Markets cautiously rise while investors monitor the Biden budget

Dow gained 64, advancers over decliners better than 4-3 & NAZ added 12.  The MLP index was off 1+ to  the 186s & the REIT index went up 3+ to 436 (in record territory).  Junk bond funds did little & Treasuries remained in demand.  Oil slid back to the 36s & gold rose 6 to 1905 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Free Apple Analysis!

Bring Your Portfolio Into The 21st Century

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

The White House unveiled a $6T budget proposal for next year that adds to the nation's ballooning debt as Pres Bisen pushes a sweeping economic agenda to dramatically expand the gov-funded social safety net.  The fiscal 2022 budget request tallies up the administration's eight-year,  $2.3T American Jobs Plan & the $1.8T American Families Plan & incorporates them into Biden's $1.5T request for annual operating expenditures, which includes the Pentagon & other federal agencies.  The proposal, which will push debt levels in 2024 held by the public to the highest levels since World War II – will likely give fresh fodder to Reps who have criticized the size & scope of Biden's spending proposals.  Under the plan, the deficit would hit $1.8T in 2022 & would routinely run above $1.3T over the next decade, despite nearly $3T in proposed tax increases.  The gap between what the gov spends & what it collects in revenue would grow to nearly $1.6T by 2031.  Total debt held by the public would more than exceed the annual value of the entire economy by 117% in 2031, the highest level in close to a century.  Biden is pushing to raise the corp tax rate to 28% from 21%, nearly double the capital gains tax rate paid by wealthy Americans, restore the top individual income tax rate to 39.6% & impose a global minimum on US companies foreign profits as part of his 2-pronged economic agenda.  "Now is the time to build the foundation that we’ve laid, to make bold investments in our families, in our communities, in our nation," Biden said.  "We know from history that these kinds of investments raise both the floor and the ceiling of an economy for everybody."  Still, the budget is merely a proposal, whether or not it's ultimately implemented hinges on Congress.  Rep lawmakers have balked at the scale of Biden's spending plans & have unified to protect the 2017 tax law from any potential rollbacks.  Some moderate Dems have also raised concerns about Biden's proposed tax hikes, warning that higher rates could derail the nascent economic recovery from the coronavirus pandemic.

Biden proposes $6T budget that will keep deficits near record highs

Senate Reps halted an effort to form a bipartisan Jan 6 commission to investigate the Capitol attack, marking the first successful legislative filibuster mounted by the GOP minority.  The legislation needed 60 votes to overcome a GOP filibuster, but Reps blocked the legislation from advancing during a procedural vote.  The vote was 54 to 35.  Just 6 Reps joined with Dems.  The House already passed legislation on May 19 to form the independent panel with support from 35 Reps, despite opposition from former Pres Trump & House Minority Leader Kevin McCarthy.  But the legislation faced an uphill climb in the 50-50 split Senate, with Senate Minority Leader Mitch McConnell also opposing the commission.  McConnell argued there are already enough investigations into the Jan 6 attack.  "I do not believe the additional, extraneous ‘commission’ that Dem leaders want would uncover crucial new facts or promote healing," McConnell said.  "Frankly, I do not believe it is even designed to."  The GOP filibuster on the Jan. 6 commission means the legislation is likely dead for now.  But its failure will be sure to intensify pressure on Dems to abolish the legislative filibuster altogether & just require a simple majority vote to advance future legislation.

Senate Republicans slam brakes on bill to create commission probing Capitol riot

Roughly ½ of all Americans have received at least one dose of a Covid vaccine, based on Centers for Disease Control & Prevention (CDC) data published, as nationwide infection levels continued their downward trend.  New Covid cases are 23K per day, on a 7-day average, down 21% from a week prior, according to Johns Hopkins University.  CDC data shows 49.9% of the US population has received one shot or more, with 40% having completed a full vaccination program.  New Covid cases are 23K, down 21% from a week prior, according to Johns Hopkins University.  Case counts have not been this low since Jun 2020.  About 1.6M vaccine shots have been reported administered each day on average over the past week. The latest 7-day average of daily US Covid deaths is 667, though the release of backlogged data from multiple states in recent days obscures the latest trend.

Nearly 50% of Americans have at least one vaccine shot as Covid case counts fall 

Gold futures climbed to score a weekly & monthly advance, with prices back above the the psychologically important level at $1900 an ounce.  Data today showed the headline US personal consumption expenditure inflation measure climbed 3.6% in Apr from the prior year, the strongest reading since 2008 & higher than the 2% preferred by the Federal Reserve.  Gold futures on Wed settled above the $1900 mark for the first time since early Jan, to turn higher for the year, but slipped below that level by the end of yesterday's session.  Aug gold,  the most active contract, rose $6 (0.4%) to settle at $1905 an ounce, following a 0.3% decline yesterday which marked its first loss in 4 sessions.  Prices, based on the most-active contract, settled at their highest since Jan 7, up 7.8% for the month, notching a weekly advance of 1.5%.  The rise in precious metals prices this week has been helped by a weak $ but the currency was gaining today, up 0.1%.  A weaker $ can make assets priced in that currency more attractive to overseas investors.  A slide in the yield on the 10-year Treasury note had also helped buoy gold buying. 

Gold futures settle back above $1,900, ending the month nearly 8% higher

Oil futures saw choppy trading, with US prices ending the session lower following 5 consecutive session gains, but prices tallied a rise for the week, as well as the month of May.  The moves for oil come just a day after prices for US benchmark crude marked their highest settlement since 2018.  West Texas Intermediate (WTI) oil for Jul declined by 53¢ (0.8%) to settle at $66.32 a barrel.  Front-month contract prices gained more than 4% for the week, as well as the month.  Aug Brent, which is now the front month, fell 48¢ (0.7%) to settle at $68.72 a barrel.  Based on the front-month contracts, WTI crude rose 4.3% for the week, as well as the month.  Brent saw a weekly advance of 4.8% & monthly climb of 3.5%.  Some commodity experts expect that OPEC+ may adjust its plans to ease output limits based on expected Iranian production, with negotiations between the US & Tehran under way since Apr. the recovery in the US from COVID is giving way to rising demand for crude & its byproducts.  Data from the Energy Information Administration showed weekly declines for domestic crude, gasoline & distillate supplies.  Still, Baker Hughes reported that the number of active US drilling rigs for oil was up a 4th straight week, up 3 at 359 this week, implying that an increase in oil production may be on tap.

Oil futures end mixed, score gains for week and month 

The Dow was up 1% for the week & 2% in May (which can be a tough month).  Not Bad!!  The goings on in DC is not good for the stock market.  Additionally the dark could of  higher inflation keeps attracting investors to gold.  Have a great & happy weekend!!

Dow Jones Industrials

Markets rise on higher personal income in April

Dow gained 113, advancers modestly ahead of decliners & NAZ went up 56.  The MLP index fell 1+ to the 186s & the REIT index rose 2+ to 435.  Junk bond funds inched higher & Treasuries were purchased, lowering the yield on the 10 year Treasury by 2 basis points to 1.59%.  Oil crawled up to 67 & gold was steady at 1898.

AMJ (Alerian MLP index tracking fund)

CL=F Crude Oil 66.96   +0.11 +0.2%

GC=F Gold    1,900.10 +1.60 +0.1%

 

 

Start Using the Leverage of Options and the Power of MarketClub Today!

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

Personal income tumbled in Apr as the prior month's boost from stimulus checks waned & inflation ran hotter than expected.  Personal income declined 13.1% month over month, less than the 14.1% decline that was expected.  Incomes surged by a downwardly revised record 20.9% in Mar as the gov sent out $1400 checks to most Americans.  Consumer spending, which accounts for 2/3 of US economic activity, edged up 0.5%, in line with estimates.  Spending was revised up to 4.7% last month, from the initial 4.2% print.   Meanwhile, core personal consumption expenditures, which exclude food & energy, rose 0.7% month over month & 3.1% from the prior year, both exceeding the respective 0.6% & 2.9% that was expected.  The 3.1% increase was the biggest in at least 28 years & the 1.2 percentage point increase from Mar's upwardly revised 1.9% year-over-year print was the largest since recordkeeping began in 1960.

Personal income plunges as stimulus check boost fades, inflation runs hot

A key inflation indicator rose a faster-than-expected 3.1% in Apr as price pressures built in the rapidly expanding US economy, the Commerce Dept reported.  The core personal consumption expenditures index was forecast to increase 2.9% after rising 1.9% in Mar.  Federal Reserve officials consider the measure to be the best gauge for inflation, though they watch a number of metrics.  As part of its price stability mandate, the Fed considers 2% to be healthy, though it is committed to letting the level average higher than usual in the interest of promoting full employment.  The index captures price movements across a variety of goods & services & is generally considered a wider-ranging measure for inflation as it captures changes in consumer behavior & has a broader scope than the Labor Dept's consumer price index.  The CPI accelerated 4.2% in Apr.  Over the past month, core PCE rose 0.7 %, also quicker than the expected 0.6%.  Including volatile food & energy prices, the headline PCE index jumped 3.6% year over year & 0.6% from Mar.  That increase in inflation came with a sharp deceleration in personal income, which declined 13.1%.  But that actually was less than the 14% estimate.  Personal income had surged 20.9% in Mar following the latest round of gov stimulus checks.  Even with the $3.2T decline in personal income, the savings rate remained elevated at 14.9%.  Consumer spending rose 0.5%, in line with estimates.  Disposable personal income, after taxes & other withholdings, tumbled 14.6%.

A key U.S. inflation gauge rose 3.1% year over year, higher than expected

The coronavirus threat in the US is likely to be rather low this summer, but it's not guaranteed to stay that way later this year, Dr Scott Gottlieb said.  “I don’t think we should declare mission accomplished. I think that we should declare a near-term victory,” he said.  Coronavirus cases in the country have tumbled as more Americans get vaccinated against Covid.  The 7-day average of daily new infections is around 23K according to Johns Hopkins University data.  That's down more than 50% since the beginning of May alone.  “I think we’ve done enough to give ourselves an opportunity to enjoy the summer and be at low risk this summer,” said Gottlieb.  However, he added, “I do think that this is going to be a risk as we get into the fall and probably more likely the winter.”  One reason for the cautious outlook for the colder months is because “we could see new variants,” said Gottlieb, who has previously noted that respiratory pathogens like the coronavirus generally spread more easily in the winter.  “I think we need to get in place better surveillance, better sequencing of strains so that we can spot these variants more quickly,” he added.  The US also cannot ease up on its efforts to get more people vaccinated yet, Gottlieb said.  That's a critical factor in lowering risk across the country.  Roughly 50% of the nation's population has received at least one dose, according to the Centers for Disease Control & Prevention.  He suggested around 75% of the country could be vaccinated by the fall.  “So, there’s still work to do. Right now, we’re on a pretty good track doing the right things,” he added.

Gottlieb: Covid risk should be low in U.S. this summer but will rise in fall

Stocks are climbing again although the advance/decline ratio is not strong.  Reaction by investors to Biden's budget (with a staggering $6T in expenses) will be driving the market next week.

Dow Jones Industrials

 

Markets rise led by the highest oil prices since 2018

Dow went up 141, advancers over decliners about 2-1 & NAZ was off 1.  The MLP index eased back to the 187s & the REIT index was off 1+ to the 432s.  Junk bond funds fluctuated & Treasuries were sold.  Oil rose in the 66s & gold slid back 2 to 1901 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Free Apple Analysis!

Bring Your Portfolio Into The 21st Century

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

US orders for big-ticket manufacturered goods dropped unexpectedly in Apr for the first time in 11 months as a shortage of computer chips disrupted autoproduction.  The Commerce Dept reported that orders for factory goods meant to last at least 3 years fell 1.3% in Apr after rising 1.3% in Mar.  Transportation orders skidded 6.7%.  Excluding transportation, which can swing sharply from month to month, durable goods orders were up 1% in Apr.  Factories have been hamstrung by a shortage of supplies as the US economy reopens from the COVID-19pandemic & demand for goods & services rebounds rapidly.  Orders for auto parts, disrupted by a shortage of computer chips, dropped 6.2% in Apr.  Orders for military capital goods dropped 25.8% after falling 11.7% in Mar.  The forecast called for durable goods orders to rise 0.7% last month.  Despite the unexpected decline, the Apr report also contained hopeful signs:  A category that tracks business investment investment — orders for nondefense capital goods excluding aircraft — increased 2.3% last month on top of a 1.6% gain in Mar.

US durable goods orders drop 1.3% in April

Average daily Covid case counts in the US are at less than ½ of the level recorded at the start of May, data Johns Hopkins University shows.  The country is seeing an average of 23K new infections per day over the past week, down from about 49K on May 1, a 53% drop.  Federal data shows the US is reporting an average of 1.7M daily vaccinations & nearly 50% of the US population has received one dose or more.  The 7-day average of daily US Covid cases is 23K as of yesterday, down 23% from a week ago & 53% from the start of the month.  Case counts have not been this low since Jun 2020.  Average daily case counts have fallen by 5% or more in 44 states & DC over the past week.  The US is reporting an average of 571 daily Covid deaths over the past 7 days.  About 1.7M vaccine shots have been reported administered each day on average over the past week, down 5% from one week ago.  Elsewhere, outbreaks are worsening.  India is currently the epicenter of the global coronavirus pandemic, but other countries from Argentina in Latin America to Nepal in Asia have also reported record increases in Covid cases in the last few weeks.

U.S. Covid cases down 53% in May, country averaging 1.7 million vaccine shots per day

Treasury Secretary Janet Treasury urged congressional leaders to step up spending, saying that the gov is operating on a budget that is more than a decade behind the times.  At a House panel that will have large sway over spending, Yellen said that inflation-adjusted spending has remained stagnant for 11 years.  Noting the aggressive programs the Treasury already has implemented to carry the economy through the Covid-19 pandemic, she asked for still more expansive fiscal policy across a variety of areas.  “Our team has done valiant work implementing these programs with the resources at our disposal,” Yellen said in prepared remarks. “But we cannot continue to be good stewards of this recovery – and tackle the new bodies of work that Congress assigns to us in the years beyond – with a budget that was designed for 2010.”  Her comments come a day before Pres Biden releases his first budget, an expected $6T spending plan to be financed by tax increases & heavy deficit spending to the tune of $1.3T annually.  Among the administration's priorities is a sweeping infrastructure plan likely to total more than $1T.

Yellen says the government is operating like it’s 2010, calls for more aggressive spending

Pres Biden is set to deliver a "major" speech on the economy later today & is expected to tout his record, saying it is "working," while pushing new spending plans as the economy stands at an "inflection point."  A White House official said the pres will make a "clear case that his economic plan is working" by touting job creation & a decrease in unemployment claims while arguing that his American Rescue Plan was "just the first step."  Initial jobless claims fell to a fresh pandemic low of 406K today, though Apr economic numbers showed rising inflation & hiring that sharply missed expecttions.  Biden is set to propose strengthening unions & raising the minimum wage to $15 an hour while discussing his plan to modernize infrastructure & ensure every American has "high-speed internet, building ports, roads and bridges" while interest rates are low.  The Federal Reserve has held interest rates near zero since Mar 2020 & has repeatedly indicated it will do so until "labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time."  Chair Powell has stressed that he sees no signs of persistent inflation.  Economic projections from policymakers' last meeting show that most officials expect rates to remain near zero thru 2023.  Biden will argue that the US is "in a race to win the 21st century" & say the country is at an "economic inflection point" while pushing to "build on the momentum" of the first months of his administration to "build a new economy, strengthen the middle class, and revitalize capitalism itself."  These remarks, though, come after a poll released yesterday revealed voters have mixed views over whether the White House is proposing too much gov spending.  When asked about the White House's proposed increases in spending, 47% of voters say it is too much, while 33% say it is about right & 17% say the spending is not enough. 

Biden to defend record, push massive new spending in 'major' speech

Gold prices fell from the key level of $1900 to settle lower for the first time in 4 session, as the $ steadied & Treasury yields moved higher, dulling the metal's investment appeal.  Aug gold, the most active contract, dropped $5 to settle at $1898 an ounce.  Gold futures for Jun, now the 2nd most-active contract, fell $5 to $1895 an ounce.  Prices, based on the most-active contract, still trade more than 7% higher month to date.  Yesterday, they settled atop $1900 an ounce & turned positive for the year, a day after hitting a high near that resistance level.   Yesterday's move marked the highest settlement since Jan 7.   Gold's rise this week had been helped by a weak $ which steadied in dealings today, but is down more than 1% lower for the month.  A weaker $ can make assets priced in that currency more attractive to overseas investors.  A slide in the yield on the 10-year Treasury note has also helped.  Falling yields can benefit precious metals & other commodities, which don't offer a coupon, by reducing the opportunity cost of holding those assets against yield-bearing ones.  Gold prices saw little reaction to today's US economic data.  The US economy expanded at an annualized 6.4% pace in Q1 unrevised from the prior estimate released last month, according to the Commerce Dept.

Gold falls back below $1,900, posting its first loss in 4 sessions

Oil futures finished higher, with US prices at their highest since 2018, as some upbeat US economic data boosted prospects for energy demand, prompting prices to stretch their streak of gains into a 5th-straight session.  The US economy expanded at an annualized 6.4% pace in Q1 unrevised from the prior estimate released last month, while initial jobless claims sank 38K to 406K in the week ended May 22, down for a 4th week in a row.  At the same time, there is a growing assumption that some members of OPEC+ (the Organization of the Petroleum Exporting Countries & their allies) may adjust plans based on the latest Iran news.  OPEC+ will hold a meeting Tues to discuss production levels.  West Texas Intermediate (WTI) crude for Jul rose 64¢ (1%) to settle at $66.85 a barrel, the highest front-month contract settlement since Oct 2018.  The front-month Jul Brent crude, the global benchmark, tacked on 59¢ (0.9%) to end at $69.46 a barrel, the highest front-month finish since May 17 of this year.  The most active Aug Brent contract which becomes the front month after Fri's session, settled at $69.20, up 47¢ (0.7%).  WTI & Brent futures have climbed for 5 sessions in a row, the longest streak of gains since Feb.  Crude remains stuck in a trading range this week, with support tied to signs of good demand ahead of the kickoff of the US summer driving season this weekend.

U.S. oil prices mark highest settlement since 2018

Oil has had a spectacular rise from the depths last year when it dropped below 0 (hard to believe).  Biden is giving a speech shortly to justify throwing more money at pet projects even though the economy is doing quite well, thank you.  Investors will have to evaluate how much good the excess pork will do.  Meanwhile the Dow has stayed fairly close to 34K for about 2 months.

Dow Jones Industrials

settled atop $1,900 an ounce & turned positive for the year, a day after hitting a high near that resistance level.   Yesterday's move marked the highest settlement since Jan 7.   Gold's rise this week had been helped by a weak $ which 89 steadied in dealings today, but is down more than 1% lower for the 90 month.  A weaker $ can make assets priced in that currency more 91 attractive to overseas investors.  A slide in the yield on the 92 10-year Treasury note has also helped.  Falling yields can benefit 93 precious metals & other commodities, which don't offer a coupon, by 94 reducing the opportunity cost of holding those assets against 95 yield-bearing ones.  Gold prices saw little reaction to today's US economic data.  The U.S. economy expanded 96 at an annualized 6.4% pace in Q1 unrevised from the 97 prior estimate released last month, according to the Commerce 98 Dept.

Gold falls back below $1,900, posting its first loss in 4 sessions

Oil futures settled higher on Thursday, 99 stretching their streak of consecutive gains to a 5th session, the 100 longest run since an 8-session climb ended on Feb 10.  The price 101 climb followed data released Wednesday 102 that revealed a decline in US supplies of crude, gasoline & 103 distillates.  Traders, however, continue to eye developments tied to 104 talks over the Iran nuclear deal, as an agreement would likely lead the 105 US to lift sanctions on Tehran, allowing it to raise oil exports.  OPEC & their allies, 106 meanwhile, will hold a meeting on Tues to discuss plans for 107 production.  West Texas Intermediate oil for Jul climbed by 64¢ (1%) to settle at $66.85 a barrel 

Oil futures up a 5th session for longest winning streak since February

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones Industrials