Monday, November 30, 2020

Markets fall, give back some of November's big gain

Dow sank 271 (above session lows), decliners over advancers 5-2 & NAZ declined 7.  The MLP index dropped 3+ to 136 & the REIT index fell 2+ to 366.  Junk bond funds remained higher & Treasuries slid lower.  Oil edged slightly lower in the 45s & gold was off 6 to 1782 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Live 24 hours gold chart [Kitco Inc.]




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The "current surge in coronavirus cases" is "very concerning" to the chief scientist behind Operation Warp Speed, the public-private partnership between biotech company Moderna (MRNA) & the federal gov to produce a vaccine.  “As it has been said, we’re probably going to experience another surge on top of the current surge and, unfortunately, there will be a lot of diseases, a lot of deaths,”  Operation Warp Speed scientific head Dr. Moncef Slaoui said.  His comments come after the number of new COVID-19 cases reported  in the US topped 200K for the first time Fri.  The highest previous daily count was 196K on Nov 20.  MRNA's public-private partnership with the federal gov Operation Warp Speed has been "making significant progress" in the production of the vaccine, according to Slaoui.  MRNA announced that it will apply for emergency use authorization of its coronavirus vaccine, being the 2nd company to do so, coming behind Pfizer (PFE) which had already filed for EUA.  The FDA plans to decide by early Dec.  Slaoui said that PFE & MRNA''s vaccines are "94-95% effective & 100% effective against severe disease."  With the process for vaccination authorization underway, Slaoui said there are “treatments” that have been approved & made available this past month, which are “two monoclonal antibodies” & “a small monoclonal antibody."  However, he also noted that the "size of the surge is such that we are not able to produce as quickly as  much treatment as needed."  “The vaccines, I hope, will be approved next week and the week after and we are standing ready to immediately distribute them across jurisdictions across the states, to make them available on the basis of the priority that the Center for Disease Control and it’s advisors will at least advise who should be vaccinated first,” Slaoui said.  Slaoui added that though there has been “tremendous work to make the vaccine available,” there is only enough to “immunize 20 million people in December.”  “It’s going to take a while before we have enough vaccines for everybody, so, resilience and patience are very important,” Slaoui added.  Slaoui projected that there “should be enough vaccines to cover the earth's population” by Jun 2021.

Operation Warp Speed scientist touts speedy vaccine, warns of virus surge

Pres-elect Biden formally announced former Federal Reserve Chair Janet Yellen as his pick for Treasury secretary.  If confirmed, she would make history as the first woman to hold the role, & she is a familiar face to the financial markets & welcomed by progressives.  Yellen also served as head of the Council of Economic Advisors under Pres Clinton.  Biden also said he intends to pick Dem political consultant Neera Tanden as director of the Office of Management & Budget.  Tanden is the pres of the liberal think tank Center for American Progress.  “As we get to work to control the virus, this is the team that will deliver immediate economic relief for the American people during this economic crisis and help us build our economy back better than ever," Biden said.  "This team is comprised of respected and tested groundbreaking public servants who will help the communities hardest hit by COVID-19 and address the structural inequities in our economy."  Progressives, including Sen Bernie Sanders' former speechwriter David Sirota, were quick to criticize Tanden, a close ally of Hillary Clinton's.  Reps aren't likely to support Tanden's confirmation, either.  "Neera Tanden, who has an endless stream of disparaging comments about the Republican Senators’ whose votes she'll need, stands zero chance of being confirmed," a spokesman for Sen John Cornyn wrote on Twitter.

Biden picks Yellen for Treasury secretary, Dem operative Tanden for OMB director

Gold futures declined, capping a troubling month for the haven asset that saw prices mark their lowest settlement since early Jul, following a loss of nearly 6% for the month of Nov.  Feb gold fell $7.20 (0.4%) to settle at $1780, after futures lost over 4% last week, marking the steepest weekly slide since Sep 25, the lowest since Jul 1.  Gold futures lost 5.6% for the month.  Prices trade more than 1% below their long-term, 200-day moving average that stands at $1806.  The skid for gold has mostly comes on the back of reinvigorated enthusiasm for assets perceived as risky, like stocks, as apparent progress on vaccines has emboldened bullish equity investors, driving buying away from safe-haven bullion.

Gold ends at a 5-month low as vaccine news pulls prices down by nearly 6% in November

The Treasury & Federal Reserve have extended 4 key COVID-19 safety net lending facilities until Mar 31 2021.  The facilities include the Commercial Paper Funding Facility & Money Market Mutual Fund Liquidity Facility, which drew funding from the Treasury's pre-existing Exchange Stabilization Fund balance, as well as the Paycheck Protection Liquidity Facility & Primary Dealer Credit Facility, which did not.  Secretary of the Treasury Steve Mnuchin announced the extension, saying he approved it with “an abundance of caution.”  “I am pleased that the Federal Reserve Board unanimously voted to approve these extensions, and I am proud of the work our teams have done to successfully execute these programs,” Mnuchin said.  The lending programs were created during the COVID-19 pandemic as a series of tools to help stabilize the then-flagging economy.  While the lending facilities have been little used so far, they were viewed as a vital backstop for the pandemic-ravaged economy.  The original expiration was set for the end of the year & until recently Mnuchin insisted that the Treasury had enough tools to keep the markets “comfortable.”  “To the extent that we have over $750 billion of firepower between what's in the Exchange Stabilization Fund & what the Federal Reserve can do going forward, markets should be very comfortable that we have plenty of capacity left,” Mnuchin said.  He had advised that any money set aside to be used for Fed lending programs but had not been used should be given to Congress for reallocation.  The Federal Reserve previously said that it would prefer the “full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”

Fed extends emergency lending programs past Dec. 31

Oil futures settled a bit lower as OPEC & its allies continued to debate the fate of existing output curbs in the face of a renewed rise in COVID-19 cases in the US & Europe.  But crude logged a sharp monthly rise in Nov, buoyed by hope for a vaccine that would ease virus-related economic restrictions & losses in energy demand.  The market awaited a final decision from OPEC & their allies tomorrow regarding a potential extension of crude production curbs into the new year.  The OPEC Conference held today concluded without an official decision, though some reports say oil producers reached a general agreement to extend current output cuts.  West Texas Intermediate crude for Jan edged down by 19¢ (0.4%) to settle at $45.34 a barrel.  The US benchmark saw a 27% monthly advance in Nov, based on the front-month contract.  The global benchmark, Feb Brent crude fell 37¢ (0.8%) at $47.88 a barrel. The front month Jan Bre, which expired at the end of the day’s session, lost 59¢ (1.2%) at $47.59 a barrel.  Brent, based on the front-month contract, saw a 27% Nov rise.  Algeria Minster of Energy Abdelmadjid Attar said today that OPEC members reached an agreement to extend existing oil production cuts of 7.7M barrels per day by 3 months from Jan.  Attar, who is also pres of the OPEC Conference, said OPEC would work with other members in the OPEC+ alliance at tomorrow's meeting to back that policy for an extension of the cuts.

Oil ends lower ahead of the OPEC+ decision, but post a November gain of 27%

This was time to take big profits.  However Nov was very good to investors.  Even with all the uncertainty going on in DC, the Dow shot up a massive 3.1K.  While stocks advanced, gold declined.  It's down about 10% from its recent high above 2K.

Dow Jones Industrials








Markets retreat after the November rally for stocks

Dow dropped 326, decliners over advancers about 3-1 & NAZ lost 89.  The MLP index pulled back 2+ to the 137s & the REIT index was off 3+ to the 366s.  Junk bond funds crawled higher & Treasuries were up slightly.  Oil was lower, above 45, & gold remained under pressure, falling 12 to 1776

AMJ (Alerian MLP index tracking fund)








CL=FCrude Oil45.21  
-0.32-0.0%







GC=FGold   1,777.10
-11.00 -0.2%






 




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Moderna (MRNA) said it will request an Emergency Use Authorization from the Food & Drug Administration (FDA) for its coronavirus vaccine as well as conditional approval from the European Medicines Agency.  CEO Stephane Bancel said that the FDA is expected to consider the vaccine at a Dec 17 meeting, & that he hopes for approval in the next several weeks.  "Our goal is to start vaccinating Americans within 24 hours after the FDA gives approval," Bancel said.  "There were 30 severe cases in the study. All 30 were on placebo."  "I believe in the first quarter [of 2021] most people that want a vaccine, that are at higher risk with older age, severe disease, health care worker, frontline worker, should be able to get vaccinated. Second quarter, every American older than 18 years of age should be able to get vaccinated," Bancel continued.  MRNA said its vaccine's efficacy against coronavirus was 94.1% & efficacy against severe coronavirus was 100%, according to primary efficacy analysis involving 30K participants.  Bancel said the company expects to start a clinical study on teenagers in the next week.  "I hope to have that data by the end of the spring ... so they can go back to school next September," he added.  The Phase 3 study of the vaccine has “exceeded” the minimum 2-months of post-vaccination follow-up as required by the FDA, MRNA said.  The vaccine has presented “no serious safety concerns identified to date,” & the “most common" adverse reactions are injection site pain, fatigue, myalgia, arthralgia, headache & redness at the injection site, the company said.  The stock climbed 20.66 (16%).
If you would like to learn more about MRNA, click on this link:
club.ino.com/trend/analysis/stock/MRNA?a_aid=CD3289&a_bid=6ae5b6f7

Moderna to request emergency authorization of coronavirus vaccine

Strong, pandemic-induced demand for housing is still there, but buyers may now be hitting an affordability wall.  Pending home sales fell 1.1% month-to-month in Oct but were 20.2% higher compared with Oct 2019.  This reading is a measure of signed contracts on existing homes, so it is a future indicator of closed sales.  It is also, therefore, a more recent read on buyer activity because it represents people out shopping during the month & making purchase decisions.  The forecast called for a small monthly gain.  “The housing market is still hot, but we may be starting to see rising home prices hurting affordability,” said Lawrence Yun, chief economist for the National Association of Realtors.  Mortgage rates hovered near historic lows during the month, but the supply of homes for sale also hit another historic low.  The number of homes for sale at the end of Oct was down nearly 20% annually & represented just a 2.7-month supply at the current sales pace.  A 6-month supply is considered a balanced market between buyer & seller.  The growing imbalance has prompted bidding wars & caused the median price of an existing home to jump to the highest level ever in Oct.  At $313K, it was up 16% annually.  Supply is especially lean on the low end of the market.  “The combination of these factors – scarce housing and low rates – plus very strong demand has pushed home prices to levels that are making it difficult to save for a down payment, particularly among first-time buyers, who don’t have the luxury of using housing equity from a sale to use as a down payment,” said Yun.

October pending home sales fall, as high prices take their toll on buyers

China's factory activity expanded at the fastest pace in more than 3 years in Nov, keeping it on track to be the first major economy to fully recover from the coronavirus crisis.  The official manufacturing Purchasing Manager's Index (PMI) rose to 52.1 in Nov from 51.4 in Oct, data from the National Bureau of Statistics showed.  It was the highest PMI reading since Sep 2017 & remained above the 50-point mark that separates growth from contraction on a monthly basis.  The forecast called of it to climb slightly to 51.5.  China's vast industrial sector is steadily returning to the levels of activity seen before the pandemic & tough containment measures paralysed huge swathes of the economy early this year.  But surging infections & fresh lockdowns in many of its key trading partners could dent demand for Chinese exports, which have been surprisingly resilient so far.  The official PMI, which largely focuses on big- & state-owned firms, showed the sub-index for new export orders stood at 51.5 in Nov, improving further from 51.0 a month earlier.  Economic indicators ranging from trade to producer prices all suggest a further pick up in the industrial sector.  A sub-index for the activity of small firms stood at 50.1 in Nov, up from Oct's 49.4.  A strong Nov e-commerce shopping festival in China unleashed strong consumer demand, bolstering confidence for small & medium firms.  China has seen a robust rebound in vehicle sales, fuelled by surging demand for trucks & electric vehicles.  In the services sector, activity expanded for the 9th straight month & at the fastest pace since 2012, as consumer confidence further improves amid few COVID infections.  Railway & air transportation, telecommunication & satellite transmission service & the financial industry are among the best performing sectors in Nov.  A sub-index for construction activity stood at 60.5 in Nov, improving from 59.8 in Oct.

Chinese factory activity on the rise, expanded at fastest pace in more than 3 years: report

There is more good news on the vaccine front, but that did not stimulate stock buyers. Some of the decline could be due to profit taking.  However, the Dow is up an astounding 3K in Nov, one of its best months in history.  Gold was also hit with selling today.

Dow Jones Industrials

 






Friday, November 27, 2020

Markets edge higher as Nasdaq reaches a new record

Dow went up 41, advancers & decliners were pretty much even & NAZ gained 126.  The MLP index gave back 1+ yo 142 & the REIT index was off 2+ to 369.  Junk bond funds crawled high & Treasuries were purchased.  Oil fell in the 45s & gold plunged 24 to 1786.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil45.25
  -0.46-1.0%
























GC=F   Gold1,783.40
-27.80-1.5%




















 

 




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Some shoppers may be avoiding stores during the coronavirus pandemic, but they're still putting many items in the virtual shopping cart.  Thanksgiving Day spending rose by 22% year over year to $5.1B, hitting a new record, according to Adobe Analytics data.  Online sales were $4.2B on Thanksgiving Day in 2019.  The company analyzes traffic on retail websites & transactions from 80 of the top 100 US online retailers.  Nearly ½ of those purchases were made on a smartphone.  Retailers that offer curbside pickup had a 31% higher conversion rate of traffic to their sites — a reflection of how popular it's become for people to buy online & retrieve purchases without stepping into stores.  The strong online shopping data reflects a trend that many retailers and industry watchers expected:  More consumers are avoiding malls & buying gifts from their couch during the pandemic.  Like just about every aspect of 2020, the global health crisis has shaken up holiday shopping. Retailers kicked off sales in mid-Oct to coincide with AMAZON Prime Day.  They've stretched out one-day sales events, giving shoppers less of a reason to rush to the store this Black Friday.  One of the country's top retail trade groups said the global health crisis won't dampen enthusiasm for shopping.  The National Retail Federation estimated holiday sales will be 3.6-5.2% year over year, amounting to $755-767B.  Last year, they rose 4% to $729B.  On average, holiday sales have increased 3.5% for the past 5 years.  The trade group, however, said it expects more of those $s will be spent online, rather than in stores.  It projected a 20-30% jump in online & other non-store sales compared to last year.  Adobe anticipates Black Friday & Cyber Monday to be the 2 largest online sales days in history.  It expects Black Friday sales will add up to $8.9-10.6B & online sales for the full holiday season will add up to $189B.

Thanksgiving Day online sales hit record $5.1 billion, up 21.5% from last year, Adobe says

Hardly any lines. Empty parking lots.  More employees than customers in stores.  These are just some of the scenes playing out across the US the morning of Black Friday 2020, a shopping holiday that in the past has drawn hoards of people to stores to score doorbuster deals before daylight even breaks.  But this year Black Friday looks a lot different. The coronavirus pandemic has instilled in many consumers a heightened sense of anxiety around going to stores.  Most retailers had their doors closed on Thanksgiving, & opened at later hours the morning of Black Friday, as they moved more doorbuster deals online to allow people to shop safely from the comfort of their home.  Even the Centers for Disease Control & Prevention has advised consumers to shop deals online on Black Friday, to use curbside pickup if they are venturing to stores, & to favor open-air shopping centers over enclosed malls.

Black Friday 2020 looks bleak at stores, malls, as shoppers stick to couch

The US set a fresh record for hospitalizations with the coronavirus illness COVID-19 on Thanksgiving Day, with more than 90K Americans in hospitals, the most since the start of the pandemic.  The US counted at least 103K new cases on yesterday.  That's below recent daily tallies that have come closer to 200K, but some states did not report their numbers for the holiday, which means the true tally is likely higher.  There are now 90K COVID-19 patients in hospitals, breaking the record of 89.9K set a day earlier.  Case numbers have been rising across the US in recent weeks & health-care workers are reported to be exhausted & stressed as hospitals & intensive-care unit beds fill.  The governors of Iowa & North Dakota have reversed their stance on face masks & mandated them in public spaces.  In medical news, the UK gov has asked its medicine regulator to evaluate the COVID-19 vaccine candidate being developed by AstraZeneca (AZN) & Oxford University, the first step toward getting it approved for deployment.  CEO Pascal Soriot said that an additional study of the vaccine is needed following efficacy data released on Mon, which has since been questioned by a number of experts.  The data showed the experimental vaccine was at least 70% effective in protecting individuals from Covid-19 in late-stage trials in the UK & Brazil.  That rose to 90% when volunteers were given ½ a dose, followed by a full dose a month later.  However, it was only 62% effective when 2 full doses were given.

U.S. sets record of more than 90,000 COVID-19 patients in hospitals and health-care workers warn situation is dire

Not much happening in sluggish trading.  Buying is is concentrated largely in the sexy tech stocks while the Dow is close to its record..  Have a great holiday weekend!!    😀😀

Dow Jones Industrials