Tuesday, August 31, 2021

Markets were mixed but higher for the month of August

Dow pulled back 39, advancers modestly ahead of decliners & NAZ was off 6.  The MLP index slid to the 176s & the REIT index went up 1+ to the 472s.  Junk bond funds fluctuated & Treasuries were weak.  Oil fell to the 68s ahead of tomorrow's OPEC+ meeting on production cuts & gold went up 5 to 1817 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]




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Consumer confidence this month fell to the lowest level since Feb as concerns over a resurgence in COVID-19 cases & inflation resulted in a less favorable view of the economy.  Confidence plunged by 11.3 points to 113.8 in Aug, according to The Conference Board.  The forecast had expected a reading of 124.  The Present Situation Index, which is based on consumers' assessment of current business conditions & the labor market, fell to 147.3 from 157.2 last month.  The Expectations Index, which measures consumers' short-term outlook for income, business & the job market, declined to 91.4 from 103.8.  "Spending intentions for homes, autos, and major appliances all cooled somewhat," said Lynn Franco, senior director of economic indicators at The Conference Board.  The percentage of consumers who said business conditions are "good" declined to 19.9% from 24.6%.  At the same time, 54.6% of consumers said jobs are "plentiful," down from 55.2% in Jul.  Americans were also less optimistic about the short-term outlooks for business conditions, jobs & financial prospects.  "While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead," Franco said.

Consumer confidence tumbles to lowest level since February

Nearly 1M Covid-19 vaccine booster shots have already been administered in the US since health officials authorized administering extra shots of Pfizer (PFE) or Moderna's (MRNA) vaccines to people with weakened immune systems on Aug 12, according to data compiled by the Centers for Disease Control & Prevention (CDC).  About 955K fully vaccinated people have received an additional dose of a Covid vaccine, CDC data shows.  That number includes those who had previously received two doses of PFE or MRNA's vaccines or one dose of Johnson & Johnson's (JNJ), a Dow stock & Dividend Aristocrat,, the agency said.  It's unclear if all of those people were considered immunocompromised.  In approving the booster shots in people with weak immune systems — which includes cancer, HIV patients & organ transplant patients — CDC officials cited several small studies that showed they didn't produce an adequate immune response after receiving 2 doses of PFE or MRNA's vaccines.  Food & Drug Administration (FDA) & CDC officials didn’t approve booster doses of JNJ’s vaccine earlier this month, saying they were waiting on more data.  Some Americans were already finding ways to get additional doses of the Covid vaccines on their own prior to the formal approval.  Some went as far as receiving the extra shots from different companies – a practice known as “mixing and matching.”  The CDC & FDA are reviewing whether to administer booster shots to the general population.  Pres Biden said the US plans to widely distribute Covid booster shots in the week of Sep 20, pending clearance from FDA & CDC scientists.

CDC: Nearly 1 million Covid booster shots have already been administered in U.S.

Delta Air Lines (DAL) plans to hire another 1500 flight attendants ahead of summer 2022, becoming the latest carrier to add jobs after travel demand rebounded from pandemic lows.  The airline was already in the process of filling 1500 flight attendant jobs with candidates whose hiring was paused at the start of the pandemic in 2020.  Airlines have been racing to fill positions from ramp workers to flight attendants to customer service agents, as well as training pilots, this summer during a surge in travel.  The recovery in demand came faster than airline execs said they expected.  Airline CEOs urged thousands of employees to take unpaid or partially paid leaves of absence or early retirement packages to cut labor costs in the depths of the pandemic.  The stock rose 54¢.
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club.ino.com/trend/analysis/stock/DAL?a_aid=CD3289&a_bid=6ae5b6f7

Delta Air Lines doubles flight attendant hiring target to 3,000

Nike (NKE), a Dow stock, is giving its office employees a week of vacation time to rest, the sportswear company announced.  "Our senior leaders are all sending a clear message: Take the time to unwind, destress and spend time with your loved ones. Do not work," Matt Marrazzo, senior manager of global marketing science said, adding that NKE HQ is "powering down for a full week" beginning Mon.  NKE is the latest company to show its prioritizing wellness and mental health for its employees during the pandemic.  The pandemic has sparked burnout among employees globally with more people working remotely & staying logged on for longer hours. Indeed, 70% of remote workers reported in a Robert Half survey from Nov working on weekends, while 45% said thy work more hours than before the pandemic.  The stock fell 3.22.
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Nike gives week off to employees: ‘Do not work’

Gold futures ended higher, with prices to tallying a slight gain for the month, as the metal found support following data showing a drop in US consumer confidence to the lowest level in 6 months.  US consumer confidence slid to 113.8 this month from a revised 125.1 in Jul, the Conference Board said.  Separately, data showed that the Chicago PMI dropped to 66.8 in Aug from 73.4.  Dec gold rose $5 to settle at $1818 an ounce after trading as low as $1803.  For the month, prices based on the most-active contract, finished up by less than $1 from the Jul 30 settlement of $1817.  The ICE U.S. Dollar Index a gauge of the currency against a ½-dozen major currencies, fell to as low as 92.403 today, but was trading steady at 92.678, on track for a monthly rise of almost 0.6%.  The $ & financial markets broadly, are now keyed in to monetary policy, with some weakness in greenback coming on the back of Federal Reserve Chair Jerome Powell’s Jackson Hole speech, which was seen as positively supporting continued buying of precious metals.  Powell offered no clear timetable this year for tapering of monetary policies that have been accommodative to financial markets, which has helped to knock the $ lower.  A weaker $ can make dollar-pegged assets such as gold more appealing to overseas buyers.

Gold ends higher with U.S. consumer confidence at a 6-month low

Oil futures settled lower, with traders watching recovery efforts for Gulf Coast refinery operations in the wake of Hurricane Ida.  Traders were also looking ahead to a meeting tomorrow of OPEC & its allies (OPEC+).  West Texas Intermediate crude for Oct, the US benchmark, fell 71¢ (1%) to settle at $68.50 a barrel.  For the month, prices for the front-month contract ended 7.4% lower — the first monthly loss since Mar. Global benchmark Oct Brent crude which expired at the end of the trading session, lost 42¢ (0.6%) at $72.99 a barrel, for a monthly loss of 4.4%.  The most actively traded Nov contract fell 60¢ (0.8%) to $71.63 a barrel.

Oil settles lower as traders watch Hurricane Ida recovery efforts, ahead of the OPEC+ meeting

There was some buying in the AM, bringing the Dow into the black.  But sellers returned after the drab report on consumer confidence for Aug.  For the month, the Dow rose 425 but it was choppy as shown in the chart below.  NAZ rose almost 600 to a record over 15K

Dow Jones Industrials








Markets drift lower on concerns about raising the US debt celing

Dow was off 5, decliners over advancers 4-3 & NAZ retreated 33.  The MLP index went up 1+ to 178 & the REIT index added 1+ to 473 for another record.  Junk bond funds hardly budged in price & Treasuries saw a little selling.  Oil was fractionally lower to the 68s & gold inched up chump change to 1813.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil68.46
 -0.75 -1.1%













GC=FGold   1,817.00
+4.80+0.3%










 

 




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Total damage & economic loss from Hurricane Ida will fall between $70-80B, Accuweather's Dr Joel N Myers said.  The weather service, which predicted significant wind damage along with storm surge & inland flooding with mass power outages, believes the power outages could last for a week or longer & will result in a near complete shutdown of New Orleans & surrounding cities & towns, Meyers added.  "Power outages will exacerbate extreme discomfort" caused by heat & humidity & will result in mold growth in impacted areas, he noted, in addition to issues for people who rely on electronic medical equipment, such as CPAP machines.  In addition, Myers said, "damage to Louisiana’s emergency response system will also add to economic losses as well as damage sustained by hospitals, already overrun with COVID-19 patients."  Louisiana will not be the only state affected by the storm, as areas hit by previous hurricanes Fred & Henri like Mississippi & Tennessee will also experience additional flooding which may be extensive & dangerous in some areas as rapidly rising water will continue to be hazardous to lives & properties in those areas causing infrastructure damage & disruption to lives.

Experts estimate the catastrophic economic loss from Ida

US home prices accelerated at a record pace for the 3rd consecutive month in Jun as homebuyers bid up prices to overcome the hurdle of low inventory.  Home prices rose 18.6% year over year, the fastest on record, according to the national Case-Shiller index.  Prices are now 41.3% above their 2006 peak.  "The last several months have been extraordinary not only in the level of price gains, but in the consistency of gains across the country," said Craig Lazzara, managing director & global head of index investment strategy at S&P Dow Jones Indices.  Price gains in Jul quickened from Jun in every city within the 20-City Composite index which grew 19.1% from the same period last year.   However, analysts warn the record-setting price gains may be nearing an end as competition for homes wanes & more inventory hits the market. 

Home prices post third straight month of record gains

Rep Jason Smith warned the US is less than 9 days away from another gov shutdown over the debt limit. 

REP. JASON SMITH: The debt limit expired 30 days ago and Democrats have done zero in trying to respond to that.  We actually sent a letter to the House and Senate leadership back in the middle of July from the House Republicans on the Budget Committee asking for conversation, talks, communications in regard to the debt ceiling. We've heard crickets. In regards to the government shutdown, we are less than nine legislative days from a government shutdown. And yet all with they are focused on is spending a different $3.5 trillion to reward their political friends, allies and donors. Nothing in regards to funding the operations of government.

Government shutdown 2021: GOP lawmaker says Democrats have had ‘zero’ response to debt limit expiring

The comments above from Jason Smith are chilling.  Dysfunctional DC has to get its act together, & fast, to avoid a financial catastrophe.  One key problem, they consider fast means at a snail's pace.  Additionally OPEC+, which accounts for upwards of ½ of the global market, is agonizing about possible production cuts.  Some are are worried about economic recovery while the virus is fighting back so hard.  Their meeting is tomorrow. 

Dow Jones Industrials

 






Monday, August 30, 2021

Markets extend gains while the Dow lags behind

Dow slid back 55, decliners over advancers 4-3 & NAZ shot up 136.  The MLP index lost 1+ to the 176s & the REIT index rose 4+ to the 471s (record record).  Junk bond funds continued mixed & Treasuries were purchased.  Oil rose to the 69s & gold fell 6 to 1812 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]




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The highly contagious delta variant of the coronavirus, which continues to make its way into communities across the country, "has all but blunted" the airline industry's path to recovery as travelers rethink their plans again, according to Adobe Analytics.  The highly contagious delta variant of the coronavirus, which continues to make its way into communities across the country, "has all but blunted" the airline industry's path to recovery as travelers rethink their plans again, according to Adobe Analytics.  At the start of the year, consumer confidence in travel picked up as vaccination rates rose across the nation.  The pent-up demand in air travel was a welcome relief for the battered industry with consumers spending $6B in domestic flights in Jun.  This figure was only 5% below pre-pandemic levels.  However, online spending in domestic flight bookings dropped by 13% in Jul, with consumers spending a total of $5.26B.  During the first 3 weeks of Aug, bookings continued to decline at an aggressive pace as consumers starting "taking the Delta variant seriously and once again shifting their travel plans," Adobe Digital Insights lead analyst, Vivek Pandya, said.  From Aug 1-21, consumers only spent $2.9B on domestic flight bookings, down 33% compared to that same time period in 2019.  At the current rate, Adobe expects spending throughout the month of August "to be significantly under July," Pandya said.  "These two months historically have similar spend levels, once again showing that like in 2020, the pandemic will continue dictating the terms."  Ticket prices are starting to decline as demand wanes.  Jul marked the first month when airline ticket prices notched 2019 levels.  However, ticket prices in Aug prices have already started to drop & are 6% below pre-pandemic levels.

Delta variant dampens airline industry's path to recovery, Adobe says

The US is a day away from ending its evacuation mission in Kabul, marking the apparent end of a 20-year attempt to create a stable democracy in Afghanistan.  As of today, Western forces evacuated 1200 out of the Afghan capital on 26 military cargo aircraft flights in a 24-hour period, according to the latest figures from the White House.  Since the mass evacuations began on Aug 14, approximately 117K people have been airlifted out of Afghanistan.  About 122K people have been evacuated since the end of Jul, including about 5500 US citizens & their families.  Today, as many as 5 rockets were intercepted by US missile defenses near Hamid Karzai Intl Airport in Kabul, the site where US forces are sprinting to carry out final evacuation flights since the Taliban gained control of the country 2 weeks ago.  White House press secretary Jen Psaki said that Pres Biden was briefed on the rocket attack & reconfirmed that commanders should prioritize the protection of US forces on the ground.  The Pentagon said Sat that it had begun its retrograde process — the withdrawal of US service members. Pentagon spokesman John Kirby said that less than 5000 service members remain in Afghanistan, adding that the US would no longer provide an exact number due to security conditions.  Kirby said the US is communicating with the Taliban about the evacuation mission.  “Our commanders on the ground remain in communication with Taliban leaders around the airfield to deconflict and to prevent miscalculations and misunderstandings, and so far that communication has been effective,” Kirby added.  When asked about the security situation, Kirby described the threats as dynamic but added that the US will “maintain the capability to protect ourselves and defend ourselves as we continue to complete the retrograde.”

U.S. winds down Kabul mission after helping evacuate 116,000 people in just over 2 weeks

A new CDC presentation says the data needed to properly evaluate Covid-19 vaccine booster shots for the general population is limited — even as Pres Biden pressures health officials to clear the shots for wide distribution beginning the week of Sep 20.  Slides published ahead of a presentation at a Centers for Disease Control & Prevention (CDC) advisory group meeting today suggest the panel may limit its initial endorsement of extra shots to vulnerable groups & health-care workers.  Several studies suggest the authorized Covid vaccines remain effective in preventing severe disease & hospitalization but may be less effective in preventing infection or mild symptomatic illness, according to the slides submitted by CDC scientist Dr Sara Oliver.  The CDC’s Advisory Committee on Immunization Practices is meeting today to consider booster shots for all eligible Americans.  They are also scheduled to vote on endorsing the Food & Drug Administration's final approval of Pfizer's (PFE) vaccine.  Since the highly contagious delta variant first appeared, vaccine efficacy has ranged between 39-84%, according to the presentation, which referenced several separate studies.  One study looking at health-care workers & first responders showed overall vaccine efficacy fell to around 65% in Jul – down from about 90% in Feb.  Israel data shows the efficacy of PFE vaccine has fallen to as low as 39% in that country.  Scientists have said the vaccines' effectiveness wanes over time & the delta variant is a hardier strain that is able to break thru that protection.  It is “important to monitor trends of effectiveness by severity of disease over time,” the slides added.  The slides noted that it is not uncommon for vaccines to require several doses. Vaccinations for Hepatitis B & HPV, for example, require a 3rd dose after 6 months.  Once booster shots are available, nursing home residents, health-care providers & the elderly — the first groups to get vaccinated in Dec & Jan — are likely to be prioritized for the extra shots.  The CDC emphasized that vaccinating the unvaccinated should be a “top priority,” adding delivery of booster doses to vaccinated individuals should not deter outreach to those who remain unprotected from the virus.

CDC scientist says there’s limited data to evaluate Covid booster dose

Gold futures ended lower, but held their ground above the important $1800 threshold after ending last week at their highest price in nearly 4 weeks.  Bullion prices had taken a leg higher on Fri after Fed Chair Jerome Powell, speaking virtually to the Jackson Hole central-bankers symposium, revealed that he supports tapering the pace of bond purchases this year, but continued to see high inflation as “transitory.”  He also emphasized that the start of the tapering process wouldn't be intended as a signal that interest-rate increases were imminent.  The speech was seen as positively supporting continued buying of precious metals.  A downturn in the $ following Powell's remarks also added to the appeal of $-pegged assets, which are comparatively cheaper to overseas buyers as the $ softens.  Dec gold fell $7 to settle at $1812 an ounce, following a weekly gain of 2% based on the most-active contract.  On Fri, gold finished at the highest since Aug 2. 

Gold futures end lower, but prices hold above $1,800 to start week

Oil & gasoline futures settled higher, as traders continued to monitor disruptions to energy operations in the Gulf of Mexico region in the wake of Hurricane Ida, which has been downgraded to a tropical storm.  Ida hit the Gulf Coast as a Category 4 hurricane on yesterday, leading to oil & natural-gas operational shutdowns in the region.  The Bureau of Safety & Environmental Enforcement reported today that an estimated 94.6% of oil production & 93.6% of natural-gas production, in Gulf of Mexico oil production has been shut in.  West Texas Intermediate crude for Oct rose 47¢ (0.7%) to settle at $69.21 a barrel.  The front month Sep gasoline contract, which expires at the end of tomorrow's session, ended at $2.31 a gallon, up 4¢ (1.7%).

Oil, gasoline futures settle higher as traders monitor storm disruptions to Gulf of Mexico energy operations

The week prior to Labor Day can be quiet for the stock market with some traders away on holiday.  This time there is a tense quality out there.  Today the Dow clearly did not participate in the rally by tech stocks & the advance/decline ratio was negative.  Now Ida is moving over land which slows the storm.  Work is starting on bringing back power to New Orleans & getting oil rigs back on line in the Gulf.  Afghanistan is a confusing mess which shows no signs of getting better for some time.  As said so many times here, the virus keeps fighting its war.  However most popular stock averages are at or near record highs.  The overbought stock market should take some time to rest.  It needs rest.  Sep is traditionally the weakest month for stocks.

Dow Jones Industrials