Markets hesitate after the long rally

Dow crawled up 103 with a little buying into the close, advancers over decliners better than 2-1 & NAZ was off 29.  The MLP index gained 1+ to go over 120 & the REIT index  edged up 1+ to the 379s.  Junk bond funds traded higher & Treasuries had limited buying, lowering yields.  Oil finished in the high 81s (a 3+ monthly high) & gold added 4 to 2004 (more on both below).

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By many measures, consumers who have been squeezed by higher prices should be experiencing some relief.  Recent releases show that, at least compared with the soaring inflation of a year ago, prices have begun to ease.  The consumer price index, which measures inflation, increased 3% from a year ago, which is the lowest level since Mar 2021, while the personal consumption expenditures price index also notched the lowest annual level in more than 2 years.  And yet, as of Jun, 61% of adults still say they are living paycheck to paycheck, according to a new LendingClub report, unchanged from a year ago.  Lower-income workers have been the hardest hit by price spikes, particularly for food & other staples, since those expenses account for a bigger share of the budget, studies show.  Roughly ¾ of consumers earning less than $50K annually & 65% of those earning $50-100K were living paycheck to paycheck in Jun, based on LendingClub's numbers.  Fewer top earners have been struggling to make ends meet.  Of those earning $100K or more, only 45% reported living paycheck to paycheck.  52% of adults, including high earners, said they have felt more financially stressed since before the Covid pandemic began in 2020, according to a separate CNBC Your Money Financial Confidence Survey conducted in Mar — largely due to inflation, rising interest rates & a lack of savings.  That survey found that 58% of Americans are living paycheck to paycheck.  Still, more than ½ of all US consumers struggle to afford their day-to-day lifestyle, which is forcing some to rely more on savings, making them financially vulnerable. “Budgets are still very stretched and, for a lot of households, credit cards are filling the gap,” said Greg McBride, Bankrate's chief financial analyst. “People aren’t financing purchases at 20% because they have other options,” he added.  “They're doing that because it's their only option.”

61% of Americans say they are living paycheck to paycheck even as inflation cools

The National Institutes of Health (NIH) said it launched mid-stage clinical trials to test at least 4 treatments, including Pfizer's (PFE) antiviral Covid-19 pill Paxlovid, as potential therapies for long Covid.  There is no proven treatment for the conditio, which refers to symptoms that continue or develop in the weeks or months following an initial Covid infection.  It affects an estimated 23M Americans.  The agency will test medical treatments like a web-based brain training program called BrainHQ & a device that uses a small electric current to stimulate brain activity.  NIH expects to launch additional clinical trials to test at least 7 more treatments “in the coming months.”  The stock was off 1¢.
If you would like to learn more about PFE, click on this link:
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NIH to test Pfizer’s Paxlovid, other treatments as potential long Covid therapies

Apple (AAPL), a Dow & NAZ stock, is preparing to unveil its next generation of devices this fall & the high-end iPhone 15 models will reportedly feature some major changes.  The company has used its proprietary Lightning charger for iPhones since 2012, but the iPhone 15 & iPhone 15 Plus will be compatible with USB-C charging.  The iPhone 15 Pro & Pro Max models will feature titanium edges instead of stainless steel & that may help make those phones a bit lighter.  USB-C is used by most modern gadgets, from Android phones & tablets to most of Apple's iPads & some of Amazon's (AMZN) Kindle eReaders.  It means you'll be able to carry one charger that will work with all of your devices.  Ministers from EU member states gave final approval to a common charger law late last year, which means that by 2024, electronic devices, including mobile phones & tablets, will need to support USB-C charging.  In other words, AAPL's Lightning charger will no longer cut it in some markets.  “Obviously we’ll have to comply,” Greg Joswiak, AAPL's senior VP of worldwide marketing, said.  AAPL is also considering raising the price of its high-end iPhone Pros.  Since 2019, the company has sold a high-end iPhone Pro that starts in the US at $999 & a Max model with a bigger screen that starts at $1099.  The stock was up 62¢.
If you would like to learn more about AAPL, click on this link:
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Apple’s iPhone 15 Pro will reportedly feature new charging port, titanium edges

Gold futures settled higher amid optimism that major central banks are approaching the end of tightening cycles.  Data showed on Fri that the Fed's favorite inflation gauge slowed to a 2-year low in Jun, easing concerns about the outlook for interest rates.  A firm $ limited the yellow metal's upside.  The $ index, after weakness in the AM, it recovered to 101.82, gaining nearly 0.2%.  Gold futures for Dec ended higher by $9 at $2009

' an ounce.  Gold prices are attempting a bullish break out as optimism grows that the major central banks are all approaching the end of their tightening cycles.  The Fed is waiting on the data, but they might be done if inflation plays nice.  Golds' rally could extend if growth prospects turn sour.

Gold Futures Settle Modestly Higher

US crude futures finish the day 1.5% higher at a 15-week-high $81.80 a barrel & end Jul with a 16% monthly rise, the largest one-month increase since Jan 2022's 17% climb.  Crude prices are finishing a solid month on a high note as demand prospects remain impressive & no one doubts that OPEC+ will keep this market tight.  Most of the major central banks appear at the tail end of their tightening cycles.  The ace up the sleeve of oil bulls is that the energy market is still awaiting massive stimulus from China that should boost global growth prospects.

WTI Oil Rises 16% in July, Largest 1-Month Rise Since January 2022

As shown below, stocks have had a very strong run in recent months.  The main problem is that the stock market is overbought.  Dow rose an impressive 1100 in Jul.  At the same time, interest rates have been raised to new highs which haven't been seen in years.  The stock market needs a rest until supporting economic data can catch up.          

Dow Jones Industrials 

Markets edge higher as investors prepare for more earnings reports

Dow went up 59, advancers over decliners 3-1 & NAZ gained 32.  The MLP index was up 1+ taking it over 240  & the REIT index gained 2 to 381. Junk bond funds were also higher & Treasuries had limited buying which reduced yields.  Oil rose to the 81s & gold added 6 to 2006.

AMJ (Alerian MLP Index tracking fund)

 

 

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The odds of the US avoiding a deep recession & achieving a "soft landing" are rising as the Federal Reserve tries to bring down inflation, but the economy isn't out of the woods yet according to a key figure at the central bank.  Neel Kashkari, pres of the Federal Reserve Bank of Minneapolis said that he agrees with Fed economists who increasingly view the US economy as likely to end this inflation cycle without a significant hit to the labor market.  "That’s our base case scenario, the economy continues to surprise how resilient it is, that’s a really good thing, as your reporting just showed the unemployment rate is still very low of 3.6%" Kashkari aidded.  "Nonetheless, I’m not going to dismiss the hardship that Americans are feeling. High inflation for several years has really put a dent in people’s pocketbooks. We’re now starting to dig our way out of that," he explained.  "So, we’re making progress. But I’m also not surprised that people are still frustrated by how long it has taken to get here."  Kashkari is one of the 12 Fed officials who serve as voting members of the Federal Open Market Committee, which makes decisions about the central bank's monetary policies that influence interest rates, which in turn have an impact on the rates paid by credit card & mortgage borrowers.  When asked whether the Fed plans to raise interest rates one more time in 2023 given that inflation slowed to 3% on an annual basis in Jun, down from a 40-year high of 9.1% inflation the US faced last year but still above the Fed's 2% target.  Kashkari said policymakers will weigh the data before making a decision.  "We need to get inflation all the way back down to 2%. And while that headline number that your reporter just shared, 3%, is really positive news, that headline number tends to move around a lot, as oil prices and gas prices and food prices fluctuate the underlying number. The core numbers more around 4.1%, that’s down from around 5.5% a year ago," Kashkari noted.  "So we’re making good progress, but it’s still double our 2% rate, and so we don’t want to declare victory," he added.  "If we need to hike – raise rates further from here, we will do so. But we’re gonna let the data guide us and not prejudge the outcome."  Kashkari went on to say that although he thinks there will be some job losses coming to the US economy as interest rates remain elevated, he believes it will be possible to have modest increases in the unemployment rate & still manage to pull off a "soft landing" that avoids a deep recession.  "I personally don’t think that’s realistic, that we’re going to end this inflation cycle with no cost to the labor market. It would not surprise me to see the unemployment rate tick up from 3.6 to 3.7, 3.8, maybe even 4%. That in my book – that would still be a soft landing," he said.  "We definitely want to avoid a deep recession where you have hundreds of thousands of people losing their jobs month after month, the kind of painful recession that we have seen in the past. If we can achieve 2% inflation with only a modest softening in the labor market, I think that would be a resounding positive outcome for the country as a whole."

Minneapolis Fed chief Kashkari hopeful US economy can avoid recession as inflation fight continues

Ford (F) announced it is projected to lose a whopping $4.5B from electric vehicles (EVs) this year, up from the previous projected loss of $3B.  The automaker's EV division, called "Ford Model e," has an estimated lost $1.8B so far this year.  The projected $4.5B loss is over twice as much as Model e's $2.1B loss in 2022.  The company recently announced that the price of its electric F-150 Lightning pickup trucks will be reduced due to cheaper raw battery materials.  The company touted that its low EV prices "establish[es] leadership ahead of industry's next-generation EVs" & that the Ford Model e's revenue is up 39%.  Ford is also expected to produce 600K EVs per year by 2024.  "The near-term pace of EV adoption will be a little slower than expected, which is going to benefit early movers  like Ford," CEO Farley said.  "EV customers are brand loyal and we’re winning lots of them with our high-volume, first-generation products; we’re making smart investments in capabilities and capacity around the world; and, while others are trying to catch up, we have clean-sheet, next-generation products in advanced development that will blow people away."  The company still generates a massive amount of revenue in other parts of the company.  Q2 revenue was $45B, with a net income of $1.9B.  "Ford Model e is an EV startup within Ford," CFO John Lawler previously said in Mar.  "As everyone knows, EV startups lose money while they invest in capabilities, develop knowledge, build volume and gain share."  The stock was off 7¢.
If you would like to learn more about Ford, click on this link:
club.ino.com/trend/analysis/stock/F_aid=CD3289&a_bid=6aeoso5b6f7

Major car maker set to lose billions on electric vehicles

Treasury yields were little changed as investors digested the latest inflation data, which could affect Federal Reserve monetary policy & considered the outlook for the economy.  The 10-year Treasury yield was little changed at 3.965% & the 2-year Treasury was down by a basis point at 4.887%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors considered what could be next for inflation & Fed monetary policy, especially regarding interest rates.  That comes after Fri's reading of the personal consumption expenditures price index, the Fed's favored inflation gauge, suggested that inflation is cooling.  On a monthly basis, the PCE was in line with expectations at 0.2% for Jun.  The core PCE, which excludes food & energy, was up by 4.1% on an annual basis, just below the anticipated 4.2%, marking the lowest level since Sep 2021.  Many investors took that as a sign that the Fed may be able to pause or end its interest rate-hiking campaign as soon as elevated rates appear to be working to cool the economy & ease inflation.  Investors considered what could be next for inflation & Fed monetary policy, especially regarding interest rates.  Many investors took that as a sign that the Fed may be able to pause or end its interest rate-hiking campaign as soon as elevated rates appear to be working to cool the economy & ease inflation.

Treasury yields are little changed as investors assess inflation outlook

High yields on Treasuries are not getting much attention by investors.  More big earnings reports are coming this week as well as the Jul jobs report.

Dow Jones Industrials

 

Markets climb as inflation continues to cool

Dow went up 176 (up 230 for the week), advancers over decliners 5-2 & NAZ added 266.   The MLP index was even in the 239s & the REIT index fell 2+ to the 368s.  Junk bond funds rose along with stocks & Treasuries were purchased over the entire session, bringing higher yields.  Oil was fractionally higher above 80 & gold gained 13 to 1998.

AMJ (Alerian MLP Index tracking fund)

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Sorry most of the post was deleted by accident.  In summary, Dow is having another excellent month.  Dow is up about 1000 in Jul.  But don't forget that high interest rates are very high & can bring on a recession.  In the meantime, enjoy improved portfolio values.

Dow Jones Industrials