Dow gained 122, advancers over decliners 3-1 & NAZ added 56. The MLP index jumped 6+ to the 117s & the REIT index was up 5 to the 364s (approaching a 7 month high). Junk bond funds continued in demand & Treasuries were a tad higher. Oil rose 1+ to the 41s & gold went up 5 to 1896 (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 ruled out a stand-alone bill for additional airline relief without a broader coronavirus relief package. "I
have been open to having a stand-alone bill for airlines," Pelosi said. "But there is no standalone bill without a bigger
bill. Why should we do one not the other? The comment that I made to
the administration was: We're happy to review what that standalone bill
would like as part of a bigger bill, if there is a bigger bill. But
there is no standalone bill." Pelosi spoke twice with Treasury Secretary Steve Mnuchin yesterday about potential aid for the virus-battered industry & was
expected to do so again today. Her comments are the latest twist in a series of
back-&-for this week on another round of emergency relief for
American workers & businesses still reeling from the pandemic &
subsequent economic recession. On
Tues, Pres Trump abruptly tweeted that he was breaking off
negotiations until after the election. Hours later, he began a
push to pass individual relief bills, including aid for airlines &
small businesses & a 2nd round of direct checks to many US
families. But today, he appeared to reverse course, saying
the 2 sides are "starting to have very productive talks" on a more
comprehensive deal. “I shut down talks two days ago because they
weren’t working out. Now they‘re starting to work out,” Trump said. “We’re talking about airlines, and we’re
talking about a bigger deal than airlines." US airlines began cutting 35K jobs last week following the
expiration of a $25B bailout fund that was created earlier this
year as part of the CARES Act. Under the terms of the
agreement, airlines were prohibited from cutting jobs or reducing
workers' pay thru Sep 30. In a letter to
congressional leaders yesterday, airline labor & industry groups
urged them to pass legislation that would provide them with another $25B in direct payroll grants, allowing them to continue paying
employees thru Mar.
Pelosi dismisses stand-alone airline relief bill without bigger COVID aid deal
Years of low interest rates led to excessive risk taking in commercial real estate & will make the current economic downturn even more severe, Boston Federal Reserve Pres Eric Rosengren said. The central bank official said he expects a wave of defaults & bankruptcies to hit that will aggravate an unemployment problem that has hit lower-wage workers disproportionately. Regulatory authorities, he added, should have been able to see conditions building up that would make any unexpected crisis worse. “Clearly a deadly pandemic was bound to badly impact the economy,” Rosengren added. “However, I am sorry to say that the slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult.” The Fed has been at the center of the coronavirus pandemic crisis response, slashing already-low interest rates & implementing a slew of programs to ensure market functioning & lend money to areas of the economy in need. In recent days, it has adapted an even more dovish approach to monetary policy, pledging not to raise rates even if inflation runs above the Fed's preferred 2% target. A loose Fed also often finds itself the target during times of excess, like the financial crisis & the dotcom bubble. Rosengren’s remarks reflected concern about the consequences of the low rates that have prevailed for the past dozen years. He noted that commercial real estate firms have “gradually increased risk by taking on more leverage, which magnifies returns with good outcomes – but also magnifies losses when bad outcomes occur. “This increase in risk-taking is more likely to take place in a low-interest environment, like the one which prevailed in the aftermath of (and as a result of) the financial crisis and Great Recession.” He specifically cited “low rates persisting for an extended period even after the economy has made progress in the recovery” as was the case when the Fed held its benchmark short-term lending rate near zero for more than 6 years after the last recession ended in 2009. In those times, “businesses and firms take on additional debt and accumulate more risky assets in search of better returns – potentially bidding up asset prices to unsustainable levels,” he said.
Years of low interest rates made the current crisis worse, Fed’s Rosengren says
Oil futures rose, lifted as strikes in Norway continue to weigh on production in the North Sea & Hurricane Delta forces the shut-in of crude & natural-gas production in the Gulf of Mexico. More than 80% of Gulf oil production & over 49% of natural-gas output were shut in as of yesterday in anticipation of the hurricane, according to the Bureau of Safety & Environmental Enforcement. Meanwhile, widening strike action could cut output in Norway, Western Europe's largest oil producer, by a qtr. West Texas Intermediate crude for Nov rose 83¢ (2.1%) to $40.78 a barrel & Dec Brent, the global benchmark, was up 87¢ (2.1%) at $42.87 a barrel. Oil prices had posted a decline yesterday, partly due to a weekly rise in US crude supplies and uncertainty surround US fiscal stimulus. In its World Oil Outlook report, OPEC said that while the pandemic has led to “huge” financial losses in the energy industry, “there have been signs of the market rebalancing after the colossal 23 [million barrel per day] contraction in oil demand in April 2020.” The market, however, also has a “long way to go to eliminate the huge stock overhang and for the markets to return to balance and stability,” the report added.
Oil ends higher as hurricane cuts over 90% of Gulf crude output
Gold rose to stage a partial rebound from a more than one-week low a day earlier, buoyed by optimism over the renewed prospects for some sort of US fiscal stimulus. Prices held onto their gains after data showed a larger-than-expected reading on US first-time jobless claims. Gold sank when Pres Trump pulled the plug on fiscal stimulus negotiations with Congress, reducing the prospect of more reflationary deficit spending, but the precious metal has found support as House Speaker Nancy Pelosi & Treasury Secretary Steve Mnuchin “talk about airline rescues and Trump says he wants more $1200 checks.” Gold for Dec climbed $4 to settle at $1895 an ounce. Gold held early gains after data showed first-time jobless claims fell to 840K last week from an upwardly revised 849K a week earlier, highlighting the need for more gov spending to support the economic recovery from the coronavirus pandemic. The forecast called for a fall to 820K.
Gold settles higher on renewed prospects for another round of U.S. stimulus
Moncef Slaoui, an immunologist by training & a longtime pharmaceutical executive, is running the Trump administration's Operation Warp Speed program to spur development of vaccines on the fastest ever timetable. While none of the 4 vaccine candidates to enter Phase 3 trials have publicly reported data from the mid-stage studies, Slaoui is hopeful that drug makers will file for emergency authorization with the Food & Drug Administration by late Nov, immunization in high-risk populations could begin this year, & that the vaccines may be more effective in clinical trials than previously assumed. “My expectation is really something between 80% and 90% efficacy,” he said. Slaoui, the administration’s vaccine czar so to speak, spent 3 decades in GlaxoSmithKline's (GSK) vaccines business before joining the boards of Moderna (MRNA) & Lonza Group (LONN). He resigned from both roles when he joined the administration. MRNA is developing one of the late-stage COVID-19 vaccines that is part of Operation Warp Speed & LONN is one of MRNA's manufacturing partners for its vaccine candidate. Operation Warp Speed has been both lauded & criticized for its aggressive timeline. The project aims to bring to market a set of vaccines and treatments with a target of delivering 300M doses of a vaccine starting in Jan. Like many scientists, however, Slaoui seems to prefer to focus on the data & not the politics in the highly politicized environment surrounding vaccine development. Pres Trump has referred to Slaoui as a “world-renowned immunologist” but also said he disagrees with his timeline for vaccine distribution, citing politics. However, Slaoui said he would resign if politics interfered with the vaccine development process.
Trump’s vaccine czar says the first vaccine should be submitted for emergency authorization around Thanksgiving
Traders continue to watch the goings on in DC over a new stimulus bill & are willing to bid prices higher, even with all the uncertainty. The economic recovery has beeh uneven. Housing is strong & autos are doing reasonable well under the circumstances, but areas of the service sector are still struggling. IF those guys in DC can come up with a stimulus bill soon, it will be warmly greeted by investors.
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