Markets retreat after retail sales disappoint

Dow dropped 282 (about 225 off session lows), decliners over advancers more than 3-1 & NAZ declined 137.  The MLP index fell 1+ to the 175s & the REIT index was about even at 465.  Junk bond funds fluctuated & Treasuries were little changed.  Oil slid lower into the 66s & gold pulled back 5 to 1784 (more on both below).

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New data from Israel on the effectiveness of Covid-19 vaccines over time is causing US health leaders to rethink their position on vaccine booster shots in the US, National Institutes of Health Director Dr Francis Collins said.  “The people who got immunized in January are the ones that are now having more breakthrough cases,” Collins said, referring to Covid infections in fully vaccinated individuals.  Israel released new data yesterday showing a reduction in the effectiveness of Pfizer's (PFE) Covid vaccine against severe illness among people 65 & older who were fully vaccinated in Jan or Feb.  Collins said the rise in breakthrough cases in Israel is likely due to a combination of the highly contagious delta variant & Covid vaccine protection waning over time.  “Mostly, of course, these are symptomatic, but not serious,” he said.  “But you’re starting to see a little bit of a trend toward some of those requiring hospitalization.”  Collins’ comments come as federal health officials are expected to recommend that most people in the US who are eligible for Covid vaccinations should get booster shots 8 months after their second doses.  The federal guidance, which would apply only to the 2-shot PFE & Moderna (MRNA) vaccines, could go into effect as early as mid-Sep, pending FDA authorization, a person familiar said.  The New York Times reported yesterday that federal health officials are particularly concerned about data from Israel, where Covid vaccinations began ahead of many other countries.  The data reportedly showed that for people vaccinated in Jan who are age 65 & older, the PFE vaccine was less than 55% effective against severe disease & hospitalization.  Collins said that federal officials are starting to see the same thing in US data.  “Although right now, it still as if our vaccine protection is working really well,” he added.  “But we don’t want to wait until it’s like oh, too late. So that’s why we’re looking at the data.”

NIH director says new Israeli Covid data is building case for booster shots 

As the economy recovers & the market notches new highs, most people are ready to live it up.  Between dining out & taking trips, Americans are now spending an average of $765 more a month compared with last year when much of the country was shut down due to the coronavirus pandemic, according to the MassMutual Consumer Spending & Saving Index.  Young adults, in particular, are determined to make up for lost time.  Milliennials & Gen Z, who reported feeling the financial impact from the rise in reopenings & social gatherings, said they are shelling out $1016 more a month, on average, than they did during summer of 2020.  MassMutual polled 1000 US adults in Jul 21-28.  “Spending that extra money is sometimes making a short-term decision,” said Paul LaPiana, a certified financial planner & senior executive at MassMutual in Park City, Utah.  Younger generations “seem to be rushing to the door to get out and start living their lives again instead of making more disciplined decisions, including putting some away, just because they’ve been missing out for the last year and a half,” he observed.  Many Americans plan to spend even more in the weeks ahead as schools & offices reopen.  Largely due to commuting costs & new clothes, roughly 1/3 of office workers are concerned that a return to in-person or hybrid work settings will cause them a financial hit.  Nearly ½ of parents of children in kindergarten thru grade 12 also anticipate spending more this back-to-school season compared with 2020, & almost as many plan to spend more on supplies than they did before the pandemic.  Back-to-school sales in the US are expected to grow 6.7% from 2019 & 5.5% from last year's Covid days, according to a forecast by Mastercard SpendingPulse.  However, the recent surge in Covid cases fueled by the delta variant could upset these predictions. Already, in-person learning is in jeopardy at some schools, while many offices have delayed their return-to-work plans.  As consumer spending picks up, savings falls.  Just 48%, of Americans said they saved less than $500 in the last 3 months, up from just 36% who said the same in Apr, MassMutual found.  The personal savings rate — how much people save as a percentage of their disposable income — hit a historic 33% last year but now stands at a bit more than 9%, according to the latest data from the Bureau of Economic Analysis.

Revenge spending is costing Americans $765 more a month, survey finds

Back to school supplies remain in short supply – & parents are paying more for classroom items than last year.  Supply chain challenges and shortages are resulting in fewer back-to-school deals & scarce items like tech & apparel on shelves, consumer analysts explain.  Backpacks, clothing, sneakers, stationery, tech gadgets & laptops are expected to be in short supply, Neil Saunders, managing director of GlobalData Retail said.  "It’s not so much that consumers won’t be able to get hold of these items at all, but that stock levels are reduced and there is less choice than in usual years. People may have to shop around more to find what they want. Prices are going up, both because of inflation and because inventory levels are down so retailers don’t need to discount as much to sell products," Saunders said.  Families with children in grades K-12 will spend an average of $849 on school supplies, that’s almost $60 more than last year, according to a recent survey from National Retail Federation & Prosper Insights & Analytics (NRF).  And the total back-to-school spending is slated to reach $37.1B.  Consumers will increase spending in every back-to-school category this year, especially with electronics & clothing seeing the most significant increases.  Indeed, shoppers will shell out an average of $21 more on electronics this year compared with 2020 & nearly $20 more on clothes, according to the NRF.  And with many classrooms still relying on virtual learning tools, 49% of consumers spending on electronics plan to buy a laptop, while 31% will purchase a tablet, according to the NRF.

Consumers face COVID-fueled back-to-school supply shortage, price surges

Gold futures ended lower, with prices easing back from intraday highs near the key $1800 mark & suffering their first loss in three sessions, just a day after marking their highest settlement since early Aug.  Dec gold fell by $2 to settle at $1787 an ounce after trading as high as $1797 during the session.  Yesterday, prices booked the loftiest finish since Aug 5.  Gold has enjoyed buying from uncertainty about the spread of the delta variant of the coronavirus & its impact on the economies of countries like China, one of the biggest purchasers of commodities.  In the US, gov data revealed that Americans cut spending at retail stores in Jul, with retail sales down 1.1% or more than the 0.3% decline forecast.  The reading on industrial production was more upbeat, up by a seasonally adjusted 0.9% in Jul, according to the Federal Reserve.  Gold sold off early last week, following a report for Jul released on Aug 6 from the Labor Dept that showed that the US created 943K jobs in Jul in a sign the economic jobs recovery gained steam & may result in the Federal Reserve tightening monetary policy.

Gold prices post first loss in 3 sessions

Oil futures stretched their streak of losses to a 4th session as investors continued to fret over the outlook for demand due to the ongoing spread of the delta variant of the coronavirus that causes COVID-19.  West Texas Intermediate (WTI) crude for Sep lost 70¢ (1%) to settle at $66.59 a barrel.  That was the lowest front-month contract finish since Aug 9.  Oct Brent crude, the global benchmark fell 48¢, (0.7%) at $69.03 a barrel, the lowest finish since Jul 19.  New Zealand took drastic action today, with the gov putting the entire nation into a strict lockdown for at least 3 days after finding a single case of coronavirus infection in the community.  The continued spread of the virus is being blamed for renewed congestion at ports in China, adding to worries about further lockdowns & the potential for a slowdown in economic activity around the world.  The Biden administration was expected to announce that most vaccinated Americans should get a COVID-19 booster shot 8 months after being fully vaccinated.  Crude prices fell yesterday but ended the day off session lows, finding support late in the session after a report said that OPEC+ doesn’t believe the market needs more crude than they already plan to produce in coming months.  The Biden administration last week urged OPEC+ to produce more crude.

Oil prices stretch losing streak to a 4th session as demand worries prevail

The retail sales data combined with the HD earnings report was sobering for investors.  So they sold.  New earnings reports should not be expected to be well received.  Dark clouds such as high inflation, spending bills in Congress, sluggish economic data, will probably be around for the rest of the year.   And now Afghanistan is a worry for everybody around the globe. 

Dow Jones Industrials