Dow climbed 131, advancers over decliners 2-1 & NAZ went up 18 (just short of a new record). The MLP index was up to the 198s & the REIT index rose 3+ to the 448s. Junk bond funds were purchased & Treasuries continued to be sold. Oil jumped 1+ to the high 74s & gold was up 3 to 1775 (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)
The Dem-controlled House voted to approve a $715B transportation & water infrastructure bill, a 5-year initiative focused on rebuilding the nation's roads, rail, public transit & water systems. The INVEST in America Act passed mostly along party lines at 221-201, with 2 Reps joining Dems to support the bill. Although Pres Biden & a bipartisan group of senators struck a deal recently for a $973B infrastructure bill, they have yet to turn the framework into actual legislation. House Dems are hoping to include many of their bill's provisions when lawmakers begin broader infrastructure negotiations later this summer. "I'm suggesting that substantial amounts of the policy in our bill should be negotiated – by the White House and the Senate and the House – to be part of that bipartisan proposal," Rep Peter DeFazio, the primary author of the bill, said. The proposal would allocate Bs to "core" infrastructure projects.:
- $343B for roads, bridges & safety
- $109B for transit
- $95B for passenger & freight rail
- $117B for drinking water infrastructure & assistance
- $51.25B for wastewater infrastructure
Still, the bill does not include any new funding efforts – something that House Reps criticized. They argued the proposal would add to the already record-high deficit & exacerbate a recent surge in the price of goods and services. House Speaker Nancy Pelosi & Senate Majority Leader Chuck Schumer endorsed a strategy that would make the passage of a smaller bill contingent on the success of a reconciliation bill focused on "human" infrastructure, such as combating climate change, expanding health care, bolstering child care & establishing free community college.
House passes $715B transportation, water bill amid bipartisan infrastructure push
A recent burst of inflation could prove more long-lasting than expected as the surging US economy faces widespread bottlenecks that have severely disrupted the global supply chain, a Federal Reserve official said. St Louis Fed Pres James Bullard predicted that prices for most goods & services will continue to climb in 2021 & 2022 after companies were thrown off by the speed of the economic recovery from the pandemic & the wave of pent-up demand among consumers who are flush with cash. "Those things I don't think are as easy to fix as some people think," Bullard said. "We're going to see continuing price pressure well into 2022." His comments come as policymakers at the central bank grapple with how to handle conflicting economic data: While inflation is on the rise – in May, the gov reported that consumer prices for goods & services rose 5% in May from a year prior, the fastest year-over-year jump since 2008 – job growth has been mostly lackluster. There are still some 9.3M Americans out of work. During their 2-day, policy-setting meeting in Jun, Fed officials unanimously voted to hold interest rates near zero, where they have sat since Mar 2020 & committed to keep purchasing $120B in bonds each month. But updated economic projections released by the Fed showed that officials expect to raise rates twice, to about 0.6%, by late 2023, in part due to heightened expectations for inflation. "The risk here for us policymakers is that there's still upside risk to inflation," Bullard added. "Even though we're going to have higher inflation this year, it could even be higher than we anticipated, and it could be higher than we anticipated next year. We have to be ready for that situation." The Fed gave no signs in Jun that it was imminently considering scaling back its aggressive bond-buying program, even though policymakers raised headline inflation expectations to 3.4% for 2021 – a full point higher than the Mar forecast. But Bullard suggested today that it was time for officials to "get moving" on the tapering discussion. "The U.S. economy is really roaring forward coming out of this pandemic," he said. "We're getting bottleneck and inflation concerns, and I think we're going to have to be attentive to those concerns."
Fed's Bullard warns inflation could be higher than expected in 2022
The federal gov will be swimming in $3T of red ink by the end of fiscal 2021, according to a Congressional Budget Office (CBO) estimate, that swelled 33% from the last forecast. As a result of multiple stimulus measures aimed at combating the pandemic's economic impact, Congress will run a budgetary shortfall this year equivalent to 13.4% of GDP, the 2nd-largest level since 1945 & exceeded only by the 2020 spending. The CBO last released a deficit estimate in Feb, when it saw a deficit $745B smaller than the one projected now. Under the current projections, the $23T portion of gov debt held by the public would bump to 103% by the end of the current fiscal year. The deficit in 2020 totaled $3.1T & already is at $2.1T thru the first 8 months of the fiscal year. Total gov debt is now $28.3T, of which the public holds $22.2T. “The economic disruption caused by the 2020–2021 coronavirus pandemic and the legislation enacted in response continue to weigh on the deficit (which was already large by historical standards before the pandemic),” the office wrote in its report. There was some good news: The CBO raised its estimate for GDP to gain 7.4% by the end of 2021 & 2.8% a year thru 2025, well above historical norm. Unemployment also will continue to decline, the report said, until it falls to around 4% in 2022 & remains there for several years. On inflation, the office sees the personal consumption expenditures index rising by 2.8% this year. The PCE index is the preferred inflation measure for the Federal Reserve, which last week indicated a headline inflation rate of 3.4%, well above its 2% target. The CBO then expects inflation to moderate in coming years to 2% in 2022 then holding around 2.1% thru 2025. The 10-year Treasury note yield is estimated to rise to 2.7% from the end of 2025; it most recently traded around 1.48%.
U.S. deficit to total $3 trillion in fiscal 2021, budget panel says
General Motors (GM) US vehicle sales during Q2 were slightly lower than expectations as an ongoing shortage of semiconductor chips
impacted vehicle production & dealer inventories. The
automaker reported sales of 688K vehicles during Q2, up 39.7% from a year earlier when the coronavirus pandemic caused Americans to shelter in place & temporarily closed auto dealerships. The forecast expected its sales to increase between 40-43%. “Consumer
demand for vehicles is also strong, but constrained by very tight
inventories. We expect continued high demand in the second half of this
year and into 2022,” said Elaine Buckberg, GM chief economist. GM said it ended Q2 with only 212K vehicles in
inventory, a 37% decline from 335K at the end of Q1. Before the pandemic impacting vehicle production, the
inventory levels were about 616K units to end 2019. GM is among
the first major automakers to report Q2 sales. Overall, analysts estimate automakers sold about 4.5M vehicles in
the US in Q2 — a 52-53% increase compared with
Q2-2020. Sales results for other automakers are coming in slightly below analyst expectations. The stock was off 13¢.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM?a_aid=CD3289&a_bid=6ae5b6f7
GM’s second-quarter sales up nearly 40% but slightly miss analyst expectations
Gold futures finished higher, supported by opportunistic buying & an unwind of short bets overnight, amid a rise in the $ to a 3-month high, which was pared earlier in the session. Aug gold traded $5 (0.3%) higher to settle at $1776 an ounce, after rising 0.5% a day ago. The move today comes after bullion booked a Jun loss of more than 7%, a roughly 5% gain in Q2 & a 6.6% decline in H1, based on the most-active contract. The $, as gauged by the ICE U.S. Dollar Index, a measure of the buck against a ½-dozen currencies, was up 0.1% though it rose to a 3-month high overnight. A stronger $ can make $-pegged precious metals more expensive to overseas buyers. Moves in gold however, were seen as likely to be constrained by risk sentiment percolating in global stocks, with the S&P 500 index reaching its 34th record close of the year.
Gold logs back-to-back gains to start July, second half of 2021
Oil future ended solidly higher, but off session highs, after news
reports said a dispute between the United Arab Emirates & Saudi Arabia
forced the delay of a meeting of the Organization of the Petroleum
Exporting Countries & its allies. An OPEC+ advisory panel will meet
again Fri in an effort to resolve the divide.
OPEC+ ministers, who were poised to consider a proposal that would
reportedly see output rise by around 400K barrels a day from Aug
to the end of the year, will meet Fri after the advisory panel
concludes its talks. West Texas Intermediate crude for
Aug rose $1.76 (2.4%) to end at $75.23 a barrel.
Oil jumps, but ends off highs, as OPEC+ decision on output boost is delayed
Stocks keep meandering with an upward bias on the buy side. The S&P 500 & NAZ have been edging higher, good enough to set new records. But the Dow is still about 145 under its record reached nearly 2 months ago.
Dow Jones Industrials
No comments:
Post a Comment