Markets edge higher near record levels

Dow rose 196 (session highs & a new record), advancers over decliners 3-2 & NAZ rose 18.  The MLP index was up 1 to 139 & the REIT index gained 4 to 373.  Junk bond funds remained mixed & Treasuries were flattish in price.  Oil was even in the 48s & gold added 7 to 1900 (more on both below).

AMJ (Alerian MLP Index tracking fund)

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Senate Majority Leader Mitch McConnell again blocked quick action on $2000 coronavirus stimulus checks on the Senate floor as he traded harsh words with Minority Leader Chuck Schumer.  McConnell in floor remarks lambasted the House-passed bill for $2000 stimulus checks as "socialism for rich people."  The comments were his most direct to date on his opposition to Pres Trump's request that stimulus checks be boosted from $600 in the recently passed stimulus.  "The data show that many upper-middle class Americans have kept their jobs, work remotely and remain totally financially comfortable," McConnell said.  "On the other hand, some of our fellow citizens have had their entire existences is turned upside down and continue to suffer terribly. We do not need to let the speaker of the House do socialism for rich people in order to help those who need help."  The majority leader earlier this week introduced his own bill for $2000 stimulus checks, tying them to other Trump priorities: repealing controversial Section 230 liability protections for online platforms & investigating election security.  He made no promises that the bill would be considered, only vague comments that the Senate would "begin a process to bring these three priorities into focus."

McConnell refuses to budge on $2,000 checks as Schumer offers separate votes on other Trump demands

Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat, expects higher oil & gas & chemical prices to boost Q4 earnings, but it is also expecting to write down $18-20B of upstream assets.  The oil giant said chemical margins would improve by $200-400M from Q3, while downstream margins would range from down $100M to up $100M.  Changes in liquids prices would boost upstream earnings by up to $400M from Q3.  XOM has posted losses for 3 straight qtrs, battered by weak oil & gas prices, a slump in demand caused by the coronavirus pandemic & a big natural gas play in the acquisition of shale producer XTO Energy that has proven to be badly-timed.  The company will report Q4 earnings on Feb 2.  The stock fell 38¢.
If you would like to learn more about XOM, click on this link:
club.ino.com/trend/analysis/stock/XOM?a_aid=CD3289&a_bid=6ae5b6f7

Exxon Mobil expects to take up to $20 billion write-down in fourth quarter

Futures for gold closed out the year with a slight gain, in a holiday-shortened week that wraps up a tumultuous, viral-stricken 2020 for financial markets.  Commodity markets will be closed tomorrow in observance of New Year's Day.  Gold futures saw modest gains in the face of a weakening $ today, which has been a feature for $-pegged commodities for the better part of 2020, helping underpin appetite for assets priced in the world's reserve currency.  The decline toward a 2½-year nadir for the currency has helped to foster gains in gold even as stocks have staged a remarkable comeback from declines driven by the COVID-19 pandemic.  That dynamic also has helped gold to its best annual gain in about 10 years.  Feb gold picked up a slight $1 after touching an intraday peak at $1904, to settle at $1895 an ounce, following a 0.6% gain on yesterday.  Commodity markets held on to their gains after a report on US employment showed that initial state jobless claims fell 19K to 787K during the Christmas week.  That tally of a forecast of 835K surveyed for last week & 803K claims from the prior week.  Meanwhile, state continuing jobless claims drop 103K to 5.22M.  For the week, gold is up 0.5% & up 6.3% in Dec, & has seen a nearly 25% gain this year, with gains slowed to a mere 0.3% rise in the last 3 months.  The year's gains thus far on a percentage basis mark the best return for the yellow metal since an almost 30% rise in 2010. 

Gold, silver prices log best annual gains in 10 years as 2020 closes out final session

Oil futures traded modestly lower today, with crude set to end 2020 down by more than 20% in a year that saw demand slammed by the COVID-19 pandemic which restricted travel & business & consumer activity.  West Texas Intermediate (WTI) crude for Feb was down 21¢ (0.4%) at $48.19 a barrel.  Mar Brent crude, the global benchmark, fell 22¢ (0.4%) to $51.41 a barrel.  However, WTI had a monthly rise of 5.8%, while Brent has gained more than 6%.  WTI had a 21% fall in 2020 based on front-month contracts, its biggest annual decline since 2018 & its 2nd annual fall in 3 years.  Still, the US benchmark staged a significant rebound from an unprecedented fall that saw an oil futures contract trade — & close — in negative territory for the first time ever in Apr.  Brent crude had a 22% annual fall, its largest since 2015.  Crude's spring plunge came as the COVID-19 pandemic plunged the global economy into recession & as Saudi Arabia & Russia engaged in a monthlong price war that flooded the world with unneeded oil.  The eventual rebound came when demand saw a partial rebound as economies recovered to varying degrees and, moreover, as OPEC & its allies (OPEC+) instituted production curbs.  OPEC+ meets Mon & is likely to further relax its output curbs, adding another 500K barrels a day to global supply.  That's on top of an earlier relaxation that will see 500K barrels a day hit the market beginning Fri — & the group is scheduled to add another 1M barrels a day over the course of Mar & Apr.  US production has also been ticking higher.

Oil prices end 2020 on a positive note, but suffer 20% annual fall as pandemic took toll on demand

This was a tumultuous year for stocks & commodities.  The Dow finished with a gain over 2000 (hard to believe after dropping to a massive loss of 10K in Mar) & NAZ had a stellar advance of 3900 as the tech billionaires got even richer.  The outlook for the stock market in the new year, as usual, is unclear.

Dow Jones Industrials

Markets edge lower on the last day of trading in 2020

Dow was off 29, advancers over decliners 5-4 & NAZ slid back 11.  The MLP index added 1+ to the 139s & the REIT index was even at 369.  Junk bond funds were mixed & Treasuries traded a little higher.  Oil drifted lower in the 48s & gold went up 10 to 1903.

AMJ (Alerian MLP index tracking fund)

CL=F Crude Oil 47.91 -0.49 -1.0%

GC=F Gold 1,902.60 +9.20 +0.5%

 

 

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The number of Americans filing for first-time unemployment benefits fell last week amid a rise in COVID-19 infections & new restrictions aimed at slowing the spread of the disease.  Data from the Labor Dept showed 787K Americans filed first-time jobless claims last week, fewer than the 833K that was expected.  The prior week's reading was revised higher by 3K to 806K.  The number of new claims, which fell to the lowest level in a month, is almost 4 times pre-crisis levels, but well below the nearly 7M filings that were recorded when lockdowns were first ordered in Mar.   About 70M Americans, 40% of the labor force, have filed for unemployment benefits at some point during the pandemic.  The number of people continuing to receive unemployment benefits fell to 5.2M versus the 5.4M forecast.  A downwardly revised 5.3M Americans remained on unemployment benefits in the latest week.

Unemployment benefit claims unexpectedly fall as lockdowns widen

China wrapped negotiations with the EU on an important investment deal & talked up hopes for more, less than a month before Pres-elect Biden is set to take office.  China & the European Commission (EC) announced that the 2 sides finished talks around a “Comprehensive Agreement on Investment” that gives each region’s businesses more access to the other's market.  Both sides rushed to get a deal done — Biden is widely expected to marshal the support of traditional American allies to put pressure on China after he takes office, in contrast to the Trump administration.  On the European side, there was a desire to finish an agreement before the end of Angela Merkel's term as German chancellor in 2021.  Negotiations had stalled this year, prior to the US presidential election.  The EC said China agreed to prohibit “distortive practices” including forced technology transfers — the practice of making companies hand over proprietary tech in exchange for access to the Chinese market.  “China has committed to an unprecedented level of market access for EU investors, giving European businesses certainty and predictability for their operations,” the European Council said.  “The Agreement will also significantly improve the level playing field for EU investors by laying down clear obligations on Chinese state-owned enterprises, prohibiting forced technology transfers & other distortive practices, & enhancing transparency of subsidies,” the statement added.

China signs EU investment deal before Biden takes office, and it wants to do more

The US set fresh records for one-day fatalities from the coronavirus-borne illness COVID-19 & number of patients hospitalized today, as California became the 2nd state after Colorado to find a case of the new COVID-19 variant that is racing across the UK.  A day after a man in his 20s from Colorado was reported to have the first confirmed case of the new variant, California Gov Gavin Newsom said California also detected a case.  He announced the news during an online call with Dr Anthony Fauci, head of the National Institute of Allergy & Infectious Diseases.  “I don’t think Californians should think that this is odd. It’s to be expected,” Fauci said.  The new variant is understood be more infectious than the original virus but it does not make people sicker.  But with hospitals already at full capacity in parts of California & elsewhere, there are growing concerns that more rapid transmission could totally overwhelm health care systems & workers.  California set a record of 432 deaths from COVID-19 yesterday, boosting the total since the start of the outbreak to 25K.  Already, hospitals are turning ambulances away in Los Angeles & EMT workers are being directed not to transport patients who do not have a pulse, while hospitals have started to ration care to prioritize patients with the best chances of survival.  Officials from Operation Warp Speed, the federal gov program created to accelerate the development of COVID vaccines & therapies, acknowledged that vaccine distribution & administration was lagging early targets.  The Centers for Disease Control & Prevention said 2.8M people had been dosed & 12.4M doses had been distributed.  That's well below the early promise for 100M doses to be delivered by year-end, which was later reduced to 40M & then 20M.  “We agree that that number is lower than what we hoped for,” said Moncef Slaoui, scientific adviser of Operation Warp Speed, said.  “We know that it should be better, and we’re working hard to make it better.”

U.S. sets record for COVID deaths and California confirms second case of highly infectious new strain

There is not much news for traders to digest.  Today is expected to be a quiet day for trading in what has been an unusually volatile year for the stock market.  Sadly, the virus keeps fighting hard in its global war.

Dow Jones Industrials

 

Markets gains pared as the Covid relief bill stalls in Congress

Dow gained 73 (above session lows in the last our of trading), advancers over decliners 2-1 & NAZ crawled up 19.  The MLP index slid back to the 137s & the REIT index was steady n the 367s.  Junk bond funds inched higher & Treasuries were little changed in price.  Oil climbed higher in a choppy session & gold rose 11 to 1894 (more on both below).

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The number of Americans who signed contracts to buy homes declined last month, but was still a record high for Nov when a seasonal slowdown traditionally seeps into the real estate market.  The National Association of Realtors said that its index of pending sales fell 2.6% to 125.7 in Nov, down from Oct's revised reading of 129.1.  An index of 100 represents the level of contract activity in 2001.  It was the 3rd straight monthly decline.  Contract signings are a barometer of finalized purchases over the next 2 months, so the report may preview what could be a strong winter for the housing market.  Contract signings are still 16.4% ahead of where they were last year, thanks to a big summer rebound that followed a spring washout due to the coronavirus outbreak.  Contract signings in all 4 regions — the Northeast, South, Midwest & West — declined from Oct to Nov but are up double-digits year-over-year thru last month.  Historically low-interest rates are drawing prospective buyers into the market, but home prices have risen significantly the past year as supply remains near all-time lows.  Mortgage finance giant Freddie Mac reported last week that the average rate on the 30-year fixed-rate home loan remained at a record low 2.66%.  US home prices jumped 7.9% in Oct, the most 2014, according to S&P CoreLogic Case-Shiller 20-city home price index.

Home contract signings hit record levels

Efforts to boost the direct payments in the year-& coronavirus relief bill to $2000 stalled as Senate Rep leaders & Dems appeared divided over whether to send more relief.  The Dem-held House has approved a stand-alone bill to boost the checks to $2000 from $600, as 44 Reps prodded by Pres Trump joined nearly all Dems in backing the measure.  The GOP-controlled Senate has showed less of an appetite for passing the checks without attaching other Trump priorities that Dems consider toxic — & would sink any legislation.  At the same time, the Treasury Dept started to send out the payments of up to $600 yesterday.  If Congress can overcome the thorny political dynamics to increase the deposits to $2000, the gov would later add on to the cash it already distributed.  House Speaker Nancy Pelosi urged the Senate to approve the stand-alone bill before the new Congress starts at noon on Sun.  “I do hope that in the days ahead — we only have a few days left in the session — that they will see the light and understand the suffering that is going on in this country,” she said of Reps.  Meanwhile, Sen Pat Toomey has said he will move to block a potential vote on the $2000 payments.  Delays could blow up any effort to pass legislation during the current session.  “It doesn’t make sense to have these universal payments. Any relief should be targeted,” he said.

Efforts for $2,000 stimulus checks stall in the Senate

Officials from the Centers for Disease Control & Prevention said that a new strain of Covid-19 now circulating in the US could further stress hospitals that are already overwhelmed with coronavirus patients.  Colorado health officials announced that they detected the first known case of the new & more infectious strain of the virus that was first discovered in the UK.  A 2nd separate new strain first identified in South Africa may also already be circulating in the US as well, CDC officials said.  “Because the variants spread more rapidly, they could lead to more cases and put even more strain on our already heavily burdened health-care systems,” Dr Henry Walke, the agency's Covid incident manager, said.  Walke said the available data indicates that the new variant spreads “more easily and quickly than other strains,” but it does not appear to cause more severe disease or increased risk of death.  He added that “experts believe our current vaccines will be effective against” both of the new strains.  Scientists are still studying how the new strain responds to Covid-19 treatments like monoclonal antibodies & convalescent plasma.

CDC says new Covid strain in U.S. could further stress ‘already heavily burdened’ hospitals

The US trade deficit in goods climbed 5.5% in Nov to a new record high, reflecting weaker US exports tied to the coronavirus pandemic.  The goods trade gap widened to $84.8B in Nov from a revised $80.4B in Oct, the gov said.  Imports of goods such as consumer electronics & industrial supplies rose 2.6% to $212B in Nov.  Goods imports were up 5.5% compared with a year earlier.  Exports rose less than 1% to $127B, however, & they are down 6.6% compared with one year ago.  The widening trade deficit largely stems from the different pace of economic recovery in the US & many of its major trading partners.  The American economy has rebounded more strongly, & consumer spending has mostly returned to normal.  As a result, the US is actually importing more foreign-made goods than it was a year ago.  Exports, on the other hand, have lagged because certain trade partners' economies have not recovered.  A fuller report on the US trade deficit that includes services such as tourism & finance will be issued next week.  The US has usually run a strong surplus in services because of tourism, but services have suffered a blow during the pandemic.  Large US trade deficits have persisted for years & aren't going away anytime soon despite a major effort by the outgoing Trump administration to lower the gap.  Exports are likely to improve, on the other hand, as the coronavirus pandemic fades, other countries catch up economically & foreign customers can afford to buy more American-made goods.

U.S. trade deficit in goods jumps 5.5% in November to record high

Futures for gold finished solidly higher as precious metals traded against a backdrop of a weaker $ steady benchmark government bond yields.  The competing factors for bullion—$ weakness that has provided recent support & rising debt yields that can undercut appetite for haven metals—has gold values hemmed to a relatively tight $1,800-$1,900 range in Dec.  hThe $ was trading, off 0.3%, at 89.707, representing its lowest level since Apr 2018.  Gold for Feb traded $10 (0.6%) higher to settle at $1893 an ounce, following a tiny gain yesterday.  Gold’s moves today inspired some bullish outlooks for the haven asset among those hoping that it will soon break out of its rangebound trade.

Gold end near $1,900 as U.S. dollar slips to over 2 1/2-year low

Oil futures ended higher after fluctuating between gains & losses in the wake of data showing a larger-than-expected drop in US crude inventories.  West Texas Intermediate crude for Feb delivery rose 40¢ (0.8%) to close at $48.40 a barrel.  Feb Brent crude , the global benchmark, gained 25¢ (0.5%) to settle at $51.34 a barrel.  The Energy Information Administration (EIA) said crude stocks dropped by 6.1M barrels last week.  The forecast called for crude stocks to fall by 3.8M barrels, while the American Petroleum Institute, yesterday had reportedly seen a 4.8M barrel drop.  Markets will be closed Fri for the New Year's Day holiday.  The EIA said gasoline inventories fell by 1.2M barrels, while distillate inventories rose 3.1M barrels.  Analysts had expected gasoline inventories to show a rise of 2.3M barrels & distillate stocks to rise by 1.3M barrels.

Oil ends higher in choppy trade after larger-than-expected drop in U.S. crude inventories

More positive news on the vaccine front helped buoy sentiment after AstraZeneca’s (AZN) COVID-19 vaccine became the 2nd inoculation to be authorized in the UK.  However negative news brought out sellers in the PM & they erased much of the advance in early trading.  Negotiations on the stimulus bill are expected to drag on thru tomorrow night, & maybe later.  Dow squeaked out a record while NAZ is close to its record close.

Dow Jones Industrials