Dow shot up 285 (close to session highs), advancers over decliners 3-1 & NAZ advanced 133. The MLP index went up 4+ to the 186s & the REIT index was fractionally lower to the 463s. Junk bond funds fluctuated & Treasuries were heavily sold after the recent rally. Oil rose 3+ to go over 70 & gold was off 6 to 1804 (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)
United Airlines (UAL) reported higher Q2 revenue & a narrower loss thanks to
a resurgence in air travel, the latest carrier to issue a brightening
outlook for one of the Covid pandemic's most battered sectors. The
airline expects to generate positive
adjusted pretax income for Q3 & Q4, &
plans to ramp up flying in response to higher travel demand. Domestic leisure travel has led the recovery, but UAL said even
intl long-haul & business travel bounced back faster than
expected in Q2. CEO Scott Kirby sai that he hasn’t seen a decline in bookings because
of the fast-spreading delta Covid-19 variant & that the rebound in
travel would likely continue “unabated.” Airlines have repeatedly pressed
the Biden administration to lift an entry ban on most non-US citizens
arriving from the UK & the EU that has been in place
since early in the pandemic. Revenue of $5.5B for Q3 was down
by more than 50% from the same qtr of 2019 but up nearly 70% from
the Q1 of this year as US officials rolled out Covid vaccines broadly this spring, attractions reopened & more customers returned to air travel. However,
UAL still posted a net loss of $434M, its 6th consecutive
quarterly loss. In Q1, UAL had a loss of
nearly $1.4BB & a loss of $1.6B in Q2-2020. The airline recorded $1.1B in income from a federal payroll grant,
part of the $54B Congress set aside for US airlines since Mar
2020. The airline ended Q2 with about $23B in available liquidity. Adjusting for one-time items, UAL posted a per-share loss of $3.91, in line with estimates. But UAL & other airlines have been upbeat about the demand recovery. UAL last month said it plans to buy 270 narrow-body jets, its largest aircraft order ever, to replace older planes & grow the carrier over the next several years. The stock rose 1.78.
If you would like to learn more about UAL, click on this link:
club.ino.com/trend/analysis/stock/UAL?a_aid=CD3289&a_bid=6ae5b6f7
United Airlines narrows loss, plans to ramp up flying to meet strong travel demand
Reps lambasted Dems for attempting to unilaterally pass a sprawling $3.5T reconciliation bill, raising concerns that another burst of gov spending will act as an accelerant to already rapidly inflation. "This is a liberal wishlist," Sen Lindsey Graham said alongside 5 GOP senators. "And how does it add to inflation? Well, spending $3.5 trillion is not a good idea when you have an inflationary economy." The gov reported last week that prices for goods and services jumped by the most in 13 years, fueling concerns that a rapidly rebounding economy could lead to runaway growth. The Labor Dept said in its monthly report that consumer prices rose 0.9% from May & 5.4% over the past year . Excluding volatile oil & gas prices, core inflation jumped 4.5% over the past year, the largest increase since 1991. GOP lawmakers have latched onto the higher-than-expected inflation, blaming the $1.9T stimulus bill that Dems passed without any GOP votes in Mar for the price spike & attacking Biden for moving forward with another $4T in new spending. "What we're talking about here is the largest expansion of government, the largest expansion in spending, and the largest tax increase literally in the history of the country," Sen John Thune said. "It is a reckless, radical agenda. And the American people are going to end up paying for it." But Pres Biden & Dem lawmakers are continuing to push forward with a reconciliation bill that envisions spending $3.5T over the next decade in order to drastically expand the gov-funded safety net. The spending agreement, announced last week, would invest Bs in an array of planned health, education, environment & social programs as Dems seek to use their power monopoly to squeeze thru a slate of left-wing priorities. It would be paid for by new taxes on wealthy Americans & corps. "It's going to be a nightmare for the American people if this reconciliation bill passes," Graham said. "It will take an inflation problem that we have today and pour jet fuel on it." Biden has argued the gov investments would curtail rising inflation – rather than inflame it.
Republicans shred Democrats' $3.5T plan as 'reckless' amid surging inflation
Harley-Davidson (HOG) joined a chorus of other US companies in warning that inflation headwinds are going to persist for at least the rest of this year. The motorcycle manufacturer has seen inflation across all modes of freight & in raw materials. "We have continued to see inflation across all modes of freight as
well as within raw materials, and we are forecasting this to continue
throughout the fiscal year," CFO Gina Goetter said. Inflation
headwinds during the qtr were worth about 5 points of margin – 2 from raw materials costs & 3 from higher logistics rates. To offset those pressures, HOG announced that beginning on Jul 1 it
would implement a 2% pricing surcharge for select models for the
remainder of the 2021 model year. The surcharge, which will not fully
offset the raw material cost pressure, would add $200 to the price of a
bike that would normally cost $10K. The inflation headwinds overshadowed its better-than-expected qtr. Motorcycle sales surged 131% year over year to $1.0B.
That helped drive a 77% increase in total revenue to $1.53B,
which exceeded the estimate of $1.4B. The
company swung to a $206B quarterly profit from a $92M
loss the year prior. Adjusted EPS of $1.41 beat the $1.17
that was expected. The stock fell 3.11.
If you would like to learn more about HOG, click on this link:
club.ino.com/trend/analysis/stock/HOG?a_aid=CD3289&a_bid=6ae5b6f7
Harley-Davidson warns inflation headwinds will persist
Gold futures lost ground, holding above the $1800-an-ounce threshold but settling at their lowest in nearly 2 weeks, as Treasury yields continued to bounce off 5-month lows, dulling demand for the precious metal. Gold for Aug fell $8 (0.4%) to settle at $1803 an ounce after touching a low at $1794. The settlement was the lowest for a most-active contract since Jul 8. The central bank will announce it's decision on monetary policy on Jul 28. So far this week, the ICE US Dollar Index has traded around 0.2% higher. The yield on the 10-year Treasury note, which dipped to a 5-month low on Mon, continued to rebound, rising 7.3 basis points to 1.279% today. Higher bond yields raise the opportunity cost of holding assets that don’t offer yields.
Gold prices settle at lowest in nearly 2 weeks as Treasury yields bounce
Oil futures posted a more than 4% gain, as a decline in crude stocks at the Cushing, Okla. storage hub to the lowest level since early 2020 provided support, outweighing any pressure from the first weekly US crude inventory rise since mid-May. The Energy Information Administration (EIA) reported that US crude inventories rose by 2.1M barrels last week marking the first weekly rise in 9 weeks. At 439M barrels, crude supplies are about 7% below the 5-year average for this time of year. The forecast was for a decline of 6.7M barrels for crude stocks, while the American Petroleum Institute yesterday reported an 806K barrel increase. The EIA data also showed crude stocks at the Cushing, Okla, storage hub declined by 1.4M barrels for the week to 36.7M barrels. Stocks at the storage hub haven't been this low since Jan 2020. West Texas Intermediate crude for Sep rose $3.10 (4.6%) to settle at $70.30 a barrel, extending a 1.3% rise from yesterday. Sep Brent, the global benchmark, gained $2.88, (4.2%) to settle at $72.23 a barrel.
U.S. oil prices up over 4% as inventories at Cushing decline to 18 month low
Dow Jones Industrials
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