in the United States and Canada."
The number of US cases of the coronavirus illness COVID-19 climbed above 2.9M as Dr Anthony Fauci warned Americans the country is “still knee-deep in the first wave,” & reiterated his message to young people that they are not invulnerable. Fauci said that unlike Europe, US communities “never came down to baseline and now are surging back up.” His warning came after the Jul 4 holiday weekend featured widely shared images of young people partying & drinking without wearing face masks or attempting to socially distance, measures that health experts say are key to containing the spread. While Pres Trump said over the weekend that 99% of coronavirus cases are “harmless,” many states are still reporting climbing & alarming hospitalization rates. Arizona reached 89% capacity for intensive care unit beds & other states, including Texas & California were expressing concerns about their hospitals rapidly filling. In Florida's Miami-Dade Country, Mayor Carlos Gimenez rolled back a reopening plan with an exec order shutting down restaurants & gyms, along with ballrooms, banquet facilities, party venues & short-term rentals. Fauci said a much hoped for vaccine for COVID-19 may not be the home run people are expecting. It's not going to be like a measles vaccine,” he added. “So there’s going to be follow-up in those cases to see if we might need a boost. We might need a boost to continue the protection, but right now we do not know how long it lasts.”
Coronavirus update: U.S. COVID-19 cases climb above 2.9 million; ‘We’re still knee-deep in the first wave,’ Dr. Fauci warns
The brief market rally ended today. This was a good time to take profits, especially in tech stocks which have had an excellent run. The Dow has been trending sideways around 26K for 6 weeks, looking for direction after bouncing off lows in late Mar. Meanwhile tech stocks had a powerful run, taking the NAZ from under 7K at its Mar low to well over 10K. That ended (at least for the time being) with significant selling in the PM. Reopening by states is encouraging for investors, but they are worried because the virus will not give up & go away. As a result, gold keeps attracting attention from the nervous ones.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The EU's exec forecasts that the bloc's economy will contract more than previously expected because of the coronavirus pandemic, which has caused lockdowns on business & public life that are only slowly being eased. The 27-nation EU economy is predicted to contract by 8.3% this year, before growing 5.8% in 2021, according to the latest predictions released today. “The road to recovery is still paved with uncertainty," EU Economy Commissioner Paolo Gentiloni said. In the previous forecasts released in May, when most of the continent was under lockdown, the bloc's GDP was forecast to contract by about 7.5% this year & to bounce back by 6% in 2021. The European Commission said the impact on economic activity in 2020 will be worse than expected because “the lifting of lockdown measures is proceeding at a more gradual pace than assumed in our Spring forecast." The group of 19 EU nations that use the € as their currency will see a record decline of 8.7% this year, & grow by 6.1% in 2021, the European Commission said in its updated predictions, called the Summer forecast. In May it had forecast a 7.8% decline this year & growth of 6.3% in 2021.
EU forecasts deeper economic hit from pandemic
The US Energy Information Administration (EIA) raised its forecasts for US & global benchmark oil prices & US crude production for this year & next. The EIA lifted its 2020 West Texas Intermediate crude price forecast to $37.55 a barrel, up 6.9% from the Jun forecast. It also expects 2021 prices to average $45.70 in 2021, up 4.1% from the previous forecast. For Brent crude, it raised this year's forecast by 6.5% to $40.50 & next year's by 3.8% to $49.70. The EIA also said it expects domestic oil production to an average 11.6M barrels per day this year, up 0.6% from the previous view, while lifting the 2021 forecast by 1.6% to 11.0M barrels per day. "Changes in supply and demand have shifted global oil markets from an estimated 21 million barrels per day of oversupply in April to inventory draws in June," the EIA said. "EIA estimates June consumption increased by almost 10 million barrels per day from April at the same time that global supply fell by 12 million barrels per day as a result of reduced production from OPEC+ and price-driven declines in the United States and Canada."
EIA lifts price forecasts for oil and U.S. crude output
The number of US cases of the coronavirus illness COVID-19 climbed above 2.9M as Dr Anthony Fauci warned Americans the country is “still knee-deep in the first wave,” & reiterated his message to young people that they are not invulnerable. Fauci said that unlike Europe, US communities “never came down to baseline and now are surging back up.” His warning came after the Jul 4 holiday weekend featured widely shared images of young people partying & drinking without wearing face masks or attempting to socially distance, measures that health experts say are key to containing the spread. While Pres Trump said over the weekend that 99% of coronavirus cases are “harmless,” many states are still reporting climbing & alarming hospitalization rates. Arizona reached 89% capacity for intensive care unit beds & other states, including Texas & California were expressing concerns about their hospitals rapidly filling. In Florida's Miami-Dade Country, Mayor Carlos Gimenez rolled back a reopening plan with an exec order shutting down restaurants & gyms, along with ballrooms, banquet facilities, party venues & short-term rentals. Fauci said a much hoped for vaccine for COVID-19 may not be the home run people are expecting. It's not going to be like a measles vaccine,” he added. “So there’s going to be follow-up in those cases to see if we might need a boost. We might need a boost to continue the protection, but right now we do not know how long it lasts.”
Coronavirus update: U.S. COVID-19 cases climb above 2.9 million; ‘We’re still knee-deep in the first wave,’ Dr. Fauci warns
The brief market rally ended today. This was a good time to take profits, especially in tech stocks which have had an excellent run. The Dow has been trending sideways around 26K for 6 weeks, looking for direction after bouncing off lows in late Mar. Meanwhile tech stocks had a powerful run, taking the NAZ from under 7K at its Mar low to well over 10K. That ended (at least for the time being) with significant selling in the PM. Reopening by states is encouraging for investors, but they are worried because the virus will not give up & go away. As a result, gold keeps attracting attention from the nervous ones.
Dow Jones Industrials
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