Dow advanced 167 but off session highs, advancers over decliners 5-2 & NAZ gained 120. The MLP index jumped 6+ to the 154s as oil rose to a 10 month high & the REIT index added 1+ to the 367s. Junk bond fund were bid higher & Treasuries remained weak while stocks were in demand. Oil shot up 2+ to 50 as OPEC agreed to extend production cuts thru Feb & gold rose 8 to 1955 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
The 2nd round of economic impact payments is likely to boost retail spending & further "accelerate the nation’s ongoing recovery" despite all the uncertainty surrounding the pandemic, the National Retail Federation (NRF) said. Last month, Congress passed a $900B pandemic relief package that allocated an additional one-time $600 payment for individuals earning up to $75K or $150K for married couples. The legislation also included an additional $300 per week in unemployment benefits. As a result, NRF chief economist Jack Kleinhenz said, "we expect retail sales spending to see a boost from the new round of stimulus." The trade group said the economic challenges spurred by the coronavirus pandemic will continue in 2021 & that "recoveries do not proceed in a straight line." While the "prospects for volatility over the next few months are high," Kleinhenz said that the new round of payments come "at a critical time that will help carry 2020’s momentum into 2021.” The IRS started issuing those payments last week, meaning the funds have already hit many bank accounts across the nation. According to NRF’s Monthly Economic Review, economic activity is likely to pick up by mid-2021 as COVID-19 vaccines continue to roll out & allow for more activities to resume. The vaccine began rolling out during Q1, which is "historically a soft spot" in the economy even without a global health crisis, according to the trade group. This means the timing "couldn’t be better," Kleinhenz said. The economy is far from a full recovery, however. The NRF noted that it has made "considerable progress" during 2020. For the first 11 months of the year, retail sales were up 6.6% compared to 2019. Meanwhile, the month of Nov saw an increase of 8.8%, further putting "the holiday season on track to meet the NRF's forecast of between 3.6 percent and 5.2 percent growth." However, results for the full holiday season won't be released until Jan 15, when the Census Bureau releases Dec's numbers.`
Second stimulus likely to boost retail spending, accelerate economic recovery, NRF says
Macy's (M) said it has notified the employees at about 45 of its department stores that
they will close by the middle of this year. The closures are part of a previously announced plan by Macy’s to shut 125 locations by 2023, which the retailer outlined last Feb. “As
previously announced, Macy’s is committed to rightsizing our store
fleet by concentrating our existing retail locations in desirable and
well-trafficked A and B malls,” a spokeswoman said. “To
that end, we announced several store closures today that align to the
guidance we provided in February 2020,” she added. “These closures bring
us closer to achieving the right mix of mall-based stores.” Liquidation
sales have already started at some locations & the rest are slated
to start later this month. Macy's operates 544 of its
namesake department stores, along with 34 Bloomingdale's locations, 19
Bloomingdale's outlets & 166 Bluemercury shops. The stock rose 18¢.
If you would like to learn more about Macy's, click on this link:
club.ino.com/trend/analysis/stock/M?a_aid=CD3289&a_bid=6ae5b6f7
Macy’s is shuttering 45 more locations this year, as part of its 3-year store closure planMacy’s is shuttering 45 more locations this year, as part of its 3-year store closure plan
Gold prices finished sharply higher, with uncertainty surrounding the Senate runoff elections in Georgia offering support for the haven metal. A climb in the US ISM manufacturing index to its highest since Aug 2018 relieved fears about the economic recovery from the pandemic & along with strength in the domestic stock market, produced some headwinds for gold earlier in the session. If Dems win both seats in the Georgia runoff contests, that could make it easier for Pres-elect Joe Biden's administration to pass legislation that could influence trading in stocks, including the repeal of corp tax cuts put in place under the Trump administration. Gold for Feb rose $7 (0.4%) to settle at $1954 an ounce, following a 2.7% gain yesterday that took bullion to its highest level since early Nov. Meanwhile, renewed implementation of lockdown measures in the UK, EU & US in particular to limit the spread of the coronavirus caused some consternation bolstered appetite for bullion. The highly transmissible strain of COVID-19 recently discovered in the UK has also been found in New York, the state's governor said & London announced a stricter national lockdown, even as vaccines are being rolled out in many parts of the world.
Gold prices end higher ahead of U.S. Senate elections in Georgia
Oil prices surged after the world's largest producers had
agreed to hold off on production increases until Mar as a spike in
coronavirus cases forced new lockdowns. Russia has agreed to keep production at its current level for another month, a compromise with other oil producers after deadlocking on the issue. OPEC & Russia along
with other producers had agreed in Dec to increase production by 500K
barrels a day, a net production cut since the start of the
pandemic of about 7.2M barrels a day. Saudi Arabia &
other producers wanted to extend the current production levels thru
Feb, while Russia resisted. Together,
OPEC & Russia with other producers (OPEC+) Russia had
argued that US producers would fill the gap in demand growth & grab
market share. Yesterday, the Saudi energy minister, Prince Abdulaziz bin Salman, said that vaccines were a “very welcome sign” for the oil market, but that producers needed to remain cautious. A
new, more contagious strain of the coronavirus has forced fresh
lockdowns in the UK & surging cases in the US prevent
business from returning to normal any time soon. “As we see light
at the end of the tunnel, we must -- at all costs -- avoid the
temptation to slacken off our resolve,” Prince Abdulaziz said. “Do not put at risk all that we have achieved for the
sake of an instant but illusory benefit.”
OPEC and Russia Agree to Hold Oil Production Steady Through February
The US announced a fresh wave of sanctions against Iran -- this time aimed at 17 companies that supply the regime with materials for the steel industry. The move is meant to cripple Iran's metals sector -- an important revenue source for the regime -- & stymie their continued funding of terrorist groups in the region. “The Trump Administration remains committed to denying revenue flowing to the Iranian regime as it continues to sponsor terrorist groups, support oppressive regimes, and seek weapons of mass destruction,” Treasury Secretary Steve Mnuchin said. The sanctions include a China-based supplier of graphite electrodes -- a key element in steel production, as well as 12 Iranian producers of steel & other metals products along with 3 foreign-based sales agents of a major Iranian metals & mining holding company, which are located in the UK & Germany. In addition, the State Dept also sanctioned one individual, Majid Sajdeh, a principal exec officer for a subsidiary of an Iranian shipping company. Tensions between Iran & the US have heightened throughout Pres Trump's term, including after Trump unilaterally withdrew from Tehran's nuclear deal with world powers in 2018. In yet another act of defiance by Tehran, the nation began enriching uranium up to 20% at an underground facility & seized a South Korean-flagged oil tanker in the crucial Strait of Hormuz, further escalating tensions in the Middle East between Tehran & the West.
US Treasury announces new sanctions on Iran's steel industry
Oil futures rallied 5%, with US prices tapping highs above $50 for the first time since Feb. OPEC+ reached an agreement on production curbs starting in Feb, with Saudi Arabia voluntarily taking on a larger reduction. Saudi Arabia's energy minister, Prince Abdulaziz bin Salman, said his country is willing to volunteer an additional production cut of 1M barrels per day to bring its output to 8.1M barrels per day starting on Feb 1, to the end of Mar. That means Saudi Arabia will carry a greater burden of the oil-output cuts in the next 2 months, as Russia & Kazakhstan are allowed to boost production by a combined 75K barrels a day. OPEC+ had voted in Dec to relax output curbs by 500K barrels a day to 7.2M barrels a day beginning on Jan 1 & then to meet on a monthly basis to reassess market needs. The producers failed to come to a decision yesterday, resulting in further talks today. West Texas Intermediate (WTI) crude for Feb rose $2.31 (4.9%) to settle at $49.93 a barrel after trading as high as $50.20. Mar Brent crude, the global benchmark, gained $2.51 (4.9%) to $53.60 a barrel. Prices for both WTI & Brent, based on the most-active contracts, settled at their highest since Feb. Iran yesterday started enriching uranium up to 20% at an underground facility & seized a South Korean-flagged oil tanker in the Strait of Hormuz.
Oil prices post a gain of nearly 5% to finish at highest since last February
It is believed that investors have largely assumed that Reps will maintain control of the Senate, albeit with a very narrow majority. Tomorrow, final results may or may not be known. The virus shows no sign of giving up its fight which is worrisome going forward. Hopefully the vaccine shots given out will make the difference in the coming months.
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