Monday, February 1, 2021

Markets rise on renewed hopes for a stimulus plan

Dow went up 160, advancers over decliners better than 3-2 & NAZ jumped 208.  The MLP index was off a fraction to the 154s & the REIT index rose 2+ to the 374s.  Junk bond funds fluctuated & Treasuries were in demand.  Oil rose higher in the 452s & gold gained 15 to 1865.

AMJ (Alerian MLP index tracking fund)

CL=FCrude Oil52.69 
+0.49+0.9%























GC=FGold   1,866.40
+16.10+0.9%
















 

 




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A group of 10 Rep senators announced that they accepted an invitation from Pres Biden to visit the White House to discuss the next steps in the coronavirus relief package.  It has been reported that these Reps—many who are considered moderates within the party— initiated the contact with the hope of talking Biden down from the $1.9T relief package he has in mind.  They have expressed concern over another massive package weeks after former Pres Trump approved a $900B measure.  Sen Bill Cassidy, who is among 10 Rep senators who proposed an alternative $600B coronavirus relief package.  "If you say you want bipartisanship ... and then you have a budget reconciliation which is chock-full of payouts to Democratic constituency groups ... you don't want bipartisanship, you want the patina of bipartisanship.”

10 Republican senators agree to meet with Biden to talk COVID-19 relief

China's factory activity grew at the slowest pace in 5 months in Jan, hit by a wave of domestic coronavirus infections, but still in line with the ongoing recovery in the world's 2nd-largest economy.  The official manufacturing Purchasing Manager’s Index (PMI) fell to 51.3 in Jan from 51.9 in Dec, the National Bureau of Statistics said.  It remained above the 50-point mark that separates growth from contraction on a monthly basis, but was below the 51.6 expected.  In Jan, mainland China reported more than 2K local cases of the coronavirus.  While the number was small compared with other countries, authorities were concerned about transmission risks during the Lunar New Year travel rush - the world's biggest annual human migration spanning 40 days from Jan-Feb.  During the month several large cities were locked down with tens of Ms tested for COVID-19, interrupting factory activity & weighing on the services sector, including logistics & transportation.  “The recent localised epidemic has had a certain impact on the production and operation of some enterprises, and the overall expansion of the manufacturing industry has slowed,” said Zhao Qinghe, an official at the statistics bureau.  “The period before and after the Lunar New Year is also traditionally an off-season for the country’s manufacturing industry,” Zhao added.

China's factory activity grew at slowest pace in 5 months: report

The US economy is set in 2021 to accelerate its recovery from the coronavirus-induced contraction of 2020, even without further economic stimulus paymets, the nonpartisan Congressional Budget Office (CBO) said.  “CBO currently projects a stronger economy than it did in July 2020, in large part because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected,” the CBO said in an abbreviated version of its annual outlook.  The CBO projected economic growth of 4.6% in 2021, compared with a 3.5% contraction in 2020.  Unemployment is projected to average 5.7% for the year, while inflation is expected to remain tame, running at 1.9% for the year versus 1.3% in 2020.  The figures could be viewed as undermining Dems' case for another big relief & stimulus package.  Pres Biden has proposed another $1.9T in aid, including another set of payments for households & aid to state & local govs.  Congressional Reps in general have said lawmakers should wait to see how the economy responds to money already approved by Congress that has yet to be spent before agreeing to spend more.  A group of 10 Reps, though, sent has Biden a counterproposal totaling $618B.  The CBO said past pandemic relief packages helped the economy, noting that the Dec package with about $900B in aid “played a part in improving the economic outlook.”

Economy set to bounce back strongly in 2021, says Congressional Budget Office

Hopes spring eternal once again for another stimulus plan.  However the 2 sides are far apart.  This week will also be filled with a lot of economic data for Jan.

Dow Jones Industrials

 






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