Dow was off 106 with selling into the close, decliners over adancers about 3-2 & NAZ gained 24. The MLP index fell 1 to 173 & the REIT index lost 2+ to the 463s. Junk bond funds fluctuated & Treasuries continued to be sold. Oil finished down 1+ to the 66s gold sank 32 to 1730 (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)
Semate Majority Leader Chuck Schumer released the text of the budget resolution thru which Dems plan to pass $3.5T worth of agenda items along party lines,
including massive gov benefit programs & climate spending. Senate
Dems plan to move to pass the budget resolution this week after
the chamber approves a bipartisan infrastructure bill. The resolution
sets up a procedural vehicle thru which Dems can get around the
Senate filibuster & therefore pass their priorities without needing to
negotiate or consult with Reps. "[W]e are on track to
pass the most consequential ‘hard’ infrastructure legislation in
decades. As soon as we complete this track, I will immediately move to
the FY2022 Budget Resolution with reconciliation instructions," Schumer wrote in a letter to Dem senators. "By
making education, health care, child care, and housing more affordable,
we can give tens of millions of families a leg up," Schumer said of the
budget resolution's contents. "By making further investments in
infrastructure, we can create tens of thousands of good-paying jobs. And
by finally tackling climate change, we can spare our country and our
planet the most devastating effects of global warming." After the budget resolution is passed, the House & Senate will
begin actually writing what is likely to be a massive bill that is going
to face fierce opposition from Reps. With only 50 members
in the Senate & a slim majority in the House, Dem's margin for
error on the reconciliation bill is extremely small. Moderates
like Sens Joe Manchin & Kyrsten Sinema & Rep
Josh Gottheimer are likely to ask for a scaled-down package
from the one supported by Dem leadership & progressives. Progressives may threaten to tank the legislation if it moves too far
toward the moderates' end of the spectrum. Gottheimer & a handful of moderate House Dems got the internal
party debate started over the weekend with a letter to Nancy Pelosi asking her to make clear the reconciliation package's
effect on the deficit & on inflation. Progressives are likely to
counter that Dems need to seize the opportunity they have in
control of the presidency & both chambers of Congress to pass as much
of their agenda as possible, as quickly as possible. Schumer –
who is up for reelection in 2022 & is trying to limit his
vulnerability on his left flank – appears to be siding with the
farther-left elements of his party.
Schumer unveils $3.5T monster that Dems plan to ram through Washington
The number of US job openings hit a record high in Jun as employers struggled to find workers amid an ongoing labor shortage. The total number of job openings rose by 590K to 10.1M, according to the Labor Dept's Job Opening & Labor Turnover Survey (JOLTS). The number of job openings in May was revised higher by 274K. The pace of hiring picked up with employers adding 6.7M workers, 697K more than in May. Hiring increased across all regions with the biggest gain in the South (+2.62M). Total separations rose 254K to 5.6M. Within the separations category, 3.9M workers quit their jobs, an increase of 239K from the prior month. Quits increased in professional & business services (+72K), durable goods manufacturing (+47K) & state & local gov, excluding education (+33K), while decreasing in state & local gov education (-26K).
Labor shortage worsens as number of US job openings hit record high in June
The bipartisan infrastructure bill is unlikely to have a big impact on growth in the next few years, economists say. Longer term, though, investments in highways, ports & broadband could make the economy more efficient & productive. The short-term boost to growth will be relatively limited for 2 reasons, economists say. For one, the bill represents just $550B in new spending—compared with nearly $6T that Conrges has approved in the past year-&-a-½ to battle the Covid-19 pandemic & its economic fallout. 2nd, the infrastructure spending will take place over 5-10 years starting in 2022, a longer timeline than pandemic-era initiatives like stimulus checks, extra unemployment benefits & small-business support programs. That will make its direct effects on employment & demand less noticeable. Pres Biden's $1.9T American Rescue Plan, passed by Congress in Mar, is projected to lift gov outlays by the equivalent of 4.9% of GDP in the current fiscal year, according to the Congressional Budget Office ((CBO). To be sure, the impact of that & other more-immediate stimulus is starting to fade as pandemic-relief programs expire, such as a $300 increase to weekly unemployment payments set to expire in Sep. Extra spending on infrastructure could lighten the drag as overall gov spending declines. The CBO expects economic growth to slow from 7.4% in 2021, a year of rapid post-Covid recovery, to 3.1% in 2022 & 1.1% in 2023, as measured from the end of Q4 to the same period the year before. The projections don't include possible effects of the infrastructure bill.
Infrastructure bill's boost to economy is likely to be limited
It’s all but certain Congress won't raise the debt ceiling before the Senate leaves for summer recess, setting the stage for a bitter partisan face-off over the borrowing cap later this fall. Some economists hoped Senate Dems would include a debt ceiling increase in the $3.5T budget proposal party leadership unveiled today. Majority Leader Chuck Schumer & House Speaker Nancy Pelosi hope to pass their budget — focused on climate change & poverty — with or without Rep support. But the party's budget left out any mention of the ceiling, meaning that the US gov will be near the brink of default when the Senate returns from its summer recess halfway thru Sep. It also means Dems & Reps will have to act fast next month to reach an agreement over one of the most fraught votes for any American politician. Lawmakers in both parties dislike voting to raise or suspend the debt ceiling because campaign ads often spin a vote to prevent a US default as evidence that the incumbent condones flagrant spending. Treasury Secretary Janet Yellen sought to quell those fears today, when she again urged lawmakers to set aside their differences to avoid economic calamity. “Increasing or suspending the debt limit does not increase government spending, nor does it authorize spending for future budget proposals; it simply allows Treasury to pay for previously enacted expenditures,” she said. “Failure to meet those obligations would cause irreparable harm to the U.S. economy and the livelihoods of all Americans.”
Dems leave debt ceiling out of budget plan, setting Congress up for showdown
Gold futures finished at their lowest level since Mar, which also saw the precious metal fall more than 5% at its low during Asian trading hours. Dec gold finished $36 (2.1%) lower at $1726 an ounce, for the lowest settlement since Mar 31, but had touched an session low at $1672 an ounce, which is the lowest intraday level since around Jun. Today's tumble comes after bullion fell 2.5% on Fri & marked its steepest weekly slump, down nearly 3%, since Jun 18. Since Thurs, gold has fallen by 4.6%, based on the most-active contract. There wasn't a clear catalyst for the session's declines but strategists & other market participants attributed the sharp drop in trade in Asian hours to low volumes & persistent concerns about the prospect for precious metals after a better-than-expected US jobs report on Fri. Gold's overnight flash crash was a perfect mix of Asia playing catch-up over with their Fed taper bets, plunging commodities as slowdown concerns grow across Asia. China’s new measures to combat the Delta variant should be helping to bolster gold moves but may be amplifying concerns about the health of one of the biggest buyers of gold & other commodities. Beijing officials last week canceled all large-scale exhibitions and events for the remainder of Aug. Investors also said thin trading volumes in Asian hours, due to holidays in Japan & Singapore, also may have contributed to today's volatility in commodities. The employment report for Jul showed that the US economy added 943K jobs. The forecast called for 845K jobs last month. Meanwhile, the unemployment rate dropped to 5.4%, below the estimate of 5.7% & falling below the 5.9% rate for Jun.
Gold skids more than 2% and ends at lowest level since March
Oil futures trimmed losses but ended down sharply as China, the
world's largest oil importer, moved to contain the spread of the delta
variant of coronavirus that causes COVID-19. West Texas Intermediate
crude for Sep delivery fell $1.80 (2.6%) to close at $66.48 a
barrel, after falling more than 4%
at its session low.
Oil ends with 2.6% loss as China moves to contain delta variant
Stocks had another tough day, made worse by selling in gold & oil. There are more concerns about the virus slowing global economic growth. Meanwhile those 2 massive pork bills working their way their Congress are worrisome. The JOLTS report above shows the economy is providing work for those who want work, making it difficult to understand why more stimulus is needed. Of course the answer is politics. Spending from the 50% infrastructure bill will add to the economy over several years & higher rates of inflation are already here. Then there is the refusal by Congress to raise the debt-ceiling which can cause ugly consequences for the stock market. But the bulls still feel good.
Dow Jones Industrials
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