Dow dropped 358, advancers ahead of decliners about 5-4 & NAZ fell 76. The MLP index was fractionally higher to 151 & the REIT index advanced 4+ to the 379s. Junk bond funds were weak & Treasuries rose in price. Oil crawled higher in the 32s & gold slid back 3 to 1853.
AMJ (Alerian MLP index tracking fund)
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A bipartisan group of senators balked at the size of Pres Biden's $1.9 T coronavirus relief proposal, raising concerns that the measure provides too much money to high-income Americans. Biden is pushing for a massive plan that includes $20B to accelerate vaccine distribution, a $15-an-hour minimum wage increase, an extension of supplemental unemployment benefits thru the end of Sep, a one-time $1400 stimulus check, a temporary expansion of the Earned Income Tax Credit & Child Tax Credit & $350B in new funding for state & local govs. While the lawmakers largely agreed the top priority should be producing & distributing vaccines, some pushed back against the $1400 stimulus payments & pressed the White House to make them more targeted to individuals in greater need. Sen Susan Collins questioned Biden officials why families making $300K would be eligible to receive the cash payment & suggested the relief focus on lower-income workers. “I was the first to raise that issue, but there seemed to be a lot of agreement … that those payments need to be more targeted,” Collins said. “I would say that it was not clear to me how the administration came up with its $1.9 trillion figure for the package.”
Bipartisan group of senators skeptical about Biden's $1.9T coronavirus relief proposal
A quicker-than-expected recovery in US manufacturing is resulting in supply disruptions and higher costs for materials used in products meeting increased demand. Prices for steel, aluminum, lumber & other materials are rising in response to higher order volumes. Commodity supply chains are now clogged with orders, causing some producers to add weekend hours and overtime for employees. Orders that took a week or 2 to fill during the summer now require 6-8 weeks, according to manufacturers coping with extended wait times for essential supplies. When many factories shut down for more than a month last spring to contain the spread of the coronavirus, production of industrial commodities dropped off as well. Inventories evaporated & suppliers were wary about ramping up production during what was expected to be a slow recovery for manufacturing in a US economy that had entered into a recession in Feb. But demand for durable goods picked up in late summer & gained momentum during fall even as Covid-19 infections soared to record levels. Consumers unable to spend on vacations, dining out, concerts & various services instead opened their wallets for autos, appliances, recreational vehicles & home improvements & construction. As a result, prices for some industrial commodities, including steel & copper, have climbed to their highest levels in years. US commodity producers have benefited as well from strengthening global prices, particularly for aluminum. Its cash price on the London Metal Exchange is up 39% from its Apr low. The domestic price for prime steel scrap used to make new steel has risen 60% since Nov, aided by increased overseas demand. Turkey has sought out US exports, & lately so too has China, which is importing scrap for the first time in nearly a decade.
Manufacturing rebound has suppliers struggling to keep up
Pres Biden will take steps to harness the purchasing power of the gov, the world's biggest single buyer, to increase domestic manufacturing & create markets for new technologies, a senior administration official said. Biden will sign an exec order aimed at closing loopholes in existing “Buy American” provisions, which structure the $600B in goods & services the federal gov buys each year, making any waivers more transparent, & creating a senior White House role to oversee the process. Increasing manufacturing, a central tenet of Biden's presidential campaign. Lower wages & weaker environmental standards have triggered the exodus of key manufacturing capabilities to China & other countries in recent decades, including medical equipment, resulting in critical gaps laid bare during the COVID-19 pandemic. China overtook the US as the world's top manufacturer in 2010, & was responsible for 28% of global output in 2018, according to United Nations data. Rebuilding critical supply chains & developing new ones is critical to US growth. The US trade deficit surged to $68B in Nov, its highest level in 14 years, as businesses scrambled to fill shelves with foreign goods & supply domestic factories reliant on foreign parts, offsetting a rise in exports. “The U.S. spends about $600 billion a year on contracts, and that is money that...can also serve to spur a revitalization of our industrial strength and help to create markets for new technologies,” the official said. The order directs federal agencies to reevaluate the threshold used to determine US content, to prevent companies it buys from importing largely foreign-made goods & selling them as US-made after making just minor tweaks.
Biden pushes elusive ‘Buy American’ goal to order the government to buy more U.S. goods
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