Dow soared 454 (near session high), advancers over decliners about 2-1 & NAZ gained 116. The MLP index fell 1 to the 123s & the REIT index jumped 6+ to the 365s (near highs since mid Mar). Junk bond funds were little changed & Treasuries continued in demand. Oil dropped 1+ to the 41s & gold plunged 31 to 1947 (more on both below).
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The US gov will run its biggest budget shortfall ever this year, at $3.3T, the nonpartisan Congressional Budget Office (CBO) said. The gov's fiscal year ends Sep 30 & the record fiscal deficit had long been seen as a fait accompli in light of the massive levels of gov support for the economy in the wake of the COVID-19 pandemic. The Treasury and the Office of Management and Budget will announce the official results sometime in Oct, if the Trump administration sticks to the usual release pattern. The CBO number was, however, slightly better than had been expected in Apr. Back then, the CBO was projecting a $3.7T deficit for this budget year & a $2.1T shortfall in 2021. The projected 2021 deficit was trimmed back to $1.8T in the new forecast. In comparison to the size of the economy, a measure most economists say better reflects the deficit's fiscal burden, the 2020 deficit would be the largest since 1945, at 16.0% of GDP.
U.S. budget deficit to hit record $3.3 trillion this year, CBO says
The US economy expanded in Aug, but many parts of the country experienced slower growth amid lingering anxiety over the coronavirus, according to the Federal Reserve's latest “Beige Book” findings. “Continued uncertainty and volatility related to the pandemic, and its negative effect on consumer & business activity, was a theme echoed across the country,” the central bank's Beige Book (the Fed's regular survey of the economy) reported. “The pickup in activity seen in May and June has slowed over the past couple of months,” Cleveland Federal Reserve Pres Loretta Mester said yetersday. She & other senior Fed officials are urging Congress to provide more help to the economy, indicating urgency on the part of a the central bank that historically has shied away from offering advice to lawmakers. Last week, the Fed broke with longstanding tradition & adopted a new approach to managing inflation that's likely to result in interest rates staying low for longer periods of time. The Fed said manufacturers in most of the country grew again. Consumer spending on houses and new cars & trucks were also bright spots. Yet total spending by both businesses & consumers was still well below pre-crisis levels. Energy producers & farmers in particular suffered from low prices & little prospect of improvement soon. Some companies were also turning temporary furloughs into permanent layoffs because of weak demand. A spate of airlines, hotels & schools last week said they would eliminate more jobs to offset a lack of customers & a sharp decline in revenue. Even in cases when companies wanted to hire, “firms continued to experience difficulty finding necessary labor, a matter compounded by day care availability, as well as uncertainty over the coming school year and jobless benefits,” the Fed added. The latest Beige Book was based on information collected on or before Aug 24.
Economy softened in August, Fed’s Beige Book finds, as some temporary layoffs turn permanent
Macy's (M) loss narrowed during Q2 as locations began to reopen from their COVID-19-induced lockdowns. The
department store chain lost an
adjusted 81¢ per share, as revenue sank 36% year-over-year to $3.56B. The results outpaced the $1.77 per share loss & $3.47B of revenue that was expected. “Restarting our stores was our top priority, and we successfully
accomplished that while also ensuring that our digital business remained
strong,” CEO Jeff Gennette. “We are encouraged by
our second quarter performance; however, we continue to approach the
back half of the year conservatively.” A faster-than-expected
recovery of in-store sales & continued strength in digital sales
resulted in comparable sales falling 35% on both an owned basis &
owned plus licensed basis. Digital sales rose 53% versus a year ago. Strong sales resulted in inventory falling 29% from a year ago, which left the company in a “clean inventory position.” The company had $1.4B cash & access to $3B thru an unused credit facility. Macy's previously withdrew its guidance & did not provide an update due to the uncertainty caused by COVID-19. The stock was up 3¢ to 7.03.
If you would like to learn more about M, click on this link:
club.ino.com/trend/analysis/stock/M?a_aid=CD3289&a_bid=6ae5b6f7
Macy's loss narrows as coronavirus stress eases
White House coronavirus advisor Dr Anthony Fauci said that the number of daily coronavirus cases in the US is “unacceptably high” heading into the fall season. The US is seeing roughly 40K new cases a day, but it needs to bring infections below 10K, Fauci said. Fauci, director of the National Institute of Allergy & Infectious Diseases, said the public's behavior over the Labor Day holiday weekend will determine how the coronavirus spreads in the US thru the colder months. “We know from prior experience as you get into the holiday weekend, the Fourth of July, Memorial Day, there’s a tendency of people to be careless somewhat with regard to the public health measures,” he said. “I want to use this opportunity to almost have a plea to the people in this country to realize that we really still need to get our arms around this and to suppress these types of surges we’ve seen.” He added: “We’re around 40,000 cases. That’s an unacceptably high baseline. We’ve got to get it down to, I’d like to see 10,000 or less.” Earlier in the year, coronavirus cases in the US began to pick up shortly after the Memorial Day holiday. New cases had hit a peak in Apr of about 31K before steadily falling to about 20K cases a day by the end of May. But after the holiday, new cases began to climb again, surging to about 70K cases a day in Jul, according to Johns Hopkins University data. Data is again showing some worrying signs of another surge. The US reported 43K new cases of the coronavirus yesterday, pushing the 7-day average past 42K, up 0.6% compared with a week earlier. Health officials fear the pandemic in the US could get worse as temperatures get cooler & people spend time together indoors.
Dr. Fauci says U.S. coronavirus cases are ‘unacceptably high’ going into Labor Day
Gold futures ended lower as global stocks rose & the $ recovered from the 2-year low it saw a day earlier, creating some headwinds for bullion values. Dec gold fell $34 (1.7%) to settle at $1944 an ounce. Prices gained chump change yesterday, but that helped them mark the highest settlement in 2 weeks for a most-active contract. The S&P 500 & the NAZ indices touched intraday records yesterday, lifted amid progress in the development of tests & vaccines for COVID-19 & prospects for another fiscal stimulus package in DC.
Gold prices down nearly 2% as stocks rise, U.S. dollar stages rebound
Oil futures declined, with US prices settling at their
lowest in nearly a month, pressured by a sharp, but temporary drop in
domestic crude supplies & production, as output in the Gulf of Mexico
sees a strong recovery from Hurricane Laura. The EIA reported that US crude inventories fell by 9.4M barrels last week, marking a 6th weekly decline in a row. The forecast called for a fall of 1.2M barrels. The American Petroleum Institute reported a drop of 6.4M barrel. The EIA data also showed crude
stocks at the Cushing, Okla., storage hub edged up by about 100K
barrels for the week. Total US crude production also dropped by 1.1M barrels
last week to stand at 9.7M barrels a day. The drop coincides
with the output shut ins related to Hurricane Laura, which touched down
on the US Gulf Coast on Aug 27. Against that backdrop, West Texas Intermediate crude for Oct fell $1.25 (2.9%) to settle at $41.51 a barrel. That was the lowest front-month finish in almost a month. Nov Brent crude,
the global benchmark, lost $1.15 (2.5%) at $44.43 a barrel. The Bureau of Safety & Environmental Enforcement yesterday
estimated that 19.9% of the current oil production in the Gulf of
Mexico has been shut in, along with around 19.7% of natural-gas output. Around the time Laura reached the Gulf Coast last Thurs, about 84% of
oil output was shut in.
Stocks advanced, with markets encouraged by the Beige Book report, some
constructive US economic data & moderating COVID-19 infections. Support directly to individuals & businesses also helped buoy equities further. Tomorrow will start with the jobless claims report which may not be cheery. Next week, trading will be more serious when more traders return.
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