Dow rose 36 with selling in the last hour, advancers over decliners about 3-1 but NAZ fell 139. The MLP index rose 3+ to the 118s & the REIT index gained 2+ to the 366s (close to a 3 month high), Junk bond funds edged higher & Treasuries drifted lower. Oil surged passed 40 with a gain of 1+ & gold was steady at 1965 (more on both below).
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The Federal Reserve concluded
its final policy-setting meeting before the Nov presidential
election with a renewed pledge to hold interest rates near
zero & keep them there until inflation is consistently rising. The
central bank, as widely expected, held the benchmark federal funds
rate at a range of 0-0.25%, where it has been
since mid-Mar. Updated guidance shows that Fed officials expect rates
to remain near-zero thru 2023. Officials also changed their
projections to reflect a smaller decline in the nation's GDP & a lower
unemployment rate of 7.6% at the end of 2020. The economic
projections from individual Fed members showed that a majority
of policymakers expect to keep the benchmark federal funds rate at near
zero thru the end of 2023. One official saw rates increasing in 2022 & 4 officials saw them increasing in 2023. It was the
central bank's first meeting since it adopted a new strategy in Aug
that will keep the benchmark federal funds rate near zero, even after
inflation has surpassed its 2% target. According to the new rule,
"following periods when inflation has been running persistently below
2%, appropriate monetary policy will likely aim to achieve inflation
moderately above 2% for some time.” The purpose is to help the nation achieve full employment; in the
past, the central bank would hike interest rates when unemployment fell
because it assumed inflation, once one of the biggest threats to the
economy, was rising. The Fed has already taken a range of
extraordinary actions to support the economy, including slashing
interest rates to near-zero in Mar, purchasing an unlimited amount of
Treasury debt (quantitative easing) & launching 9
lending facilities to ensure that credit flows to businesses & banks. But the economic outlook has brightened since the
Fed met in Jul, when a spike in COVID-19 cases & renewed restrictions
on certain businesses appeared poised to derail the nation's gradual
recovery. The US has more than 6.6M confirmed cases, the
highest in the world & the virus has killed 196K Americans, according
to Johns Hopkins University data.
Central bank likely to hold interest rates near 0 through '23 to bolster economy
Pres Trump urged Reps to embrace a larger coronavirus stimulus package as a top White House aide showed more optimism about striking a deal with Dems. He pres told GOP lawmakers to “go for the much higher numbers” in legislation designed to boost an economy & health-care system struggling under the weight of the pandemic. Many Reps have embraced limited relief — or backed no new spending at all — as the major parties struggle to break a stalemate over a 5th relief bill. Shortly after Trump tweeted, White House chief of staff Mark Meadows said that he is “probably more optimistic about the potential for a deal in the last 72 hours than I have been in the last 72 days.” The comment from Meadows, one of the 2 leading Trump administration negotiators in stimulus talks, followed the yesterday's release of a roughly $1.5T aid proposal by the bipartisan House Problem Solvers Caucus. Dem House committee chairs rejected the proposal yesterday as party leaders call to inject at least $2.2T into the coronavirus fight. House Speaker Nancy Pelosi, again opposed a more limited relief proposal. Today Pelosi & Senate Minority Leader Chuck Schumer said they were “encouraged” by Trump's tweet. They added that they “look forward to hearing from the President’s negotiators that they will finally meet us halfway with a bill that is equal to the massive health and economic crises gripping our nation.”
Trump signals he may back bigger coronavirus stimulus as Meadows says he’s optimistic about a deal
The global economy has performed better-than-expected but it is still
on track for an "unprecedented" decline in output, the Organization for
Economic Cooperation and Development (OECD) warned. In its
latest economic outlook, the OECD said the world economy will contract
by 4.5% this year — an upward revision from an estimate made in Jun
that pointed to a 6% fall in gross domestic product (GDP). "The
drop in global output in 2020 is smaller than expected, though still
unprecedented in recent history," the OECD added. Going forward, the OECD expects the global economy to grow by 5% in
2021. Nonetheless, the outlook "remains exceptionally uncertain" due to
the coronavirus pandemic. Critically-hit sectors, such as the
travel & tourism industries, have not fully recovered from the strict
lockdown measures imposed earlier this year. Many countries are
grappling with a resurgence in the number of infections. As a result,
authorities might introduce new restrictions in the coming weeks to
contain new waves — which would add further pressure on the global
economy. "Output picked up swiftly following the easing of
confinement measures and the initial re-opening of businesses, but the
pace of the global recovery has lost some momentum over the summer
months," the OECD said. China, the US & the euro area are expected to perform
better than originally forecast in Jun. In comparison, growth
expectations for India, Mexico & South Africa have worsened. China is seen growing by 1.8% in 2020 — the only country among the OECD estimates that's expected to experience growth. By contrast, the US economy is set to contract by 3.8% & the euro area by 7.9%. The
picture is even more dire for India, Argentina, the UK, South Africa & Mexico, which are all forecast to collapse by more than 10%.
OECD projects global GDP will collapse by 4.5% this year
Eli Lilly (LLY) said its antibody-based drug appears to have reduced the
rate of hospitalization for coronavirus patients recently diagnosed with
mild-to-moderate symptoms. The drugmaker said it tested 3 different doses of LY-CoV555 against a placebo in a trial
enrolling roughly 450 patients. The middle dose of 2800 mg met the
trial's target of significantly reducing the presence of SARS-CoV-2
after 11 days. Other doses of the monoclonal antibody-drug, including the 700 mg dose & the 7000 mg dose, did not meet that goal. The
announcement comes at a time when many are closely monitoring the
development of antibody drugs as a potential bridge to a coronavirus
vaccine. To date, more than 29.5M people have contracted
Covid-19 worldwide, including 936K deaths, according to Johns Hopkins University. The stock rose 89¢.
If you would like to learn more about LLY, click on this link:
club.ino.com/trend/analysis/stock/LLY?a_aid=CD3289&a_bid=6ae5b6f7
Eli Lilly reports reduced hospitalization rate for coronavirus patients using its antibody treatment
Gold futures climbed for a 3rd straight session, then moved even higher after the Federal Reserve said it intends to keep key interest rates near zero thru 2023, which is likely to prove bullish for long-term metals investors. The central bank signaled it plans to keep a key short-term interest rate near zero at least thru the end of 2023 to help the economy recover from the coronavirus. The Fed's forecasts for 2023, released for the first time, also show the rate staying near zero from now until at least 2024. Dec gold was at $1974 an ounce after it had settled with a gain of $4 (0.2%) at $1970 an ounce, with most-active contract prices again ending at their highest Sep 1. Prices for gold initially fell, then moved up during the regular session in the wake of US retail sales data, which revealed a rise of 0.6% in Aug for a 3rd month in a row, but momentum appears to be waning after a burst of demand earlier in the summer once the country opened for business.
Gold prices log a third straight climb, then extend gains after Fed policy statement
Oil futures rallied, with US prices ending above $40 a
barrel after gov data that showed an unexpectedly large
weekly drop in US crude inventories, while production curtailments in
the Gulf of Mexico caused by Hurricane Sally worsened. US crude inventories fell by 4.4M barrels last week, according to the Energy Information Administration (EIA). That was larger than the forecast for a decline of 1.8M barrels, but yesterday the American Petroleum Institute, a trade group, had reported a drop of 9.5M barrels. The
EIA also reported that crude stocks at the Cushing, Okla., storage hub
edged down by about 100K barrels for the week. Total oil production,
however, climbed 900K barrels to 10.9M barrels per day last
week. West Texas Intermediate crude for Oct rose $1.88 (4.9%) to settle at $40.16 a barrel, with front-month contract prices at their highest
since Sep 3. Nov Brent,
the global benchmark, added $1.69 (4.2%) to $42.22 a barrel. Hurricane Sally hit the Alabama coast early today as a Category 2
storm, carrying maximum sustained winds of 105 miles an hour. It has
since been downgraded to a tropical storm, but “catastrophic and
life-threatening flooding” is happening along portions of Florida
Panhandle & southern Alabama, the Bureau of Safety & Environmental Enforcement estimated 27% of current oil production in the Gulf of Mexico had
been shut in because of the storm, along with approximately 30% of
natural-gas production.
There was selling in the last hour led by tech shares on NAZ. Otherwise, this was an up day with Dow closing above above 28K (down 400 this month). The announcement by the Fed is pretty much was expected, so it did not get a lot of attention. Talk about another stimulus package is still just talk ahead of the big election.
No comments:
Post a Comment