Dow shot up 358 (closing near the highs), advancers over decliners about 3-1 & NAZ jumped 241. The MLP index was steady in the 105s & the REIT index rose 5+ to the 341s. Junk bond funds slipped lower & Treasuries was slightly higher. Oil was steady, just above 40, & gold fell 7 to 1869 (more on gold below).
AMJ (Alerian MLP Index tracking fund)
Treasury Secretary Steve Mnuchin said he & House Speaker Nancy Pelosi agreed to resume talks on another coronavirus relief package more than a month after negotiations first collapsed. “I’ve
probably spoken to Speaker Pelosi 15 or 20 times in the last few days
on the CR,” Mnuchin told the Senate Banking Committee yesterday,
referring to a continuing resolution (CR) to extend gov funding
thru the end of the year. "And we’ve agreed to continue to have
discussions about the CARES Act.” Pelosi also told reporters at the Capitol yesterday that she expected to revive negotiations with the White House shortly. "We'll be hopefully soon to the table with them," she said. Their comments come amid a high-stakes impasse between the 2
parties over another round of emergency relief for American workers &
families still reeling from the virus-induced crisis. Although Dems & Reps broadly agree that another bill is necessary to aid the
economy's recovery, they sharply disagree over the size & scope of
it. Dems have offered to come down to $2.2T from the
roughly $3T HEROES Act, which the House passed in May &
insist the legislation needs to include extended unemployment benefits, a
fresh round of $1200 stimulus checks & additional funding for state & local govs. But the White House & Rep leaders
want to keep the price tag closer to $1T amid growing concerns
among some lawmakers over the ballooning deficit, which is
projected to hit a record-shattering $3.3T this year, according
to the Congressional Budget Office. Asked
last week whether she was allowing perfect to be the enemy of good
by holding out for $2.2T, Pelosi said: "It's not perfect.
Perfect is $3.4 trillion." House Dems are drafting a $2.4T aid package in hopes of jumpstarting negotiations. The revised measure is likely to include funding
for state & local govs; a 2nd $1200 stimulus check; more
than $100B in aid for schools to safely reopen & renewed
funding for jobless aid. Economists have urged lawmakers to cut a deal or risk imperiling the nascent recovery from the shutdown earlier this year. "The CARES
Act really did a lot of good in putting money in people's hands and
keeping them in their homes and keeping them spending, keeping them in
one piece," Federal Reserve Chair Jerome Powell said in congressional
testimony this week. "Going forward, more of that may be needed." Congress is scheduled to be in session through early Oct.
The US. recession was severe but also short and is now over, said Richmond Fed Pres Tom Barkin. The
US went into a recession on Mar 15 when the economy went into a
lockdown to try to stem the outbreak of the coronavirus. It ended in
Jun or Jul, Barkin said. The US economy sank at a record 31.7% annual rate in Q2. Economists expect a sharp recovery in Q3. A
committee of economists led by the National Bureau of Economic Research
decides the official timing of recessions & this is not known to be a
swift process. A decision could come “like three years from now,” about
when the pandemic-hobbled economy slipped in & out of recession,
Barkin quipped. St Louis Fed Pres James Bullard said earlier the economy could fully recovery on some metrics by the end of this year. Even if the recession is over, Barkin said he didn-t think the economy would recover fully until 2021 or after. The US economy “has kind of been in the hospital and we’re out of the hospital now but we’re recovering at home,” Barkin said. “We’re vulnerable” to another adverse development, he added. “That
could be a lot of things. I mean imagine for a second some big showdown
with Iran or China or imagine a terrorist incident on US soil. Something else that wings in from left field, that's the thing I worry
about the most. “I do think the economy is getting healthier but we’re not healthy,” he said.
A rising tide worldwide of new cases & deaths from the
coronavirus-borne disease COVID-19 has prompted calls for new shutdown
measures overseas & more political wrangling in the US, but also
reignited efforts to produce a stimulus bill to fend off a renewed
pandemic-induced economic slowdown. The global case tally reached 32M today as deaths grew to 984K, according to Johns Hopkins University. In the US, the case toll climbed to nearly 7M & the death toll reached 203K. There were 45K new cases reported in the US today,
up from 41K yesterday. That was close to the daily average of 42K
over the past week, which was up 17% from the average 2 weeks earlier.
There were 885 new coronavirus deaths over the past day, down
from 1091 a day before.
Gold futures ended with a loss, with bullion booking its 4th decline in 5 sessions, prompting the asset to suffer its worst weekly slide in about 6 months. Dec gold fell $10 (0.6%) to settle at $1866 an ounce, sending the metal to its lowest finish in 2months. It saw a 4.9% weekly drop—the steepest for a most-active contract since mid Mar. The chance for a 2nd Congressional stimulus package, which the stock market has been craving, remains slim. This should also support the gold price.
Stocks were around breakeven until midday when the announcement was made that talks resumed on another stimulus bill. Stocks jumped even though the odds for a new bill (or significant bill) are weak. Investors are hoping for the best but the 2 sides are still far apart. The Dow finished the week down 500 & the NAZ finished up 100 thanks to late day buying today. They're both in the red in the month.
Dow Jones Industrials