Dow declined 192 (but above lows in late day trading), decliners over advancers 3-2 & the NAZ index retreated 107. The MLP was off 4+ to the 187s & the REIT index lost 1+ to the 407s. Junk bond funds rose & Treasuries were purchased again. Oil tumbled 8+ to the 95s & gold continued weak, sliding 4 to 1726 (more below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The € hit parity with the $ for the first time in 20 years, meaning that the currencies have the same worth. The € fell to $0.9998 against the $, the lowest level since 2002, as the euro zone's energy supply crisis & economic woes continue to depress the common currency. The € is currently up 0.14%, at about $1.005. At the same time, the $ index hit $108.56, its highest since 2002, before easing from that level. Fears of a recession have grown in recent weeks due to rising uncertainty over the bloc's energy supply, with Russia threatening to further reduce gas flows to Germany & the broader continent. Russia temporarily suspended gas deliveries via the Nord Stream 1 pipeline yesterday for annual summer maintenance works. The pipeline is Europe's single biggest piece of gas import infrastructure, carrying around 55B cubic meters of gas per year from Russia to Germany via the Baltic Sea. The scheduled 10-day suspension of gas flows has stoked fears of a permanent cut to supplies, potentially derailing the region's winter supply preparations & exacerbating a gas crisis. The prospect of the € falling below this level was a reflection of burgeoning recession fears across the euro zone. The prospect of a starker economic slowdown has also cast doubt over whether the ECB will be able to tighten monetary policy aggressively enough to rein in record-high inflation without deepening the economic pain.
Euro reaches parity against dollar, hits lowest level since 2002
Experts are weighing the odds as to how likely a recession is & how fast it could come upon us. Most Americans — 70% — already believe an economic downturn is on its way, according to a new survey from MagnifyMoney. The online survey was conducted between Jun 10-14 & included 2082 respondents. A recession is defined as a significant economic decline that lasts more than a few months. The biggest recession warning sign, which 88% of respondents pointed to, is high inflation. Respondents also reported seeing signs of an economic downturn in housing & rent prices, with 61%; rising interest rates, 56%; the stock market, 55%; declines in consumer spending, 42%; & rising unemployment, 36%. Some of those perceptions may lean on how people feel about the economy, rather than hard numbers. While the US economy still has bright spots — including a strong overall job market & rising wages — higher prices have raised Americans' feelings of financial insecurity, according to Matt Schulz, chief credit analyst at LendingTree, which owns MagnifyMoney. “When something as fundamental to people’s every day lives as gas prices and grocery bills goes sky high, it really has a huge impact on the way people look at things,” Schulz added. New data for Jun is slated to be released tomorrow. “We expect the headline number, which includes gas and food, to be highly elevated, mainly because gas prices were so elevated in June,” White House press secretary Karine Jean-Pierre said yesterday. However, those Jun numbers are already out of date because energy prices have since fallen substantially, she continued. “The President’s number one economic priority is tackling inflation,” Jean-Pierre said. “And looking ahead, there are a number of reasons why we expect those high prices to ease over the coming months.”
70% of Americans think a recession is coming: What they are doing to prepare
People hospitalized with Covid-19 have doubled since early May as the even more transmissible omicron BA.5 subvariant has caused another wave of infection across the country, US health officials reportd. But deaths from Covid still remain relatively low given the number of infections right now, the officials added. Dr Ashish Jha, who coordinates the Biden administration's Covid response, said deaths from the virus are not increasing at the same rate they once did due to the availability of vaccines & the antiviral treatment Paxlovid. “Even in the face of BA.5, the tools we have continue to work. We are at a point in the pandemic where most Covid-19 deaths are preventable,” Jha told reporters. But he said the number of deaths still remains unacceptably high given the fact that the US has vaccines & treatments to prevent the worst outcomes. More than 16K patients were hospitalized with Covid across the US as of Sat, according to data from the Centers for Disease Control & Prevention (CDC). Currently, an average of more than 5K people have been admitted to the hospital with Covid every day compared with an average of more than 2K daily admissions for the week ended May 1, according to the CDC. The US is currently reporting an average of nearly 104K Covid infections per day as of Sun which is almost double the number of reported cases at the start of May, according to the data. White House chief medical advisor Dr Anthony Fauci said the reported infections are clearly an undercount because many people are using at-home tests that aren't reflected in the data. Fauci added the real number of cases might be anywhere 300-500K new infections a day. Deaths from the virus have remained relatively low at about 280 fatalities a day on average. At the height of the winter omicron wave, an average of nearly 2700 people were dying from Covid a day. “The ratio of hospitalization, ICU and death to cases is much lower now than it was many months ago,” Fauci said. The omicron BA.4 & BA.5 subvariants now make up 80% of Covid infections across the US, with BA.5 emerging as the dominant version of the virus. Fauci said BA.5 is more transmissible than past variants & it substantially evades the protective antibodies triggered by vaccines, but the shots are still generally protecting against severe disease. In other words, people who are fully vaccinated might get infected & have mild to moderate symptoms, but they are unlikely to be hospitalized & even more unlikely to die from Covid. Fauci said BA.5 doesn’t appear to carry a great risk of severe disease compared with other omicron subvariants. But as cases increase due to its greater transmissibility, some people will end up in the hospital or ICU, he added.
Covid hospitalizations have doubled since May as omicron BA.5 sweeps U.S., but deaths remain low
Oil prices fell sharply on a strong $, demand-sapping COVID-19 curbs in top crude importer China & fears of a global economic slowdown. Brent crude futures were down by $6.15 (5.7%) at $100.95 a barrel & US West Texas Intermediate crude was down $6.30 (6.1%) at $97.79. The € lost ground today, trading near parity with the $, while stock markets fell on the prospect of rising interest rates & worries over economies worldwide. A stronger US currency usually weighs on oil because it makes the $-priced commodity more expensive for holders of other currencies. Renewed COVID-19 mobility curbs in China were also weighing on prices. Spare capacity within OPEC+ is running low, with most producers pumping at maximum capacity. OPEC forecast that world oil demand will rise by 2.7M barrels per day (bpd) in 2023, slightly slower than in 2022, with consumption supported by better containment of the pandemic & still-robust global economic growth.
Oil slides on strong dollar and weaker demand outlook
Oil futures fell sharply, with US benchmark crude prices back below $100 a barrel & settling at their lowest since Apr. Barring a major supply disruption, oil looks like it is going to trade sub-$100 for a while until the crude demand outlook improves. West Texas Intermediate crude for Aug fell $8.25 (7.9%) to settle at $95.84 a barrel, the lowest front-month contract finish since Apr.
Oil prices fall below $100 a barrel to settle at a 3-month low
Gold prices settled a little higher for a 2nd straight session, holding ground at their weakest level in more than 9 months as the precious metal continued to feel the pressure from a stronger $. Gold futures for Aug fell $6.90 (0.4%) to settle at $1724 an ounce after touching a low at $1721. Prices based on the most-active contract settled at their lowest since last Sep. Gold has been smothered by an appreciating $ & expectations over the Federal Reserve maintaining an aggressive stance towards higher interest rates. Since gold hit its 2022 peak north of $2K per ounce back in Mar, it has been largely driven by the strong $ which is at a 20-year high based on the index measuring its strength against major currencies, while higher Treasury yields, which have stolen some of the precious metals' luster in the eyes of investors. The worst inflationary environment in 4 decades has not proved helpful for gold prices, which are pacing towards a fresh round of yearly lows versus the $.
Gold stretches losses to a second day; silver slides to weakest since summer 2020
This was another dreary day for the stock market. In the next 2 days new inflation reports are coming & they are expected to be gloomy. Earnings are will begin shortly. With all that's going on in the financial markets (i.e. the collapse of the €), earnings could be disappointing. Investors need to be strong when looking at the Dow chart below.
Dow Jones Industrials
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