Dow soared 422, advancers over declines better than 3-1 & NAZ climbed 156. The MLP index was even at 110+ & the REIT index inched up to 360. Junk bond funds crawled higher & Treasuries declined while stocks were being purchased. Oil dropped 1+ to the 39s after recent strength & gold tumbled 22 to 1886.
AMJ (Alerian MLP Index tracking fund)
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Pres Trump called on Congress in a series of tweets to pass additional
coronavirus relief measures, reversing course from hours earlier when he announced
he was calling off negotiations until after the election. "The
House & Senate should IMMEDIATELY Approve 25 Billion Dollars for
Airline Payroll Support, & 135 Billion Dollars for Paycheck
Protection Program for Small Business. Both of these will be fully paid
for with unused funds from the Cares Act. Have this money. I will sign
now!" Trump wrote. "If
I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go
out to our great people IMMEDIATELY. I am ready to sign right now. Are
you listening Nancy?" he tweeted less than 30 minutes later. Trump
reiterated his openness to sending a fresh round of $1200 checks, calling on Nancy Pelosi to "move fast." "Move Fast, I Am Waiting To Sign!" he tweeted. Dems have largely resisted efforts to pass piecemeal relief legislation. Trump's
renewed push for another round of fiscal stimulus came just hours after
he abruptly pulled the plug on negotiations, jolting traders which
sent stocks tumbling. “I
have instructed my representatives to stop negotiating until after the
election when, immediately after I win, we will pass a major Stimulus
Bill,” Trump tweeted. The tweet appeared to end the months-long
efforts between Pelosi & Treasury Secretary Steve Mnuchin to strike a deal. During the yesterday's call, Mnuchin confirmed that Trump had called off
negotiations, according to Pelosi's deputy chief of staff,
Drew Hamill. Pelosi "expressed her disappointment in the president's
decision," Hamill said. Mnuchin & Pelosi spoke again today, during which the secretary inquired about a bailout
for the airline industry, according to Hamill. "The Speaker
reminded him that Republicans blocked that bill on Friday & asked
him to review the DeFazio bill so that they could have an informed
conversation," he tweeted.
Trump pushes Pelosi to pass COVID relief after pulling plug on negotiations
Minneapolis Federal Reserve Pres Neel Kashkari became the latest central banker to warn against not getting more stimulus to the US economy, saying that the cost of doing nothing could be major. As the impasse in DC intensifies, Kashkari said that workers, businesses & govs need more cash from Congress. “There are enormous consequences if we just let things go, and the downturn will end up being much worse,” he added. “If we don’t support people who have lost their jobs, then they can’t pay their bills and then it ripples through the economy and the downturn is much worse than it needs to be.” Fed officials have been warning about a failure to act. Fed Chair Jerome Powell yesterday that additional fiscal help is needed & that there was little worry of doing too much. After Trump's directive, Cleveland Fed Pres Loretta Mester said that a delay in stimulus would mean a “much slower” recovery. “Whatever assistance can be provided to people who have lost their jobs is important,” Kashkari said. “Whatever assistance can be provided to small businesses that have been affected by the pandemic is important, and supporting state and local governments, whose revenues have been hammered by the Covid crisis, that also is important, because they employ a lot of people.” Kashkari added that the nature of the downturn, which was caused solely by the coronavirus pandemic & not because of systemic weakness as during the financial crisis, means there is no particular “moral hazard” in using public money to bail out private industry.
Fed’s Kashkari warns delaying stimulus will have ‘enormous consequences’
Mortgage rates moved even lower last week after setting multiple
record lows in recent months, spurring more borrowers to call their
lenders & apply for a refinance, but homebuyers were not quite as
motivated. The average contract interest rate for 30-year
fixed-rate mortgages with conforming loan balances of up to $510K
slipped to 3.01% from 3.05%, while points decreased to 0.37 from 0.52
for loans with a 20% down payment. In
response, refinance application volume, which is most sensitive to
weekly rate moves, rose 8% for the week & was 50% higher than a year
ago, according to the Mortgage Bankers Association's (MBA) seasonally adjusted
index. That is the highest refinance volume since mid-Aug. Applications
for a mortgage to purchase a home fell 2% for the week but were 21%
higher than a year ago. While the annual comparison is strong, purchase
volume has been falling little by little & is now down just over 4%
from 4 weeks ago. “There are signs that demand is waning at the
entry-level portion of the market because of supply and affordability
hurdles, as well as the adverse economic impact the pandemic is having
on hourly workers and low- and moderate-income households,” the MBA said. “As a result, the lower price tiers are seeing
slower growth, which is contributing to the rising trend in average loan
balances.” The average loan size increased again, to a record $371K, thanks to stronger activity on the high end of the market.
Mortgage rates set another record low, sparking new strength in refinances
Dow Jones Industrials
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