Wednesday, January 13, 2021

Markets struggle for direction

Dow went up 9, advancers modestly above decliners & NAZ gained 70.  The MLP index rose 1+ to 160 & the REIT index rebounded 4 to the 362s.  Junk bond funds were purchased & Treasuries climbed higher in price.  Oil was flattish in the 53s (11 month high) & gold jumped 15 to 1859.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil52.91T-0.30-0.6%

GC=FGold 1,857.80


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Researchers in Ohio said that they've discovered 2 new variants of the coronavirus that likely originated in the US — one of which quickly became the dominant strain in Columbus, Ohio over a 3-week period in late Dec & Jan.  Like the strain first detected in the UK, the US mutations appear to make Covid-19 more contagious but do not seem like they will diminish the effectiveness of the vaccine, researchers said.  The Ohio State University researchers have not yet published their full findings, but said a non-peer-reviewed study is forthcoming.  A spokesman for the Centers for Disease Control & Prevention, said the agency is looking at the new research.  One of the new strains, found in just one patient in Ohio, contains a mutation identical to the now-dominant variant in the UK, researchers said, noting that it “likely arose in a virus strain already present in the United States.”  However, the “Columbus strain,” which the researchers said has become dominant in the city, includes “three other gene mutations not previously seen together in SARS-CoV2.”  “This new Columbus strain has the same genetic backbone as earlier cases we’ve studied, but these three mutations represent a significant evolution,” Dr Da Jones, vice chair of the division of molecular pathology at Ohio State, said.  “We know this shift didn’t come from the U.K. or South African branches of the virus.”  The mutation found in the dominant new strain in Columbus — COH.20G/501Y — “may be occurring independently in multiple parts of the world during the past few months,” the researchers added.  Peter Mohler, chief scientific officer at the Ohio State Wexner Medical Center & co-author of the forthcoming study, said there's no data to indicate that the new strain will impact the effectiveness of vaccines.

Ohio researchers say they’ve identified two new Covid strains likely originating in the U.S.

The ECB is sticking to its growth projections despite new coronavirus restrictions across Europe that could further dent business activity & output.  “I think our last projections in December are still very clearly plausible,” Pres Christine Lagarde said.  In Dec, the bank estimated a 3.9% GDP rate for 2021, after a contraction of 7.3% in 2020.  The official & final reading for 2020 is not yet known.  However, since the publication of these forecasts last month, many European govs have announced tough new lockdowns or an extension of existing restrictions.  The Netherlands announced yesterday a lockdown until Feb 9. Germany, in lockdown since Nov, is considering extending it for another 8-10 weeks.  Austria remains closed until late Jan.  France has intensified its curfew & Portugal is contemplating a new lockdown too.  These measures follow an uptick in cases & deaths from Covid-19 since the Christmas period, in some cases the new figures are worse than during the first wave last spring.

Lagarde stands by growth forecasts despite new lockdowns hitting Europe

Never have Americans saved so much money & earned so little on it.  For those stashing cash, the average savings account rate is down to just 0.05%, or even less, at some of the largest retail banks, according to the Federal Deposit Insurance Corp.  Rates have fallen significantly since the Federal Reserve cut its benchmark rate to essentially zero to combat the economic effects of the coronavirus  crisis.  Although the Fed has no direct influence on deposit rates, they tend to be correlated to changes in the target federal funds rate.  At the same time, bank deposits have ballooned since the start of the Covid-19 outbreak, pushing rates even lower & allowing banks to reduce what they pay depositors.  With so many Americans at a standstill, the personal savings rate — how much people save as a percentage of their disposable income — hit a historic 33% in Apr.  It has since backed off that record high as pandemic-related assistance programs started to wind down.  However, the rate is still near 13%, according to the latest data from the Bureau of Economic Analysis, higher than it has been in 4 decades .

Savings interest rates hit rock bottom as bank deposits balloon

Investors are not sure what to do while stock averages are near record highs.  Treasury debt is being sold in anticipation of higher interest rates as inflation fears rise.  Of course, the goings on DC are very disturbing while the virus keeps on with its fight.  There are dark clouds around which worried investors are watching closely.

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