Dow shot up 245 (session high), advancers over decliners 3-2 & NAZ gained 164 (new record again). The MLP index lost 1+ to the 123s & the REIT index was fractionally lower to the 357s. Junk bond funds crawled higher & Treasuries continued strong. Oil rose in the 42s & gold eased back 4 to 1973 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Treasury Secretary Steve Mnuchin urged Congress to resume
coronavirus relief talks & cut a deal on another aid package amid a
high-stakes impasse between top Dems & White House officials
that's dragged on for weeks. "While we continue to see signs of a
strong economic recovery, we are sensitive to the fact that there is
more work to be done, and certain areas of the economy require
additional relief," Mnuchin said while testifying before the House
subcommittee. Mnuchin, one of the top negotiators for the White House,
said they will continue to try to work with the Senate & House on a 4rth round of emergency aid, despite an ongoing stalemate between the 2 sides. "I believe a bipartisan agreement still should be
reached and would provide substantial funds for schools, testing,
vaccines, PPP for small businesses, continued enhanced unemployment
benefits, child care, nutrition, agriculture, and the U.S. Postal
Service, along with liability protection for universities, schools, and
businesses," Mnuchin added. One
of the biggest points of contention between the parties is the cost of
the proposal; talks broke down at the beginning of Aug, putting
potentially Ts of $s in aid at risk. Dems have
offered to come down $1T from the roughly $3T HEROES
Act, which the House passed in May. But the White House & Rep
leaders want to keep the price tag closer to $1T amid growing
concerns over the nation's ballooning deficit. An effort to
restart relief talks stalled last week, with House Speaker Nancy Pelosi
saying it's fruitless to revive the negotiations until the GOP agrees to
a $2.2T price tag. "We
have said again and again that we are willing to come down, meet them
in the middle — that would be $2.2 trillion," Pelosi said
Thurs. "When they're ready to do that, we'll be ready to discuss and
negotiate. I did not get that impression on that call." Mnuchin
has previously called the $2T figure a "non-starter," & has
urged Dems to return to the bargaining table & compromise on a $1T package.
During House testimony, Mnuchin urges Congress to reach stimulus deal
The pace of job gains over the next decade will slow considerably amid a sharp decline in the active labor force & an aging population, according to Labor Dept projections. From the period of 2020-29, the economy is expected to add a net 6M new jobs, an annual growth rate of just 0.4%, the Bureau of Labor Statistics estimates. That compares with the 1.3% annual rate during the 2009-19 period, which got a boost from the recession's recovery that started in mid-2009 & ended up being the longest expansion in US history before it ended in Feb of this year. The slow growth rate also does not include the impacts of the coronavirus pandemic, which cost the economy more than 25M jobs initially before employees were brought back to work as restrictions eased to combat Covid-19. Some 16.3M workers remained unemployed as of Jul, nearly 11M more than the pre-pandemic level. The department noted that the virus could cause “new structural changes to the economy” & will be accounted for in future projections. Outside of the pandemic, job creation is expected to slow amid demographic changes & a sharp increase in productivity brought on in part by technological changes. Job gains are expected to be concentrated in health care, which occupies 5 of the top 20 sectors expected to see the fastest growth. The department projects health-care support occupations to add nearly 1.6M positions thru 2029, a 22.6% increase. Food preparation & serving occupations are expected to increase by 1M, though that could change due to the impact the industry has felt from coronavirus restrictions.
Job growth expected to slow sharply over the next decade, Labor Department says
Results of a private survey showed China's manufacturing
activity expanded in Aug at the fastest pace in nearly a decade. The Caixin/Markit manufacturing Purchasing Managers' Index (PMI) came in at 53.1 for Aug, compared to 52.8 in Jul The forecast called for the Caixin/Markit manufacturing PMI to come in at 52.7. PMI
readings above 50 indicate expansion, while those below that level
signal contraction. The readings are sequential & indicate on-month
expansion or contraction. The expansion in Aug was the fastest since 2011. “Manufacturing
demand and supply continued to recover, and overseas demand started to
pick up,” wrote Wang Zhe, a senior economist at Caixin Insight Group. In
Aug, “the subindices for output and total new orders again hit their
highest levels since January 2011,” the report said. The gauge for new
export orders also entered expansionary territory for the first time
this year, as the coronavirus outbreak slowed overseas, added Wang. China's
manufacturing sector has been battered as factories temporarily shut
earlier this year due to large-scale lockdowns to contain the
coronavirus pandemic. Global demand was also hit as the virus spread
around the world. But recent data show signs of China's economy recovering from the pandemic. Yesterday, China's National Bureau of Statistics reported that official manufacturing PMI for the month of August came in at 51.0, slightly missing analysts expectations for a 51.2 reading.
Private survey shows China’s manufacturing sector grew in August at fastest pace in nearly 10
American manufacturers grew again in Aug for the 4th straight
month, but companies still aren't bringing back lots of workers or
seeking to increase investment with the coronavirus pandemic still
infecting the economy. The Institute for Supply Management said its manufacturing index rose to 56% in Aug from 54.2% in Jul (readings over 50% indicate growth). The forecast called for the index to total 54.9%. Althought the index hit a 21-month high, manufacturers aren't
doing as well now as they were 2 years ago. Businesses executives are
asked if their companies are doing better or worse compared with the
prior month, but the survey doesn't reveal how much better. Most manufacturers are producing fewer goods with fewer workers
than they were before the coronavirus pandemic. The index had fallen to
an 11-year low of 41.5% in Apr during the height of the crisis. New orders & production both rose in a good sign for the economy. The index for new orders jumped to 67.6% from 61.5%, marking
the highest level since 2004. Yet other measures of actual production
show new orders are actually still about 5% below pre-crisis levels. The production gauge rose to 63.3% from 62.1%. Timothy Fiore, chairman of the survey, said execs were
“generally optimistic” but “to a lesser degree compared with Jul.”
Coronavirus cases spiked during the summer & sapped the economy of
some of the momentum built up in May & Jun. The employment gauge,
meanwhile, also increased, but manufacturers have reduced hours &
staff levels because of weaker domestic & foreign demand for their
products. The employment index crept up to 46.4%, but any number below
50% is a negative sign. 15 of the 18 industries tracked by ISM expanded in Aug up from 13 in the prior month. The ISM index is compiled from a survey of execs who order
raw materials & other supplies for their companies. The gauge tends
to rise or fall in tandem with the health of the economy.
U.S. manufacturing growth continues, but many workers are not returning
In remarks to the Brookings Institution, Brainard became the latest Fed official to argue vociferously in favor of the central bank's historic shift to inflation averaging. The Fed broke with decades of tradition last week to adopt an inflation-averaging strategy that could result in interest rates staying low for longer periods. The bank would strive for an average 2% inflation rate over an undetermined period of time instead of a hard 2% target before raising rates. Senior Fed officials, including Chair Jerome Powell & Vice Chair Richard Clarida, have come out in force in the past week to argue on behalf of the change. Brainard said the new strategy will help support an economic recovery from the coronavirus pandemic & boost hiring in the long run, especially for less-skilled Americans on the fringes of the labor market. Echoing comments from her colleagues, Brainard said the Fed may have erred by raising interest rates as much as it did from 2015 to 2018. The central bank lifted its benchmark fed funds short-term rate to as high as 2.5% from the near-zero level that long prevailed in the aftermath of the 2007-09 the last recession. The cost of many business & consumer loans are tied to the fed-funds rate. Although Ms of Americans still found jobs, Brainard suggested hiring “would have been greater” had the Fed’s new inflation-averaging strategy been in place several years ago. Brainard said the Fed's old approach to measuring inflation & deciding when to raise interest rates had become less effective because of major changes in the US & global economies that have swept in an era of low inflation. The Fed used to raise interest rates when the unemployment rate fell, but the longstanding relationship, known to economists as the Phillips curve, began to break down more than a decade ago. Even as unemployment fell to record lows, inflation barely rose. For most of the past decade inflation has persistently run below the Fed's 2% target, raising the specter of an even more damaging bout of deflation. The last time the US experienced a serious bout of deflation was in the early stages of the depression almost a century earlier. The new strategy, Brainard said, could “arrest any downward drift in inflation expectations.”
Brainard says Fed should shift to more aggressive strategy to boost the economy
Gold futures settled off the session's highs after better
than expected US manufacturing data lifted the $ back up from its
lowest level in about 2 years, but prices for the precious metal
still finished at their highest in 2 weeks. Data showed that the ISM manufacturing survey rose to 56 in Aug, from 54.2. Dec gold edged up by 30¢ to settle at $1978 an ounce,
which marked highest settlement since Aug 18 for a most-active
contract. Prices, however, had traded as high
as $2001 during the session. The Federal Reserve's decision to alter its monetary-policy
framework to allow for inflation to rise above, or below, its 2% annual
target for longer periods, has weakened the $ which provided more incentive for
buyers of bullion who see gold as a inflation hedge. The gains for gold come even as the US stock market traded mostly higher to start Sep, a month that has historically been a weaker performer than others.
Gold inches higher to finish at highest in 2 weeks
Oil futures notched modest gains, with US prices up for the first time in 4 sessions, finding support as some economic data show signs of recovery, boosting prospects for energy demand. West Texas Intermediate crude for Oct rose 15¢ (0.4%) to settle at $42.76 a barrel, while Nov Brent crude, the global benchmark, settled 30¢ (0.7%) higher at $45.58 a barrel. Oil futures lost ground yesterday but WTI logged its 4th straight monthly rise & Brent rose for a 5th straight month. Energy production in the Gulf of Mexico region has seen significant recovery following Hurricane Laura last week. The Bureau of Safety & Environmental Enforcement estimated that about 28.4% of the current oil production in the Gulf of Mexico has been shut in, along with around 25% of natural-gas output. Around the time Laura reached the Gulf Coast early Thurs, about 84% of oil output was shut in. Oil production by the Organization of the Petroleum Exporting Countries rose by 950K barrels per day to 24.3M barrels per day in Aug, from Jul, following a 3-decade output low in Jun. The move followed a decision by OPEC & its allies to taper collective output cuts to 7.7M barrels per day starting May 1 from record cuts of 9.7M barrels a day.
U.S. oil prices log first gain in 4 sessions as upbeat economic data boost demand prospects
Buyers continue to bid stock prices higher. The US economy is recovering, although at a slower pace & investors are hoping for another stimulus package to be passed by Congress. NAZ keeps racking up record closes & the Dow is within 1K of recording its record highs in Feb. The Dow is being helped by red hot Apple (AAPL) as is the NAZ. Traders are hoping to take the NAZ over 11K (it needs another 61) this week.Dow Jones Industrials
No comments:
Post a Comment