Dow lost 150, decliners over advancers about 2-1 & NAZ gained 140 to another record. The MLP index fell 4+ to the 191s & the REIT index remained weak, down 2 to the 448s. Junk bond funds were about even & Treasuries rose on strong demand. Oil fell 1+ to the 72s & gold went up 2 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 bipartisan infrastructure proposal reached by Pres Biden & a group of senators has regained its footing. Even so, Dems' plan to push it thru Congress in tandem with a broader package to expand the social safety net & fight climate change faces a familiar threat: Senate Minority Leader Mitch McConnell. Biden's suggestion last week that he may veto the bipartisan framework if lawmakers do not also pass other Dem priorities briefly threatened the deal. The pres assuaged some Reps by clarifying that he would sign the bill if it were passed on its own. But McConnell insisted today that Dem leaders on Capitol Hill also need to separate the 2 pieces of legislation, raising the risk that the deal could unravel. “The President has appropriately delinked a potential bipartisan infrastructure bill from the massive, unrelated tax-and-spend plans that Democrats want to pursue on a partisan basis,” he said. “Now I am calling on President Biden to engage Leader Schumer and Speaker Pelosi and make sure they follow his lead.” Biden's statement “would be a hollow gesture” unless Senate Majority Leader Chuck Schumer & House Speaker Nancy Pelosi make the same commitment to pass the bipartisan plan even without the Dems' bill, McConnell said. The statement from McConnell, who has vowed to fight Biden's economic agenda, highlights the perils Dems face in trying to pass their priorities. Pressure from McConnell could trip up the party's delicate strategy to keep its liberal & centrist members on board for both bills.
McConnell attacks Dems’ infrastructure strategy, threatening deal despite Biden olive branch to GOP
With the Federal Reserve set to release a much-anticipated report this summer on the potential creation of a digital $, the central bank's vice chair for supervision said that he has significant doubts about the idea. Fed Governor Randal Quarles expressed skepticism about most arguments made in favor of a central bank digital currency. “The potential benefits of a Federal Reserve CBDC are unclear,” Quarles said in prepared remarks. “Conversely, a Federal Reserve CBDC could pose significant and concrete risks.” Among the downsides he cited are the challenges if the public could bypass traditional banks and go straight to the Fed for digital money. Along the same lines, he said the benefits that consumers get thru bank competition might be diminished if the Fed stepped further into the space. Also, he worried about the potential of cyberattacks on a system whose security would be difficult to design. Proponents of a Fed-issued digital $ say it could speed up payments systems, particularly internationally. They also cite the benefits for the unbanked or under-banked who don't have access to the existing digital payments system. Essentially, a Fed digital currency would act the same as the digital $s that are exchanged every day, except instead of being guaranteed by banks they would be backed by the Fed. Those who don't have bank accounts could use the Fed system to transfer money back & forth. Advocates say, for example, that getting stimulus checks out to people during crises like the Covid-19 pandemic would be made easier thru a central bank digital currency system. But Quarles said the system could be difficult & expensive to design, likely would require an act of Congress & would be redundant for the systems already in place. “First, the U.S. dollar payment system is very good, and it is getting better. Second, the potential benefits of a Federal Reserve CBDC are unclear. Third, developing a CBDC could, I believe, pose considerable risks,” he said. “So, our work is cut out for us as we proceed to rigorously evaluate the case for developing a Federal Reserve CBDC.” His remarks come with the Fed set to release a research paper this summer to explore the issue further. Some other Fed officials, such as Governor Lael Brainard, have expressed support for the CBDC.
Fed Vice Chair Quarles casts significant doubt on establishing a digital dollar
Investors can’t seem to get enough of plain old US stocks & demand, already near an all-time high, shows no signs of slowing down as the S&P 500 sits at a record high. "Households, foreign investors, mutual funds, and pension funds collectively own 91% of the US equity market," noted Goldman Sachs in a recent research note. "We forecast households will be net buyers of $400 billion in equities in 2021 driven by the buildup of cash in money market funds, anemic credit yields, and a rebound in retail trading activity," the team, led by David Kostin, detailed. Trading among the retail community has jumped, in part due to firms such as Robinhood, which in a recent campaign touted the ease of investing with just $1. The other component expected to drive stocks higher, according to Goldman, is buying from big business. "Corporations will be the largest source of equity demand for the remainder of 2021, as we expect buybacks to accelerate and issuance to slow from peak 1Q21 levels," Goldman said. Big banks could be among the more active buyers. Last week, the Federal Reserve reported 27 of the nation's largest banks passed its stress tests with flying colors, with banks now holding more than double the average capital cushion required by the Fed to ensure the stability of the US financial system & the ability to lend to both businesses & consumers. As a result, restrictions on buybacks & divs will be lifted officially on Jun 30.
US stock ownership nears record, will keep climbing: Goldman Sachs
Gold futures scored back-to-back session gains, after posting the first weekly price gain in 4 weeks, as traders look to the $, ahead of key economic data this week, for hints on the $-denominated precious metal's next move. Aug gold climbed $2 to settle at $1780 an ounce. The 100-day moving average for the most-active contract stands at $1792 an ounce.
Gold ends higher, scoring back-to-back gains
Oil futures marked their lowest finish in more than a week, pulling back after a recent rise to their highest levels since 2018. Concerns that the spread of a COVID variant in Europe and Austria will lead to less travel, easing demand for fuel, put pressure on oil prices, as traders awaited a decision this week by the Organization of the Petroleum Exporting Countries & its allies (OPEC+) on crude production levels. The group of producers will hold technical meetings this week to review the oil market, ahead of official meetings of OPEC, as well as the wider OPEC+ group, on Thurs. West Texas Intermediate (WTI) crude for Aug fell $1.14 (1.5%) to settle at $72.91 a barrel. Sep Brent crude the most actively traded contract for the global crude benchmark, fell $1.24 (1.6%) at $74.14 a barrel. Aug Brent crude which expires at the end of Wed's trading session, fell $1.50 (2%) to $74.68 a barrel. Front-month WTI & Brent crude marked their lowest settlements since Jun 18. In early Apr, OPEC+ agreed to gradually rollback previous output cuts from May thru Jul. Saudi Arabia also said it would ease the voluntary cuts the kingdom had been making since Feb. OPEC+ had been holding back roughly 8M barrels a day of output at the time, 1M of which represented the Saudis' voluntary cut. Meanwhile, China said it plans to raise retail prices of gasoline & diesel starting tomorrow, according to a report from Xinhua, citing the National Development & Reform Commission.
Oil prices end at a more than a 1-week low on demand concerns, OPEC+ output uncertainty
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