Dow rose 44, decliners over advancers more than 4-3 & NAZ fell 32. The MLP index was off 2+ to the 188s & the REIT index jumped 3+ to the 461s (record territory). Junk bond funds slid lower & Treasuries remained inheavy demand. Oil dropped 2+ to the 72s & gold climbed 16 to 1826 (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)
Wells Fargo (WFC) swung to a profit in Q2, the bank said, as
it released funds set aside to cover soured loans, while costs tied to
its years-old sales practices scandal stabilized. WFC has been operating under penalties from regulators since
2016 when details of a sales scandal emerged & led to the departure of 2 CEOS & Bs of $s in litigation &
remediation costs. Under an order imposed by the Federal Reserve in 2018, the bank is not allowed to let its assets rise above $1.95T. However, WFC began to rein in costs this year, signaling that it may
finally be emerging from the episode that has dogged it for nearly 5
years. The 4th-largest US lender reported EPS of $1.38, compared with a net loss per share of $1.01 last year. The forecast for EPS was 95¢. The stock rose 1.75.
If you would like to learn more about WFC, click on this link:
club.ino.com/trend/analysis/stock/WFC?a_aid=CD3289&a_bid=6ae5b6f7
Wells Fargo beats profit estimates on reserve release boost
OPEC arrived at a deal after a nearly 2-week standoff over its future oil production levels. The temporary but unprecedented gridlock that began in early Jul saw the UAE reject a coordinated oil production plan for the group spearheaded by its kingpin, Saudi Arabia. Abu Dhabi had demanded that its own “baseline” for crude production — the maximum volume it’s recognized by OPEC as being able to produce — be raised because this figure then determines the size of production cuts & quotas it must follow as per the group’s output agreements. Members cut the same percentage from their baseline, so having a higher baseline would allow the UAE a greater production quota. The UAE initially called for its baseline to be raised from 3.2M barrels a day to 3.8M barrels a day. According to sources, the compromise reached between Saudi Arabia & its smaller neighbor will raise the UAE's baseline to 3.65M barrels per day from Apr 2022. The reports have not been officially confirmed. The initial agreement supported by most OPEC delegates set out a plan for the group to collectively bring production up to 400K barrels of crude per day monthly thru to the end of 2022. This would end the remaining limits that were set in the spring of 2020, as economic recovery & growing demand for oil have brought crude prices up to their highest level since late 2018.
OPEC reportedly reaches compromise on oil production after dispute with UAE
American Airlines (AAL) shares rose after the carrier forecast better revenue & a narrower
loss than previously estimated for Q2, the latest sign
that airlines are recovering from the coronavirus pandemic's toll on
travel. The carrier said that it
expects to post a “slight” pretax profit for Q2. Itwill likely report results ranging from a net loss of $35M to
a net profit of $25M for Q2. Excluding net special items, it expects a net loss of up to $1.2B an adjusted per-share loss of $1.67-1.76. That
compares with estimates of $2.44 a share. “We are clearly moving in the right direction,” CEO Doug Parker & Pres Robert Isom said in a staff note. AAL flew 44M passengers in Q2, an
82% increase from Q1, though still below
2019 levels. Revenue for the qtr ended last month likely came
in 37.5% below the same period of 2019, when it generated almost $12B, compared with an earlier estimate of a 40% drop. AAL expects its daily cash build rate will be about $1M a day, the first positive qtr since the pandemic started. AAL, for its part, trimmed its schedule
for the first ½ of Jul by 1% & canceled flights last month
partially due to a shortage of trained & available pilots or other
staff. “Restoring service this quickly in response to
unprecedented demand growth is incredibly complex,” Isom & Parker
wrote. “But the people of American are rising to the occasion, and the
results prove that.” The stock rose 60¢.
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 shares surge on carrier’s better second-quarter forecast
Gold futures marked their highest finish in nearly a month, finding support on the back of a decline in the $ & Treasury yields, as Federal Reserve Chair Jerome Powell offered his first day of his 2-day testimony to Congress on the state of the economy. In prepared testimony for delivery to the House Financial Services panel, Powell once again said that he believes the sharp rise in inflation seen so far this year will moderate. The market has seen mounting evidence of surging inflation, with headline CPI for Jun beating expectations, rising 0.9% after a 0.6% jump in May, while the annual rate rose to 5.4% from 5%, the highest level since 2008. Aug gold climbed $15 (0.8%) to settle at $1825 an ounce, following a 0.2% gain yesterday. Prices based on the most-active contract saw their highest settlement since Jun 16. Prices held onto their gains, at $1825 in post-settlement trade, shortly after the Fed's Beige Book on economic conditions, released after the gold futures settlement, said the US economy “strengthened further.” Gold has enjoyed a resurgence amid questions about the economic outlook in the recovery from COVID-19, a rebound that is complicated by the spread of delta variants of the virus & growing pricing pressures that might compel the Fed to soon scale back its accommodative policies & eventually raise interest rates. Commodity experts say that gold has particularly benefited from a struggle to see COVID restrictions removed in parts of Europe & Asia.
Gold marks highest finish in nearly a month as Powell says inflation will moderate
Oil futures settled lower, pressured by data showing a decline in US gasoline demand, as traders weighed speculation that Saudi Arabia & the UAE have made progress toward a compromise on production levels. A disagreement between the 2 nations had led to an abrupt end to discussions by OPEC+ (Organization of the Petroleum Exporting Countries & their allies) earlier this month without an agreement on crude production levels. Some reports said the UAE & Saudi Arabia had reached a compromise, but the UAE has said no deal has been reached with OPEC+ producers & that talks are ongoing & would need the support of other OPEC countries. Traders also parsed thru US weekly petroleum supply data that revealed domestic crude supplies fell for an 8th week in a row, but implied demand for motor gasoline declined, leading to an increase in supplies of the fuel. West Texas Intermediate crude for Aug fell $2.12 (2.8%) to settle at $73.13 a barrel. Sep Brent crude, the global benchmark, lost $1.73 (2.3%) at $74.76 a barrel. Saudi Arabia & the UAE reached a compromise to lift the amount of oil the UAE can pump as part of a wider OPEC+ agreement according to people familiar with the matter. OPEC+ talks on a proposal to lift production by 400K barrels a day each month thru late 2022 fell apart earlier this month after the UAE insisted that its baseline should be raised from around 3.16M barrels a day. In the compromise reportedly reached today with Saudi Arabia, the UAE. can raise that to 3.65M barrels a day starting in Apr. Some reports, however, said that in a statement, the UAE energy minister denied that an agreement had been reached with OPEC+ & that “deliberations and consultations between concerned parties are ongoing,” Meanwhile the US gov reported that US crude inventories fell by 7.9M barrels last week, marking an 8th weekly decline in a row.
Oil prices drop as traders weigh talk of Saudi Arabia, U.A.E. output deal progress
Dow Jones Industrials
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