Dow soared 343, advancers over decliners 12-1 & NAZ rose 32. The MLP index shot up 8 to 107 (but barely above the starting point of 100 a good 25 years ago) & the REIT index jumped up 18 to 347. Junk bond funds remained in heavy demand for their high yields & Treasuries slid a little lower. Oil went up 2 to 27 on hopes for a production cut by OPEC+ (more below) & gold surged 49 to 1734 (around highs since 2012).
AMJ (Alerian MLP Index tracking fund)
The number of Americans seeking unemployment benefits swelled to 6.6M last week, surging for the 3rd consecutive week as strict measures to contain the novel coronavirus paralyzed the nation's economy. Claims between the period of Mar 28 & Apr 4 neared the previous week's record of 6.9M, according to the weekly jobless claims report from the Labor Dept published. The previous week's total was revised higher by 219K. The forecast called for the number of initial claims for state unemployment benefits to hit 5.25M. That brings the number of applications for the last 3 weeks to more than 16M, a stunning sign of the colossal economic damage inflicted by the outbreak, compared to a total of 11.5M filed from the beginning of the year thru Mar 14. With a labor force that totals about 162M, that means an estimated one in 10 workers have lost their jobs. The 4-week moving average was 3.5M, up 1.43M from a week ago. The report, which provides the most up-to-date evidence on the labor market and the health of the economy, likely reinforces views that the US has already entered a recession, bringing to an end a historically long, 11-year economic expansion.
Oil prices jumped over 4% building on yesterday's gains ahead of what could be one of OPEC's most historic & impactful meetings in history. Crude prices have been decimated in recent weeks as the fallout from the coronavirus evaporated demand & as a tit-for-tat feud between Russia & Saudi Arabia floods the market with crude. Pres Trump, who made his past disdain for OPEC known, says the 2 nations may come to a truce at the virtual meeting. “You have two countries that are getting hurt very badly, Russia that is their primary source and Saudi Arabia that is definitely their primary source and it doesn’t make sense that they flooded the market, for whatever reason they did that for themselves, it was an argument that they had and I think they will straighten it out, a lot of progress has been made over the last week and it will be interesting to see what comes out of OPEC tomorrow.” Despite the short pops in crude prices this week, US prices are down 59% to the $26 per barrel level & Brent, the global benchmark, is off 50% sitting near $33 per barrel this year. The sharp drop has American energy companies fighting for survival. The imbalance between supply & demand slashed 44% from the S&P 500 energy sector's market value, reducing it to $539B. Before the coronavirus, America achieved the milestone of becoming energy independent for the first time ever as a net exporter of natural gas, & a net exporter of crude oil & petroleum products.
The Federal Reserve will provide up to $2.3T of loans to further support the economy, the central bank said. The Main Street Lending Program will provide support to households & businesses of all sizes & help govs deliver critical services to combat disruptions caused by the COVID-19 pandemic. “Our country's highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus," Federal Reserve Chair Jerome Powell said. "The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible." The new facility will supply liquidity for the Small Business Administration's Paycheck Protection Progam, which provides loans to small businesses to allow them to keep their workers on the payroll. The program will also assist with the flow of credit to small- & mid-sized businesses by purchasing up to $600B of loans. It will increase the flow of credit to households & companies by expanding facilities to support up to $850B in lending as well as provide up to $500B of credit to states & municipalities. Companies employing up to 10K workers with revenue of less than $2.5B that were in good financial standing before the crisis can receive 4-year loans with principal payments & interest that can be deferred up to a year.
Stocks were bid higher at the opening, but enthusiasm is fading. The Dow has pulled back 200 from early highs. The move by the Fed to supply money sounds good but will not help until companies start borrowing & that could take time. Meanwhile the report on jobless claims was dreary as expected. Ms are out of work & many more are sweating the future of their employment. Additionally while there seems to be progress in fighting coronavirus, that war will drag on for some time while US & global economies are in deep depression states. As a result nervous investors keep buying gold. After the stock market has recorded its best week in decades (ending tonight), profit taking is expected in the PM.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 26.69 | +1.60 | +6.4% |
| GC=F | Gold | 1,723.40 | +39.10 | +2.3% |
The number of Americans seeking unemployment benefits swelled to 6.6M last week, surging for the 3rd consecutive week as strict measures to contain the novel coronavirus paralyzed the nation's economy. Claims between the period of Mar 28 & Apr 4 neared the previous week's record of 6.9M, according to the weekly jobless claims report from the Labor Dept published. The previous week's total was revised higher by 219K. The forecast called for the number of initial claims for state unemployment benefits to hit 5.25M. That brings the number of applications for the last 3 weeks to more than 16M, a stunning sign of the colossal economic damage inflicted by the outbreak, compared to a total of 11.5M filed from the beginning of the year thru Mar 14. With a labor force that totals about 162M, that means an estimated one in 10 workers have lost their jobs. The 4-week moving average was 3.5M, up 1.43M from a week ago. The report, which provides the most up-to-date evidence on the labor market and the health of the economy, likely reinforces views that the US has already entered a recession, bringing to an end a historically long, 11-year economic expansion.
Jobless claims surge for third straight week
Oil prices jumped over 4% building on yesterday's gains ahead of what could be one of OPEC's most historic & impactful meetings in history. Crude prices have been decimated in recent weeks as the fallout from the coronavirus evaporated demand & as a tit-for-tat feud between Russia & Saudi Arabia floods the market with crude. Pres Trump, who made his past disdain for OPEC known, says the 2 nations may come to a truce at the virtual meeting. “You have two countries that are getting hurt very badly, Russia that is their primary source and Saudi Arabia that is definitely their primary source and it doesn’t make sense that they flooded the market, for whatever reason they did that for themselves, it was an argument that they had and I think they will straighten it out, a lot of progress has been made over the last week and it will be interesting to see what comes out of OPEC tomorrow.” Despite the short pops in crude prices this week, US prices are down 59% to the $26 per barrel level & Brent, the global benchmark, is off 50% sitting near $33 per barrel this year. The sharp drop has American energy companies fighting for survival. The imbalance between supply & demand slashed 44% from the S&P 500 energy sector's market value, reducing it to $539B. Before the coronavirus, America achieved the milestone of becoming energy independent for the first time ever as a net exporter of natural gas, & a net exporter of crude oil & petroleum products.
Oil spikes ahead of big OPEC meeting
The Federal Reserve will provide up to $2.3T of loans to further support the economy, the central bank said. The Main Street Lending Program will provide support to households & businesses of all sizes & help govs deliver critical services to combat disruptions caused by the COVID-19 pandemic. “Our country's highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus," Federal Reserve Chair Jerome Powell said. "The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible." The new facility will supply liquidity for the Small Business Administration's Paycheck Protection Progam, which provides loans to small businesses to allow them to keep their workers on the payroll. The program will also assist with the flow of credit to small- & mid-sized businesses by purchasing up to $600B of loans. It will increase the flow of credit to households & companies by expanding facilities to support up to $850B in lending as well as provide up to $500B of credit to states & municipalities. Companies employing up to 10K workers with revenue of less than $2.5B that were in good financial standing before the crisis can receive 4-year loans with principal payments & interest that can be deferred up to a year.
Fed launches $2.3T loan program to support Main Street
Stocks were bid higher at the opening, but enthusiasm is fading. The Dow has pulled back 200 from early highs. The move by the Fed to supply money sounds good but will not help until companies start borrowing & that could take time. Meanwhile the report on jobless claims was dreary as expected. Ms are out of work & many more are sweating the future of their employment. Additionally while there seems to be progress in fighting coronavirus, that war will drag on for some time while US & global economies are in deep depression states. As a result nervous investors keep buying gold. After the stock market has recorded its best week in decades (ending tonight), profit taking is expected in the PM.
Dow Jones Industrials
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