Dow fell 223, decliners over advancers better than 2-1 & NAZ gained 79 to another record. The MLP index gave back 2+, down to the 125s, & the REIT index continued down 2+ to the 359s. Junk bond funds were steady & Treasuries rose in price bringing higher yields. Oil was flattish just under 43 & gold was little changed at 1975 (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)
Supply chain disruptions as a result of the coronavirus pandemic are putting a damper on Labor Day weekend sales. Americans in the markets for new appliances & waiting until the unofficial end of summer to get a deal on dishwashers, refrigerators, washer-dryers & other big-budget household items may have to hold out longer for a bargain, industry experts say. Warehouses & factories that manufacturer appliances across the country were operating at 50% capacity as a result of nationwide COVID-19 restrictions in Mar & Apr. General Electric ( GE) said it paused plant operations for a week at the beginning of the coronavirus pandemic to enhance safety measures inside the facilities including social distancing, sanitization & temperature checks for workers. LG's factory in Clarksville, Tenn. also had to stop production at its plant for a few weeks in Apr, but has since resumed, the company said. Local retailers are also seeing fewer deals ahead of the holiday weekend compared to last year. Designer Appliances based in NJ said GE offered promotion pricing on around 330 appliance models last year & now they've only received 25. With more Americans working from home during the pandemic, there's been an uptick in home improvement projects with more shoppers frequenting stores like Lowes (LSS) & Home Depot (HD), a Dow stock. LSS saw in-store visits spike in Apr 14% year-over-year & 30% & 25.8% in Jun & Jul months. HD, meanwhile, saw visit growth of 19.1% & 19% year-over-year in Jun & Jul. While Labor Day weekend is a big end of the season sales driver, retailers are likely to take a hit this year too. The apparel sector as a whole was down 25.7% for visits year-over-year the week beginning Aug 17, while foot traffic to shopping centers was down 25% overall. Some industry experts suggest shoppers hold off buying a new appliance to wait until closer to the holidays.
Labor Day weekend sales impacted by appliance shortage, supply disruptions
The number of confirmed US cases of the coronavirus that causes
COVID-19 edged above 6M today, & the head of the Food & Drug Administration (FDA) said he would not be pressured to rush out a
vaccine by Pres Trump before the Nov presidential
election. Dr Stephen Hahn, FDA Commissioner, said that
his agency may make a vaccine available before Phase 3 trials have been
completed, but only if it is convinced that the benefits outweigh the
risks. Hahn suggested it could do so using its emergency use
authorization (EUA), which is not a full approval, but could be put into
effect for certain groups, such as health care workers. “We have a convergence of the
Covid-19 pandemic with the political season, and we’re just going to
have to get through that and stick to our core principles,” Hahn said. “This is going to be a science, medicine, data decision.
This is not going to be a political decision.”
Coronavirus update: U.S. case tally edges above 6 million and FDA head says he won’t be pressured to rush out a vaccine
4 of China's 5 largest state-owned banks said they have increased their provisions against bad debt to brace for future losses due to the impact of the global coronavirus pandemic. All 5 reported their biggest profit falls in at least a decade & an increase in soured loans when announcing their ½-year results last week. The results highlight the impact of the pandemic & the economic slowdown on Chinese banks as borrowers struggle to repay debt after months of lockdown & some sectors, such as those in the travel industry, labour to survive on lingering COVID-19 fears. Amid the grind, China's banks have been asked to step up & lend to flagging sectors while sacrificing profits in a bid to revive the country's fortunes. Agricultural Bank of China (AgBank) said “the lagging impact of the epidemic and the risk of uncertainty are expected to be further transmitted to the banking industry,” in its ½-year results. China Construction Bank (CCB), the country's 2nd-largest lender by assets, said it plans to assess credit risks and up provisions, just as Bank of China (BoC) said the same. Even more directly, Bank of Communications (BoCom) said it had boosted “provisions to counter the future impact of the pandemic.” Q2 loan-loss provisions were up 61% to 436% compared to the same period last year at ICBC, CCB, AgBank & BoC, showed data from China Intl Capital Corp (CICC). The crater in H1 profit was mostly down to provisioning ordered by regulators, said CICC, noting that Q2 profit would otherwise have been 1.5% to 5.1% for those 4 lenders.
Four of China's five largest state-owned banks prepare for bad debt from COVID-19
Gold futures ended higher, buoyed by weakness in the $, but prices still finished a bit lower for the month in the wake
of 5 consecutive monthly gains. Overall, bullion continues to be viewed as a haven in the face
of the COVID-19 pandemic, & the precious metal drew increased
attention last week after the Federal Reserve said it is shifting to a policy of average inflation targeting,
which would effectively see policy makers end the practice of
pre-emptively hiking interest rates to stave off inflation. That setup
is viewed as a bullish one for gold, which is viewed as a hedge against
rising inflation. Expectations for a low-rate regime in the US & in much of the
developed world,& softness in the $ also has boosted
appetite for gold. Dec rose $3 (0.2%) to settle at $1978 an ounce. Hope for some pickup in economic activity, amid optimism over
potential coronavirus treatments, also has boosted appetite for silver,
which is viewed as both an industrial and precious metal. China’s official gauge of business activity expanded faster in Aug, with the nonmanufacturing purchasing managers index rising to 55.2, compared with 54.2 in Jul. For the month of Aug, gold lost 0.4%.
Gold prices end higher, but most-active prices suffer first monthly loss in 6 months
Oil futures rose, ending Aug with an upbeat note after data showed a stronger-than-expected pickup in China's service sector. West Texas Intermediate (WTI) crude for Oct rose 17¢ (0.4%) to $43.14 a barrel. The new front-month Nov Brent crude contract was 21¢ higher, a gain of 0.5%, at $46.02 a barrel. Based on the most actively traded contracts, US benchmark WTI crude had a monthly gain of 7%, which would represent a 4th straight monthly climb. Brent, the global benchmark, had a 5% rise, its a 5th monthly climb in a row. Oil's gains have accompanied a global rally in equities that has the US market on track for its strongest monthly gain in more than 3 decades, as well as a sliding $. OPEC & their allies (OPEC+ alliance of producers) has largely complied with its self-imposed production curbs. Meanwhile, the $ has continued to weaken versus major rivals. A weaker $ is seen as supportive to commodities priced in the currency, making them less expensive to users of other currencies. Meanwhile, oil bulls were cheered by data out of China. The country's official nonmanufacturing purchasing managers index rose 55.2% in Aug, up from 54.2 in Jul. The Aug reading was the 6th consecutive expansion after the gauge in Feb was fell well below the 50 mark, which separates expansion from contraction.
Oil futures end lower for the session; U.S. prices up a fourth month
Dow Jones Industrials
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