Monday, November 23, 2020

Markets climb higher after Biden chooses Yellen for Treasury Secretary

Dow jumped 327, advancers over decliners 7-2 & NAZ went up  25. The MLP index zoomed, up 6+ to 141, & the REIT index was fractionally higher to 370.  Junk bond funds fluctuated & Treasuries were sold.  Oil rose to 43 & gold plunged 34 to 1837 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

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After scrambling to hoard cash in the spring, some large US companies that halted their div payments are reversing their decision, a sign that their leaders believe the worst of the crisis is behind them.  Earlier this year, when much of the country's economy shut down in the first waves of the coronavirus pandemic, companies withdrew cash from credit lines, stopped repurchasing stock & halted div payments amid the uncertainty.  The public health plight continues, but many businesses—from factories to law firms—have learned how to operate during the pandemic.  Retailers, fast-food restaurants & car makers are doing better, & there is hope among execs that any new restrictions to battle the latest US surge in cases won't be as severe.  A company's decision to pay a div typically depends on management’s comfort with having enough cash flow for other uses—post-payment—along with its ability to access other cash.  It is a commitment to make regular payouts to shareholders & suspending it is frequently a last resort in a crisis.  Of the 42 companies in the S&P 500 index that suspended their div earlier this year, 6 have resumed paying their div & several more have given a timeline to do the same.

Companies aim to renew dividend payments, sign of optimism worst of COVID-19 is over

The Food & Drug Administration (FDA) issued emergency use authorization for Regeneron's (REGN) COVID-19 antibody therapy, an experimental treatment given to Pres Trump that he said helped cure him of the disease.  The FDA said the monoclonal antibodies, casirivimab & imdevimab, should be administered together for the treatment of mild to moderate COVID-19 in adults & pediatric patients with positive results of direct SARS-CoV-2 viral testing & who are at high risk for progressing to severe COVID-19.  This includes those who are 65 years of age or older or who have certain chronic medical conditions.  The treatment is part of a class of drugs known as monoclonal antibodies, which are manufactured copies of antibodies created by the human body to fight infections.  Regeneron's REGEN-COV2 "antibody cocktail" - containing an antibody made by the company & a 2nd isolated from humans who recovered from COVID-19 - is designed so that the 2 antibodies seek out & bind to the coronavirus' spike protein to prevent it from entering healthy human cells.  The company expects to have does of REGEN-COV2 treatment ready for about 80K patients by the end of this month, about 200K patients by the first week of Jan & approximately 300K patients in total by the end of Jan.  The stock rose 4.87 (1%).
If you would like to learn more about REGN, click on this link:

Regeneron COVID-19 antibody given emergency authorization by FDA

Retailers could end up having a strong finish to 2020, despite all of the challenges that the coronavirus pandemic has dealt the industry, according to a new forecast that cites a strong stock market, rising home values & record personal savings rates as factors that could boost spending.  The National Retail Federation (NRF) said it expects holiday sales during Nov & Dec to rise 3.6-5.2% year over year, amounting to $755B-767B.  “Given the pandemic, there is uncertainty about consumers’ willingness to spend,” NRF Chief Economist Jack Kleinhenz said.  “But with the economy improving, most have the ability to spend.”  With spending on travel & entertainment largely sidelined, consumers have more money to spend on other items, the group said.  Last year, holiday sales rose 4% to $729B.  And holiday sales on average have increased 3.5% for the past 5 years.  The sales forecast excludes automobile dealers, gasoline stations & restaurants.  Some shoppers may look to avoid crowded stores, which will shift more spending online, the group said.  Retailers have also been urging shoppers to use services like curbside pickup to try to ease the stresses on their supply chains.  NRF is projecting a jump of 20-30% in online & other non-store sales, amounting to $202-218B this holiday season, compared with $169B in 2019.  “The outlook for the holiday season is very bright,” NRF CEO Matt Shay said.  “We’ve seen consumers are very engaged [and] looking for opportunities to celebrate. ... We expect a strong finish to the season.”  Retail sales in the US increased by less than expected in Oct.  The possibility still remains that sales could be hurt further by the spike in Covid infections & deaths since Election Day.  Unemployment remains elevated & some states have once again begun to shutter indoor dining, & roll out other restrictions that could result in additional furloughs or layoffs.  Hope around the distribution of an effective Covid vaccine has sparked more recent optimism, however.

Retail trade group sees holiday sales up 3.6% to 5.2%, in a ‘strong finish’ to 2020

Gold futures finished sharply lower, notching the sharpest daily fall since early Nov, as investors unloaded the metal amid news on prospective vaccines  treatments for COVID-19 that broke down near-term support for bullion.  Drugmaker AstraZeneca (AZN) said a study found the vaccine it is developing with the University of Oxford had an up to 90% efficacy rate.  That news followed similarly upbeat vaccine news from Pfizer (PFE)  & its partner BioNTech (BNTX), as well as from drugmaker Moderna (MRNA) earlier this month.  Distribution of vaccines could begin to front line workers yet this year, once the FDA grants approval, according to the head of Operation Warp Speed.  Vaccine progress has been a drag on bullion because it undercuts the haven appeal for gold.  Dec gold shed $36 (1.8%) to settle at $1837 an ounce, after putting in a weekly loss of 0.7% on Fri, its 2nd consecutive.  The metal booked its worst daily decline since Nov 9.  Many gold traders considered the trading area around $1850 to represent support for gold.  Optimism around vaccines & treatments for COVID-19 were helping foster buying in comparatively riskier US equities, with the Dow starting the week higher.

Gold prices end 1.8% lower Monday as vaccine progress slams precious metals

Oil futures rose, ending higher after another round of positive news on work toward a vaccine & treatments for COVID-19.  West Texas Intermediate crude for Jan delivery rose 64¢ (1.5%) to close at $43.06 a barrel.  The finish was the highest for a front-month contract since Aug 26.  Crude was lifted after AZN said its vaccine candidate was up to 90% effective.  Crude has rallied in Nov, finding support as a number of vaccine candidates have shown high efficacy in late-stage trials.

Oil ends at nearly 3-month high on signs of further progress toward COVID vaccine

The latest forecast for the economy is for modest growth in Q4 & a limited shrink in Q1,  That's far from spectacular, but much better than many other major economies.  The new vaccines are looking good along with treatments used to treat afflicted patients, enabling them to recover.  The Dow is in record territory while safe-have gold has been drifting lower since early Aug.

Dow Jones Industrials

Markets rise on more positive vaccine news

Dow rose 136, advancers over decliners about 4-1 & NAZ was off 54.  The MLP index jumped 5+ to 140 & the REIT index added 3+ to the 372s   Junk bond funds fluctuated & Treasuries were sold today.  Oil went up to almost 43, & gold tumbled 38 to 1834.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil42.78
  +0.36 +0.9%

GC=FGold   1,834.30
-38.10  -2.0%


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British pharmaceutical giant AstraZeneca (AZN) said an interim analysis of clinical trials showed its coronavirus vaccine has an average efficacy of 70% in protecting against the virus.  It comes after a string of encouraging vaccine results in recent weeks.  Pfizer (PFE) & Moderna (MRNA) reported preliminary results showing that their respective Covid vaccines were around 95% effective.  It is hoped a Covid vaccine could help to bring an end to the coronavirus pandemic that has claimed more than 1.3M lives worldwide.  The AZN vaccine, developed in collaboration with the University of Oxford, was assessed over 2 different dosing regimens.  One dosing regimen showed an effectiveness of 90% when trial participants received a ½ dose, followed by a full dose at least one month apart.  The other showed 62% efficacy when given as 2 full doses at least one month apart.  The combined analysis from both dosing regimens found average vaccine effectiveness of 70%.  No hospitalizations or severe cases of the disease were reported in participants receiving the vaccine.  “These findings show that we have an effective vaccine that will save many lives,” professor Andrew Pollard, chief investigator of the Oxford Vaccine Trial, said.  AZN stock fell 1.79 (3%).
If you would like to learn more about AZN, click on this link:

Oxford-AstraZeneca Covid vaccine shows an average effectiveness of 70%

Economic activity in the euro zone sank once again in Nov after govs introduced new lockdowns & social restrictions to contain further spreading of the coronavirus.  However, news that a Covid-19 vaccine might soon be ready for distribution has made businesses more confident about returning to their normal activity levels in the next 12 months.  The flash euro zone PMI composite output index, which looks at activity in both manufacturing & services sectors, came in at 45.1 in Nov — the lowest reading in 6 months, & down from 50 in Oct.  A reading below 50 represents a contraction in business activity.  “The eurozone economy has plunged back into a severe decline in November amid renewed efforts to quash the rising tide of COVID-19 infections,” Chris Williamson, chief business economist at IHS Markit said.  Amid a 2nd wave of coronavirus cases in the fall, many European nations tightened social restrictions in Oct, which has dented their economies once again.  The economic shock was once again felt mostly in the services sector with non-essential shops closed, restrictions on movement & curfews.  Williamson explained that the nature of the latest lockdowns is different from those introduced earlier this year & that has meant that the economic shock has been somewhat smaller.  “There’s a broader picture here, which is the global nature of the lockdown back in the spring. So what we had there was a synchronized lockdown and that meant that was literally no demand anywhere, but now you’ve got pockets of very strong rebounding demand,” he added.  However, the decisions to introduce new lockdowns have contributed to a cresting of new cases as well.  As a result, European leaders are planning to lift some of the restrictions in the coming weeks, albeit in a very gradual manner.

Euro zone business activity shrinks to six-month low after new coronavirus lockdowns

Leaders of the world's 20 biggest economies have pledged to address the global recession caused by the coronavirus & outlined plans to accelerate an equitable & sustainable recovery at the conclusion of the historic G-20 summit in Saudi Arabia.  “We are committed to leading the world in shaping a strong, sustainable, balanced and inclusive post-COVID-19 era,” G-20 leaders declared in a 12 page document.  Saudi Arabia's historic G-20 presidency, the first ever for an Arab country, has been dominated by the need to address the economic & social impact of the ongoing pandemic, which has now killed more than 1.3M worldwide.  “The COVID-19 pandemic and its unprecedented impact in terms of lives lost, livelihoods and economies affected, is an unparalleled shock that has revealed vulnerabilities in our preparedness and response and underscored our common challenges,” the final communique said.  The group pledged to “spare no effort to protect lives, provide support with a special focus on the most vulnerable, and put our economies back on a path to restoring growth, and protecting and creating jobs for all.”  The G-20 also pledged to mobilize more resources to address the immediate financing needs to support the research, development, manufacturing, and distribution of safe and effective Covid-19 diagnostics, therapeutics & vaccines.  “We will spare no effort to ensure their affordable and equitable access for all people,” the declaration added, without providing specific details.  “If one country suffers, we will all suffer,” Saudi Arabia's Finance Minister Mohammed Al-Jadaan told the summits final press briefing.  “Every single leader was supportive of the G-20 initiatives to ensure that we provide enough resources to ensure that the vaccine and therapeutics are available to everyone.”  G-20 leaders pledged to address the disproportionate social & economic impact of the virus, having already deployed an unprecedented $11T to accelerate the global recovery & $21B at the outset of the crisis to support health systems & the hunt for a vaccine.

G-20 leaders pledge to ‘spare no effort’ to ensure equitable access to coronavirus vaccines worldwide

More news on new vaccines is bringing out investors.  Unfortunately, the virus continues to fight hard, causing more death & grief.

Dow Jones Industrials


Friday, November 20, 2020

Markets pull back as rising Covid cases weigh on investors

Dow declined 219, decliners over advancers 4-3 & NAZ lost 49.  The MLP index was off 1+ to the 135s & the REIT index fell 2+ to the 369s.  Junk bond funds fluctuated & Treasuries continued in demand.  Oil went above 42 & gold added 10 to 1872 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]

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The US reported 188K new Covid-19 cases yesterday, yet another record-breaking daily total as US health officials urge Americans to stay home for Thanksgiving & states impose tighter restrictions to slow the persistent spread of the virus.  “We’re alarmed,”  Dr Henry Walke, the Centers for Disease Control & Prevention’s Covid-19 incident manager, said where the agency urged people not to travel over Thanksgiving.  “One of our concerns is that as people over the holiday season get together, they may actually be bringing infections with them to that small gathering and not even know it,” he added.  The US first crossed 100K new Covid-19 cases on the Nov 3 & infections have continued to climb to all-time highs ever since.  The nation has reported a weekly average of 165K new cases every day, a record-breaking streak that's lasted for 24 consecutive days, according to Johns Hopkins University.  Unlike other peaks in the spring & summer that hit the Northeast & Sunbelt states, infectious disease experts have said the latest surge has no clear epicenter.  Some state & city officials have warned that there's so much spread, local outbreaks cannot be traced back to a single event or venue. “I believe this is the most serious public health moment we’ve experienced since 1918 and the swine flu,”  Dr Michael Osterholm, a coronavirus advisor to Pres-elect Joe Biden, said.  “We realize that we have a very dangerous period for the next two weeks that we’re going to have to respond to. We’re already watching our hospitals being overrun,” Osterholm continued.

U.S. reports record 187,833 new Covid cases as CDC warns against holiday travel

JPMorgan economists now see an economic contraction in Q1 due to the spreading coronavirus & related restrictions being imposed by states & cities.  The new forecast is a departure from the widely held view that Q1 would be positive, with an improving economy throughout 2021.  The economists said they expect the economy to expand briskly in the 2nd & 3rd quarter, based on positive vaccine developments.  “This winter will be grim, and we believe the economy will contract again in 1Q,” they wrote.  They projected that Q1 will contract by 1% after growth of 2.8% in Q4.  For the 2nd qtr, they see the economy rallying & growth of 4.5% followed by a robust 6.5% in Q3.  They also expect $1T of fiscal stimulus, likely beginning near the end of Q1 which should help boost midyear growth.  “One thing that is unlikely to change between 2020 and 2021 is that the virus will continue to dominate the economic outlook. ... Case counts in the latest wave are easily surpassing the March and July waves,” the economists wrote.  They noted that the economy was helped thru the Jul outbreak by the economic reopenings.  “The economy no longer has that tailwind; instead it now faces the headwind of increasing restrictions on activity. The holiday season — from Thanksgiving through New Year’s — threatens a further increase in cases,” they added.  The economists also expect to see monthly declines in employment at different points over the next few months, but monthly job gains should be back in the Ms around the middle of the year & then moderate again late in 2021.  “We think the trends in the labor market should roughly follow what we expect for consumer spending — job growth should weaken noticeably around the turn of the year as the virus weighs on the economy, and then pick up again early next year once vaccine distribution eases virus concerns and fiscal support boosts growth,” they wrote.

JPMorgan becomes first major bank to say first-quarter GDP will decline because of Covid surge

Gold futures tallied their first gain in 4 sessions, but posted a 2nd straight weekly decline, as momentum in bullion buying has ebbed considerably, despite an environment of rising cases of COVID-19 & tightening social restrictions.  Gold bulls say that fresh prospects for coronavirus relief may be offering some renewed support for buying precious metals.  Yesterday, Senate Minority Leader Chuck Schumer said Majority Leader Mitch McConnell had agreed to restart negotiations over a new coronavirus aid relief package.  Treasury Secretary Steve Mnuchin also said he is preparing to reach out to House Speaker Nancy Pelosi.  For months, Reps & Dems were disputing the size & scope of a potential aid bill.  It isn't clear if discussions will restart in earnest, but commodity investors may find the recent reports sufficient reason to buy gold on the expectation that more funds could be expended by govs to limit the economic harm from the spread of the deadly pathogen.  Against that backdrop, Dec gold gained $10 (0.6%) to settle at $1872 an ounce, snapping a 3-session slide.  Precious metals have been facing some headwinds, lately, as news on successful therapies & potential cures have served to undercut appetite for gold.

Gold ends higher after a 3-session skid, but posts a 2nd weekly slide in a row

Oil futures rose, prompting US prices to post a gain of 5% for the week.  Promising developments on potential COVID-19 vaccines, which would help ease economic restrictions & the loss of energy that may go with it, have provided support for prices.  On its expiration day, Dec West Texas Intermediate crude rose 41¢ (1%) to settle at $42.15 a barrel.  Jan, which is the new front-month contract, settled at $42.42 a barrel, up 52¢ (1.2%).

Oil futures end higher for the session and week

Nov has been a good month for stocks (shown below), helped by the news on new vaccines.  At the same time the virus has been fighting back much harder with new cases spreading to record levels around world.  The Dow is up 2760 this month but slid lower this week while the relief bill in Congress continues to go nowhere..

Dow Jones Industrials