Dow rallied 289 (close to 28K), advancers over decliners about 2-1 & NAZ soared 229 (to go above 11K). The MLP index went up 1+ to the 136s & the REIT index gained 4+ to the 361s. Junk bond funds were in demand again & Treasuries were sold. Oil rose 1+ into the 42s & gold was off another 5 to 1940 in a wild day of trading following yesterday's plunge (more on both below).
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
House Speaker Nancy Pelosi said that Dem leaders & White House officials are still at a stalemate regarding another coronavirus relief deal, leaving billions in aid for American families & workers in the lurch. “We’re miles apart,” Pelosi said. According to Pelosi, the 2 sides are divided over education funding, eviction protections and additional money for food stamps. "It's a chasm," she said. Negotiators are trying to bridge the divide between a $1T aid package put forward by Senate Reps at the end of Jul & the roughly $3T legislation passed by House Dems in May. The Trump administration rejected an offer by Pelosi last week to meet in the middle on a $2T price tag. Talks between the 2 sides broke down last Fri, putting at risk potentially Ts of $s in aid for families, businesses & the US economy, including a fresh round of $1200 stimulus checks, extra unemployment aid for Ms of out-of-work Americans & $100B to help reopen schools. There have been no signs of a détente so far, with each party continuing to blame the other for the stalled-out discussions. Earlier today, Treasury Secretary Steve Mnuchin, one of the lead negotiators on the Rep side, urged Dems to compromise on a $1T relief package.
Nancy Pelosi speaks out over stalled coronavirus relief deal
The US budget deficit shrank in Jul to the lowest level since the start of the coronavirus pandemic, but the gov is still on track to post the biggest shortfall as a share of the economy since WW II because of massive federal aid for households & businesses. The deficit slid to $68B last month from a record $864B in Jun, the Treasury said. It was also ½ as large as the $120B budget gap in the same month a year earlier. The sharp decline largely reflected an expected spike in tax receipts as well as somewhat smaller spending on coronavirus relief. The gov allowed businesses & individuals to delay until Jul tax payments normally due in Apr, part of a series of measures meant to blunt the damage to the economy from the virus. The budget deficit thru the first 10 months of the current fiscal year climbed to $2.81T, well above the $867B gap in the same period in 2019. The gov operates on annual budget that runs from Oct 1 to Sep 30 instead of using the calendar year more common in the business world. The US is set to record a $3.7T deficit in fiscal 2020 owing to a gigantic increase in spending by the federal gov to prevent the economy from sinking into depression. The magnitude of the spending is almost on the scale during WW II. Last year, the budget deficit totaled just under $1T. The deficit could go even higher if Reps & Dems end a deadlock over another financial-relief bill. Talks broke down last week & haven't resumed. The next package could top $1T.
The number of confirmed cases of the coronavirus illness COVID-19
worldwide climbed above 20.3M & the US case
tally topped 5.15M, as Florida & Georgia reported record
one-day death tolls. There were more than 1300 deaths in the US yesterday, according to data aggregated by Johns Hopkins University. Florida counted 276 deaths, according to the Florida Dept of Health, topping the previous record of 257 recorded on Jul 31. Georgia counted 137 deaths to beat its previous record of 92 reported last Fri. In one school district in Cherokee County, more than 900 students & staff have been ordered to quarantine
after 59 tested positive for COVID-19. Many schools in rural &
suburban Georgia, Tennessee & Mississippi reopened in early Aug, & some have now been forced to close again.
Global cases top 20.3 million and U.S. tally tops 5.15 million as Florida and Georgia see record one-day deaths
For decades, Chinese leaders embraced foreign investments & exports to power China's economy. Now, with the world in recession & US-China tensions deepening, Pres Xi Jinping is laying out a major initiative to accelerate China's shift toward more reliance on its domestic economy. The new policy is gaining urgency as Chinese companies face increasing resistance in foreign markets, Chinese officials say. In a series of speeches to senior gov officials since May, Xi has trotted out the new strategy, translated as “domestic circulation,” prioritizing domestic consumption, markets & companies as China's main growth drivers. Investments & technologies from overseas, though still desirable, would play more of a supporting role. The concept remains vague in detail & the notion of empowering Chinese consumers in particular has been around for some time. As with many top-level slogans in China, Xi's new development model is meant to guide policy makers & local leaders & result in meaningful changes. The goal is to make China far less dependent on foreign firms, technology & markets, though doing so won't be easy, especially at a time when entrepreneurs are unwilling to expand & households are cutting back on spending. Detailed policies, Chinese officials say, will be fleshed out in an Oct meeting of the ruling Communist party's 370 or so top officials, known as a plenum, when they gather to discuss an economic blueprint for the next 5 years starting in 2021. Behind the inward-looking pivot, the officials say, is a realization in Beijing that fraught relations with much of the developed world are here to stay. Pres Trump's trade war of the past 2 years has already led China to pour resources into its own research labs, universities & companies to try to wean the country off its addiction to foreign technologies like American semiconductors.
China’s Xi speeds up inward economic shift
Gold futures settled higher, recouping a small portion
of the more than 4% drop suffered a day earlier, as Treasury yields
traded off the day's highs & the $ edged lower, providing some
support for the precious metal. The recent weakness for the asset came as yields for benchmark
gov bonds have risen firmly in recent trade, providing
haven-seeking investors another alternative to bullion, which doesn't
offer a coupon. Dec gold rose $2 to settle at $1949 an ounce. It traded low
as $1874 for the session, the lowest intraday mark for a most-active
contract since Jul 23. Prices for the yellow metal dropped 4.6% yesterday, which
represented the steepest one-day $ decline since 2013 & steepest percentage slide since Mar 13 of this year. Prices for precious metals have surged to, or near, records in recent
weeks at least partly on the back of the economic damage wrought by the
COVID-19 pandemic & the potential for a vaccine has been considered a
bearish factor for the precious metal that thrives on uncertainty. Yesterday, reports of a vaccine being registered in Russia helped to spark
selling in gold.
Gold settles higher, a day after losing more than 4%
Oil futures climbed to a 5-month high, as gov data showed that domestic crude supplies fell for a 3rd week in a row. The Energy Information Administration (EIA) reported that US crude inventories fell 4.5M barrels last week, following sizable declines in each of the previous 2 weeks. The forecast called for a decline of 4.7M barrels for crude supplies. The American Petroleum Institute yesterday reported a weekly decrease of roughly 4M barrels. West Texas Intermediate crude for Sep gained $1.06 (2.6%) to settle at $42.67 a barrel, after the US benchmark finished yesterday's session down 0.8%. Global benchmark Oct Brent crude settled 93¢ (2.1%) higher at $45.43 a barrel, following a 1.1% decline in the previous session. The EIA data showed crude stocks at the Cushing, Okla., storage hub edged up by 1.3M barrels for the week, but total domestic oil production saw a weekly fall of 300K barrels to stand at 10.7M barrels a day. In a monthly report, OPEC said it now expects global oil demand growth to fall by 9.1M barrels a day this year to 90.6M barrels per day, due mainly to lower economic activity levels in developing economies. The expected decline in demand growth is 100K barrels a day lower than last month's forecast. Demand growth in 2021 is expected to rise by 7M to 97.6M barrels a day, OPEC said, unchanged from its Jul forecast.
Oil prices end at highest since March with U.S. crude supplies down 3 weeks in a row
The economic recovery in the US is stumbling & there are doubts about a new stimulus package. But investors are optimistic about the future. At the same time, nervous investors have bid gold to record levels (with profit taking in the last 2 days). The bulls are in command & would like to take all of the popular stock averages to new records soon.
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