Tuesday, January 19, 2021

Markets rise amid Yellen's testimony

Dow went up 134, advancers over decliners 2-1 & NAZ advanced 111.  The MLP index was off a fraction in the 159s & the REIT index slid back 1+ to the 369s.  Junk bond funds crawled higher & Treasury yields continue to climb with more selling.  Oil rose to 53 & gold added 8 to 1838.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil52.80
+0.44+0.8%



































GC=FGold  1,833.10
+3.20+0.3%






































 

 




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Treasury Secretary nominee Janet Yellen is calling on Congress to do more to fight a deep pandemic-induced recession, saying the threats of a longer & even worse downturn are too great to cut back on support now.  “Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later,” Yellen said in testimony prepared for her confirmation hearing.  Yellen is expected to have little trouble winning approval in a Senate that will be narrowly controlled by Demts once 2 Dem senators from Georgia are seated.  “Eighteen million unemployment insurance claims are being paid every week. Food bank shelves are going empty. The damage has been sweeping and as the president-elect said last Thursday, our response must be too,” Yellen added.  “Over the next few months, we are going to need more aid to distribute the vaccine, to reopen schools, to help states keep firefighters and teachers on the job,” Yellen said.  She said more support would also be needed to keep unemployment benefit checks going out & to help families who are going hungry or in danger of being homeless.  Biden last week unveiled a $1.9T relief plan that would provide more aid to American families, businesses & local communities & provide more support for vaccine production & distribution.  While Dems have endorsed the effort, many Rep lawmakers have expressed concerns about the price tag given soaring federal budget deficits.  Yellen said that she & Biden were aware of the country's rising debt burden.

Janet Yellen asks Congress to do more to fight pandemic-induced recession

Dr Scott Gottlieb said the rollout of Covid vaccines in the US may eventually be slowed by not enough people wanting to receive the shot.  While the incoming Biden administration will initially be focused on increasing access to vaccines, Gottlieb said public-health efforts also must combat concerns held by some Americans.  “I think we need to also .... work on the demand side of this equation. We can’t lose sight of that and just take for granted that everyone wants this vaccine,” the former Food & Drug Administration commissioner said.  Pres-elect Joe Biden has pledged to vaccinate 100M people in 100 days.  Last week, Biden offered more details on his plan to do so, which includes having the Federal Emergency Management Agency & National Guard build coronavirus vaccine clinics across the US.  Biden also intends to accelerate the timeline for when Covid vaccines could be available at pharmacies.  Biden's plan to address the slower-than-expected vaccine rollout is an “all-of-the-above approach, and then you see what’s working,” said Gottlieb, who led the FDA in 2017-2019.  “We’ve talked about access being the real challenge right now, and now we’re talking about supply because we’re starting to get to a steady state of supply and it’s hard to increase the supply in the near term,” Gottlieb said.  “At some point, demand is going to be come an issue.”  Currently, demand for coronavirus vaccines remains strong because older Americans have become eligible for shots, Gottlieb said.  With age being key risk making people more vulnerable to becoming hospitalized, or potentially, dying from Covid-19, those Americans appear rather willing to take the vaccine.  “There’s going to be a lot of intense demand even in younger cohorts, but I think once we get to 100 million, maybe 120 million vaccines, the demand is going to get soft,” Gottlieb said, basing his forecast on the number of US adults who received a flu shot this past year.  “Those were people who were worried about getting Covid going out and getting flu vaccines. That may be the universe of people who really have significant demand for a Covid vaccine,” he added.

Dr. Scott Gottlieb estimates only about 120 million people in U.S. really want Covid vaccine

The Intl Energy Agency (IEA) cut its 2021 global oil demand forecast, citing soaring Covid-19 cases & renewed lockdown measures that will further limit mobility.  The IEA said it now expects world oil demand to recover by 5.5M barrels per day to 96.6M this year.  That reflects a downward revision of 0.3M barrels from last month's assessment & follows an unprecedented collapse of 8.8M barrels per day last year as the coronavirus pandemic battered global oil markets.  The IEA's latest oil market report comes as countries continue to implement strict public health measures in an attempt to curb virus spread, with lockdowns imposed in Europe & parts of China.  The energy agency said oil demand growth was projected to fall slightly during the first 3 months of the year in the wake of tougher gov plans that call for additional travel restrictions.  This is expected to curb worldwide mobility once again, prompting the IEA to trim its Q1 forecast for oil demand growth to 94.1M barrels per day.  That would see oil demand return to near year-ago levels & reflects a downward revision of 0.6M barrels from Dec's oil market report.  “The global vaccine roll-out is putting fundamentals on a stronger trajectory for the year, with both supply and demand shifting back into growth mode following 2020′s unprecedented collapse,” the IEA said in its closely-watched report.  “But it will take more time for oil demand to recover fully as renewed lockdowns in a number of countries weigh on fuel sales,” it added.

IEA cuts 2021 oil demand outlook as new Covid lockdowns weigh on fuel sales

The Dow started trading above 31K, then buyers pulled back.  Traders are making bets on a stimulus package, but that is uncertain.  In addition, more gloomy news on the virus front complicates future projections..

Dow Jones Industrials

 






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