Dow dropped 276, decliners over advancers better than 3-2 & NAZ retreated 51. The MLP index was off 2 to the 201s & the REIT index was even. Junk bond funds fluctuated & Treasuries continued to be in demand. Oil continued down pennies but hung in above 50 & gold went up 4 to 1574 (more below.).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The Federal Reserve said key threats to a moderately expanding US economy have eased but warned that China's widening coronavirus outbreak could pose a new threat to the global outlook. In its latest monetary policy report to Congress, the central bank said the odds of the US sliding into a recession have shrunk considerably, even though a manufacturing slump & global growth weighed on the outlook last year. “Downside risks to the U.S. outlook seem to have receded in the latter part of the year, as the conflicts over trade policy diminished somewhat, economic growth abroad showed signs of stabilizing, and financial conditions eased,” the Fed said, noting both the labor market & consumer spending have remained strong. “The likelihood of a recession occurring over the next year has fallen noticeably in recent months.” Still, it did identify the rapidly spreading coronavirus — more than 600 people have died from the mysterious illness, while Chinese officials confirmed more than 31K cases — had emerged as a new risk to the global economy. Multiple companies & countries are limiting travel to & from mainland China, evacuating citizens & scaling back operations, raising concerns about the health of the world's 2nd-largest economy. “Possible spillovers from the effects of the coronavirus in China have presented a new risk to the outlook,” the Fed added. During policymakers' most recent rate-setting meeting, Fed Chair Jerome Powell suggested the illness could disrupt activity in China, which could have a worldwide impact. But, he declined to speculate further about the situation. "It's a very serious issue," Powell said, before adding, “We’re carefully monitoring the situation.” Powell will testify before Congress Tues & Wed. The report on the state of the economy & monetary policy, which the Fed is required to submit to lawmakers twice a year, reaffirmed its wait-&-see approach to interest rates, calling it “appropriate.” Over the past few months, the benchmark federal fund rate has sat at 1.5-1.75%, following 3 modest cuts in 2019. “The Committee judged that the prevailing stance of monetary policy was appropriate to support sustained expansion of economic activity, strong labor market conditions, & inflation returning to the Committee's symmetric 2% objective,” the Fed said. “The Committee noted that it will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.”
VP Mike Pence confirmed the Trump administration is working on the 2nd round of tax cuts geared toward middle-class Americans. "They're absolutely coming," he said. "I expect we'll be talking about that before this election year is out. It's one of the reasons we’re focusing so much attention on getting Donald to trump four more years." The legislation is likely to include new adjustments in the tax brackets, which the 2017 Tax Cuts & Jobs Act reduced, according to previous statements from Larry Kudlow, Trump's chief economic adviser. In Nov, Kudlow said that a 15% rate for the middle-class sounded "pretty good." Kudlow also confirmed that Rep Kevin Brady, the ranking member on the House Ways & Means Committee, has been attending ongoing meetings with the administration. 2 years ago, Reps temporarily slashed individual taxes, while also permanently reducing the corp tax rate to 21% from 35%, juicing the economy. Administration officials have previously suggested they're seeking to make the reductions in individual obligations, which are set to sunset in 2025, permanent. The Tax Cuts & Jobs Act is perhaps the biggest legislative accomplishment of the Trump administration so far. Since then, Reps have broached the subject of another round of tax cuts, although hopes of its passage were mostly dashed when Dems won control of the House during the 2018 midterms. The proposal comes as a crowded field of Dem pres candidates unveils sweeping social programs, a number of which would be funded by new levies on both the wealthy & corps.
Gold futures shook off losses seen shortly after the release of better-than-expected US employment data, to settle higher as renewed worries about the spread of the coronavirus & it's impact on the global economy worked to pull US benchmark stock indices down from record levels. The precious metal is still viewed by some commodity experts as a go-to asset in the face of an expected period of lower interest rates globally and nagging concerns about Wuhan virus. The US created a better-than-expected 225K new jobs in Jan, reflecting surprising resilience in the labor market. The increase in new jobs easily surpassed the 164K forecast. Gold for Apr delivery rose $3 (0.2%) to settle at $1573 an ounce. For the week, bullion lost about 0.9% based on the most-active contract.
For the time being, today's down market can be viewed as a routine correction in an overbought market. But the corona scare is casting a dark shadow of stock averages which are pretty much at record levels.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
The Federal Reserve said key threats to a moderately expanding US economy have eased but warned that China's widening coronavirus outbreak could pose a new threat to the global outlook. In its latest monetary policy report to Congress, the central bank said the odds of the US sliding into a recession have shrunk considerably, even though a manufacturing slump & global growth weighed on the outlook last year. “Downside risks to the U.S. outlook seem to have receded in the latter part of the year, as the conflicts over trade policy diminished somewhat, economic growth abroad showed signs of stabilizing, and financial conditions eased,” the Fed said, noting both the labor market & consumer spending have remained strong. “The likelihood of a recession occurring over the next year has fallen noticeably in recent months.” Still, it did identify the rapidly spreading coronavirus — more than 600 people have died from the mysterious illness, while Chinese officials confirmed more than 31K cases — had emerged as a new risk to the global economy. Multiple companies & countries are limiting travel to & from mainland China, evacuating citizens & scaling back operations, raising concerns about the health of the world's 2nd-largest economy. “Possible spillovers from the effects of the coronavirus in China have presented a new risk to the outlook,” the Fed added. During policymakers' most recent rate-setting meeting, Fed Chair Jerome Powell suggested the illness could disrupt activity in China, which could have a worldwide impact. But, he declined to speculate further about the situation. "It's a very serious issue," Powell said, before adding, “We’re carefully monitoring the situation.” Powell will testify before Congress Tues & Wed. The report on the state of the economy & monetary policy, which the Fed is required to submit to lawmakers twice a year, reaffirmed its wait-&-see approach to interest rates, calling it “appropriate.” Over the past few months, the benchmark federal fund rate has sat at 1.5-1.75%, following 3 modest cuts in 2019. “The Committee judged that the prevailing stance of monetary policy was appropriate to support sustained expansion of economic activity, strong labor market conditions, & inflation returning to the Committee's symmetric 2% objective,” the Fed said. “The Committee noted that it will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.”
Fed says chance of recession has 'fallen noticeably,' but warns of emerging threat
VP Mike Pence confirmed the Trump administration is working on the 2nd round of tax cuts geared toward middle-class Americans. "They're absolutely coming," he said. "I expect we'll be talking about that before this election year is out. It's one of the reasons we’re focusing so much attention on getting Donald to trump four more years." The legislation is likely to include new adjustments in the tax brackets, which the 2017 Tax Cuts & Jobs Act reduced, according to previous statements from Larry Kudlow, Trump's chief economic adviser. In Nov, Kudlow said that a 15% rate for the middle-class sounded "pretty good." Kudlow also confirmed that Rep Kevin Brady, the ranking member on the House Ways & Means Committee, has been attending ongoing meetings with the administration. 2 years ago, Reps temporarily slashed individual taxes, while also permanently reducing the corp tax rate to 21% from 35%, juicing the economy. Administration officials have previously suggested they're seeking to make the reductions in individual obligations, which are set to sunset in 2025, permanent. The Tax Cuts & Jobs Act is perhaps the biggest legislative accomplishment of the Trump administration so far. Since then, Reps have broached the subject of another round of tax cuts, although hopes of its passage were mostly dashed when Dems won control of the House during the 2018 midterms. The proposal comes as a crowded field of Dem pres candidates unveils sweeping social programs, a number of which would be funded by new levies on both the wealthy & corps.
Pence confirms second round of tax cuts 'absolutely' coming, likely this year
Gold futures shook off losses seen shortly after the release of better-than-expected US employment data, to settle higher as renewed worries about the spread of the coronavirus & it's impact on the global economy worked to pull US benchmark stock indices down from record levels. The precious metal is still viewed by some commodity experts as a go-to asset in the face of an expected period of lower interest rates globally and nagging concerns about Wuhan virus. The US created a better-than-expected 225K new jobs in Jan, reflecting surprising resilience in the labor market. The increase in new jobs easily surpassed the 164K forecast. Gold for Apr delivery rose $3 (0.2%) to settle at $1573 an ounce. For the week, bullion lost about 0.9% based on the most-active contract.
Gold prices rise as coronavirus fears persist
For the time being, today's down market can be viewed as a routine correction in an overbought market. But the corona scare is casting a dark shadow of stock averages which are pretty much at record levels.
Dow Jones Industrials
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