Dow finished lower, down 46 to session lows, in uneven trading, decliners over advancers 3-2 & NAZ was off 13. The MLP index was little changed, staying close to 224 & the REIT index fell 3 to 371. Junk bond funds hardly budged & Treasuries had very heavy selling, raising yields substantially. Oil fell 1 to the 75s & gold pulled back 8 to 1991 (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)
US
manufacturing pulled off a 3-year low in Apr as new orders
improved slightly & employment rebounded, but activity remained
depressed amid higher borrowing costs & tighter credit, which have
raised the risk of a recession this year. Despite
the weakness in factory activity & demand for goods reported by the
Institute for Supply Management (ISM), there was a build-up of
inflation pressures last month. The
ISM said its manufacturing PMI increased to 47.1 last month from 46.3
in Mar, which was the lowest reading since May 2020. The forecast called for 46.8. It
was the 6th straight month that the PMI remained below 50, which
indicates contraction. And activity could remain subdued as the ISM
noted that customers' inventory levels "are now at the low end of the
'too high' level," & "likely not conducive to future output growth." Though
a separate S&P Global survey showed manufacturing expanding for the
first time in 6 months in Apr, factories continued to report
hesitancy among customers to place orders because of higher prices and
economic uncertainty. The ISM says a PMI reading below 48.7% over a period of time generally indicates the economy is in recession. The
ISM said 73% of manufacturing gross domestic product was contracting,
up from 70% in Mar. But it noted that fewer industries declined
sharply.
US manufacturing contacts again in April but pulls off 3-year low
State treasurers & other top finance officials from 27 states urged Pres Biden to end what they said was his "unconscionable" policy of forcing people with good credit scores to subsidize mortgage loans of higher-risk borrowers & warned Biden's plan would be a "disaster." Biden's plan was outlined just a few weeks ago by the Federal Housing Agency (FHFA) & is set to take effect today. The plan is aimed at helping lower-income borrowers afford their monthly mortgage payments – it would do so by forcing people with good credit scores to pay more each month for their mortgages, extra payments that would be credited to the loans of higher-risk borrowers. The controversial policy has been attacked by both Reps & Dems, including Pres Obama's former Federal Housing Administrator. Today, financial officers from 27 states weighed in & said it was clear the policy was a mistake even before it takes effect. "It is already clear that this new policy will be a disaster," they wrote in a letter led by Pennsylvania Treasurer Stacy Garrity that was sent to Biden & FHFA Director Sandra Thompson. "It amounts to a middle-class tax hike that will unfairly cost American families millions upon millions of dollars. And – at a time when the real estate market has already slowed considerably due to high interest rates – it will further depress home sales." "We urge you to take immediate action to end this unconscionable policy," they wrote. The state finance officers blasted the plan for turning the normal system of home buying incentives "upside down" by hurting people who make sound financial decisions. "[T]the policy will take money away from the people who played by the rules & did things right – including Ms of hardworking, middle-class Americans who built a good credit score & saved enough to make a strong down payment," they wrote. "Incredibly, those who make down payments of 20 percent or more on their homes will pay the highest fees – one of the most backward incentives imaginable." It noted that the forced extra payments will be used to hand out "better mortgage rates to people with lower credit ratings." Others have said the plan would make it easier for people with shaky credit histories to afford more expensive mortgages, a move that could put more people at financial risk.
States revolt against Biden admin's new mortgage redistribution rule
American Airlines(AAL) pilots have voted overwhelmingly to allow their labor union to call a
strike while the carrier said talks for a new contract are getting
close to a conclusion. Pilot strikes are rare & would require
permission from the federal National Mediation Board. The vote doesn't
mean a decision to call a strike would happen immediately. More
than 96% of its pilots participated in the vote & 99% of them
voted to allow the union to call a strike, the Allied Pilots Association
(APA) said. The APA called the strike authorization vote
in Mar as talks for a new deal dragged on. CEO
Robert Isom had said the airline was ready to raise pay to match rival Delta Air Lines (DAL), whose pilots approved a 4-year deal earlier this year with 34% raises & other improvements. “Today
marks a proud milestone in our pilot group’s unity and resolve and an
important step on our path to securing the contract we have earned and
deserve — one that prevents management from operating at a discount to
our competitors and includes our ‘must have’ quality-of-life
priorities,” APA pres Capt. Ed Sicher wrote to pilots. A
spokeswoman for AAL said the carrier believes a deal is
“within reach” & that a “handful” of issues are left to complete. “The
finish line is in sight,” she saidt. “We understand that a
strike authorization vote is one of the important ways pilots express
their desire to get a deal done and we respect the message of voting
results.” The stock was up 25¢.
If you would like to learn more about AAL, click on this link:
club.ino.com/trend/analysis/stock/AAL_aid=CD3289&a_bid=6aeoso5b6f7
American Airlines pilots vote for potential strike while airline says negotiations are progressing
Gold fluctuated between gains & losses as traders assessed JPMorgan Chase's winning bid for the failed lender First Republic Bank & the Federal Reserve's interest-rate hike path. The rescue of First Republic Bank in a gov-led deal fueled optimism that the worst of banking drama may be over. While both gold held below recent highs, it continues to show real underlying strength. Still, the 2nd-largest US bank failure reminded investors that further troubles may lie ahead. That may prompt the Fed to slow down its cycle of rate hikes. Gold for Jun fell 8 to settle at $1991 an ounce.
Gold prices end at lowest in over a week as dollar strengthens ahead of Fed decision Wednesday
Oil futures settled lower, giving a portion of the back-to-back gains last week. Overall oil prices have generally shifted lower over the past month as the economics overshadow other factors. Last week brought a seemingly set of supportive inventory data, with a more than 5M barrel weekly drop in crude supplies & uptick in refined product demand. However the numbers struggled to translate to meaningful price support as crude continued to come under pressure on concerns around upcoming demand. Jun West Texas Intermediate crude fell $1.12 (1.5%) to settle at $75.66 a barrel.
Oil prices end lower on ‘economic headwinds’
Trading was choppy today. Between the unrest in the banking industry & the Fed meeting later this week, there is plenty to be absorbed. These conditions may continue until Powell gives his comments on Wed. Dow has been near 34K for months.Dow Jones Industrials
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