Dow pulled back 237 (ending its winning streak), decliners over advancers 3-1 & NAZ was off 77. The MLP index stayed near 240 & the REIT index sank 7+ to the 379s as yields rallied. Junk bond funds fluctuated & Treasuries were very heavily sold, driving up the yields on the 10 year Treasury a very big 16 basis pints, taking it above 4%. Oil rose 1+ to nearly 80 & gold retreated 25 to 1944 (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 regulators unveiled a sweeping set of proposed changes to banks' capital requirements to address evolving intl standards & the recent regional banking crisis. The changes, designed to boost the accuracy & consistency of regulation, will revise rules tied to risky activities including lending, trading, valuing derivatives & operational risk, according to a notice from the Federal Reserve, Office of the Comptroller of the Currency & the Federal Deposit Insurance Corp. Long expected by banks, the proposed rules seek to tighten regulation of the industry after 2 of its biggest crises in recent memory — the 2008 financial crisis, & the Mar upheaval in regional lenders. They incorporate parts of intl banking regulations known as Basel III, which was agreed to after the 2008 crisis & has taken years to roll out. The changes will broadly raise the level of capital that banks need to maintain against possible losses, depending on each firm's risk profile. While the heightened requirements apply to all banks with at least $100B in assets, the changes are expected to impact the biggest & most complex banks the most. “Improvements in risk sensitivity and consistency introduced by the proposal are estimated to result in an aggregate 16% increase in common equity tier 1 capital requirements,” the regulators said. Tier 1 common capital levels measure an institution's presumed financial strength & its buffer against recessions or trading blowups. Most banks already have enough capital to meet the requirements, the regulators said. They would have until Jul 2028 to fully comply with the changes. The KBW Bank Index dipped less than 1% today; the index has fallen 11% this year. Further, in response to the failure of Silicon Valley Bank in Mar, the proposal would force more banks to include unrealized losses & gains from certain securities in their capital ratios, as well as compliance with additional leverage & capital rules. That effectively eliminates a regulatory loophole that regional banks enjoyed; while larger firms with at least $250B in assets had to include unrealized losses & gains on securities in their capital ratios, regional banks won a carve-out in 2019. That helped mask deterioration in SVB’s balance sheet until investors & customers sparked a deposit exodus in Mar.
Regulators unveil sweeping changes to capital rules for banks with $100 billion or more in assets
An Eli Lilly (LLY) experimental drug helped patients lose about 26% of their weight on average following extended use or intensive lifestyle changes, according to results from 2 studies. It’s the highest weight reduction seen in a late-stage clinical trial to date, the company said. The injectable drug, tirzepatide, alone resulted in up to 22.5% weight loss in a previous phase 3 trial. The data further bolsters LLY's position in the budding weight loss drug market & establishes the company as a formidable competitor to Novo Nordisk (NVO), the Danish manufacturer of the blockbuster Ozempic & Wegovy treatments. LLY last month filed for Food & Drug Administration approval of the injection for chronic weight management. Tirzepatide is already approved in the US & sold under the name Mounjaro for the treatment of diabetes. Both
trials followed adults who were obese or overweight with weight-related
conditions, but excluded those with Type 2 diabetes. Patients who stayed on the drug lost 26% of their weight on average after 88 weeks. The
findings of the trial “reinforce that obesity should be regarded like
other chronic diseases where chronic therapy may be needed to maintain
treatment benefits,” Dr Jeff Emmick, LLY's senior VP
of product development, said. The stock rose 1.26.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY_aid=CD3289&a_bid=6aeoso5b6f7
Eli Lilly says obesity drug helped boost weight loss to 26% in two trials
McDonald's (MCD), a Dow stock & Dividend Aristocrat, reported quarterly earnings & revenue that topped expectations as its China sales rebound & mascot Grimace drives US
visits. “This quarter, if I’m being honest, the theme was Grimace,” CEO Chris Kempczinski said. The fast-food giant reported 2nd-qtr EPS or $3.15, up sharply from $1.60 a
year earlier. The company spent $18M during the qtr on
its corp restructuring, which included layoffs & buyouts for
some employees in Apr. Excluding those charges & other items, EPS was $3.17. Net sales rose 14% to $6.5B. The
company's global same-store sales climbed 11.7%, topping estimates of 9.2%. All 3 of its divisions reported
double-digit growth for same-store sales. In the US, its largest
market, same-store sales climbed 10.3%. MCD also reported that
visits to its US locations grew for the 4th consecutive qtr. The stock rose 3.39.
If you would like to learn more about MCD, click on this link:
club.ino.com/trend/analysis/stock/MCD_aid=CD3289&a_bid=6aeoso5b6f7
McDonald’s earnings top estimates as mascot Grimace fuels U.S. sales
Gold prices ended at the lowest in 2 weeks as benchmark Treasury yields popped to almost 4% a day after the Federal Reserved bumped up rates to the highest in 22 years & said a US recession looks avoidable. Gold futures for Aug closed at $1945 an ounce, down 1.2% & shedding $24, while booking the lowest settlement for the most-active contract since Jul 11. The rising 10-year Treasury yield to 3.98% yesterday & a push higher in the $ against a basket of rival currencies put pressure on the precious metal.
Gold ends at lowest in two weeks as 10-year bond yield nears 4%
US crude futures finished 1.7% higher at $80.09 a barrel, marking the first time WTI has settled above $80 since Apr 18. Helping sentiment was some very bullish economic data. Jobless claims continue to fall & durable goods orders were strong. Quarterly data was especially good, with GDP up 2.4% sequentially from the last qtr. Oil prices trimmed their gains by more than $1 late in the session amid strengthening of the $, but quickly recovered to finish strong. WTI has now finished higher in 5 of the past 6 sessions & looks poised for a 5th straight weekly gain . Brent also rose to end at $84.24.
WTI Oil Ends Above $80 for 1st Time in 3 Months
Stocks were eking out a gain in early trading, but sellers returned in the PM & took the averages lower. Investors are worried about the rally in Treasury yields which has the ability to bring on a recession. Stocks may have tough sledding going forward.
Dow Jones Industrials
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