Dow was up 56, decliners modestly ahead of advancers & NAZ gained 134 (both setting records). The MLP index was off 1+ to 150 & the REIT index rose 3+ to the 363s. Junk bond funds fluctuated & Treasuries were hit with selling again. Oil rose 1+ to the 51s (another high since Feb) & gold plummeted 64 to 1846 (more on both below).
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Federal Reserve Vice Chair Richard Clarida said he expects the central bank to maintain the pace of its asset purchases through the balance of 2021. “My economic outlook is consistent with us keeping the current pace of purchases throughout the rest of this year,” he said. As things stand, the Fed is buying at least $120B in month, split between a minimum $80B in Treasuries & $40B in mortgage-backed securities. The pace of purchases has accelerated thru the Covid-19 pandemic as a continuing effort both to maintain economic growth & market functioning. Markets have been wondering how long the Fed will keep the program going given that its holdings have now eclipsed $7T. Clarida said he doesn't see a pullback anytime this year even though he expects growth to accelerate. “I think it could be quite some time before we would think about tapering the pace of our purchases the way I look at the data, and I’m relatively optimistic about the economic outlook,” he added. “We want further progress in the labor market and moving toward our 2% inflation objective, and I think that’s some ways away before we declare victory on that.” While the Fed will keep its options open as the economy progresses thru the year, Clarida added officials are committed to hitting & likely exceeding their inflation goal, as well as to full, inclusive employment. Following the Dec meeting, the Fed committed to keeping the asset purchase program going until substantial progress has been made toward the mandate. Earlier this week, Atlanta Fed Pres Raphael Bostic said he wouldn't be surprised if the pace of the bond buying decelerates by the end of the year. “Right now, I think maintaining the current pace of purchases throughout the remainder of this year is my expectation,” Clarida said.
Clarida says Fed bond purchases to keep pace through the rest of the year
Dr Scott Gottlieb predicted that by the end of the month nearly 1/3 of the coronavirus since the beginning of the pandemic. Covid-19 cases across the nation, tracked by Johns Hopkins University as of today, totaled nearly 21.6M. Gottlieb has often said that actual infections among Americans run much higher than the official count. The former FDA commissioner in the Trump administration also said that he believes about 10% of the population could be vaccinated by Jan 31. However, the US rollout of the vaccines has been rocky & only 5.9M doses have been administered yesterday morning. Those forecasts have implications for how fast the coronavirus will continue spread across the country, Gottlieb said, adding that as more people develop antibodies, whether thru prior infection or a vaccine, “the virus is going to start to burn itself out.” “It won’t go away, but prevalence will decline,” acknowledged Gottlieb. “By the end of this month, we’ll have infected probably about 30% of the American public and maybe vaccinated another 10%, notwithstanding the very difficult rollout of the vaccine. You’re starting to get to levels of prior exposure in the population where the virus isn’t going to spread as readily.” Based on his prediction that would mean slightly more than 99M people in America would have been infected since the novel virus emerged in Wuhan, China, in late 2019. That would also mean about 33M Americans will have received their initial doses by the end of Jan.
Gottlieb sees 30% of U.S. getting Covid and 10% vaccinated as of end January
Gold futures dropped by more than 4% to log their biggest one-day loss since early Nov, as yields for gov bonds extended a weekly climb, eroding some appetite for bullion which competes against haven sovereign debt for buyers. Strength in the $ also pressured dollar-denominated prices for gold. Benchmark stock indices carved out fresh records today before pulling back. Feb gold fell by $78, losing 4.1% to settle at $1835 an ounce. That was the lowest settlement for most-active gold futures since Dec 14. Prices also saw their worst one-day percentage loss in a month. Based on the Dec 31 settlement, which was the last trading day of last week, gold has lost nearly 3.2%. A weaker-than-expected Dec jobs report failed to provide much of lift for metals on the session even though analysts expect more fiscal stimulus from the incoming Biden administration. A closely watched employment reading showed that the US lost jobs in Dec for the first time in 8 months as the spread of coronavirus & variants of the COVID-19 forced fresh lockdowns in parts of the country. Businesses & gov shed 140K jobs last month. The official unemployment rate, meanwhile, was unchanged at 6.7%.
Gold prices drop over 4% for biggest one-day loss since November
Sen Joe Manchin said that he would "absolutely not" support sending Americans a $2000 stimulus check, potentially dealing a fatal blow to a key part of Pres-elect Joe Biden's coronavirus relief plan. Twin victories by Jon Ossoff & Raphael Warnock in the Georgia run-off elections this week clinched Dems a 50-50 split in the Senate, with VP-elect Kamala Harris able to cast a tie-breaking vote. The narrow majority will likely make moderate senators like Manchin, a West Virginia Dem, some of the most powerful members of the chamber. “Absolutely not. No,” Manchin said: “Getting people vaccinated, that’s job No. 1.” “How is the money that we invest now going to help us best to get jobs back and get people employed?" he continued. "And I can’t tell you that sending another check out is gonna do that to a person that’s already got a check." Biden initially wavered on whether he supported a $2000 payment, but in the final days before the Georgia runoffs — which played a key role in whether he'd be able to accomplish his legislative agenda — the incoming pres threw his full weight behind the proposal. "If you send Jon and the Reverend to Washington, those $2,000 checks will go out the door," Biden said on the eve of the special elections. "And if you send Sens. Perdue and Loeffler back to Washington, those checks will never get there. It's just that simple. The power is literally in your hands."
Manchin says he won't support Biden's push for $2,000 stimulus checks
Oil futures rose, with prices up by roughly 8% for the week in large part due to Saudi Arabia's decision to unilaterally cut crude output. West Texas Intermediate crude for Feb rose $1.41 (2.8%) to settle at $52.24 a barrel. Mar Brent crude, the global benchmark, climbed $1.61 (3%) at $55.99 a barrel. Based on the settlement on Dec 31, US benchmark WTI crude rose 7.7%, while Brent crude was up 8.1%. The gain marked a 9th weekly increase out of the last 10 weeks for both benchmarks, which also settled at their highest values since Feb. Saudi Arabia took traders off guard on Tues by announcing it would cut output by 1M barrels a day in Feb & Mar. The move came after a protracted meeting of OPEC+ — made up of the Organization of the Petroleum Exporting Countries & a Russian-led alliance of non-OPEC producers — that saw the group agree to largely stick to its existing output curbs, while allowing Russia & Kazakhstan to boost output by a combined 75K barrels a day. The nation saw at least 4111 deaths yesterday from COVID-19, the most in a single day since the start of the outbreak & counted a record of at least 280K new cases, also a record. In the last week, the US has averaged 237K cases a day, after experts warned that infections could accelerate if Americans traveled in large numbers during the recent holiday season. Meanwhile, oil prices appeared unfazed today by data from Baker Hughes, which revealed a 7th straight weekly increase in the number of active US oil drilling rigs. The oil-rig count rose by 8 to 275 this week.
Oil prices climb by roughly 8% for the week after Saudi output cut
The defection by Manchin on the stimulus bill may be significant. Without his vote, the Dems will only have 49 in the Senate. He represents West Virginia with conservative values. Of course there is an abundance of chaos in DC, making it difficult to understand how much influence this will have on legislation. There was buying in stocks during the last 2 hours, enabling the indices to reach new record closes.
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