Thursday, November 12, 2020

Markets slide lower as vaccine rally slows

Dow dropped 117, decliners over advancers about 2-1 & NAZ was up 13.  The MLP index inched higher in the 123s & the REIT index was off 1+ to the 366s.  Junk bond funds fluctuated & Treasuries were being purchased.  Oil edged higher in the 41s & gold rose 18 to 1880.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil 42.03
 +0.58+1.4%











GC=FGold  1,879.501+17.90+1.0%

 

 




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The number of Americans applying for state unemployment benefits inched down last week to the lowest level since Mar but still remained significantly higher than pre-pandemic levels.  The latest jobless claims figures from the Labor Dept show that 709K workers sought aid last week, about 4-times the pre-crisis level.  Still, it's well below the peak of nearly 7M in late Mar, when states first implemented lockdown measures to curb the spread of COVID-19.  Jobless claims have not been this low since Mar 14, when 282K Americans filed for aid, shortly before the virus-induced crisis triggered a flood of layoffs.  More than 66M Americans  roughly 40% of the nation's labor force  have applied for aid since the coronavirus lockdowns began in mid-Mar.  The forecast for last week called for 735K new claims.  The number of people who are continuing to receive unemployment benefits fell to 6.78M, a decline of 436K from the previous week, suggesting that employers are calling their workers back.  Still, some of the drop in continuing claims may represent workers who have used up the maximum number of payments available thru state unemployment programs (typically about 6 months) & are now receiving benefits thru a separate federal program that extends the aid by 13 weeks.  Congress created the extra federal benefits earlier this year with the passage of the CARES Act.  There are still roughly 10M more out-of-work Americans than there were in Feb, before the pandemic hit.

Another 709,000 Americans filed for jobless aid last week

White House coronavirus advisor Dr Anthony Fauci said a vaccine to bring an end to the pandemic now appears to be on the horizon, but he warned it may not be enough to help eradicate the disease.  America's leading expert on infectious disease dismissed the idea that people may become complacent following a breakthrough in the race to deliver a safe & effective vaccine.  “I think the opposite. ... I really do” Fauci said.  “The cavalry is coming but don’t put your weapons down, you better keep fighting because they are not here yet. Help is on the way, but it isn’t here yet.”  “So to me, that is more of an incentive of, ‘Please don’t give up. Don’t despair, the end is in sight,’ as opposed to: ‘Hey, we are good to go, don’t worry about anything.’ We are not good to go. We have got to continue to double down on public health measures,” he added.

Dr. Fauci says ‘help is on the way’ with vaccines but Covid won’t be eradicated

Americans spent more in Sep on goods & services such as new cars, clothing & recreation, a 5th straight increase that underpinned an historic rebound in the economy during Q3.  Consumer spending rose 1.4% last month, the gov said.  The forecast called for a 1.1% advance.  The increase in spending capped off a record surge in GDP over the summer.  The increase in spending capped off a record surge in GDP over the summer.  The gov today reported that GDP, the official scorecard for the US economy, leaped at a record 33% annual pace following a historic decline at the onset of the coronavirus pandemic.  Yet GDP is mostly a look in the rearview mirror & it's unclear if consumers can keep spending at current levels.  The US is suffering another major wave of coronavirus cases & most federal aid for the economy lapsed in Jul.  Ms of unemployed Americans could be cut off from unemployment benefits at the end of the year unless a deadlocked Congress approves another major package of emergency aid for struggling businesses & idled workers.  Consumers bought new cars & trucks in Sep, purchased new clothes for the start of the school year & cooler fall weather, & spent more on recreation such as gym memberships & park fees.  They also visited their doctors & dentists more often.  Even after a string of increases, however, consumer spending is still about 2% below pre-pandemic levels.  Incomes increased 0.9% last month to help fuel the rise in spending.  More people went back to work & received wages & salaries.  Small businesses that reopened also made more money.   Consumer spending is the single biggest contributor to a strong economy, but the sharp rebound in outlays during the summer was bound to slow after federal aid dried up & pentup demand was exhausted.  The ongoing epidemic has made it all but impossible for Ms of people to return to work soon & countless businesses face the prospect of failure unless the virus eases & customers return.  That will weigh on spending in the months ahead & slow an economic recovery.

U.S. consumer spending climbs 1.4% in September to cap off strong third quarter

The weekly jobless claims report has become routine,  There is improvement but the pace has slowed, leaving many unemployed with no quick end.  New vaccines will be welcomed but the fight with the coronavirus is still struggling to make significant progress.  On balance, investors remain optimistic, taking the Dow close to record levels.

Dow Jones Industrials

 






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