Dow dropped 358, decliners over advancers 4-1 & NAZ lost 58. The MLP index fell 3+ to the 123s & the REIT index dropped 3+ to the 306s (about a 6 week low). Junk bond funds pulled back along with stocks & Treasuries went up in price. Oil slid lower in the 25s & gold rose 14 to 1721.
AMJ (Alerian MLP Index tracking fund)
Federak Reserve Chair Jerome Powell said that Congress & the White House may need to act further to pull the US out of the worst economic downturn since the depression & avoid the coronavirus-induced recession from becoming "prolonged." “The coronavirus crisis raises longer-term concerns as well. Deeper & longer recessions can leave behind lasting damage to the productive capacity of the economy,” Powell said. “Avoidable household and business insolvencies can weigh on growth for years to come.” Avoiding those outcomes, Powell said, may require additional policy measures from the gov. The central bank chief did not specify which policy measures should be considered. So far, Congress has passed 4 massive stimulus packages totaling nearly $3T to blunt the economic pain from the virus outbreak. That includes the $2.2T CARES Act signed into law at the end of Mar, which established the Paycheck Protection Program, expanded unemployment benefits by $600 per week & sent one-time payments of up to $1200 to Americans who earn less than $99K. "Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery," Powell said. "This tradeoff is one for our elected representatives, who wield powers of taxation and spending." House Dems yesterday unveiled a $3T coronavirus relief bill, though it faces a steep path to passage in the Rep-controlled Senate. The Fed has also taken a range of extraordinary actions to support the economy, including slashing interest rates to near-zero, purchasing an unlimited Treasuries (quantitative easing) & launching crisis-era lending facilities to ensure that credit flows to households & businesses. It has also said it will buy corp bonds & lend to states & cities. In the past 6 weeks, the Fed has pumped $2.3T into the economy, an unprecedented amount. But Powell said those actions may not be the "final chapter, given that the path ahead is both highly uncertain & subject to significant downside risks."
People are returning to the housing market as states begin to slowly reopen from lockdown measures put in place by state & local govs to curb the spread of coronavirus. That is being reflected in the latest mortgage application figures as well as purchasing interest, according to the Mortgage Bankers Association (MBA). Applications for mortgages increased 0.3% over the prior week, while the purchasing index rose 11%. “We expect this positive purchase trend to continue – at varying rates across the country – as states gradually loosen social distancing measures, and some of the pent-up demand for housing returns in what is typically the final weeks of the spring home buying season," said said Joel Kan, MBA's associate VP of economic & industry forecasting. Interest in refinancing fell by 3% from the previous week, but is still triple the same week one year ago. The average contract interest rate for 30-year fixed-rate mortgages rose slightly to 3.43% from 3.40%. “Mortgage rates stayed close to record-lows, but refinance applications decreased for the fourth consecutive week, driven by a 5 percent drop in conventional refinances.," added Kan. The survey covers over 75% of all US retail residential mortgage applications & has been conducted weekly since 1990.
The world's biggest shipping company, Denmark's Moller-Maersk, said that it expects its transport volumes to drop by up to 25% in Q2 as the world economy slides toward recession. CEO Soeren Skou said that the group was “strongly positioned to weather the storm” but that the COVID-19 crisis had “a significant impact” on its activities. The group presented Q1 results, which showed revenue edged up to $9.6B from $9.5B for the same period last year & it booked a profit of $209M, better than a loss of $656M. The group said its full-year outlook contained “high uncertainties,” & the global container demand “is expected to contract in 2020 due to COVID-19.” It previously had a forecast for growth of 1-3%.
Dreary data is sinking into the minds investors & they are selling. Reopening is only having a limited effect on the economy. The Dow is in the the lower ½ of the 23K range & may be breaking out to the downside of its sideways trend line.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 25.61 | -0.17 | - 0.7% |
| GC=F | Gold | 1,717.10 | +10.30 | +0.6% |
Federak Reserve Chair Jerome Powell said that Congress & the White House may need to act further to pull the US out of the worst economic downturn since the depression & avoid the coronavirus-induced recession from becoming "prolonged." “The coronavirus crisis raises longer-term concerns as well. Deeper & longer recessions can leave behind lasting damage to the productive capacity of the economy,” Powell said. “Avoidable household and business insolvencies can weigh on growth for years to come.” Avoiding those outcomes, Powell said, may require additional policy measures from the gov. The central bank chief did not specify which policy measures should be considered. So far, Congress has passed 4 massive stimulus packages totaling nearly $3T to blunt the economic pain from the virus outbreak. That includes the $2.2T CARES Act signed into law at the end of Mar, which established the Paycheck Protection Program, expanded unemployment benefits by $600 per week & sent one-time payments of up to $1200 to Americans who earn less than $99K. "Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery," Powell said. "This tradeoff is one for our elected representatives, who wield powers of taxation and spending." House Dems yesterday unveiled a $3T coronavirus relief bill, though it faces a steep path to passage in the Rep-controlled Senate. The Fed has also taken a range of extraordinary actions to support the economy, including slashing interest rates to near-zero, purchasing an unlimited Treasuries (quantitative easing) & launching crisis-era lending facilities to ensure that credit flows to households & businesses. It has also said it will buy corp bonds & lend to states & cities. In the past 6 weeks, the Fed has pumped $2.3T into the economy, an unprecedented amount. But Powell said those actions may not be the "final chapter, given that the path ahead is both highly uncertain & subject to significant downside risks."
Fed's Powell: Lawmakers may need to take more action to avoid 'lasting' pain
People are returning to the housing market as states begin to slowly reopen from lockdown measures put in place by state & local govs to curb the spread of coronavirus. That is being reflected in the latest mortgage application figures as well as purchasing interest, according to the Mortgage Bankers Association (MBA). Applications for mortgages increased 0.3% over the prior week, while the purchasing index rose 11%. “We expect this positive purchase trend to continue – at varying rates across the country – as states gradually loosen social distancing measures, and some of the pent-up demand for housing returns in what is typically the final weeks of the spring home buying season," said said Joel Kan, MBA's associate VP of economic & industry forecasting. Interest in refinancing fell by 3% from the previous week, but is still triple the same week one year ago. The average contract interest rate for 30-year fixed-rate mortgages rose slightly to 3.43% from 3.40%. “Mortgage rates stayed close to record-lows, but refinance applications decreased for the fourth consecutive week, driven by a 5 percent drop in conventional refinances.," added Kan. The survey covers over 75% of all US retail residential mortgage applications & has been conducted weekly since 1990.
Housing market gains ground as stay-at-home guidelines ease
The world's biggest shipping company, Denmark's Moller-Maersk, said that it expects its transport volumes to drop by up to 25% in Q2 as the world economy slides toward recession. CEO Soeren Skou said that the group was “strongly positioned to weather the storm” but that the COVID-19 crisis had “a significant impact” on its activities. The group presented Q1 results, which showed revenue edged up to $9.6B from $9.5B for the same period last year & it booked a profit of $209M, better than a loss of $656M. The group said its full-year outlook contained “high uncertainties,” & the global container demand “is expected to contract in 2020 due to COVID-19.” It previously had a forecast for growth of 1-3%.
World's biggest shipper expects 25% drop in container demand
Dreary data is sinking into the minds investors & they are selling. Reopening is only having a limited effect on the economy. The Dow is in the the lower ½ of the 23K range & may be breaking out to the downside of its sideways trend line.
Dow Jones Industrials
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