Dow finished up 18 after a late day rally, advancers over decliners 3-2 & NAZ gained 27. The MLP index soared 7+ to the 221s & the REIT index fell 3+ to 447. Junk bond funds remained weak & Treasuries saw a little buying, bringing slightly lower yields. Oil rebounded 2+ to almost 91 & gold fell 4 to 1772 (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)
Treasury Secretary Janet Yellen asked the Internal Revenue Service to develop an operational plan for deploying the $80B in new funding allocated to it under the Dems' health care & climate change spending package. Yellen said the influx of funding over the next decade is a "significant operational challenge" that ultimately allows for a "monumental opportunity" to reshape the tax-collecting agency. She laid out her top priorities in the memo which included clearing a backlog of unprocessed tax returns, modernizing IRS technology, improving taxpayer services & hiring "at least" 50K new employees over the next 5 years. "The work will require an all-hands-on-deck approach from the dedicated employees of the IRS," she wrote. Yellen directed the agency to draft an operational plan within 6 months that includes details about how the money will be spent over the next decade, with specific operational initiatives & associated timelines. Providing the IRS with an influx of funding has been a top priority for Dems & emerged as one of the most prominent financiers of the Inflation Reduction Act that Pres Biden signed into law this week. But it has elicited a fierce pushback from Reps, who say that a beefed-up IRS could ultimately hurt lower-income Americans. That's because the IRS disproportionately targets low-income Americans when it conducts tax audits each year. In fact, households with less than $25K in earnings are 5 times as likely to be audited by the agency than everyone else, according to a recent analysis of tax data from fiscal year 2021 by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University. The reason for that is a rise in what is known as "correspondence audits," meaning the IRS conducts reviews of tax returns via letters or phone calls rather than more complex face-to-face audits. Just a fraction (100K of the 659K audits in 2021) were conducted in person. According to the Syracuse study, more than ½ of the correspondence audits initiated by the IRS last year (54%) involved low-income workers with gross receipts of less than $25K who claimed the earned income tax credit, an anti-poverty measure. The discrepancy is primarily due to high-income taxpayers having complex investments that can easily shroud the gaps between taxes owed and paid vs. taxes reported & paid. Yellen has pushed back against that fear, reiterating in her memo that she directed the IRS to not increase audits on households earning less than $400K annually. The spending bill is expected to raise an estimated $739B over the next decade by increasing IRS funding, establishing a 15% minimum corp tax targeting companies' book income, allowing Medicare to negotiate prescription drug costs & imposing a 1% excise tax on corp stock buybacks.
MONEY MAYHEM: Yellen determined to pour more money into Dems' spending package
The US & Taiwan will engage in formal trade talks, the office of the US Trade Representative said. The
talks are connected to the US-Taiwan Initiative on 21st-Century
Trade, which was announced on Jun 1 & comes amid tense US-China
relations. "Today, we begin negotiations with Taiwan under the
auspices of [the American Institute in Taiwan] and [the Taipei Economic
and Cultural Representative Office] that will deepen our trade and
investment relationship, advance mutual trade priorities based on shared
values, and promote innovation and inclusive economic growth for our
workers and businesses," said Deputy US Trade Representative
(USTR) Sarah Bianchi. "We plan to pursue an ambitious schedule
for achieving high-standard commitments and meaningful outcomes covering
the eleven trade areas in the negotiating mandate that will help build a
fairer, more prosperous and resilient 21st century economy." The negotiations are expected to take place this fall, USTR said.
FORMAL DISCUSSIONS: US to hold wide-ranging trade talks with Taiwan amid tensions with China
Dr Ashish Jha has an updated prediction for when Covid booster shots targeting the omicron's BA.5 subvariant could be available: within the next 3 weeks or so. “We’re going to know more about this in the upcoming weeks and these vaccines will become available by early to mid-September,” Jha, the White House's Covid response coordinator, said. The timeline is the most specific estimate to date, following comments in prior months from health officials signaling a potential rollout in Sep or Oct. He noted that while the booster shots are expected to sail relatively smoothly thru vetting from the Food & Drug Administration & Centers for Disease Control & Prevention, any authorization hiccups could delay that release date. The booster shots being considered by the FDA & CDC are made by both Moderna (MRNA) & Pfizer (PFE) are known as “bivalent” shots — which means they target 2 separate strains of the coronavirus. In this case, the shots target both the original Covid strain & omicron's BA.5 subvariant, which currently represents 85-90% of all US cases. Jha emphasized that BA.5 is “incredibly immune evasive” & contagious, fueling breakthrough cases among vaccinated individuals & reinfections in those who had the virus just months prior. The subvariant could wreak more havoc in the fall as vaccine immunity wanes & people spend more time indoors, making updated shots a potentially valuable tool for nationwide protection. “The big picture, bottom line, is these are substantial upgrades in our vaccines, in terms of their ability to prevent infection, prevent transmission and certainly to prevent serious illness,” Jha said. “And those vaccines are coming very, very soon.”
Dr. Ashish Jha: BA.5 boosters could be here in the next 3 weeks
Gold futures gave up early gains to suffer a 4th straight session loss, with prices settling at their lowest in 3 weeks on the back of strength in the $, as investors digested the latest economic data & minutes from the Federal Reserve's Jul meeting. Gold prices for Dec fell $5 to settle at $1771 per ounce, following 3 consecutive sessions of declines. That was the lowest finish for a most-active contract since Jul 28. Prices for gold declined following data that revealed a weekly fall in US jobless claims & strength in the $. The ICE US Dollar index traded 0.9% higher today. St Louis Fed Pres James Bullard signaled his support for another large 75 basis point rate increase at the central bank's Sep policy meeting.
Gold prices log a 4th straight loss to end at a 3-week low
US oil futures jumped, as recent US gov data showing weekly declines
in domestic crude & gasoline supplies helped to ease worries about a
recession, pulling West Texas Intermediate (WTI) crude prices to their highest
finish in almost a week. Sep WTI crude rose $2.39 (2.7%) to settle at $90.50 a barrel, the highest front-month contract finish
since Aug 12.
U.S. oil futures rally to their highest finish in nearly a week
Dow began the day in the red. During the midday period, buyers returned & the Dow closed in the black. No dramatic news for the rise. Buyers are hoping for the Fed to be gentile with the interest rate hikes & there will not be a "real" recession. However there are concerns about retailers & home-building has been stumbling..
Dow Jones Industrials
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