Dow went up 90 closing near session highs, decliners over advancers 5-4 & NAZ declined 82 (under 14K). The MLP index fell fractionally to 155 & the REIT index was fractionally lower to the 386s. Junk bond funds crawled higher & Treasuries saw a little selling. Oil jumped 1+ to the 61s (another high since Jan 2020) & gold remained depressed, down 26 to 1772 (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)
Total consumer debt rose to nearly $14.6T as 2020 came to a close, pushed by a record-breaking rise for mortgages in the red-hot housing market, according to a Federal Reserve report. Debt increased 1.4% for the final 3 months, representing another $206B as households took advantage of low interest rates & continued fiscal & monetary stimulus. Mortgage debt passed $10T for the first time & rose at the fastest pace in Q4 since 2006. The quarterly increase of $182B culminated a year in which homeowners took advantage of low rates to refinance & as city dwellers moved to suburbs amid the continuing shift brought during the Covid-19 pandemic. In 2020, total household debt rose by $414B amid a shift from borrowing to finance automobiles & education & into mortgages. The year saw mortgage debt increase $486B while student loans increased just $47B to $1.56T & auto debt nudged higher by $43B to $1.37T. Credit card debt declined for the year by $108B to $820B. Borrowers have had 2 primary tailwinds over the past year – the low interest rates as well as forbearance guidelines that have kept delinquencies in check.
Household debt rises to $14.6 trillion due to record-breaking rise in mortgage loans
Federal Open Market Committee members at their most recent gathering reaffirmed that the central bank will be keeping policy loose well into the future, according to meeting minutes. With the economy continuing to shake off the effects from the Covid-19 pandemic, the committee, which sets monetary policy for the Federal Reserve, kept policy unchanged. That meant holding benchmark short-term borrowing rates near zero & maintaining the minimum $120B of asset purchases each month. In a discussion over the Fed's asset purchase program & interest rate policy, the minutes indicated little chance for a change anytime soon. “Participants noted that economic conditions were currently far from the Committee’s longer-run goals and that the stance for policy would need to remain accommodative until those goals were achieved,” the meeting summary said. “Consequently, all participants supported maintaining the Committee’s current settings and outcome-based guidance for the federal funds rate and the pace of asset purchases.” Members noted that the QE program, which has taken the Fed's balance sheet to nearly $7.5T, “had materially eased financial conditions and was providing substantial support to the economy.” The deliberations come amid concerns central bank officials have over the pace of recovery. Of particular focus is the goal of a ’broad and inclusive” labor market recovery, across racial, gender & income lines. The post-meeting statement noted that the speed of economic activity & improvements in the labor market has “moderated in recent months.” The minutes helped amplify Fed sentiment in that regard. “With the economy still far from those goals, participants judged that it was likely to take some time for substantial further progress to be achieved,” the summary stated. Since the meeting, Fed officials have been virtually unanimous in saying they don’t expect significant policy changes until more progress is made towards the central bank's enhanced goal for the labor market. Powell & others have stressed that they won't start raising interest rates to head off inflation, but rather will wait for actual price pressures to show up before tightening policy. “In terms of tapering, it’s just premature. We just created the guidance. We said we wanted to see substantial further progress toward our goals before we modify our asset purchase guidance,” Powell said at his post-meeting news conference.
Gold futures saw a 4th loss in a row, with prices logging their lowest finish since Jun, as a death cross chart pattern formed — signaling a potential longer-term downtrend in the metal's prices. The most active gold futures contract mark its first death cross since Jun 2018, with the 50-day moving average at $1856 & the 200-day moving average at $1857. A death cross occurs when the 50-day moving average crosses below the 200-DMA, which is widely viewed as a dividing line between longer-term uptrends & downtrends. Yields in Treasuries, seen as a direct haven competitor to gold that also offers a coupon, have been touching their highest levels in months, making a more compelling case to own bonds compared against commodities that don't offer a yield. Apr gold fell $26 (1.5%) to settle at $1772 an ounce, after skidding 1.3% yesterday. The yellow metal booked the lowest finish for a most-active contract since late Jun. Losses for gold also follow US economic data, with retail sales up 5.3% in Jan, the largest increase in 8 months — a positive sign in regard to the health of the consumer amid the COVID-19 pandemic. Industrial production also rose 0.9% in Jan, to mark a 4th straight month climb.
Gold settles at lowest since June as ‘death cross’ chart pattern signals bearish trend
Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, hasn't manufactured a lot of doses of its single-shot Covid-19
vaccine ahead of its regulatory clearance expected later this month. The
administration has learned in the last couple of weeks that JNJ
will only have “a few million” doses ready when the vaccine is likely
authorized by the Food & Drug Administration (FDA), Jeff Zients, Pres Biden's Covid czar, said during a briefing on the pandemic. Federal & state health officials were expecting vaccine supply to rapidly
increase after the emergency use authorization of JNJ's vaccine. The
FDA has scheduled a meeting of its Vaccines & Related Biological
Products Advisory Committee on Feb 26 to discuss the vaccine & the
US could authorize the vaccine as early as the next day. JNJ
currently has a deal with the gov to supply 100M
doses of its vaccine by the end of Jun, Zients said. Assuming the
vaccine is authorized, the Biden administration will work with JNJ
to ramp up supply as quickly as possible, he said, adding US officials
hope many of those doses will be available in the early months of its
rollout. “We’re doing everything we can working with the company to accelerate the delivery schedule,” he said. The stock rose 1.24.
If you would like to learn more about JNJ, click on this link:
club.ino.com/trend/analysis/stock/JNJ?a_aid=CD3289&a_bid=6ae5b6f7
J&J has only a few million Covid vaccine doses ready for U.S. launch: Biden official
Govs & countries accumulated more debt during the COVID-19 pandemic than they did during the 2008-09 financial crisis, a leading trade group said. The Institute of International Finance (IIF) said global debt-to-GDP surged by 35 percentage points to over 355% in 2020, rising by $24T to $281T. The global debt ratio rose 10 percentage points in 2008 & by 15 points in 2009. The IIF said gov debt rose to 105% of GDP, from 88% in 2019. Mature countries added $10.7T in gov debt to try to contain the crisis, the IIF added. The IIF said global gov debt should rise another $10T this year. The pace of COVID-19 vaccination differs considerably across countries, & difficulty in vaccine rollout could delay recovery, prompting further debt accumulation, the trade body said. Switzerland was the only mature market economy recording a modest decline in gov debt ratio, the IIF added. Nonfinancial private-sector debt rose to 165% from 124%. Many large firms in the US & Japan took advantage of supportive gov measures to boost their cash stockpiles. The IIF noted the decline in the number of firms filing for insolvency has been extraordinary but is dependent on continued gov support.
Global debt surged by more during the pandemic than the 2008 financial crisis, IIF finds
Oil futures climbed, with US prices settling above $60 a barrel for a 2nd straight session, as freezing weather extending as far south as Texas continues to shut in production & keep refineries closed. The frigid temperatures have also reduced US crude & natural-gas production, though most of the projected 3-4M barrels per day of downed oil output could be restored by the weekend. West Texas Intermediate crude for Mar, the US benchmark, rose $1.09 (1.8%) to settle at $61.14 a barrel, a day after closing above $60 for the first time since Jan 2020. Prices notched a 3rd consecutive session gain. Apr, the global benchmark, climbed 99¢ (1.6%) to $64.34 a barrel. The deep freeze has accelerated a rally in crude driven by optimism over vaccine rollouts & falling COVID-19 cases, which boosted expectations for a broader economic recovery. Output cuts by OPEC & its allies (OPEC+) have also contributed to the positive tone, enhanced by Saudi Arabia's unilateral decision to cut its production by 1M barrels a day in Feb & Mar. The crude rally, however, is seen leading to pressure to further relax output curbs, perhaps as early as meetings in early Mar. Saudi Arabia plans to announce a reversal of its unilateral output cuts when OPEC+ meets next month amid the recent recovery in oil prices based on comments from advisers to the kingdom.
Oil ends higher as Texas output and refinery disruptions continue
A few buyers returned (nibblers) in the PM, & that was good enough to trim early losses. However the massive winter storm, mostly around Texas, is doing damage to the national economy. Temps will warm by the weekend, but it is a negative. Tomorrow the report on employment claims is due before the open & that is likely to be dreary, about 800K which is where it has been for months (& above 200K which was common early last year.ago).
Dow Jones Industrials
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