Dow lost 7, decliners over advancers about 4-3 & NAZ added 53 for a new record. The MLP index stayed near 151 & the REIT index slid back fractionally to the 389s. Junk bond funds dipped lower & Treasuries remained weak. Oil was fractionally lower to 58 & gold fell 18 to 1824 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
House Speaker Nancy Pelosi expects Dems will pass their next coronavirus relief package before programs buoying jobless Americans lapse next month, she said. The House hopes to approve its $1.9T aid plan “by the end of February so we can send it to the president’s desk before unemployment benefits expire” on Mar 14, she added. The pandemic-era policies set to run out add a $300-per-week federal unemployment supplement, expand benefits eligibility to self-employed and gig workers & extend the number of weeks Americans can receive benefits. 9 House committees this week started to write & advance their portions of the relief bill, which Dems are expected to pass thru budget reconciliation without Rep votes. Pelosi expects the panels crafting the legislation will finish their work this week. The Budget Committee will then combine the policies. Once the completed bill goes through the Rules Committee, the full House can vote on it.
Pelosi expects Covid relief will be signed into law before unemployment programs expire
The federal budget deficit is projected to total $2.3T in the 2021 fiscal year, a drop from last year but still well ahead of anything the US had seen prior to the Covid-19 pandemic, the Congressional Budget Office (CBO) reported. That total does not include the $1.9T in relief spending that Pres Biden has proposed as the ultimate size of the package has not been determined yet. While smaller than the $3.13T shortfall in fiscal 2020, the red ink this year still will be the 2nd-largest in the nation's history either in total $ terms or as a proportion of the $20.9T US economy. Whereas the previous deficit was 14.9% of GDP, the 2021 level is projected to be 10.3%. The $ size of the budget shortfall is $448B, or 25%, larger than the previous forecast from the CBO. Not surprisingly, the CBO said the inflated level comes from the added spending that Congress has instituted to combat the effects from the covid spread. After pushing through the $2.2T CARES Act in Mar 2020, Congress in Dec approved $900B more in funding. However, the report notes that the big deficits are somewhat offset by faster economic growth. “Those deficits, which were already projected to be large by historical standards before the onset of the 2020–2021 coronavirus pandemic, have widened significantly as a result of the economic disruption caused by the pandemic and the enactment of legislation in response,” the CBO said. The deficits continue to push the national debt higher as well. Currently, the public share of the $27.9T national debt comes to $21.8T (a little above 100% of GDP). The CBO anticipates that number will continue to grow, hitting $35.3T, 107% of GDP by 2031. That would be the highest debt-to-GDP ratio in US history. Average annual debt is estimated at $1.2T thru 2031, topping their 50-year average of 3.3%. The CBO expects GDP to grow 3.7% in 2021, lower than the Federal Reserve median forecast of 4.2%. However, that's an improvement over the 2020 full-year decline of -3.5%.
Deficit projected at $2.3T for 2021, not counting additional stimulus, CBO says
Gold futures fell to suffer their first loss in 5 sessions, a day after posting the highest price settlement since the start of the month. Prices for gold declined as Treasury yields moved higher. The 10-year Treasury note yield was up 3.4 basis points at 1.164%. A rise in gov debt yields can undercut appetite for precious metals. Gold for Apr lost $15 (0.9%) to settle at $1826 an ounce. Yesterday, prices settled at $1842, their highest since Feb 1. Prices for gold had found support in recent days, buoyed by the prospect for further US fiscal stimulus & the indication from the Federal Reserve that more coronavirus aid will be needed on top of Ts of $ already spent on limiting the damage from COVID-19. Yesterday, Federal Reserve Chair Jerome Powell emphasized that monetary policy makers would continue bolstering the economy thru low interest rates & hefty asset purchases, & he cautioned that the labor market remained fragile due to the COVID-19 pandemic, in need of fiscal stimulus. Against that backdrop, gold futures traded higher for the week, on track to post their first weekly rise in 3 weeks. Prices for gold had been trading higher before a weekly report from the Labor Dept showed that US initial jobless benefit claims in states fell to 793K from revised 812K in early Feb, leaving the labor market showing little improvement. Continuing claims for joblessness fell by 145K but remained at an elevated 4.5M.
Gold prices suffer first loss in 5 sessions
General Motors (GM) announced that it will invest $100M in 2 of its
US-based manufacturing plants to boost production of 10-speed
automatic transmissions found in 2 of its popular pickups. The
company is allocating $93M for its plant in Romulus, Michigan,
that will increase “machining capability.” It
is also investing $7M in a Bedford, Indiana, plant for increased
die-casting metal capabilities. The
investments are intended to boost production of the transmissions used
for its Chevrolet Silverado & GMC Sierra light-duty pickups. “Demand for our Chevrolet Silverado and GMC Sierra
full-size pickups continues to be very strong and we are taking action
to increase the availability of our trucks for our dealers and
customers,” Phil Kienle, VP of GM North American
Manufacturing & Labor Relations, said. The stock was off 1.31.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM?a_aid=CD3289&a_bid=6ae5b6f7
GM invests $100 million in two U.S. plants to boost transmission production
Oil futures settled lower, as traders fretted over a lower
demand forecast for this year, putting an end to the longest streak of
session price gains in more than 2 years. West Texas Intermediate (WTI) crude for Mar,
the US benchmark, fell 44¢ (0.8%) to settle at
$58.24 a barrel. WTI had gained
ground in each of the last 8 sessions. Apr Brent crude,
the global benchmark, lost 33¢ (0.5%) at $61.14 a barrel after a 9-day winning streak. US & global benchmark crude prices yesterday had logged their longest
streak of session gains in 2 years. In a monthly report, OPEC trimmed its forecast
for a rebound in global oil demand this year. It expects
appetite for crude to rise by 5.8M barrels a day in 2021, down
100K barrels a day from its Jan forecast, to average 96.1M
barrels a day. Earlier, the IEA, in its own monthly report,
said that a recovery in demand will outstrip rising output in H2 to prompt “a rapid stock draw” of the glut of
crude built up since the outbreak of the coronavirus. However,
the IEA said it remains “cautious about the outlook for oil demand” in Q1, in part due to new COVID variants, & has downwardly
revised its Q1 forecast by 100K barrels per day, with
demand now expected to decline by 110K barrels per day
year-over-year, to 93.7M barrels per day.
Oil futures decline, putting an end to their longest streak of gains in over 2 year
Stocks bobbed around in choppy trading with very little decided. The fight with coronavirus drags on which is putting a damper on economic recovery. The stimulus package remains stuck in the mud. But stocks have been having a good month in Feb. So far, the Dow is up 1400 while NAZ jumped about 1K even with all the problems around.
Dow Jones Industrials
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