Dow fell 25, decliners barely over advancers & NAZ went up 19. The MLP index was steady in the 201s & the REIT index rose 3+ to the 434s. Junk bond funds continued flattish & Treasuries were sold. Oil went up to the 52s & gold added 7 to 1585 (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)
As part of a forthcoming package of proposed tax cuts, the White House is considering ways to incentivize households to invest in the stock market, according to senior administration officials familiar with the discussions. The proposal, one of many new tax cuts under consideration, would see a portion of household income treated as tax-free for the purposes of investing outside a traditional 401(k). Under one scenario, a household earning up to $200K could invest $10K on a tax-free basis, although these numbers are fluid. “Nothing’s ruled out,” said one senior administration official. “Nothing’s been ruled in, either.” The development comes as Pres Trump seeks reelection this fall. He has sought to distinguish himself from his potential Dem rivals by accusing of them of pursuing “socialist” policies while he has touted tax cuts & deregulation under his administration. After the last recession, the percentage of American households owning stocks fell to 52% from 62% before the crisis, according to Gallop. That percentage reached 55% in 2019, a year when the stock market hit record highs. The stock market's rise under Trump's tenure is a well-documented point of pride for the pres & his top economic officials, who have called the Dow a “barometer” & a “mark-to-market indicator” of the administration’s performance. The S&P 500, seen as the broadest index of corp performance, has risen 49% since Trump took office. The White House publicly has been pointing to the package as a new shot of adrenaline in an economy whose growth shows signs of slowing 10 years into an expansion. A payroll tax cut would become an option only if the economy experienced significant decline, according to 2 senior administration officials. Separately, Larry Kudlow, director of the National Economic Council, has suggested cutting the tax rate to 15% for middle-class earners. Kudlow & ViP Mike Pence have suggested that the package could be unveiled in early fall
The economy will continue to plow ahead & will be boosted later this year by a return of business investment, said Cleveland Fed Pres Loretta Mester. “If you look at the underlying fundamentals for the U.S. economy, they are pretty good,” Mester said. “Inflation is low, labor markets are strong, and the economy appears to be growing at around-trend of 2%,” Mester added. The consumer sector has been driving growth, while the business sector has been weaker. For instance, industrial output has fallen in 4 of the past 5 months. “But again, that [the business side] looks like it is stabilizing too and I expect it to pick up later in the year,” Mester continued. Manufacturers in her district aren’t worried about a recession, she said. They expect a steady flow of orders, “nothing to write home about — higher or lower,” she said. The spread of COVID-19, the illness derived from the novel coronavirus that reportedly originated in Wuhan, China, is a risk to the outlook, but Mester said she hasn't formally marked down her forecast for US growth yet. “Right now, we’re just evaluating the number of cases, like everyone else is, and trying to figure out how much impact it will have on the U.S. economy,” she said. She is a voting member on the FOMC this year & sounded content with the decision at the past 2 meetings to leave policy unchanged. The economic outlook “gives us a baseline to watch, & look, & evaluate — & then we'll determine whether policy moves — one way or the other— going forward,” Mester said. Inflation will gradually move up toward the Fed's 2% target, although not on a sustainable basis until the end of the year or early next year. The Fed trimmed its benchmark rate 3 times last year, in what officials termed an insurance cut, leaving the federal-funds at 1.5%-1.75%. Financial markets are pricing in a qtr-point rate cut in Jul. Asked about the market pricing in more easing, Mester, in an echo of Fed Chair Jerome Powell, replied: “I think policy is in a good place.”
Retail sales in the US rose modestly in Jan as Americans spent more money eating out & furnishing their homes, but spending was relatively soft at the start of the new year. Retail sales climbed 0.3% last month, the gov said, matching the forecast. Sales at home centers jumped 2.1% to mark the biggest increase since last summer. Bars & restaurants also saw a sharp increase in sales, which rose 1.2% for the 2nd month in a row. People go out to eat more when they are confident in the economy. Companies that sell home furnishings also reported a 0.6% rise in receipts as they continued to benefit from rising home sales. Sales also rose slightly for auto dealers & internet retailers. On the negative side of the ledger, sales declined at gas stations owing to lower prices at the pump. Sales also fell a steep 3.1% at clothing stores — the biggest decline since 2009. Warmer than usual temperatures likely depressed purchases of cold-weather apparel. Other segments that posted lower sales included pharmacies & box stores that sell electronics & appliances. Sales for Dec & Nov were both reduced a tick to show a 0.2% increase in each month, reflecting somewhat softer business conditions at the end of the year. Retail sales didn't appear to add much to the economy in Jan. A more narrow measure of sales that is used in the gov's calculation of GDPwas basically flat in the month. Yet retail sales — & consumer spending more broadly — are expected to rise fast enough in 2020 to keep the economy expanding at a steady pace. Higher incomes & the lowest jobless rate in 50 years have given Americans a lot of confidence in the economy.
Gold settled higher to post a modest weekly rise as investors attempted to gauge the economic impact of the spread of COVID-19 in China. Gold for Apr delivery rose $7.60 (0.5%) to settle at $1586 an ounce, with prices for the most-active contract scoring weekly rise of 0.8%. The settlement was the highest since Jan 31. Increased concerns over China's viral outbreak have served to underpin gold & other haven assets, particularly when equities & other assets perceived as risky come under selling pressure. China said 121 more people had died from COVID-19, the disease caused by a novel coronavirus that emerged in Wuhan in late 2019, over the previous 24 hours, bringing the total to 1381. The country’s National Health Commission reported 5K new confirmed cases in mainland China, bringing the total to 64K. The number of new cases jumped sharply yesterday after a change in the gov's counting method.
Gold posts a modest weekly gain as investors seek handle on coronavirus outbreak
Oil futures settled higher to score a weekly gain, their first in 6, as traders assessed reported signs of Chinese demand for crude against a backdrop of concern about the impact of COVID-19 on the global economy. Among the independent refiners, Shandong Shouguang Luqing Petrochemical snapped up as many as 7 cargoes from Russia, Angola & Gabon for Mar & Apr, while Sinochem Hongrun Petrochemical bought a shipment from Gabon. WTI, the US benchmark, notched a 3.4% weekly rise, while Brent, the global benchmark, saw a 5.2% weekly rise.. The gains marked the first weekly gain for both grades since the week ended Jan 3. Analysts said oil, which slumped into a bear market last week, has also found its footing on ideas OPEC & its allies, particularly Russia, could agree to a plan to further curb production in response to demand fears sparked by the spread of COVID-19 in China.
Oil futures log first weekly rise in 6 weeks
The Dow went up about 300 this week with modest selling in the last couple of days. Meanwhile nervous investors are bidding gold prices higher. Getting the Chinese virus under control will be necessary if the bulls want to take the Dow to 30K.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
As part of a forthcoming package of proposed tax cuts, the White House is considering ways to incentivize households to invest in the stock market, according to senior administration officials familiar with the discussions. The proposal, one of many new tax cuts under consideration, would see a portion of household income treated as tax-free for the purposes of investing outside a traditional 401(k). Under one scenario, a household earning up to $200K could invest $10K on a tax-free basis, although these numbers are fluid. “Nothing’s ruled out,” said one senior administration official. “Nothing’s been ruled in, either.” The development comes as Pres Trump seeks reelection this fall. He has sought to distinguish himself from his potential Dem rivals by accusing of them of pursuing “socialist” policies while he has touted tax cuts & deregulation under his administration. After the last recession, the percentage of American households owning stocks fell to 52% from 62% before the crisis, according to Gallop. That percentage reached 55% in 2019, a year when the stock market hit record highs. The stock market's rise under Trump's tenure is a well-documented point of pride for the pres & his top economic officials, who have called the Dow a “barometer” & a “mark-to-market indicator” of the administration’s performance. The S&P 500, seen as the broadest index of corp performance, has risen 49% since Trump took office. The White House publicly has been pointing to the package as a new shot of adrenaline in an economy whose growth shows signs of slowing 10 years into an expansion. A payroll tax cut would become an option only if the economy experienced significant decline, according to 2 senior administration officials. Separately, Larry Kudlow, director of the National Economic Council, has suggested cutting the tax rate to 15% for middle-class earners. Kudlow & ViP Mike Pence have suggested that the package could be unveiled in early fall
White House considering tax incentive for more Americans to buy stocks, sources say
Despite a roaring US stock market, investors continue to pile money into the bond market at a record pace. Last
week, set a new standard for cash flowing into fixed income
funds with $23.6B of inflows, according to Bank of America Global
Research. If that keeps up, the year will see another $1T of
inflows for the $10T already in global bond market funds. By
contrast, equity funds took in a net $8B in 2019. Investors are betting that a low interest rate environment coupled with
slow though not spectacular economic growth will make bonds both a way
to preserve capital & generate income at a time of growing volatility in the stock market.
Investors are flocking to bond funds in record numbersThe economy will continue to plow ahead & will be boosted later this year by a return of business investment, said Cleveland Fed Pres Loretta Mester. “If you look at the underlying fundamentals for the U.S. economy, they are pretty good,” Mester said. “Inflation is low, labor markets are strong, and the economy appears to be growing at around-trend of 2%,” Mester added. The consumer sector has been driving growth, while the business sector has been weaker. For instance, industrial output has fallen in 4 of the past 5 months. “But again, that [the business side] looks like it is stabilizing too and I expect it to pick up later in the year,” Mester continued. Manufacturers in her district aren’t worried about a recession, she said. They expect a steady flow of orders, “nothing to write home about — higher or lower,” she said. The spread of COVID-19, the illness derived from the novel coronavirus that reportedly originated in Wuhan, China, is a risk to the outlook, but Mester said she hasn't formally marked down her forecast for US growth yet. “Right now, we’re just evaluating the number of cases, like everyone else is, and trying to figure out how much impact it will have on the U.S. economy,” she said. She is a voting member on the FOMC this year & sounded content with the decision at the past 2 meetings to leave policy unchanged. The economic outlook “gives us a baseline to watch, & look, & evaluate — & then we'll determine whether policy moves — one way or the other— going forward,” Mester said. Inflation will gradually move up toward the Fed's 2% target, although not on a sustainable basis until the end of the year or early next year. The Fed trimmed its benchmark rate 3 times last year, in what officials termed an insurance cut, leaving the federal-funds at 1.5%-1.75%. Financial markets are pricing in a qtr-point rate cut in Jul. Asked about the market pricing in more easing, Mester, in an echo of Fed Chair Jerome Powell, replied: “I think policy is in a good place.”
Fed’s Mester sees weak business investment picking up later this year — but coronavirus is a risk to outlook
Retail sales in the US rose modestly in Jan as Americans spent more money eating out & furnishing their homes, but spending was relatively soft at the start of the new year. Retail sales climbed 0.3% last month, the gov said, matching the forecast. Sales at home centers jumped 2.1% to mark the biggest increase since last summer. Bars & restaurants also saw a sharp increase in sales, which rose 1.2% for the 2nd month in a row. People go out to eat more when they are confident in the economy. Companies that sell home furnishings also reported a 0.6% rise in receipts as they continued to benefit from rising home sales. Sales also rose slightly for auto dealers & internet retailers. On the negative side of the ledger, sales declined at gas stations owing to lower prices at the pump. Sales also fell a steep 3.1% at clothing stores — the biggest decline since 2009. Warmer than usual temperatures likely depressed purchases of cold-weather apparel. Other segments that posted lower sales included pharmacies & box stores that sell electronics & appliances. Sales for Dec & Nov were both reduced a tick to show a 0.2% increase in each month, reflecting somewhat softer business conditions at the end of the year. Retail sales didn't appear to add much to the economy in Jan. A more narrow measure of sales that is used in the gov's calculation of GDPwas basically flat in the month. Yet retail sales — & consumer spending more broadly — are expected to rise fast enough in 2020 to keep the economy expanding at a steady pace. Higher incomes & the lowest jobless rate in 50 years have given Americans a lot of confidence in the economy.
U.S. retailers get off to a sluggish start in 2020 — clothing stores the biggest losers
Gold settled higher to post a modest weekly rise as investors attempted to gauge the economic impact of the spread of COVID-19 in China. Gold for Apr delivery rose $7.60 (0.5%) to settle at $1586 an ounce, with prices for the most-active contract scoring weekly rise of 0.8%. The settlement was the highest since Jan 31. Increased concerns over China's viral outbreak have served to underpin gold & other haven assets, particularly when equities & other assets perceived as risky come under selling pressure. China said 121 more people had died from COVID-19, the disease caused by a novel coronavirus that emerged in Wuhan in late 2019, over the previous 24 hours, bringing the total to 1381. The country’s National Health Commission reported 5K new confirmed cases in mainland China, bringing the total to 64K. The number of new cases jumped sharply yesterday after a change in the gov's counting method.
Gold posts a modest weekly gain as investors seek handle on coronavirus outbreak
Oil futures settled higher to score a weekly gain, their first in 6, as traders assessed reported signs of Chinese demand for crude against a backdrop of concern about the impact of COVID-19 on the global economy. Among the independent refiners, Shandong Shouguang Luqing Petrochemical snapped up as many as 7 cargoes from Russia, Angola & Gabon for Mar & Apr, while Sinochem Hongrun Petrochemical bought a shipment from Gabon. WTI, the US benchmark, notched a 3.4% weekly rise, while Brent, the global benchmark, saw a 5.2% weekly rise.. The gains marked the first weekly gain for both grades since the week ended Jan 3. Analysts said oil, which slumped into a bear market last week, has also found its footing on ideas OPEC & its allies, particularly Russia, could agree to a plan to further curb production in response to demand fears sparked by the spread of COVID-19 in China.
Oil futures log first weekly rise in 6 weeks
The Dow went up about 300 this week with modest selling in the last couple of days. Meanwhile nervous investors are bidding gold prices higher. Getting the Chinese virus under control will be necessary if the bulls want to take the Dow to 30K.
Dow Jones Industrials
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