Dow dropped 210 (above session lows), decliners over advancers 2-1 while NAZ surprisingly shot up 121 ro record territory. The MLP index sank 8+ to 200 & the REIT index was up fractionally to the 451s. Junk bond funds continued slightly higher & Treasuries saw heavy buying. Oil fell 1+ to 71 & gold tumbled 80 to 1780 (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)
A group of bipartisan lawmakers unveiled a roughly $1T framework for an infrastructure projects package, the latest offer in a monthlong
initiative between Reps & the White House to reach a deal on Pres Biden's next big economic initiative. The coalition of 20 senators – 10 Reps & 10 Dems – are
eyeing a scaled-back $974B measure that would include about $579B in new funding. The money would be spent over the course of 5 years on core infrastructure projects, like roads & bridges,
transit systems & broadband. "We support this bipartisan
framework that provides an historic investment in our nation’s core
infrastructure needs without raising taxes," the senators said in a
statement. "We look forward to working with our Republican and
Democratic colleagues to develop legislation based on this framework to
address America’s critical infrastructure challenges." The
lawmakers have not finalized an agreement on how to pay for the bill & continue to discuss that part of the plan, including with the White
House. Options include repurposing federal COVID relief money, closing
the tax gap & using leftover unemployment insurance money from the 26
states that are prematurely opting out of a federal relief program. By
comparison, Biden has proposed the $2.3T American Jobs Plan, a
sweeping initiative that would make massive investments in the nation's
crumbling roads & bridges & includes billions to combat climate
change & bolster care for elderly & disabled Americans, as well as
the $1.8T American Families Plan, which would dramatically
expand the gov-fund social safety net. Biden has called for
funding the first plan by raising taxes on corps, from 21% to
28%, & the 2nd by increasing taxes on wealthy Americans earning
more than $400K – hikes that Rep lawmakers fiercely oppose. While the $928B offer is much closer in line to Biden's target,
there remains an ideological gulf between the 2 sides over what
constitutes infrastructure. The GOP's plan notably does not include new
spending on a wide range of areas where Biden has recommended Bs,
such as elder care & veterans hospitals.
What's in the latest bipartisan infrastructure proposal?
The prices of commodities were falling sharply, cutting into months of gains & weighing on equity markets, as China takes steps to cool off rising prices & the $ strengthens. The decline in commodities was widespread, with futures prices for palladium & platinum falling more than 11% & 7%, respectively, along with declines of more than 5% for corn futures & 4% for contracts tied to copper. Oil prices were also down more than 2%. The move continued a slide that began earlier in the week, thanks in part to actions by Chinese regulators. A Chinese gov agency announced a plan yesterday to release reserves of key metals, including copper & aluminum. Officials in the country have also warned about speculation in financial markets in recent weeks. The Federal Reserve's increased projections for inflation & rate hikes from yesterday also could be contributing to the decline by putting upward pressure on the $ & signaling that the central bank is closely following the rise in prices. The $ index, which measures the greenback against a basket of currencies, has risen about 1.6% since Fed's updated projections were released. Commodities often move inversely to the greenback since they are mostly priced in $s globally. The fall comes after a strong H1 for commodities, fueled by increased industrial demand as the US & other economies began to reopen as Covid cases declined. The weakness for commodities rippled into the equity market today, taking a bite out of energy & mining stocks.
Commodities from copper to corn tumble on China crackdown, rising dollar
Federal health officials are continuing to push for more Americans to get vaccinated as the delta variant accounts for a bigger share of new cases in the US. “You have to get vaccinated in order to be protected from Covid-19, the delta variant and any other variant that might come down the road,” Jeffrey Zients, White House coronavirus response coordinator, told reporters. The variant, first detected by scientists in India, has now spread to more than 80 countries & accounts for more than 10% of new cases in the US, up from 6% last week. “If you are vaccinated, you are protected, and if you are not, the threat of variants is real and growing,” US Surgeon General Dr Vivek Murthy said after explaining that the delta variant is “significantly more transmissible and may be more dangerous than prior variants.” The Centers for Disease Control & Prevention recently designated the delta variant as a variant of concern “based on mounting evidence that the delta variant spreads more easily and causes more severe cases when compared to other variants, including B.1.1.7 (Alpha),” it said. New cases & deaths are down dramatically in the US, thanks to generally successful vaccination campaigns in many states. But some pockets of the country are still seeing a rise in cases & hospitalizations.
U.S. officials continue push for vaccinations as delta variant gains ground
Gold futures dropped nearly 5%,
with most-active contract prices marking their largest one-day loss of
the year & lowest finish since Apr 30. The Federal
Reserve yesterday signaled an interest rate increase sooner than
previously expected. .
Aug gold fell $86 (4.7%) to settle at $1774 an ounce.
Gold futures suffer a sharp drop to their lowest finish since late April
Oil futures dropped, with prices pulling back from the highest finish in more than 2 years as the $ strengthened in the wake of a hawkish shift in tone by the Federal Reserve. The $ strengthened after Fed policy makers penciled in 2 rate hikes by the end of 2023 & discussed the eventual tapering of the central bank's asset buying program. The ICE $ Index a measure of the currency against a basket of six major rivals, was up 0.8% at 91.83. A stronger $ can weigh on commodities priced in the currency, making them more expensive to users of other currencies, though pressure on crude was offset by strong demand expectations. West Texas Intermediate crude for Jul delivery lost $1.11 (1.5%) to settle at $71.04 a barrel. It eked out a gain of just 3¢ yesterday to settle at the highest since Oct 2018. Aug Brent crude, the global benchmark, fell $1.31 (1.8%) to $73.08 a barrel. Yesterday, Brent logged its highest settlement since Apr 2019.
Oil prices end sharply lower as Fed’s shift in tone lifts U.S. dollar
This was one brutal days in the financial markets. Commodities were hit with heavy selling which led to the stock market decline. However, tech stocks did well with the NAZ around record highs, & the advance/decline ratio was mild all considered. There is more wrangling about how to pass an infrastructure bill & the virus has shows no signs of wanting to give up its fight. The Dow is back where it was 2 months ago (see below).
Dow Jones Industrials
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