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)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
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
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
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