Dow went up 83 (near session high), advancers modestly above decliners & NAZ crawled up 3. The MLP index rose 4+ to the 187s & the REIT index was even in the 463s. Junk bond funds inched higher & Treasuries saw a little buying. Oil remained above 72 & gold was off 5 to 1796 (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 group of lawmakers is racing to finalize a long-sought infrastructure agreement this week as they attempt to reconcile key differences that could imperil the roughly $1.2T deal. Although senators hoped to finish negotiations today, the 22-member group concluded weekend talks with major roadblocks still remaining. The biggest sticking points are how much funding should go to public transit, highways, bridges, water & broadband & whether to use unspent COVID-19 relief money to help pay for the bill. The coming days are crucial: Senate Majority Leader Chuck Schumer has said that he wants to pass the bipartisan package as well as the blueprint for a $3.5T budget plan before the Senate leaves for its 5-week Aug recess. Schumer held a procedural vote last week to begin debate on the unfinished proposal, but all 50 Reps voted against it, saying they needed to see the finalized legislation first. But developments as senators are drafting the bill indicate that fractures could be opening between key negotiators & the White House. Dem negotiations & White House officials sent an offer yesterday to Rep with proposals to overcome the existing issues. But Reps responded poorly to the offer, alleging that is attempts to revisit issues where there was already agreement. "Our staff worked through the weekend to continue to finalize key aspects of this agreement. Republicans made very reasonable, good-faith offers every step of the way during this process, including on transit Wednesday. That offer was met with silence for three days," a GOP aide said. "The ‘global offer’ we received from the White House and Chuck Schumer was discouraging since it attempts to reopen numerous issues the bipartisan group had already agreed to." The aide said that talks could collapse if the White House does not show more "flexibility."
Bipartisan infrastructure deal enters crucial week as roadblocks remain
American Airlines (AAL) said it might have to add stops to certain flights because of fuel
delivery delays at some midsize airports & asked pilots to conserve
when when possible, the latest headache during a surge in summer travel. The
carrier said airlines, including AAL, have experienced the supply
shortages due to a lack of truck drivers, trucks & fuel supply. “American
Airlines station jet fuel delivery delays initially affected mostly
western U.S. cities, but are now being reported at American stations
across the country. Delivery delays are expected to continue through
mid-August,” according to a company memo. The airline said flights will carry additional fuel into airports
affected by shortages, a procedure known as tankering or add fueling
stops. AAL did not immediately respond to a request for comment
about how many disruptions fuel supply issues have caused. “As our
country continues to face multiple challenges, let’s work together as a
team to operate reliably, safely and as efficiently as possible,” the
memo added. The stock rose 88¢.
If you would like to learn more about AAL, click on this link:
club.ino.com/trend/analysis/stock/AAL?a_aid=CD3289&a_bid=6ae5b6f7
American Airlines warns about fuel shortages around the country
Sales of newly built homes dropped in Jun to the lowest level since the early days of the coronavirus pandemic in Apr 2020, according to data released by the Census Bureau. Sales of new single family homes fell to an annualized rate of 676K, 6.6% below May’s rate of 724K & 19.4% below the Jun 2020 level of 839K. The forecast called for new home sales to increase 3.4% in Jun. After a year of frenzied buying & price gains in the double digits, newly built homes are now out of reach for much of the demand that remains in the market. The median price of a newly built home in Jun rose just 6% from Jun 2020, & while that is a large gain historically, it is nothing compared with the 15%-20% annual gains seen in previous months. Most of the homebuying is on the higher end of the market & builders cannot afford to put up affordable homes due to skyrocketing construction costs. Softwood lumber, in particular, spiked more than 300% during the pandemic, & while it has fallen back dramatically in the last month, it is still about 75% above its 2019 average. Other lumber products are still significantly more expensive. The inventory of new homes for sale jumped from a 5.5-month supply in May to a 6.3-month supply in Jun. Last fall, it sat at a low of just 3.5 months. In Jun, the number of homes for sale that had not yet been started hit an all-time high. Buyers in Jun were also hit with higher mortgage rates, which spiked about a qtr of a percentage point during the month. While that may not sound like a lot, if buyers are already stretched by higher home prices, they have less of a financial cushion to absorb higher mortgage rates. Single family housing starts continue to gain, albeit slowly & not on the lowest end of the market. Permits, an indicator of future construction, are not as robust as the market needs.
Housing boom is over as new home sales fall to pandemic low
Gold futures fell below the key $1800 mark to finish at the lowest price in nearly 3 weeks, as investors prepared for this week's meeting of Federal Reserve policy makers. The Fed tomorrow will begin a 2-day policy meeting of its FOMC. Policy makers are expected to discuss plans around eventually slowing the pace of the Fed's monthly bond purchases. The Fed will issue its monetary policy statement on Wed. Some economists, however, said that investors expecting clear answers about the crucial questions of when the tapering will start and the pace of any pull back will likely be disappointed. Gold for Aug edged down $2 to settle at $1799 an ounce. That was the lowest most-active contract settlement since Jul. Gold prices had traded as high as $1812 today, supported in part by weakness in the $. The ICE US Doll, a measure of the currency against a basket of 6 major rivals, was down nearly 0.4%. A weaker $ can be supportive for commodities priced in the unit, making them less expensive to users of other currencies.
Gold ends below $1,800, lowest in almost 3 weeks
US benchmark oil futures suffered their first loss in 5 sessions, but global benchmark crude prices ended with a gain, as traders weighed prospects for demand amid the spread of the delta variant of the coronavirus that causes COVID-19. Reports of a crackdown by China on crude importers also contributed to price pressures. West Texas Intermediate crude for Sep fell 16¢ to settle at $71.91 a barrel. Prices for the front-month contract had posted gains in each of the last 4 trading sessions. Sep, however, tacked on 40¢ (0.5%) to settle at $74.50 a barrel, stretching its streak of gains to a 5th-consecutive session. Oil futures rose last week, shaking off a plunge last Mon as investors temporarily dumped equities & other assets perceived as risky in a selloff attributed in part to concerns around a renewed rise in COVID-19 cases. Those worries, however, continue to linger. Expectations around the potential for Chinese oil imports to rise are being scaled back although expectations for higher oil production may pressure oil prices. Baker Hughes reported on Fri a 4th straight weekly rise in the number of active US oil drilling rigs, implying a production increase ahead.
U.S. oil futures suffer first loss in 5 sessions as demand worries prevail
Even though the popular stock averages are around record highs, there is a lot of investor nervousness. Gold continues to be in demand & the yield on the 10 year Treasury has fallen 45 basis points in the last 4 months. The infrastructure bill keeps stumbling along as they write it. Expect it to be thousands of pages long & thrown at the senators a few hours before the deadline at week's end. Thar's called being sloppy & careless with Ts of $s by gov workers who really don't really care.
Dow Jones Industrials
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