Dow went up 170 but well off early highs, advancers over decliners 5-2 & NAZ gained 93 taking it over 10K. The MLP index rose 4+ to 153 & the REIT index slid back 1 to the 354s. Junk bond funds were little moved & Treasuries drifted lower. Oil added 1+ to go over 40 & gold rose 1 to 1750, near its multi year highs.
AMJ (Alerian MLP Index tracking fund)
The Federal Reserve is seeing high demand for its business loan initiative put in place to help smaller companies get through the coronavirus-induced recession, Boston Fed Pres Eric Rosengren said. As the Main Street lending facility wraps up its first full week of operation, Rosengren reported brisk interest on the borrowing side amid what looks like tepid interest from banks thus far. “Of course there is a learning curve, but we are seeing tremendous interest in the loans from businesses,” he added. “Lenders are determining how they’ll participate in and communicate about the program. Borrowers will need to persist during this ramp-up phase.” The Boston Fed is implementing the program aimed at providing loans to companies with fewer than 15K employees. Though it was announced early in the current crisis, getting the program off the ground has been a challenge as the Fed has listened to feedback from the banking & business communities. The Fed recently announced modifications to the initial plans — maximum & minimum loan sizes were changed to provide funding from $250K to $300M, maturities were extended & borrowers now will pay no interest in the first year & not have to pay principal for 2 years. In addition, the Fed now will now buy 95% of the loans, an effort to ease the risk for participating banks. Rosengren said the Fed has heard from “over 200 financial institutions, large and small” that have registered to participate. There are nearly 4500 commercials banks in the US. Despite what appears to be a fairly low level of bank participation in the first week, Rosengren said he remains “very positive about the promise of the program in helping local businesses and lenders maintain vital business credit during these very challenging economic times.” The central bank official said such programs as well as the other measures the Fed has taken will be important as the economy struggles to get back on its feet. Rosengren has one of the more pessimistic forecasts among FOMC officials, expecting that the unemployment rate “will remain in double digits through the end of the year.” The median Fed projection is for a 9.3% rate. A principal reason for his pessimism is fear that some states have relaxed social distancing rules too soon & risk more intense spread of the coronavirus. “In sum, given the death toll of the virus even with the economic lockdown, I see a substantial risk in reopening too fast and relaxing social distancing too much,” he said. “And even if it turns out that the response to the pandemic has been calibrated appropriately, the forecast from FOMC participants highlights the need for additional highly stimulative monetary policy, including the use of Federal Reserve emergency lending facilities.” Like other Fed officials, Rosengren expects both the central bank & Congress will need to do more to help the economy.
Fed’s Rosengren reports ‘tremendous interest’ from businesses for loan program
Senior White House adviser Kevin Hassett believes America's economy is bouncing back quickly after shutting down during the coronavirus pandemic. "The recovery has begun," said. "I think that, you know, pretty much we're looking for an acceleration over the summer and then a real boom in the second half of the year." Hassett pointed to the recent retail sales data released Tues to prove his point. American shoppers ramped up their spending on store purchases by a record 17.7% from Apr to May, delivering a dose of energy for retailers that have been reeling since the coronavirus shut down businesses, flattened the economy & paralyzed consumers during the previous 2 months. The gov's report Tues showed that consumers' retail purchases have retraced some of the record-setting month-to-month plunges of Mar (8.3%) & Apr (14.7%) as businesses have increasingly reopened. Still, the pandemic's damage to retailers remains severe, with purchases still down 6.1% from a year ago. "I think that what happened really is that the people who kept their jobs didn't go out and spend much because they were stuck at home, and then the people who were unemployed got very generous unemployment insurance and that piled a whole bunch of cash up into people's accounts," Hassett said. Last month's bounce-back by consumers comes against the backdrop of an economy that may have begun what could be a slow & prolonged recovery. In May, employers added 2.5M jobs, an unexpected rise that suggested the job market has bottomed out. Still, a big unknown is whether early gains in job growth, retail sales & other areas can be sustained in the coming months or whether they may plateau at a low level.
Long-term US mortgage rates fell this week as the benchmark 30-year home loan reached a new all-time low. Mortgage buyer Freddie Mac reported that the average rate on the key 30-year loan declined to 3.13% from 3.21% last week. It was the lowest level since Freddie began tracking average rates in 1971. A year ago, the rate stood at 3.84%. The average rate on the 15-year fixed-rate mortgage eased to 2.58% from 2.62%. In recent weeks, signs have pointed to the economy appearing to be slowly recovering from the devastation of the coronavirus pandemic, with more businesses partially reopening. The housing market has shown strength & robust homebuying demand, but it may be difficult to sustain because of the tight supply of homes available for sale, said Freddie Mac. The outlook for the economy and housing will be affected by prospects for a vaccine for the virus & gov relief measures & policies. The gov reported yesterday that about 1.5M laid-off workers applied for US unemployment benefits last week, a historically high number, even as the economy increasingly reopens & employers bring some people back to work. The latest figure marked the 11th straight weekly decline in applications since they peaked at nearly 7M in Mar.
Stocks may see an additional uptick in volume due to quadruple witching (expirations for stock index futures & options) along with individual stock futures & options, occur simultaneously. Rebalances for S&P indices & SPDR exchange-traded funds will also take place. In short, outside factors are at play today. US-China trade relations are looking better while the outcome for the virus is still unclear. That will have a major influence on the recovery for the economy. The Dow is up 580 this week.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 40.18 | +1.34 | +3.5% |
| GC=F | Gold | 1,745.00 | +13.90 | +0.8% |
The Federal Reserve is seeing high demand for its business loan initiative put in place to help smaller companies get through the coronavirus-induced recession, Boston Fed Pres Eric Rosengren said. As the Main Street lending facility wraps up its first full week of operation, Rosengren reported brisk interest on the borrowing side amid what looks like tepid interest from banks thus far. “Of course there is a learning curve, but we are seeing tremendous interest in the loans from businesses,” he added. “Lenders are determining how they’ll participate in and communicate about the program. Borrowers will need to persist during this ramp-up phase.” The Boston Fed is implementing the program aimed at providing loans to companies with fewer than 15K employees. Though it was announced early in the current crisis, getting the program off the ground has been a challenge as the Fed has listened to feedback from the banking & business communities. The Fed recently announced modifications to the initial plans — maximum & minimum loan sizes were changed to provide funding from $250K to $300M, maturities were extended & borrowers now will pay no interest in the first year & not have to pay principal for 2 years. In addition, the Fed now will now buy 95% of the loans, an effort to ease the risk for participating banks. Rosengren said the Fed has heard from “over 200 financial institutions, large and small” that have registered to participate. There are nearly 4500 commercials banks in the US. Despite what appears to be a fairly low level of bank participation in the first week, Rosengren said he remains “very positive about the promise of the program in helping local businesses and lenders maintain vital business credit during these very challenging economic times.” The central bank official said such programs as well as the other measures the Fed has taken will be important as the economy struggles to get back on its feet. Rosengren has one of the more pessimistic forecasts among FOMC officials, expecting that the unemployment rate “will remain in double digits through the end of the year.” The median Fed projection is for a 9.3% rate. A principal reason for his pessimism is fear that some states have relaxed social distancing rules too soon & risk more intense spread of the coronavirus. “In sum, given the death toll of the virus even with the economic lockdown, I see a substantial risk in reopening too fast and relaxing social distancing too much,” he said. “And even if it turns out that the response to the pandemic has been calibrated appropriately, the forecast from FOMC participants highlights the need for additional highly stimulative monetary policy, including the use of Federal Reserve emergency lending facilities.” Like other Fed officials, Rosengren expects both the central bank & Congress will need to do more to help the economy.
Fed’s Rosengren reports ‘tremendous interest’ from businesses for loan program
Senior White House adviser Kevin Hassett believes America's economy is bouncing back quickly after shutting down during the coronavirus pandemic. "The recovery has begun," said. "I think that, you know, pretty much we're looking for an acceleration over the summer and then a real boom in the second half of the year." Hassett pointed to the recent retail sales data released Tues to prove his point. American shoppers ramped up their spending on store purchases by a record 17.7% from Apr to May, delivering a dose of energy for retailers that have been reeling since the coronavirus shut down businesses, flattened the economy & paralyzed consumers during the previous 2 months. The gov's report Tues showed that consumers' retail purchases have retraced some of the record-setting month-to-month plunges of Mar (8.3%) & Apr (14.7%) as businesses have increasingly reopened. Still, the pandemic's damage to retailers remains severe, with purchases still down 6.1% from a year ago. "I think that what happened really is that the people who kept their jobs didn't go out and spend much because they were stuck at home, and then the people who were unemployed got very generous unemployment insurance and that piled a whole bunch of cash up into people's accounts," Hassett said. Last month's bounce-back by consumers comes against the backdrop of an economy that may have begun what could be a slow & prolonged recovery. In May, employers added 2.5M jobs, an unexpected rise that suggested the job market has bottomed out. Still, a big unknown is whether early gains in job growth, retail sales & other areas can be sustained in the coming months or whether they may plateau at a low level.
Senior Trump adviser points to signs of economic bounce back, previews 'boom'
Long-term US mortgage rates fell this week as the benchmark 30-year home loan reached a new all-time low. Mortgage buyer Freddie Mac reported that the average rate on the key 30-year loan declined to 3.13% from 3.21% last week. It was the lowest level since Freddie began tracking average rates in 1971. A year ago, the rate stood at 3.84%. The average rate on the 15-year fixed-rate mortgage eased to 2.58% from 2.62%. In recent weeks, signs have pointed to the economy appearing to be slowly recovering from the devastation of the coronavirus pandemic, with more businesses partially reopening. The housing market has shown strength & robust homebuying demand, but it may be difficult to sustain because of the tight supply of homes available for sale, said Freddie Mac. The outlook for the economy and housing will be affected by prospects for a vaccine for the virus & gov relief measures & policies. The gov reported yesterday that about 1.5M laid-off workers applied for US unemployment benefits last week, a historically high number, even as the economy increasingly reopens & employers bring some people back to work. The latest figure marked the 11th straight weekly decline in applications since they peaked at nearly 7M in Mar.
US mortgage rates fall; 30-year at all-time low of 3.13%
Stocks may see an additional uptick in volume due to quadruple witching (expirations for stock index futures & options) along with individual stock futures & options, occur simultaneously. Rebalances for S&P indices & SPDR exchange-traded funds will also take place. In short, outside factors are at play today. US-China trade relations are looking better while the outcome for the virus is still unclear. That will have a major influence on the recovery for the economy. The Dow is up 580 this week.
Dow Jones Industrials
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