Markets edge lower after a sluggish retail sales report

Dow declined 167 (above early lows), advancers over decliners 5-4 & NAZ fell 24.  The MLP index rose 2+ to the 131s & the REIT index was even in the 376s.  Junk bond funds traded higher & Treasuries continued in demand.  Oil crawled higher in the 41s & gold was off 2 to 1885 (more on both below)

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Congress appeared nowhere close to passing another coronavirus relief bill as infections surge across the country & new public health restrictions threaten businesses & jobs.  Lawmakers have not passed new aid in months during the health & economic crisis.  As the virus again overwhelms hospitals & forces state & local officials to restrict economic activity, Reps & Dems have not budged from their positions on stimulus.  Yesterday, Senate Minority Leader Chuck Schumer said he & House Speaker Nancy Pelosi have not heard from Senate Majority Leader Mitch McConnell in about 2 weeks since McConnell said he would take the lead for the GOP in the next round of talks.  Dems have pushed for a package that costs at least $2.2T, while Reps want a roughly $500B bill.  “If Leader McConnell and our Republican colleagues want to sit down and negotiate a bipartisan solution, with a bipartisan process, Democrats are ready and willing and able to do so,” said Schumer.  Both McConnell & Pelosi have signaled they want to pass legislation this year, before Pres-elect Joe Biden takes office.  But neither leader has showed willingness to yield ground, making it unclear what could get thru the GOP-controlled Senate & Dem-held House.  Pres Trump has also devoted more of his energy in the last 2 weeks to fighting the 2020 election results than governing during a once-in-a-century crisis.  McConnell has insisted in recent days that the pace of economic recovery means Congress needs only to pass a targeted, narrow plan to get the country thru the next few months.  Today, he said Reps “want to pass more coronavirus relief” but blamed Dems for blocking bills the GOP tried to approve in recent weeks.  The Rep legislation would include a $300-per-week enhanced unemployment benefit, more Paycheck Protection Program loans for small businesses & liability protections for companies.  It would not send a 2nd direct payment to most Americans.  Pelosi has continued to push for a sweeping package after House Dems passed a $2.2T bill last month.  She contended Biden's election gives Dems more leverage in legislative talks.  Biden yesterday called on Congress to pass a bill similar to the Dem HEROES Act before he takes office.  The House-passed bill would reinstate the $600-per-week supplemental jobless benefit that expired earlier this year, give another $1200 stimulus check to individuals, send more than $400B to state & local govs, & authorize more small business loans, among other provisions.

Congress is far from sending more stimulus help as coronavirus cases surge and economic pain looms

The nation’s homebuilders have never been this happy.  In Nov, builder confidence in the construction market for single-family homes soared to its 3rd record high in as many months.  Overall builder sentiment hit 90 on the monthly National Association of Home Builders' Wells Fargo Housing Market Index.  Anything above 50 is considered positive.  Last Nov, the index stood at 71.  At the start of the coronavirus pandemic in Apr, builder confidence plummeted to 30.  Buyer demand has been incredibly & unexpectedly strong since then.  “Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” said NAHB Chairman Chuck Fowke.  “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”  Of the index's 3 components, current sales conditions rose 6 points to 96.  Sales expectations in the next 6 months increased 1 point to 89 & buyer traffic rose 3 points to 77.  The NAHB noted that 69% of the responses for the Nov survey were received before the election for pres was called by the media on Nov 7.  The election results, therefore, & their impact on builder sentiment, will be reflected more fully in Dec's report.  The nation’s homebuilders have been benefiting from a very low supply of existing homes for sale, as well as a newfound consumer desire to live out in the suburbs.  The stay-at-home culture of the pandemic means buyers want not just more space, but specific spaces for working, schooling & exercising at home.  They also want more outdoor space.  The unexpected surge in demand caught builders off guard early on, & they are now dealing with supply chain issues that are increasing costs.  “Another record high for the HMI reflects that housing is a bright spot for the economy,” said the NAHB's chief economist, Robert Dietz.  “However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front.”

Homebuilder confidence in November shatters record high, as buyers keep fleeing for the suburbs

Home Depot (HD), a Dow stock, reported Q3 earnings that beat estimates as consumers continued to focus on home improvement during the coronavirus pandemic & sales surged 24% from a year ago.  The company said some of the temporary employee compensation programs that it implemented during the pandemic will become permanent wage increases, which will result in $1B of additional expenses per year.  CEO Craig Menear said that the company has spent about $1.7B on temporary pay & benefits so far this year.  During the fiscal Q3, EPS was $3.18, up sharply from $2.53 a year earlier.  The forecast called for EPS of $3.06.  Net sales rose 23% to $33.5B, up from $27.2B reported a year ago.  The retailer topped expectations of $32B.  Menear said digital sales rose 80% year over year, with customers picking up about 60% of their orders in stores.  US same-store sales soared 24.6% & the value of an average purchase rose to $72.98, up 10% compared with the same time last year.  Sales per square foot rose more than 23% to $554.  The stock fell 7.05 (3%).
If you would like to learn more about HD, click on this link:
club.ino.com/trend/analysis/stock/HD?a_aid=CD3289&a_bid=6ae5b6f7 

Home Depot earnings beat as shoppers focus on home, retailer to raise hourly wages

Gold futures settled lower, easing back after climbing over the last 3 trading sessions but failing to reclaim the key $1900-an-ounce mark.  Prices had posted gains in recent days despite news of progress on a COVID-19 vaccine, which would ordinarily serve as a headwind for the precious metal.  Dec gold declined by $2 to settle at $1885 an ounce, a day after eking out a gain & its 3rd consecutive advance.  Gold has been more responsive to news of a resurgence across the globe of the COVID-19 pandemic that has buoyed the commodity for months.  The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 55M today, according to datafrom Johns Hopkins University, while the death toll rose above 1.3M.  In the past week, the US has averaged 155K cases a day, up 82% from the average 2 weeks ago & cases are rising in 50 states & territories.  There are currently a record of 73K COVID-19 patients in US hospitals, topping the previous record of 70K set a day ago.  The spread of the virus has limited the downside move for gold, even as a report yesterday confirmed success toward a vaccine to combat the deadly pathogen.  Sanguine investors believe that longer-term weakness in the $ may also lay the groundwork for higher gold prices eventually, as central banks & govs expend outsize funds to limit the economic damage from the pandemic, which could weigh on the $.  A weaker $ is viewed as supportive for gold, which is priced in the currency, making it attractive to commodity buyers using other currencies.

Gold prices post first loss in 4 sessions

Oil futures ended on a mixed note, with US benchmark prices slightly higher but the global Brent benchmark a bit lower, as traders mull the next move for OPEC & their allies.  An OPEC+ committee today failed to announce a recommendation for production policy in the new year.  In a statement. the Joint Ministerial Monitoring Committee, which makes policy recommendations to OPEC & its allies (OPEC+), emphasized that participating countries need to be “vigilant, proactive and be prepared to act, when necessary.”  It then said the committee’s recommendations will be provided to the OPEC & non-OPEC ministerial meeting on Dec 1.  The OPEC conference will be held on Nov 30.  West Texas Intermediate crude for Dec rose 9¢ to settle at $41.43 a barrel.  Jan Brent crude, the global benchmark, fell 7¢ at $43.75 a barrel.  WTI jumped 3% & Brent rose more than 2% yestyerday after Moderna (MRNA) announced its COVID-19 vaccine candidate was more than 94% effective in preventing infections.  That came a week after Pfizer (PFE) said their vaccine candidate was highly effective.

Oil prices end mixed as traders weigh next move for OPEC+, upcoming EIA supply data

Federal Reserve Chair Jerome Powell made a fresh appeal to Congress to pass another coronavirus relief package to help troubled businesses & out-of-work Americans.  In a talk to in San Francisco, Powell said Congress' tax & spending powers can directly target income support for groups that really need it, in a way that the central bank cannot.  “There hasn’t been a bigger need for it in a long time,” Powell said.  The Fed boss said he expects the economic recovery that has taken root so far to continue “at a solid pace,” but cautioned that significant downside risks exists, even as progress on new vaccines and therapies have emerged.  Those include experimental cures that Moderna  (MRNA) & Pfizer (PFE) a week ago have declared at least 90% effective against COVID-19 in late-stage trials.  “The vaccine news is certainly good news, particularly in the medium term,” Powell added.  In the near term, “there are significant challenges and uncertainty,” he added.  “The next few months may be very challenging,” he said.  The rate of economic improvement since May has been steadily slowing after an initial “outside bounce back,” he continued.  Low-income workers whose jobs may call for them to interact with the public have borne the brunt of the losses during the pandemic, he noted.

Powell says need for more fiscal spending is greater than it’s been in a long time

This was a profit taking day for traders.  The soft retail sales report in the AM also kept buyers away.  In early trading the Dow fell 400.  Buying trimmed the losses with a little selling in the last hour.  The Dow remains close to setting a new record above 30K  The bulls are still feeling pretty good.

Dow Jones Industrials