The Dow hit record territory gaining 120 points to 18,347 on strong volume. Energy and material stocks led the way as Brexit fears eased. Bank stocks also did well.
An article in the New York Times talked about global bond markets and what they are indicating about the global economy. The bottom line is that long term interest rates are at the lowest in the 227 year history of the United States. The yield curve and interest rates both indicate that inflation and economic growth will be slow until at least the year 2021 when the cows are supposed to come home. Low rates also indicate a 60% change of recession in next couple of years. However it is important to know that just because rates are lower than whale poop it does not mean we face economic disaster. Low rates might be a reflection of the requirement for banks, pensions and insurance companies to buy safe bonds and that central banks have also been buyers of these assets and this demand is pushing prices up and rates down. Apple is sitting on over $200 billion in cash. Microsoft holds over $100 billion in cash and the list goes on. The US economy continues to look like Paradise Island while Europe resembles Gilligan’s Island where everyone wants to get rescued from.
“Boeings” strategy to give away a dozen donuts with each jet order is working as they sold another 40 737’s to various buyers at the Farnborough Airshow. They also got an order for 20 747-8 freighters from a Russian cargo company called Volga-Dnepr. When asked about how soon delivery to Volga-Dnepr could take place they replied “not nyet”. Ha-ha.
Citigroup announced it was closing its foreign currency accounts in Venezuela within 30 days. The Venezuelan gubment uses Citi for foreign currency transactions and this is the latest in a long line of international corporations that have stepped back from doing business in the troubled utopia of President Nicolas “it’s not my fault” Maduro. Maduro used the occasion to blast capitalism saying that Venzuela does not need Citi and will be fine without it. Meanhwile the gubment of Venezuela confiscated a Kimberly Clark plant. Tick……tick……..tick……..
Gold fell 1.6% today as Brexit tensions eased.