Dow sank 291 (near session lows), decliners over advancers 5-2 & NAZ pulled back 67. The MLP index fell 1+ to the 177s & the REIT index was off 1+ to the 465s. Junk bond funds were mixed & Treasuries continued higher with strong demand. Oil was steady above 70 & gold climbed 10 to 1805 (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)
Congressional leaders are digging in on their contradictory debt limit positions as
the deadline for US default looms in Oct in a bit of high-stakes
political gamesmanship with potentially severe economic consequences. Senate Minority Leader Mitch McConnell & Majority Leader
Chuck Schumer doubled down on their positions regarding
how the debt limit should be raised. Schumer is arguing it should be
done on a bipartisan basis, while McConnell says Dems should raise the limit on their own because they're the ones proposing partisan spending bills. If
the stalemate continues to the last minute, it could affect the US' credit rating – or worse if the US actually defaults on its
debt when the Treasury Dept's "extraordinary measures" run out in
Oct. "Washington Democrats have spent trillions, trillions of
dollars on pet liberal projects. They've been printing and wasting
money like there's no tomorrow," McConnell said. "Democrats have done this proudly on a party-line basis." "The debt suspension that just expired in August automatically
covered the borrowing that had been accumulated before that date,"
McConnell added, referencing Dems' claim that the debt limit hike
will pay for spending by former Pres Trump. "This
is about the future," the minority leader continued. "This isn't the
last four years when we were reaching bipartisan agreement." McConnell & Reps want Dems to instead raise the debt limit via budget
reconciliation, either in their multitrillion-dollar spending plan or
thru a separate reconciliation vehicle. If Dems are forced to
put the debt limit increase in the $3.5T reconciliation bill, it
could make it more difficult for their fiscally conservative members to
vote for that legislation as well – another benefit for Reps of
their current stance. "If the United States defaults on its debt, it will harm every single
American in this country, including potentially those who rely on Social Security and members of our military," Schumer said. "The consequences would reverberate around the world." He
continued: "So any efforts to play nasty political games with the full
faith and credit of the United States is reckless, irresponsible,
despicable." 46 Rep senators signed a letter saying they won't vote
for a debt limit increase in any form, meaning the GOP can stop any
effort by Dems to raise the debt ceiling thru a standalone bill,
a gov funding bill or otherwise. Without
movement by either side, the US will eventually default on its debt,
an outcome that both sides say would be unacceptable – but say would be
their opponents' fault.
McConnell, Schumer dig in on debt limit demands as October approaches
Pfizer (PFE) expects to release clinical trial data on how well its Covid-19
vaccine works in 6-month to 5-year old children as early as the end of
Oct, CEO Albert Bourla said. Covid vaccine data for
kids between ages 5 -11 will come much sooner, he said, potentially
ready to be submitted to the Food & Drug Administration by the end of
this month. “Then,
it is up to the FDA to take their time, and then make a decision,”
Bourla added. His comments come as many parents say
they are anxious to get their children vaccinated, especially as
schools reopen & the highly contagious delta variant continues to
spread. The strain has led to a surge in hospitalizations across the
US, including among young kids who are currently ineligible to get the shots. The stock went up 15¢.
If you would like to learn more about PFE, click on this link:
club.ino.com/trend/analysis/stock/PFE?a_aid=CD3289&a_bid=6ae5b6f7
Pfizer CEO says Covid vaccine data for kids under age 5 may come in late October
Anyone searching for a home today knows full well the pickings are slim. The supply of US homes for sale is near a record low, & the gap between supply & demand is widening. The US is short 5.24M homes, an increase of 1.4M from the 2019 gap of 3.84M, according to new research from Realtor.com. The US Census found that 12.3M American households were formed from Jan 2012 - Jun 2021, but just 7M new single-family homes were built during that time. Single-family home construction has suffered from a severe labor shortage that began well before the pandemic but was then exacerbated by it. Supply chain disruptions in the past year have pushed prices for building materials higher, & as pandemic-induced demand soared, prices for land increased as well. While new household formation is actually slower than it was before the pandemic, homebuilders would have to double their recent new home production pace to close the gap in 5-6 years. A new household can be either owner-occupied or rented. “The pandemic has certainly exacerbated the U.S. housing shortage, but data shows household formations outpaced new construction long before Covid. Put simply, new construction supply hasn’t been meeting demand over the last five years,” said Realtor.com chief economist Danielle Hale. “Millennials, many of whom are now in their 30s and even 40s, have debunked the industry’s ‘renter generation’ expectations.” Household formation is when an individual moves out of a shared living situation. Single-family home construction has been rising steadily since it bottomed in 2009 during the last recession. It is still not as high as it was just before the housing boom & is actually running at the slowest pace since 1995, according to the US Census. The slower pace comes as the largest generation enters its typical homebuying years.
America is short more than 5 million homes, and builders can’t make up the difference
Gold futures ended higher, finding support as the $ weakened after a report showing US inflation rose in Aug at
the slowest pace in 7 months. The consumer-price index climbed 0.3% in Aug, compared to a rise of 0.5% in Jul. The forecast estimated the cost of living, as measured by CPI, rose 0.4% in Aug. Dec gold rose $12 (0.7%) to settle at $1807 an ounce, reversing course
from an earlier drop to as low as $1780. The settlement marked the
highest for a most-active contract since Sep 3. In addition to the CPI data itself, the Fed next week will likely use
inputs, including the CPI report, to determine its plans for scaling
back COVID-era bond purchases which have been in force to help provide
liquidity to markets that were gummed up during the worst of the
pandemic in the spring of 2020.
Gold settles back above $1,800 as dollar weakens after U.S. inflation report
Oil futures settled little changed, holding ground at their highest prices in about 6 weeks, as concerns eased over the impact of Tropical Storm Nicholas on crude & natural-gas production in the Gulf of Mexico after the storm made landfall as a hurricane on the Texas coast. West Texas Intermediate crude for Oct rose by a penny to settle at $70.46 a barrel. That was enough to mark its highest finish since Aug, but prices had climbed to as high as $71.22 during the session. Nov Brent crude, the global benchmark, climbed by 9¢ at $73.60 a barrel, the highest front-month finish since Jul 30. The Bureau of Safety & Environmental Enforcement estimated that 39% of oil production in the Gulf of Mexico remained shut in due to Ida, equivalent to 720K barrels a day of output & more than 48% of natural-gas output was also shut in. Meanwhile, the Intl Energy Agency (IEA) cut its supply rebound forecast for 2021 by 150K barrels a day, due in part to storm damage, while also cutting its demand forecast by 100K barrels a day, citing the impact of the delta variant of COVID-19. The monthly report from the agency comes after OPEC yesterday also trimmed its demand forecast for the Q3. Unlike OPEC, however, the IEA didn't lift its 2022 demand forecast. OPEC said a robust economic recovery would see demand grow by 4.2M barrels a day in 2022, up 900K barrels from the cartel's Aug estimate. The IEA expects world oil demand next year to average 99.4M barrels a day, while OPEC is looking for demand of 100.8M barrels a day.
Oil settles little changed, holding at a 6-week high as output concerns tied to Nicholas fade
Dow Jones Industrials
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