Wednesday, January 20, 2021

Markets rise as Biden is being inaugurated

Dow jumped up 138, advancers over decliners a relatively modest 3-2 & NAZ soared 228.  The MLP index fell 1+ to the 157s & the REIT index rose 4+ to the 373s.  Junk bond funds fluctuated & Treasuries saw a little selling.   Oil climbed higher in the 53s & gold gained a very big 23 to 1863.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil53.39
  +0.41+0.8%


















GC=FGold  1,867.70
+27.50+1.5%






















 

 




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Pres-elect Joe Biden will inherit dueling crises when he takes office, with plans to usher in a sweeping agenda that addresses the raging coronavirus pandemic & the economic catastrophe that it triggered.  Biden intends to use exec orders to accomplish some of his goals during the first 100 days of his presidency — including, after his inauguration, extending an eviction moratorium & forbearance on student loan payments — but some moves require congressional approval, such as the $1.9T coronavirus relief proposal he outlined last week.  “President-elect Biden is assuming the presidency in a moment of profound crisis for our nation," Biden's incoming chief of staff, Ron Klain, said.  "We face four overlapping and compounding crises: the COVID-19 crisis, the resulting economic crisis, the climate crisis and a racial equity crisis."  Biden is planning a slew of exec actions for his first days, including rejoining the Paris climate accord, reversing the Trump administration's travel ban from several Muslim-majority countries &requiring that people wear masks on federal property — part of a broader effort to curb the spread of the deadly virus.  The incoming pres has also pledged to deliver 100M COVID-19 vaccine doses in his first 100 days & reopen most K-8 schools during that same period.  He has also promised to work with Congress to pass another massive coronavirus relief package, which would include $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.

Biden's first 100 days to target COVID-19 relief, economic stimulus

Just 2 months ago, homebuilders had never been happier.  Buyer demand, driven by the pandemic-induced desire for larger newer homes in the suburbs, had homebuilder sentiment at an all-time high.  Now the rising cost of getting homes built is making builders less optimistic.  Builder confidence in the market for single-family homes fell 3 points in Jan to 83, according to the NAHB/Wells Fargo Housing Market Index.  Anything above 50 is considered positive.  2 months ago, the index hit a record high of 90.  In January 2019, before the pandemic struck, it was at 75.  “Builders are grappling with supply-side constraints related to lumber and other material costs, a lack of affordable lots and labor shortages that delay delivery times and put upward pressure on home prices,” said NAHB Chair Chuck Fowke.  Of the index's 3 components, current sales conditions dropped 2 points to 90.  Sales expectations in the next 6 months fell 2 points to 83 & buyer traffic fell 5 points to 68.  “While housing continues to help lead the economy forward, limited inventory is constraining more robust growth,” said NAHB chief economist Robert Dietz.  “A shortage of buildable lots is making it difficult to meet strong demand and rising material prices are far outpacing increases in home prices, which in turn is harming housing affordability.”  On a 3-month moving average for regional HMI scores, sentiment in the Northeast fell 6 points to 76.  It rose 2 points to 83 in the Midwest.  In the South, sentiment fell 1 point to 86 & in the West it dropped a point to 95.

Spike in lumber and land prices causes homebuilder confidence to fall

Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, raised its outlook for the 2nd consecutive qtr after its revenue rose 8%, fueled by higher demand for its cleaning products & shaving & styling products as the pandemic continues to guide consumer behavior.  The company expects sales growth of 5-6% in fiscal 2021, up from its prior outlook of 3-4% growth.  It's also forecasting that its adjusted earnings will rise 8-10%, up from the previous target of 5%-8%.  Fiscal Q2 EPS was $1.47, up from $1.41 a year earlier.  Excluding items, EPS was $1.64, beating the $1.51 expected.  Net sales rose 8% to $19.7B, topping expectations of $193B.  Organic sales, which strip out the impact of acquisitions, divestitures & foreign currency, also rose 8%.  New products helped lift sales.  “It’s a combination of products that were planned and a quick response to real, emerging needs,” CFO & COO Jon Moeller.  In fiscal 2021, P&G is forecasting foreign currency headwinds that will cost about $100M after tax, as well as higher freight costs that will also cost $100M after tax.  The company expects it will buy back as much as $10M of its own stock during the fiscal year, up from a prior estimate of $7-9B.  The stock was off 1.72.
If you would like to learn more about PG, click on this link:
club.ino.com/trend/analysis/stock/PG?a_aid=CD3289&a_bid=6ae5b6f7

P&G raises forecast after earnings top expectations, fueled by 8% jump in sales

Everybody is felling great today & there is no shortage of buyers for stocks (although market breadth is not impressive) & commodies (including gold).  Tomorrow Biden's workday will begin.

Dow Jones Industrials

 






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