Dow was down 50 (at its low) after yesterday's selloff, advancers over decliners about 3-2 & NAZ added 52. The MLP index went up 1 to the 172s & the REIT index even at 461. Junk bond funds inched higher & Treasuries was hit with a little profit taking. Oil crawled higher above 70 & gold gained 12 to 1776 (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)
Top congressional Dems announced they will attach a measure to suspend the federal borrowing limit thru the end of 2022 onto a must-pass bill to keep the gov funded thru early Dec, setting up a high-stakes showdown with Reps who repeatedly threatened to oppose the maneuver. The House is expected to take up the bill as early as this week, as Dems rush to avert a gov shutdown in 9 days to avoid a debt default sometime in mid-Oct, while simultaneously crafting a partisan $3.5T tax & spending bill. "Addressing the debt limit is about meeting obligations the government has already made, like the bipartisan emergency COVID relief legislation from December, as well as vital payments to Social Security recipients and our veterans," House Speaker Nancy Pelosi & Senate Majority Leader Chuck Schumer said in a joint statement. Still, the bill faces an uphill battle to passage: Dems hold marginally thin majorities in both chambers of Congress, & Reps have vowed to block any legislation that suspends the nation's $28T debt ceiling. Dems would need to secure the support of at least 10 GOP lawmakers in the Senate to defeat a filibuster. "We will not support legislation that raises the debt limit," Senate Minority Leader Mitch McConnel said after Pelosi & Schumer's announcement. "Democrats do not need our help." The battle to raise the gov's borrowing limit carries big risks for the broader economy: With the total debt standing at $28.5T, the gov would be forced to slash federal aid programs unless the cap is either suspended or lifted. Without congressional action, the US could default on its debt sometime in Oct, potentially triggering an "economic catastrophe," Yellen wrote in a recent op-ed. If the US failed to raise or suspend the debt limit, it would eventually have to temporarily default on some of its obligations, which could have serious & negative economic implications. Interest rates would likely spike & demand for Treasuries would drop; even the threat of default can cause borrowing costs to increase.
Dems to link debt limit suspension with spending bill to avert a govt shutdown
Covid-19 is officially the most deadly outbreak in recent American history, surpassing the estimated US fatalities from the 1918 influenza pandemic, according to data compiled by Johns Hopkins University. Reported US deaths due to Covid crossed 675K yesterday, & are rising at an average of more than 1900 fatalities per day. The nation is currently experiencing yet another wave of new infections, fueled by the fast-spreading delta variant. The 1918 flu – which came in 3 waves, occurring in the spring of 1918, the fall of 1918; & the winter & spring of 1919 – killed an estimated 675K Americans, according to the Centers for the Disease Control & Prevention. It was considered America's most lethal pandemic in recent history up until now. In 1918 the US population was less than 1/3 of today's with an estimated 103M people living in America just before the roaring 1920s. Today, there are nearly 330M people living in the US. That means the 1918 flu killed about 1 in every 150 Americans, compared with 1 in 500 who have died from Covid so far. The 1918 virus also tended to kill differently than Covid. With World War I, there was a massive movement of men across all of America & Europe. While the coronavirus can be especially severe for the elderly & those with underlying health conditions, the 1918 virus was unusual in that it killed many young adults. Globally, the 1918 flu killed more people, an estimated 20-50M, according to the World Health Organization. Covid has taken the lives of approximately 4.7M people worldwide, according to Johns Hopkins data.
Covid is America’s deadliest pandemic as U.S. fatalities surpass 1918 flu
Gold futures settled higher for a 2nd straight session, as the $ edged back, helping to extend gains for the precious metal which has been partially supported by worries about a possible default by one of China's largest property companies. Traders also positioned themselves for Federal Reserve policy statement & interest-rate projections at the conclusion of the 2-day meeting tomorrow. Dec gold rose $14 (0.8%) to settle at $1778 an ounce, following a 0.7% rise yesterday, which halted a 3-session skid. Keeping bullion's gains in check today though was a partial recovery in global equity markets, including a rise in the Dow & a rise in gov bond yields, following yesterday's slump. Gold prices added to earlier gains after data today showed that US home builders started construction on homes at a seasonally-adjusted annual rate of 1.62M in Aug, up 3.9% from the previous month's upwardly-revised pace. Today's trading action suggests that the anxieties over the outlook for China's highly leveraged property developer Evergrande have subsided for now, but that hasn't entirely sapped demand for precious metals, with the Fed set to conclude its policy meeting tomorrow, which could prove a catalyst for commodities. Prices for bullion have been under pressure in recent sessions as a result of strong economic data out of the US, which has supported the belief that the Fed will taper its $120B in monthly purchases of Treasuries & mortgage-backed securities before the end of 2021.
Gold scores back-to-back gain, buoyed by weakness in the dollar on first day of Fed meeting
Oil futures ended higher, supported by expectations for a weekly drop in US crude inventories, a day after a broad selloff attributed to jitters about the impact of a default by Chinese property giant Evergrande. West Texas Intermediate (WTI) crude for Oct tacked on 27¢ to finish at $70.56 a barrel on its expiration day after trading as low as $69.67. Nov WTI crude which is now the front month contract, rose 35¢ to settle at $70.49 a barrel. Nov Brent crude the global benchmark, climbed 44¢ (0.6%) to settle at $74.36 a barrel. Oil, along with a range of other commodities, equities & other assets perceived as risky, sold off yesterday, a move tied in large part to worries surrounding a potential default by Evergrande Meanwhile, data shows US oil output in the Gulf of Mexico continues to recover slowly from Hurricane Ida, which hit the Louisiana coast on Aug 29. The Bureau of Safety & Environmental Enforcement said 16% of oil production in the Gulf remained shut in, equal to 321K barrels a day of output.
Oil futures end higher ahead of weekly data on U.S. petroleum supplies
In choppy trading, the Dow finished at its low. Hardly a convincing rally after yesterday's brutal day. Everybody is anxious to hear what the Fed has to say tomorrow. Expectations are for an announcement that tapering will begin in Nov. Of course, the goings on in DC are getting a lot of attention. It is likely those guys won't get serious about slopping $Ts of $s around until they learn their paychecks could be delayed if the gov runs out of money. They must raise the debt ceiling & fund the gov for the next 12 months. The annual budget is around 5T$.Dow Jones Industrials
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