Dow dropped 85 with buying in the last hour, decliners over advancers 3-2 but NAZ rose 104. The MLP index was flattish in the 207s & the REIT index remained steady in the 457s. Junk bond funds drifted lower & Treasuries continued to be sold, taking the yield on the 10 year Treasury up 3 basis points to 1.5%. Oil was steady just under 71 & gold declined 12 to 1866 (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)
Inflation expectations for the next year climbed for a 7th straight month in May to a record high, according to a new survey from the Federal Reserve Bank of New York. Median one-year ahead inflation expectations last month rose 0.6 percentage points to 4%, the highest since the New York Fed's Survey of Consumer Expectations began. Inflation expectations for the next 3 years climbed from 3.1% to 3.6%, trailing only the Aug 2013 print. Respondents over 60 years of age & those earning a high school degree or less were most concerned about future inflation. The internet-based survey consists of a rotating panel of approximately 1300 household heads who participate for up to a year with a roughly equal number rotating in & out each month. Inflation expectations over the short-term have in recent months been in increasing at a faster pace than for the medium-term. The 0.4 percentage point difference between the 2 is the biggest spread on record. The gap comes as the Fed has said it expects inflation pressures to be "transitory" due to a base effects skew that occurred when prices declined at the start of the pandemic. Median year-ahead home price change expectations rose 0.7 percentage points to 6.2%, hitting a record high for a 3rd straight month. Respondents in the West & South regions were most worried about home price gains. Respondents also expect prices for all commodities to increase over the next year. The median year-ahead expected change in food prices increased 2.2 percentage points to a record high 8% while the one-year ahead expected change in the price of gas rose 0.6 percentage points to 9.8%. The median one-year ahead expected change in rent ticked up 0.3 percentage points to a record high 9.7%.
Inflation expectations for next year surge to record high
JPMorgan (JPM) CEO Jamie Dimon believes cash is king – at least for the time being. JPM has been “effectively stockpiling” cash rather than using it to buy
Treasuries or other investments because of the possibility higher
inflation will force the Federal Reserve to boost interest rates, Dimon
said. The biggest US bank by assets has
positioned itself to benefit from rising interest rates, which will let
it buy higher-yielding assets, he added. “We
have a lot of cash and capability and we’re going to be very patient,
because I think you have a very good chance inflation will be more than
transitory,” he said. “If you look
at our balance sheet, we have $500 billion in cash, we’ve actually been
effectively stockpiling more and more cash waiting for opportunities to
invest at higher rates,” Dimon added. “I do expect to see higher rates
and more inflation, and we’re prepared for that.” The stock was off 2.80.
If you would like to learn more about JPM, click on this link:
club.ino.com/trend/analysis/stock/JPM?a_aid=CD3289&a_bid=6ae5b6f7
Jamie Dimon says JPMorgan is hoarding cash because ‘very good chance’ inflation is here to stay
The Transportation Security Administration screened more than 2M people at US airports yesterday, the highest number since before Covid-19 was declared a pandemic in Mar 2020. The increase is welcome news for airlines, hotels & other travel businesses that were devastated by the virus, travel restrictions & quarantines. The TSA screened nearly 2.1M people on yesterday the most since Mar 7, 2020. That is still close to 545K fewer people compared with the same day in 2019, as business & intl travel are still depressed. Airline execs have said that is improving but that it will take longer to recover than domestic leisure travel, which is fueling the rebound. The agency screened just over 2M people on Fri, about 74% of the number that passed through TSA airport checkpoints compared with 2 years earlier. The increase in travelers is boosting the price of vacations from airfares, to hotel rates to car rental prices.
Airport screenings top 2 million a day for first time in pandemic
Gold futures fell, with prices marking their lowest settlement in a month as Treasury yields strengthened a bit ahead of an important meeting of the Federal Reserve. The Fed's 2-day policy meeting starts tomorrow. Commodity investors will be keyed in on the central bank's view on inflation & the labor market, which have diverged in recent months, as reports on inflation have come in stronger than expected & jobs reports have been weaker than expected in the recovery phase of the pandemic. Gold is seen as a hedge against inflation & trade in Treasuries have implied that fixed-income investors have deemed price pressures as likely fleeting. The 10-year Treasury note was yielding around 1.50%, after touching lows around 1.45% to hang near its lowest levels since Mar. Bond prices & yields move in opposite directions. A gauge of the $, the ICE US Dolla, was down less than 0.1%. Against that backdrop, gold now trades lower for the month, as well as the year so far, but some investors are bullish on the outlook for bullion.
Gold futures settle at lowest in a month as investors wrestle with inflation outlook
US oil futures settled slightly lower
as traders continued to eye prospects for energy demand. In a report
issued last week, the International Energy Agency said it expects oil
demand to return to pre-pandemic levels before the end of 2022. West Texas Intermediate oil for Jul fell 3¢ to settle at $70.88 a barrel after trading as high as $71.78.
U.S. oil futures edge lower as traders eye demand
With the gloomy predictions for higher inflation, investors are nervous & not anxious to buy stocks. there is also selling in gold but tech stocks are getting attention. For what it's worth, the Dow was up more than 100 in the last hour.
Dow Jones Industrials
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