Dow roared ahead 306 (below early highs), advancers over decliners 3-2 but NAZ remained lower, down 310 The MLP index was off fractionally to 171 & the REIT index rose 4+ to the 382s. Junk bond funds were weak & Treasuries continued out of favor (taking yields higher). Oil fell 1+ to the 64s & gold tumbled 17 to 1681 (more on both below).
AMJ (Alerian MLP Index tracking fund)
The House plans to pass Dems' $1.9T coronavirus relief bill tomorrow to get fresh aid to Americans &starting this month. The chamber aims to approve the rescue package in time for Pres Biden to sign it before key unemployment programs expire on Sun. The Senate passed the legislation on Sat. The
bill extends a $300 per week boost to unemployment benefits through
Sep 6 & sends direct payments of up to $1400 to most Americans. The
stimulus money will start hitting accounts this month, Biden said. The
bill also includes an expansion of the child tax credit, rental payment
assistance & funds for Covid-19 vaccine distribution & testing. It
directs money to state, local & tribal govs, along with
schools. Dems passed the bill in the evenly split Senate
without Rep support thru the budget reconciliation process.
They are not expected to win any votes from House Reps, as the
GOP criticizes what it calls wasteful spending in the bill.
In many ways, the coronavirus crisis has paved the way to better budgeting. Consumers are paying down debt & saving more than they have in decades. Many are leveraging low interest rates to refinance & lower their monthly bills. Federal relief, such as stimulus checks, expanded unemployment benefits & an extended pause in loan repayments, have even given some a chance to catch up on past-due payments. Altogether, Americans repaid almost $83B in credit card debt during 2020 — a record. That marks only “the second time in the past 35 years we’ve even ended the year owing less credit card debt than we started with,” said Jill Gonzalez, an analyst at WalletHub. The first time was in 2009, in the wake of the last recession. By the end of last year, the average household credit card balance fell to $8K, WalletHub found. Credit cards are one of the mo st expensive ways to borrow money. Card rates now stand at 15.99%, on average, down slightly from a record high of 17.85%. Many experts predict there could be a surge in consumer spending once more people are vaccomated & Covid-related restrictions are lifted, which could undo some of the recent progress made toward paying down debt. According to the National Retail Federation, economic indicators point toward potentially record retail sales growth during 2021. Consumers have “plenty of purchasing power” that will combine with pent-up demand to provide “accelerants for growth,” the trade association said.
A rise in the $ & gov bond yields combined to dim appetite for bullion, pushing prices to their lowest finish since a $1.9T COVID-19 relief bill is set to be voted on by the House as early as tomorrow, after the Senate narrowly approved the aid package over the weekend with concessions to accommodate centrist Dems. The fiscal package was expected to be a boost for gold because it means additional gov spending, making safe-haven metals a more compelling investment; however, the prospects of a brighter economic outlook domestically & outside the US may be weighing on near-term gold demand. Gold for Apr fell $20 (1.2%) to settle at $1678 an ounce, with prices based on the most-active contract ending at their lowest since last Apr. Prices for gold last week booked a 1.8% weekly decline. Treasury Secretary Janet Yellen said higher long-term Treasury debt yields were a sign market participants were anticipating a stronger recovery, not of increased inflation concerns. Gold is often used as a hedge against inflation.
Health experts made a concerted effort over the weekend to highlight the risks posed by new variants of the coronavirus-borne illness COVID-19 & urged Americans not to drop their guard until the vaccine program is in full swing. The message was a reinforcement of the one pushed last week by the administration of Pres Biden, after several states announced plans to reopen for business in the near term. Michael Osterholm, director of the University of Minnesota’s Center for Infectious Disease Research & Policy said, adding that the current vaccination rate just isn't fast enough to stop the spread of the new variants. “We are in the eye of the hurricane right now,” Osterholm said. “Things are going very well, we see blue skies.” But the UK variant “is about to come upon us,” he said. “Today it’s wreaking havoc in parts of Europe.” To counter the threat, Osterholm said the US must not let up on coronavirus restrictions & must work to vaccinate the population even faster. The Centers for Disease Control & Prevention’s vaccine tracker shows that 116M doses had been delivered to states, 90M doses had been administered & 59M people had received one or more doses, equal to 17.7% of the population. Already 31M Americans have received 2 doses, equal to 9.2% of the population. The US vaccinated about 2M people a day on average last week with one day nearly hitting 3M. Progress in the form of falling cases, hospitalizations & now a relief package continues in a predictable & positive direction.
Oil futures pulled back, posting their first loss in 4 sessions after an attack on Saudi oil facilities briefly lifted global benchmark Brent crude prices above $70 a barrel for the first time since early last year. Warplanes from a Saudi-led coalition dropped bombs on Yemen’s rebel-held capital San’a on Sun, following attacks on Saudi Arabia's oil & military facilities. The coalition blamed the administration of Pres Biden for the attacks by Iran-backed Houthi rebels after a decision to remove them from US terror lists. Saudi Arabia, however, said its largest oil export terminal at Ras Tanura in the Persian Gulf was unscathed after a drone attack. The price of the front-month May Brent fell $1.12 (1.6%) to settle at $68.24 a barrel, after hitting a high of $71.38 a barrel on Sun. It was the first time the global benchmark traded above $70 since Jan 2020. Apr West Texas Intermedia, US benchmark, lost $1.04 (1.6%) at $65.05 a barrel after hitting a higher near $68 overnight. Both contracts are up more than 30% YTD, adding more than 7% last week following a surprise move by OPEC & its allies to rollover current production cuts thru end-Apr. OPEC's 13 members pumped 24.86M barrels of oil per day in Feb, down 840K barrels per day from Jan. OPEC's 9 partners, meanwhile, added 12.97M barrels per day, for an increase of 60K barrels per day from a month earlier. Overall, Saudi Arabia stuck to its pledge to cut an additional 1M barrels per day of its own output last month, driving total output by OPEC & its Russia-led allies to a 4-month low.
There was selling in the PM when enthusiasm by investors dimmed. Tech stocks as shown by the NAZ were hit with selling all day, taking the NAZ lower & into the red YTD. Oil, gold & Treasuries were also sold, indicating all is not well for stocks & commodities. And Dow could not hold above 32K it reached in the AM.
Dow Jones Industrials