Dow rose 121, advancers over decliners about 5-4 & NAZ advanced 128. The MLP index fell 1+ to the 104s (100 was the starting value 24 years ago) & the REIT index added 1+ to 337. Junk bond funds pulled back & Treasuries were purchased. Oil slid back to 40 & gold was off 11 to 1865.
| CL=F | Crude Oil | 39.75 | -0.56 | -1.4% |
| GC=F | Gold | 1,856.50 | -20.40 | -1.1% |
White House economic adviser Larry Kudlow said the administration had relief $s left over from the CARES Act that it could put toward other stimulus measures. When asked whether he thought a new stimulus package could possibly pass Congress now that the Supreme Court vacancy has become a key issue, Kudlow indicated he didn't think the administration's relief plans would be affected by the judicial situation “at the moment.” “Our side has an efficient targeted assistance package, stuff we think is necessary,” Kudlow said, adding that there is money left over that could be “repurposed” toward those efforts. During the first round of PPP relief, the Small Business Administration said more than 5.2M loans were approved, valued at a cumulative $525B. There is about $130B that has not been used. Reps have proposed a more targeted 2nd round of PPP loans intended to help businesses that have been most severely impacted by the pandemic. A proposal in Jul called for $190 B worth of PPP funding to be made available to business owners with 300 employees or fewer whose revenue declined by at least 50% as a result of the coronavirus pandemic.
White House has money to ‘repurpose’ for additional coronavirus stimulus, Kudlow says
House Dems are preparing a new, smaller coronavirus relief
package expected to cost about $2.4T as they try to forge ahead
with talks with the Trump administration. The bill would include enhanced unemployment
insurance, direct payments to Americans, Paycheck Protection Program (PPP)
small-business loan funding & aid to airlines, among other provisions. To reach the price tag, Dems would chop roughly
$1T from their previous proposal for a 5th pandemic aid plan. The party aims to restart stimulus negotiations with the White House after talks fell apart last month. House Speaker Nancy Pelosi has repeatedly pushed Treasury Secretary Steve Mnuchin & White House chief of staff Marl Meadows to boost the administration’s roughly $1.3T offer by another T $s. Pelosi directed Dem committee chairs to draft legislation. The House could
vote on a bill as soon as next week, but Dems have not yet decided
on a plan. Dems & Reps have
failed to come to agreement on more aid to combat the health &
economic damage from the crisis, even after a $600 per week supplemental
unemployment benefit, a federal moratorium on evictions & the window
to apply for PPP loans lapsed. Hopes for more legislation dwindled in
recent weeks as Reps grew wary of spending & election-year
politics infiltrated the process. The
GOP put together a scaled-back bill after a measure costing about $1T that they released in Jul failed to lead to a bipartisan
breakthrough. The
discussions about a relief proposal come as concerns grow about the
potential for the US economic recovery, boosted by the Ts in
relief Congress has passed this year, appears to falter. Federal Reserve
Chair Jerome Powell, among other economic experts, has warned the economy could take a hit without more fiscal stimulus.
House Democrats prepare new $2.4 trillion stimulus plan with unemployment aid, direct payments
New orders for key US-made capital goods increased more than expected in Aug & demand for the prior month was stronger than previously estimated, suggesting a rebound in business spending on equipment was underway after a prolonged slump. The upbeat report from the Commerce Dept, however, did not change views that the economy's recovery from the COVID-19 recession was slowing as gov money to help businesses & tens of Ms of unemployed Americans runs out. New coronavirus cases are rising in some parts of the country. That could crimp consumer spending, with retail sales already slowing. Federal Reserve Chair Jerome Powell this week stressed the need for more fiscal stimulus, telling lawmakers that it could make the difference between continued recovery & a much slower economic slog. Another rescue package appears unlikely before the Nov 3 presidential election. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.8% last month, the Commerce Dept said. Data for Jul was revised up to show these core capital goods orders increasing 2.5% instead of 1.9% as previously estimated. The forecast called for core capital goods orders gaining 0.5% in Aug. Core capital goods orders last month were boosted by increased demand for machinery, primary metals, computers & electronic products. But orders for fabricated metal products & electrical equipment, appliances & components fell. Shipments of core capital goods increased 1.5% last month. Core capital goods shipments are used to calculate equipment spending in the gov's GDP measurement. They advanced 2.8% in Jul. Business investment tumbled at a record 26% annualized rate in Q2, with spending on equipment collapsing at an all-time pace of 35.9%. Investment in equipment has contracted for 5 straight qtrs. Economic activity rebounded sharply over the summer as businesses reopened after mandatory closures in mid-Mar to slow the spread of the coronavirus. GDP is expected to rebound at as much as a record 32% annualized rate in Q3 after tumbling at a 31.7% rate in the Apr-Jun period, the worst performance since the gov started keeping records in 1947.
U.S. core capital goods orders beat expectations; business investment rebounding
Dow Jones Industrials
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