Markets gain while McConnell and Pelosi talk about a stimulus package

Dow rose 85, advancers over decliners better than 3-2 & NAZ went up 27.  The MLP index jumped 7 to the 148s (an almost 6 month high) & the REIT index rose 3 to the 370.  Junk bond funds inched higher & Treasuries continued to be sold.  Oil advanced in the 45s & gold climbed 13 to 1843 (more on both below).

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OPEC members & allies reached a deal to begin easing oil production cuts next year.  The group will increase output by 500K barrels per day beginning in Jan & then hold monthly discussions about how quickly production will return to the market thereafter.  Brent crude oil, the intl standard, traded up 61¢ at $48.86 per barrel while West Texas Intermediate crude oil added 47¢ to $45.75 per barrel.  The decision is the latest easing of the supply cuts that were implemented in the wake of the COVID-19 pandemic.  The OPEC+ group said in Aug it would taper its production cut by 2M barrels per day to 7.7M.  Members in Apr slashed production by a record 9.7M barrels per day in an effort to stabilize the market after lockdowns aimed at slowing the spread of COVID-19 resulted in global demand declining by 25-30M barrels per day.  The sharp drop in demand resulted in Brent falling below $20 per barrel & WTI plunging below zero for the first time on record.  Lower prices have taken a toll on energy companies including majors Exxon Mobil (XOM) & Chevron (CVXI, both Dow stocks.  This week, both scaled back their spending plans thru 2025.

OPEC+ agrees to ease coronavirus-driven oil supply cuts

Nov bankruptcy filings in the US hit a 14-year low, driven by a decline in individuals filing for protection from creditors as they continue to enjoy the benefits of eviction moratoriums & other gov assistance stemming from the coronavirus pandemic.  Total bankruptcy filings amounted to 34K for the month, the lowest monthly total since 2006, according to data from legal-services provider Epiq Systems.  Commercial chapter 11 filings for Nov were up 40%, with 654 new cases compared with 449 over the same period in 2019, according to Epic.  On the other hand, noncommercial chapter 13 filings, which enable individuals to restructure their debt, were down 45% from a year earlier to 138K filings, according to Epiq.  Noncommercial chapter 7 filings, which enable individuals to liquidate their assets so as to escape their debt burden, declined by 21% in Nov.  One factor for the decrease in personal filings is the uncertainty about the state of the economy recovery.  Even though markets have been buoyed recently by positive developments regarding Covid-19 vaccines, many individual borrowers are still unsure about their near-term financial prospects, leading them to delay making a major personal decision such as filing for bankruptcy under chapters 7 or 13. 

November bankruptcies hit 14-year low with steep drop in personal filings

Gold futures climbed for a 3rd day in a row to mark their highest settlement in almost 2 weeks.  Persistent weakness in the $ & growing hope that an impasse among entrenched parties in DC on another coronavirus relief deal will be broken, provided support for the precious metal.  House Speaker Nancy Pelosi & Senate Minority Leader Chuck Schumer issued a joint statement calling on a bipartisan effort to achieve another round of COVID-19 relief measures, on the back of a proposed $908B plan.  On top of that, Senate Majority Leader Mitch McConnell said reaching a compromise on another coronavirus fiscal package was possible, as long as Dems moved toward Rep positions.  Still, doubts remain about progress being made to strike a pact before year-end, but investors are starting to bet that a deal, which would be bullish for gold, pointing to more gov spending, can be achieved at some point.  Investments in gold have been viewed as a hedge against fiscal stimulus plans that have the potential to revive inflation & increase debt & devalue currencies.  The COVID financial relief talks come as the one-day total of deaths from the pandemic in the US hit a record in the US at 3157 Wed, & newly reported infections were at their 2nd-highest level, surpassing 200K for the 2nd time in less than a week.  Against this backdrop, gold has achieved some newfound buoyancy after hitting a roughly 5-month nadir earlier this week.  Feb gold  rose $12 (0.7%) to settle at $1842 an ounce, the highest finish for a most-active contract since Nov 20.  Prices for the metal surged 2.1% on Tues, marking the biggest one-day climb in 3 weeks.  Prices on Mon had touched their lowest settlement since Jul 1.

Gold prices settle at a nearly 2-week high, mark 3rd gain in a row

The US reported a record 2800 deaths caused by Covid-19, the highest single-day death toll ever reported, according to data compiled by Johns Hopkins University.  The US previously reported over 2600 deaths on Api 15, during the first phase of the Covid-19 surge this spring.  Those were clustered mostly in the Northeast & other cities around the country.  The bleak record on yesterday came with other signs that the nationwide outbreak is growing more severe.  The country reported more than 200K cases of the virus yesterday, the 2nd highest daily number, according to Hopkins data.  And more than 100K people are currently so sickened by the virus that they require medical attention in hospitals.  However, coronavirus data has become challenging to interpret following the Thanksgiving holiday, as states work to resume normal reporting schedules, so the single-day figures may be at least partially a result of delayed reporting.  The trends, though, all point to an outbreak that is growing more severe by the day. 

U.S. reports record 2,800 Covid deaths in a single day, hospitals under stress

Oil futures ended higher, even though major producers agreed to a gradual increase in crude production starting in Jan, defying earlier expectations for an extension of current output cuts.  OPEC & allies, OPEC+, announced that they will pare current production cuts of 7.7M barrels per day to 7.2M barrels per day, starting in Jan.  That represents a production increase of 500K barrels per day.  OPEC+ said it will hold monthly meetings starting next month to “assess market conditions and decide on further production adjustments for the following month, with further monthly adjustments being no more than 0.5 mb/d.”  The group also extended the amount of time that certain countries can compensate for overproduction.  They now have until the end of Mar 2021 to make up for past production over their allotted quotas.  Before today's meeting, the group was expected to extend current production cuts of 7.7M barrels a day.  Without a new agreement, it was due to relax those reductions by about 2M barrels a day in Jan.  West Texas Intermediate crude for Jan rose 36¢ (0.8%) to settle at $45.64 a barrel.  Feb Brent, the global benchmark, added 46¢ (1%) at $48.71 a barrel.

Oil prices end higher as OPEC+ agrees to a gradual increase in output for 2021

The jobless claims data was reasonably good, although far from spectacular.  However the talks in DC are getting the most attention & it looks like those guys could come up with a package fairly soon although selling in the last hour suggest there are more stumbling blocks.  The popular stock averages are at or close to record highs.

Dow Jones Industrials