Dow added 16, decliners over advancers better than 4-3 & NAZ was off 9. The MLP index hardly budged in the 169s & the REIT index inched up in the 411s. Junk bond funds crawled higher & Treasuries were little changed. Oil rose in the 59s & gold fell 2 to 1740 (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)
The Biden administration released its wide-ranging plan to raise taxes on corps & enforce stricter policies in order to finance Pres Biden's $2.25T economic spending proposal. The "Made in America" tax plan, if adopted, would implement a series of corp tax reforms, including raising the rate paid by US companies to 28% from 21% — a partial rollback of Rep's 2017 tax cuts. But the rate would remain lower than it was before the tax overhaul, when it stood at 35%. The proposal also seeks to tighten tax-code loopholes that allow corps to reduce, or eliminate, their liability, often by shifting profits overseas. It would so in part by doubling the global minimum rate paid by American multinational companies to 21%. By ending offshoring incentives, the administration estimated it would bring about $700B in federal revenue into its coffers. Treasury Secretary Janet Yellen said the plan will end a "global race to the bottom" of corp taxation — a competition that she said ultimately hurts American workers & competitiveness. "By choosing to compete on taxes, we've neglected to compete on the skill of our workers and the strength of our infrastructure," she added. "It's a self-defeating competition, which is why we're proposing this 'Made in America' tax plan. It changes the game we play." It would raise $2.5T in new revenue over the course of 15 years, the White House said, & would be used to pay for the sweeping infrastructure measure, dubbed the American Jobs Plan, that Pres Biden unveiled last week. That proposal would make massive investments in the nation's roads & bridges, as well as transit systems, schools & hospitals. Although some corps have indicated they are willing to pay more in taxes, the proposal has drawn criticism from Reps & several business groups, including the Chamber of Commerce & the Business Roundtable, which argue that higher taxes would ultimately derail the economy's recovery from the coronavirus pandemic.
Biden administration details plan to tax corporations, crack down on offshoring
Federal Reserve officials indicated at their last meeting that the pace of asset purchases is unlikely to change anytime soon while the central bank pursues its economic goals. The FOMC released minutes from the Mar 16-17 meeting as investors looked for indications about where policy may be heading in the future. The meeting summary indicated that while officials saw the economy gaining substantially, they see much more progress needed before ultra-easy policy changes. Members said the $120B a month in bond purchases “were providing substantial support to the economy.” “Participants noted that it would likely be some time until substantial further progress toward the Committee's maximum-employment & price-stability goals would be realized and that, consistent with the Committee's outcome-based guidance, asset purchases would continue at least at the current pace until then.” The adherence to “outcome-based guidance” is a pledged that the Fed will wait until the economy shows “substantial further progress” toward the dual goals of full employment & inflation that runs around 2%. The guidance is a shift in policy for the Fed, in which it previously would adjust policy in anticipation of inflation. The minutes said that members agreed changes in policy “should be based primarily on observed outcomes rather than forecasts.” The Fed’s policymaking arm voted to keep short-term borrowing rates anchored near zero & to continue buying at least $120B in bonds each months. In addition, the committee raised its outlook for economic growth & inflation ahead. The median outlook for GDP tin 2021 went to 6.5%, a big upgrade from the 4.2% expectation in the Dec projections. Officials also indicated that the unemployment rate could fall to 4.5% by the end of the year & inflation could run to 2.2%, slightly above the Fed's traditional 2% target. Though inflation shows up 64 times in the minutes, Fed officials indicated little concern that it might become a problem anytime soon. One notion in the minutes said that inflation forecasts were right around where FOMC members expected.
Fed officials expect it will be ‘some time’ before it starts tightening policy, minutes show
The highly contagious variant first identified in the UK is now the most common Covid strain circulating in the US, the head of the Centers for Disease Control & Prevention (CDC) said. The variant, known as B.1.1.7, is “now the most common lineage circulating in the United States.” CDC Director Dr Rachelle Walensky said during a White House briefing. “Testing remains an important strategy to rapidly identify and isolate infectious individuals, including those with variants of concern,” Walensky added. The UK identified B.1.1.7, which appears to be more deadly & spread more easily than other strains, last fall. It has since spread to other parts of the globe, including the US, which has identified 16,275 cases across 52 jurisdictions as of yesterday, according to the CDC. Last week, Walensky said the B.1.1.7 strain was starting to become the predominant strain in many regions of the US, accounting for 26% of Covid-19 cases circulating across the nation. She urged the public to continue pandemic safety measures, such as washing hands, wearing masks & practicing social distancing. “This is a critical moment in our fight against the pandemic,” Walensky said last week “We can’t afford to let our guard down.” Coronavirus case counts remain far off their peak Jan levels, but slightly above the most recent low point in late Mar. The 7-day average of daily new cases is 64, according to Johns Hopkins University, a level similar to what the country saw during the summer surge.
CDC says variant from the UK is now the most common strain circulating in the U.S.
Gold futures settled with a modest decline after posting gains in each of the past 4 trading sessions, but some experts forecast a recovery for bullion prices as questions about the state of the economy & lofty stock-market valuations persist. Prices for the metal then moved slightly lower in electronic trading, before moving back up not long after minutes from the Federal Reserve's Mar meeting showed that members of the FOMC agreed that that the COVID-19 pandemic was “causing tremendous human and economic hardship” across the US & the world. The minutes also noted that “indicators of economic activity and employment had turned up recently, although the sectors most adversely affected by the pandemic remained weak.” All members agreed to maintain the “target range for the federal funds rate at 0 to ¼ percent.” During today's session, Jun gold fell 1 to settle at $1741 an ounce, after gaining 0.8% yesterday. In electronic trading shortly after the release of the Fed minutes, prices were at $1742. Gold prices yesterday had marked a 4th consecutive gain, the longest such streak in about 2 months. Some commodity experts, meanwhile, believe that gold's decline may be limited if investors doubt that equity markets will continue to run to records.
Gold prices settle with a loss for the first time in 5 sessions
The way people feel about their finances is still about 12% below
pre-pandemic levels, according to year-long polling by Morning Consult. The anxiety is worst in the South & West & in states such as Nevada & Hawaii whose economies rely heavily on tourism. Morning Consult's daily poll of consumer confidence has been one of
the best surveys to gauge how Americans have reacted to the coronavirus
over the past year. The
latest findings, drawn from 2.6M interviews in the past
year, showed that people in the Northeast feel the most upbeat about
their finances. Even though the Northeast has been of the
nation's biggest coronavirus hotspots, states in the region provide
bigger unemployment benefits than most of the rest of the country. “The generosity of unemployment benefits likely explains some of these regional divergences,” Morning Consult said. Other potential factors: The
Northeast may have more people who can work from home in a region of
the country with a high percentage of professional workers & the
densest array of high-speed internet lines. The Northeast also
voted heavily for Pres Biden. Other surveys show big partisan
divides in how Americans view their financial health. Dems turned a
lot more optimistic, & conservatives more pessimistic, after the
election. Anxiety was the highest in the South even though most states avoided
strict lockdowns & their economies stayed more open. Lower jobless
benefits & fewer stay-at-home work opportunities may have played a
role. The states in which anxiety is the highest are those whose
economies are highly dependent on tourism & travel. The hardest hit were vacation hot spot Hawaii & gambling mecca Nevada. To
be sure, confidence is likely to rise, & sharply, if coronavirus
cases continue to decline. Most Americans who want a vaccine should be
able to get one within the next month. The economy itself is already firing back up in a big way, with the US adding more than 900K new jobs in Mar alone. Many
of these new jobs were in businesses that suffered the worst during the
pandemic, such as airlines, hotels, resorts, restaurants, entertainment
venues & places of amusement. More Americans are flying & planning
vacations, good news for tourism-dependent states.
Americans still very anxious about their financial security one year after pandemic
Oil prices ended higher, shaking off an earlier decline, as traders parsed US gov data showing a more-than-3M-barrel decline in crude inventories & a bigger-than-expected climb in gasoline inventories. US crude inventories fell by 3.5M barrels last week, according to the EIA. The forecast called for a decline of 700K barrels, while the American Petroleum Institute yesterday reported a 2.6M-barrel decrease. West Texas Intermediate crude for May tacked on 44¢ (0.7%) to settle at $59.77 a barrel. Jun Brent crude, the global benchmark, added 42¢ (0.7%) to $63.16 a barrel. The EIA data also reported that crude stocks at the Cushing, Okla., storage hub declined by 800K barrels for the week, while total domestic oil production stood at 10.9M barrels a day, down from 11.1M barrels a day. Demand for oil should pick up as lockdowns are slowly removed & more countries ease travel restrictions, while the rollout of vaccines still promises an end to the pandemic. The concern, however, is that the rise in demand will be offset by rising oil supply as OPEC & its allies (OPEC+) agreed last week to begin easing output curbs, while indirect talks between the US & Iran could see sanctions against Tehran eventually lifted.
Oil prices end higher as traders weigh latest supply update, demand prospects
Stocks were nervous at the opening & remained under modest pressure all day. As usual, the Fed report was unexciting. That's what they want it to be. Investors have been thinking about higher corp taxes & the thoughts are not good. More money paid for taxes will pinch div hikes & capital expenditures. Then there is the worry about corps moving overseas for various reasons. The popular averages are at lofty levels, but that may not last if those guys in DC get their hands on more tax money.
Dow Jones Industrials
No comments:
Post a Comment