Markets struggle as investors assess the relief package

Dow sank 200 (barely above 30K & close to session lows), decliners over advancers 4-3 & NAZ went up 65.  The MLP index slid to the 141s & the REIT index added 2+ to the 367s.  Junk bond funds inched higher & Treasuries remained in demand.  Oil fell 1+ to the high 46s & gold pulled back 14 to 1868 (more on both below).

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A closely-watched gauge of US consumer confidence tumbled in Dec as rising coronavirus cases dragged American optimism to its lowest level since the summer.  Rising pessimism is now spreading during the crucial holiday season, which could make or break a number of retailers, airlines, restaurants & other sectors that have been hammered financially during the pandemic.  The Dec reading of 88.6 released by the Conference Board is a sharp decline from last month, which was revised downward to 92.9, & it is far worse than expected.  It may be an ominous sign for an economy in which consumer spending accounts for 70% of all economic activity.  The Commerce Dept reported last week that US retail sales fell a seasonally adjusted 1.1% in Nov, the biggest drop in 7 months & also worse than most were expecting.  The drumbeat of weak economic data may be providing a grim preview of Christmas receipts, which can account for a qtr or more of a retailer's annual sales.  The index measuring consumers' assessment of current business & labor market conditions also fell sharply, from 105.9 last month to 90.3 in Dec.  Consumers' short-term outlook for income, business & labor market conditions ticked up slightly from 84.3 in Nov to 87.5 this month, possibly because of recent approvals for COVID-19 vaccines.  It remains to be seen how the $900B relief bill, which was passed yesterday & too late for the survey, will affect consumer behavior this winter.  The bill combines coronavirus-fighting funds with financial relief for individuals & businesses.  It would establish a temporary $300 per week supplemental jobless benefit & a $600 direct stimulus payment to most Americans, along with a new round of subsidies for hard-hit businesses, restaurants & theaters & money for schools, health care providers & renters facing eviction.

During crucial holiday season, US consumer confidence slumps

The new coronavirus strain that was first detected in the UK could already be circulating in the US without notice, the Centers for Disease Control & Prevention (CDC) said.  While the variant hasn't been found in the US yet, the CDC noted that scientists haven't sequenced the genetic coding for many COVID-19 infections here.  The agency said “viruses have only been sequenced from about 51,000 of the 17 million US cases,” so the new strain could have slipped notice.  “Ongoing travel between the United Kingdom and the United States, as well as the high prevalence of this variant among current UK infections, increase the likelihood of importation,” the CDC added.  “Given the small fraction of US infections that have been sequenced, the variant could already be in the United States without having been detected.”  The new variant is currently being referred to as “SARS-CoV-2 VUI 202012/01,” the CDC said.  It became prevalent across southeast England in Nov & reportedly accounts for 60% of recent infections in London.  The CDC said it doesn't know why the new strain of the virus emerged, but it could have been “by chance alone.”  “Alternatively, it may be emerging because it is better fit to spread in humans,” the CDC said. “This rapid change from being a rare strain to becoming a common strain has concerned scientists in the UK, who are urgently evaluating the characteristics of the variant strain and of the illness that it causes.”  The new coronavirus “mutates regularly,” the CDC noted, but the overwhelming majority of mutations are insignificant. The significance of the new variant found first in the UK has yet to be determined, but the CDC noted that based on early data from the UK, the new strain could “potentially be more rapidly transmissible than other circulating strains.”  The CDC noted that there have been several mutations of the coronavirus, saying scientists are studying how that's affected its ability to spread or whether it’s made it more lethal or resulted in milder infections.

CDC: New Covid strain in UK could already be circulating undetected in U.S.

Gold futures logged their first consecutive losses in about 2 weeks, marking the steepest slide for the metal since early Dec, as a perkier $ & an attempted rebound in equities kept the haven metal under selling pressure in the session.  The $ rose 0.6% on the day & is one pace for a weekly gain of 0.7%.  A stronger $ can be a headwind for assets priced in the currency like precious metals.  Meanwhile, stocks were trying to recover from volatile trading that was sparked by worries about a more transmissible strain of coronavirus spreading from the UK.  Gold bulls still see longer-term positives for the yellow metal in the wake of a fresh $900B-fiscal stimulus package passed by Congress.  Investors are betting that the fiscal aid package will continue to support the currency-devaluing thesis that has backed gold bids up to this point, even if investors are currently taking some profit by selling bullion.  Feb gold ended $12 (0.6%) lower to settle at $1870 an ounce, after shedding 0.3% on Mon.  The drop marked its steepest in a session since Dec 9 & its first consecutive days of declines since the 3-session skid that also ended Dec 9.

Gold prices notch steepest daily slide in 2 weeks

The US topped another somber milestone in COVID-19 cases of 18M, as the number of daily new cases & deaths got back to increasing to snap a brief streak of declines.  Hospitalizations rose for the first time in 4 days, but by enough to mark another record.  Meanwhile, with more states publicly reporting vaccinations, the number of doses administered nationwide jumped by more than 100K.  The US has now recorded a total of 18M COVID-19 cases & the death toll rose to 319K.  On a daily basis, new COVID-19 cases increased to 211K yesterday, up from 180K on Sun to snap a 3-day streak of declines.  At least 1962 peopled died from COVID-19, up from 1422 on Sun, also the first increase in 4 days.  The new daily counts were well below the one-day records of 280K (with data anomaly) in new cases seen on Dec 11 & 3611 in deaths suffered on Dec 16.  Hospitalizations jumped 1750 in a day to record of 115K.  That's the biggest one-day increase since it rose by 2265 on Dec 15 & the record was the 17th reached this month.  There have now been 23 states that have publicly reported vaccinations, with the dose count climbing to 244K from 144K the day before.  The states that have reported the most doses administered are Florida with 43K & Texas with 42K.  This comes amid growing concerns over a new, more infectious strain of the novel coronavirus that causes COVID-19 that has bubbled up from the UK, which has led many countries to issue travel bans.  The number of global confirmed cases of COVID-19 grew to 77M & the death toll reached 1.7M.  More than 43.8M people have recovered.

U.S. tops 18 million COVID-19 cases, as daily new cases and deaths are back on the rise

Oil futures settled sharply lower for the 2nd straight day on worries about energy demand following new travel bans & lockdowns in Europe & the US. to combat the COVID-19 pandemic, even though a vaccine rollout has begun.  France's border with the UK remained closed to trade & travel & other European countries are banning travel from the UK amid reports of a new strain coronavirus.  Nearly 40 countries in Europe, Asia, South America & the Middle East have restricted travel from the UK, & countries, including Australia have also reported news of a fast-spreading variant of the disease.  Saudi Arabia also temporarily suspended all intl passenger flights for citizens & residents over fears about the fast-spreading new variant of the coronavirus.  The kingdom's interior ministry says the one-week flight ban may be extended “until medical information about the nature of this virus becomes clear.”  Medical professionals said that the new vaccines should work on the mutations of the coronavirus.  Meanwhile in the US, a $900B coronavirus relief package & $1.4T bill funding government operations thru Sep 2021 was passed by Congress.  Investors have long wagered that such a deal would support the economy & thereby prop up energy demand.  Also weighing on oil are reprorts that Russia, one of the world's biggest producers of crude, favors a 500K [barrel per day] increase in production by OPEC & its allies (OPEC+).  Russia advocates raising the output for OPEC+ by 500K barrels a day in Feb, matching a hike already agreed upon for next month, according to a report.  Against that backdrop, West Texas Intermediate crude for Feb lost 95¢ (2%) to settle at $47.02 a barrel, after the contract closed 2.6% lower.  The Jan contract expired at the end of Mon.  Feb Brent crude shed 83¢ (1.6%) to end at $50.08 a barrel following a 0.8% decline on Mon.  The most-active contracts for Brent & WTI are threatening to notch their first weekly decline, after 7 weekly gains in a row, since Oct 30 in the Christmas-shortened week.

Oil prices end sharply lower, threatening to snap 7-week streak of gains

Traders are reading the relief package to see what it contains.  The guys in Congress had only 2 hours to read the 5500 page bill.  It contains plenty of pork, pet projects that the writers liked.  While the virus data above is grim, there is a lot of hope going forward.  Vaccine shots are being given to those most at risk which should reduce the number of deaths.  Additionally, more than 45M across the globe have been infected & over 96% have survived.  Survivors were also helped by new drugs used for treatments.

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