Dow plunged 648 to session lows, decliners over advancers an enormous 10-1 & NAZ dropped 211. The MLP index gave back 7+ to 138 & the REIT index declined 12+ to the 335s. Junk bond funds were lower & Treasuries rose in price. Oil sank 2+ to the 38s & gold went up 3 to 1785.
AMJ (Alerian MLP Index tracking fund)
New coronavirus cases in the US have surged to their highest level in 2 months & are now back to where they were at the peak of the outbreak. The US yesterday reported 34,700 new cases of the virus, according to a tally compiled by Johns Hopkins University. There have been only 2 previous days that the US has reported more cases: Apr 9 & 24, when a record 36,400 cases were logged. New cases in the US have been surging for more than a week after trending down for more than 6 weeks. While early hot spots like New York & New Jersey have seen cases steadily decrease, the virus has been hitting the south & west. Several states yesterday set single-day records, including Arizona, California, Mississippi, Nevada & Texas. Cases were also surging in other parts of the world. India reported a record daily increase of nearly 16K new cases. Mexico, where testing rates have been low, also set a record with more than 6200 new cases. But China appears to have tamed a new outbreak of the virus in Beijing, once again demonstrating its ability to quickly mobilize vast resources by testing nearly 2.5M people in 11 days. In the US state of Arizona, which on Tues reported a record 3600 new infections, hundreds of young conservatives packed a megachurch to hear Pres Trump's call for them to back his reelection bid. As he did at a rally in Oklahoma over the weekend, Trump referred to the virus with a pejorative term directed at its emergence in China. Earlier yesterday, Dr Anthony Fauci told Congress that the next few weeks are critical to tamping down the surge. "Plan A, don't go in a crowd. Plan B, if you do, make sure you wear a mask," said Fauci, the infectious disease chief at the National Institutes of Health.
IMF slashes its forecasts for the global economy and warns of soaring debt levels
Weekly homebuyer mortgage demand ticks down but is still a remarkable 18% higher than a year ago
Thoughts about rising cases of coronavirus shook investors. Those fears may be less serious than when fears are based on gut reactions. Many cases are for younger adults who were being careless about taking precautions. Also, their younger bodies should be better able to fight off the virus if they become infected. For the time being investor concerns are rising which is increasing the demand for safe have gold & Treasuries while the Dow is at its Jun low.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 39.56 | -0.81 | -2.0% |
| GC=F | Gold | 1,782.40 | +0.40 | +0.0% |
New coronavirus cases in the US have surged to their highest level in 2 months & are now back to where they were at the peak of the outbreak. The US yesterday reported 34,700 new cases of the virus, according to a tally compiled by Johns Hopkins University. There have been only 2 previous days that the US has reported more cases: Apr 9 & 24, when a record 36,400 cases were logged. New cases in the US have been surging for more than a week after trending down for more than 6 weeks. While early hot spots like New York & New Jersey have seen cases steadily decrease, the virus has been hitting the south & west. Several states yesterday set single-day records, including Arizona, California, Mississippi, Nevada & Texas. Cases were also surging in other parts of the world. India reported a record daily increase of nearly 16K new cases. Mexico, where testing rates have been low, also set a record with more than 6200 new cases. But China appears to have tamed a new outbreak of the virus in Beijing, once again demonstrating its ability to quickly mobilize vast resources by testing nearly 2.5M people in 11 days. In the US state of Arizona, which on Tues reported a record 3600 new infections, hundreds of young conservatives packed a megachurch to hear Pres Trump's call for them to back his reelection bid. As he did at a rally in Oklahoma over the weekend, Trump referred to the virus with a pejorative term directed at its emergence in China. Earlier yesterday, Dr Anthony Fauci told Congress that the next few weeks are critical to tamping down the surge. "Plan A, don't go in a crowd. Plan B, if you do, make sure you wear a mask," said Fauci, the infectious disease chief at the National Institutes of Health.
Coronavirus cases in US climb to highest levels in 2 months
The IMF slashed its economic forecasts once again & warned that
public finances will deteriorate significantly as governments attempt to
combat the fallout from the coronavirus crisis. The IMF estimates a contraction of 4.9% in global GDP in 2020, lower than the 3% fall it predicted in Apr. “The
Covid-19 pandemic has had a more negative impact on activity in H1 than anticipated & the recovery is projected to be
more gradual than previously forecast,” the IMF said in its
World Economic Outlook update. The fund also downgraded its GDP
forecast for 2021. It now expects a growth rate of 5.4% from the 5.8%
forecast made in Apr (the positive reading reflects that economic
activity will be coming from a lower base following 2020's heavy
contraction). The institution explained that the downward revisions
were due to social distancing measures likely remaining in place during H2, with productivity & supply chains being
hit. And in those nations still grappling with high infection rates, the
fund expects that longer lockdowns will dent economic activity even
more. The IMF cautioned that the forecasts are surrounded with unprecedented
uncertainty & economic activity will depend on factors such as the
length of the pandemic, voluntary social distancing, changes to global
supply chains & new labor market dynamics. “The steep decline in activity comes with a catastrophic hit to the
global labor market,” the IMF added, indicating that the global
decline in work hours in Q2 is likely to be
equivalent to a loss of more than 300M full-time jobs. “The hit to the labor market has been particularly
acute for low-skilled workers who do not have the option of working
from home. Income losses also appear to have been uneven across genders,
with women among lower-income groups bearing a larger brunt of the
impact in some countries,” the IMF said. Looking
at country forecasts, the US is expected to contract by 8%
this year. The IMF had estimated a contraction of 5.9% in Apr. Similarly, the fund also downgraded its forecasts for the euro zone, with the economy now seen shrinking by 10.2% in 2020. Brazil, Mexico & South Africa are also expected to contract by 9.1%, 10.5% & 8%, respectively. In
order to mitigate some of the economic impact from the pandemic,
govs across the world have announced massive fiscal packages &
new borrowing. As a result, public finances are seen deteriorating
significantly as a result. “The steep contraction in economic
activity and fiscal revenues, along with the sizable fiscal support, has
further stretched public finances, with global public debt projected to
reach more than 100% of GDP this year,” the fund said.
IMF slashes its forecasts for the global economy and warns of soaring debt levels
Mortgage rates remained at a record low last week, but refinance demand pulled back anyway. That,
in addition to a brief respite in the surprisingly strong demand from
homebuyers, caused total mortgage application volume to fall 8.7% on a
seasonally adjusted basis from the previous week, according to the
Mortgage Bankers Association (MBA). Homebuyer
mortgage applications have been surging for 5 straight weeks, thanks
to pent-up demand from Mar & Apr & a coronavirus-induced desire
by more consumers to find more space & escape urban apartments.
Purchase mortgage volume fell 3% for the week but was a remarkable 18%
higher than a year ago. “One factor that may potentially crimp
growth in the months ahead is that the release of pent-up demand from
earlier this spring is clashing with the tight supply of new and
existing homes on the market,” said Joel Kan, an MBA economist. “Additional housing inventory is needed to give buyers more options and
to keep home prices from rising too fast.” Applications to
refinance a home loan fell 12% for the week but were 76% higher than the
same week in 2019. Lenders may not be offering the best rates on
refinances, simply to keep up with high volume they're now seeing from
homebuyers. In addition, the difference between where rates were a year
ago & where they are now is narrowing. “Despite the decline last
week, MBA still anticipates refinance originations to increase to $1.35
trillion in 2020 — the highest level since 2012,” Kan added. The refinance share of mortgage activity decreased to 61.3% of total applications from 63.2% the previous week. The
average contract interest rate for 30-year fixed-rate mortgages with
conforming loan balances of up to $510K or less remained unchanged at
3.30%. Points including the origination fee increased to 0.32 from 0.29
for loans with a 20% down payment.
Weekly homebuyer mortgage demand ticks down but is still a remarkable 18% higher than a year ago
Thoughts about rising cases of coronavirus shook investors. Those fears may be less serious than when fears are based on gut reactions. Many cases are for younger adults who were being careless about taking precautions. Also, their younger bodies should be better able to fight off the virus if they become infected. For the time being investor concerns are rising which is increasing the demand for safe have gold & Treasuries while the Dow is at its Jun low.
Dow Jones Industrials
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