Markets rise in a choppy session as tech stocks recover

Dow was 8, advancers over decliners about 5-4 & NAZ went up 56.  The MLP index added 1 to 160 & the REIT index climbed 5+ to the 364s.  Junk bond funds continued strong & Treasuries remained in demand bringing lower yields.  Oil slid back to the high 52s & gold went up 9 to 1853 (more on both below).

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A record 4327 people died from Covid-19 in the US yesterday, marking the deadliest day of the pandemic so far as the federal gov tries to speed up the rollout of lifesaving vaccines.  It comes as researchers in Ohio say they have found 2 new variants that likely originated in the US   The new record is the 2nd time in the last week that Covid-19 deaths have exceeded 4K in one day.  It also pushes the nation's weekly average of deaths per day to 3342 — a 26% increase compared with a week ago, according to data compiled by Johns Hopkins University.  So far, 34,804 people have died in Jan, on track to become the deadliest month of the pandemic in the US.  Medical experts say the nation is now in its post-holiday surge & the situation will likely worsen before it improves.  The US has reported more than 22.8M Covid-19 cases since the beginning of the pandemic & cases are rising in a majority of states every day.  As of yesterday, the average number of new cases over the last week climbed by at least 5% in 36 states & DC.  “We were in a bad place even before the actual holidays came upon us,” White House health advisor Dr Anthony Fauci said.  “We’re in a very difficult situation, and it’s getting worse,” Fauci added.  “I hope that as we get towards the end of January that we’ll see a peaking and a turning around, particularly if people hang in there and don’t get discouraged by Covid-19 fatigue and let down on their public health measures.”  The record number of Covid-19 fatalities comes as the Trump administration — with just a week until Pres-elect Joe Biden takes office — tries to speed up the distribution of coronavirus vaccines.

U.S. Covid deaths reach another record, as researchers find two new variants in Ohio

A 3rd of the US central bank's 12 districts reported flat or declining activity over Nov & Dec, according to the latest Federal Reserve Beige Book survey.  The majority of districts said activity increased only modestly.  Some districts reported declining retail sales, an unusual development for the end of year holiday season.  Car sales were weaker.  However, there was a pickup in activity in the energy sector for the first time since the onset of the pandemic.  A growing number of Fed districts reported a drop in employment levels over the last 2 months of 2020.  Inflation seemed to be bubbling, with almost all districts reporting modest prices increases & businesses said they were able to pass some of these costs to consumers.  Economists think economic conditions are going to get worse before they get better.  The prospect of wider vaccinations against COVID-19 have raised expectations for a further economic recovery after Jun.  The next 2 qtrs could be challenging.

A third of Fed’s districts experienced flat or declining activity as 2020 closed, Beige Book survey says

The US gov ran a budget deficit of $144B in Dec & the gap is likely to grow even higher in the next few months after the US approved more federal aid for the economy.  The deficit increased last month from just a $13B budget gap in the same month of 2019, the Treasury Dept said.  The budget gap in the first 3 months of the current fiscal year was 61% higher compared to a year earlier — $573B vs $357B.  The increased deficit almost entirely reflects a surge in gov spending to try to keep the economy afloat until the coronavirus pandemic fades away.  The gov has spent trillions on stimulus checks for families, more generous unemployment benefits & grants to struggling businesses.  It ran a budget deficit of $144M in Dec & the gap is likely to grow even higher in the next few months.  The high level of taxes stems from a strong rebound in the economy since the pandemic erupted last spring & the ability of most companies to adjust.  Tax receipts could slow again, however, after a record spike in cases & more gov restrictions on business.  The new restrictions are not nearly as widespread, though.  Gov spending climbed 40% from a year earlier to $490B in Dec.  Most of the increase in spending last month was tied to health care & Social Security benefits.  And the federal gov is spending more on coronavirus vaccines & related treatments.  Historically large budget deficits are expected to persist for some time.  Last month the guys in DC approved nearly $1B in fresh aid for the economy, with Pres-elect Joe Biden promising even more help is on the way.  The deficit topped $3T in the fiscal year that ended in Sep, the largest deficit as a percentage of GDP since 1945.  The deficit was expected to be halved in the current fiscal year, according to the Congressional Budget Office, but that will depend on the actions taken under the new Biden administration

U.S. budget deficit climbs to $144 billion in December – and more red ink on the way 

Futures for gold finished higher after a report on US inflation & as investors monitored a House vote on impeaching Pres Trump, for a 2nd time, days before he is set to relinquish power to Pres-elect Joe Biden on Jan 20.  Feb gold prices traded $10 (0.6%) higher to settle at $1854 an ounce, after settling 0.4% lower yesterday.  Gold futures added to gains early today after the consumer-price index (CPI) showed a climb of 0.4% in Dec & a core reading, minus food & energy, rose 0.1% in Dec.  The year-over-year reading came in at 1.4% & 1.6% for the core figure, compared against estimates for 1.3% & 1.6%, respectively.  The headline CPI has now risen for 7 months straight but remains below the Federal Reserve’s 2% target.  Investors have largely looked past renewed political rancor in DC.  The Dem-controlled House was expected to vote later today to impeach Trump for his apparent role in a violent attack on the Capitol.  A handful of House Reps have said they would vote to impeach.  Lately, gold has been trading in a relatively muted range & tending lower, with a risk of slipping below a psychologically important price at $1800, which would be seen as near-term bearish by some technical strategists.  Meanwhile, a business survey of the Federal Reserve's 12 business districts, indicated declining activity over Nov & Dec in some areas released after the gold settlement.

Gold prices end higher as investors watch Trump impeachment vote

Oil futures ended lower in a choppy session, snapping a 6-day winning streak for the US benchmark, after the $ gained ground & inventories of gasoline & distillates rose more than expected.  West Texas Intermediate (WTI) crude for Feb fell 30¢ (0.6%) to $52.91 a barrel.  WTI's 6-day winning streak was the longest since Mar.  Mar Brent, the global benchmark, fell 52¢ (0.9%) to close at $56.06 a barrel.  Both benchmarks finished yesterday at their highest since Feb 21.  The Energy Information Administration said US crude inventories fell by 3.2M barrels last week, slightly less than the 3.8M barrel drop expected.  It was also smaller than the 5.8M fall reported by the American Petroleum Institute yesterday.

Oil snaps 6-day winning streak as U.S. dollar rises, product inventories build

Traders were twiddling their thumbs today.  Not much was happening, except for the excitement in DC.  Rising deaths in the US & around the globe are no great concern to those guys.  The stock market may be stumbling along over the short term while the new administration gets started.  The Dow was steady during in Dec.  After a quick  rise to new records in Jan, it has been  pretty much going sideways although NAZ with its tech stocks under fire lately has been volatile.  There was a little selling in the last hour.

Dow Jones Industrials