Markets rise as investors monitor stimulus negotiations in Washington

Dow soared 357 (near session highs), advancers over decliners about 5-2 but NAZ pulled back 42 from its record close on Fri.  The MLP index added 3+ to the 135s & the REIT index was fractionally higher in the 363s (flattish for the last couple of  months).  Junk bond funds were higher & Treasuries slid lower in price.  Oil went up to 42 & gold climbed 6 to 2034 (more on both below).

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A relief program that threw a critical lifeline to small business during the coronavirus pandemic is responsible for a "majority" of the jobs created since May, according to Small Business Administration Administrator Jovita Carranza.  The $670B Paycheck Protection Program (PPP), created when Congress passed the CARES Act at the end of Mar, officially closed to new applicants on Sat.  "I would say the majority of the 9.3 million jobs that have been retained are attributable to small businesses," Carranza said.  Since the program launched at the beginning of Apr, more than 5.2M loans worth about $525B had been distributed, according to Carranza.  The program has helped to save an estimated 51 M jobs.  "This Paycheck Protection Program sustained the small business economy," Carranza added.  "It also protected the employers' and the employees' wages. The Paycheck Protection Program was essential to sustaining and mobilizing our national economy."  There's roughly $135B remaining in the fund.  As Dem leaders & White House officials struggle to negotiate the next round of emergency aid, some lawmakers are debating what to do with the leftover PPP money amid a resurgence in COVID-19 cases & a fresh round of business shutdowns that are threatening to slow -- or reverse -- the economy's gradual recovery.  Under a $1T stimulus proposal unveiled by Senate Majority Leader Mitch McConnell last week said the money would be repurposed for more targeted aid to the hardest-hit small businesses, which would be eligible to apply for a 2nd PPP loan.  Businesses that have seen their revenue decline by 50% or more in the first or 2nd qtr of this year (compared to last year) could dip into the PPP for a 2nd loan.  The aid would be limited to businesses with no more than 300 employees, down from the original 500-worker limit established in the CARES Act.  A portion of the money would be set aside for businesses with fewer than 10 workers.  The proposal, drafted by Sen Marco Rubio & Sen Susan Collins would also ease some of the restrictions on the taxpayer-funded money.  For instance, businesses would be allowed to use the loan to purchase personal protective equipment for workers, investments the senators said are needed to ensure the owners can run their businesses safely during the pandemic.  Rubio & Collins have urged Congress to act unanimously on the PPP extension as talks on a broader stimulus bill crawl along.

SBA chief reveals program that created 'majority' of jobs since May

Treasury Secretary Steve Mnuuchin said that he believes Dems are “willing to compromise” on a 4th coronavirus stimulus package, saying that if there is a “fair deal,” the Trump administration will “do it this week.”  Mnuchin said he wouldn't comment on the “specifics of logistics of negotiations" because he does “not think that’s helpful.”  “There is a deal to do if Democrats are reasonable and want to compromise,” Mnuchin added.  “And if the attitude is, we’d rather give you nothing than agree on things, then we’re not gonna get a deal.”  “But I heard [Nancy] Pelosi over the weekend,”  Mnuchin said. They’re willing to compromise, so if we can get a fair deal, we’ll do it this week, but the president needed to take action.”  He added: “He’s not gonna sit around. Meadows and I reported back to him that we’re going nowhere, and that’s why he took action.”  Mnuchin was referring to his negotiations with White House Chief of Staff Mark Meadows on Capitol Hill in recent weeks with congressional leadership, including House Speaker Pelosi & Senate Minority Leader Chuck Schumer.  The talks had reached a stalemate over the weekend, prompting Pres Trump to take exec action over the weekend to provide financial relief to Americans amid the coronavirus pandemic.  The exec actions included $400 per week in supplemental unemployment aid — a replacement of the program passed under the CARES Act earlier this year that gave unemployed people $600 a week extra until the federal program expired at the end of Jul.  The action would require states to pay for 25% of the $400 weekly benefit, while the federal gov would pick up 75%.  The $400 payment to unemployed Americans came as Reps argued that the initial unemployment insurance program disincentivized Americans to get back to work, with many collecting more money unemployed than employed.  Reps pushed for the program to be reduced to $200 per week, while Dems argued the program should be renewed at the original $600 a week.  The pres also signed executive actions that would encourage federal efforts to help renters & homeowners avoid eviction or foreclosure for failing to make their monthly payments; defer the payroll tax from Sep 1 to Dec 31, for employees making $100K or less a year & suspend federal student loan payments & set interest rates to 0% through Dec 31 — the current student loan relief program was set to expire on Sep 30.  

Mnuchin hints at stimulus agreement, says Dems are 'willing to compromise'

After plunging in April, consumer sentiment in housing began a promising recovery.  Home sales surged & beat expectations; homebuilders reported buyer traffic was, well, through the roof, & online housing-related searches soared.  Consumer confidence in housing now appears to be weakening, but consumer curiosity is not.  Fannie Mae's monthly Home Purchase Sentiment Index fell back in Jul.  The percentage of respondents who said it was a good time to buy a home decreased from 61% to 53%.  Those who said it was a bad time to buy increased from 27% to 38%.  Some of the drop can be attributed to a rise in Covid-19 cases in Jul & growing concern over more parts of the economy shutting down again.  Home prices were also a factor.  “Supply constraints appear to be applying upward pressure to consumers’ home price expectations, which in turn has contributed to both a sharp reversal in optimism about whether it is a good time to buy a home and further improvement in home-selling sentiment,” said Fannie Mae.  Despite the decline in confidence, consumers are still much more interested in all facets of the housing market.  The pandemic has both increased & altered demand for housing & it has also helped push mortgage rates to record lows.  No surprise, Google searches for “Refinance home loan calculator” jumped nearly 4,000% last week, according to Google Trends.  This as news hit of another record low on the 30-year fixed — &, of course, searches for, “How low will mortgage rates go?” quadrupled.  There is also more evidence of a surge of interest among first-time homebuyers.  Searches for “Process of buying a house” jumped 950%, &“Minimum credit score to buy a house” was also popular.  Recent home sales numbers have showed an uptick in the share of first-time buyers in the market.  Some consumers, however, are stretching their finances to make that purchase.  Searches for “Can you use your 401(k) to buy a house?” were up 2,800% in the past 3 months.  Low supply & high demand has heated up the competition this summer, & competition was already fierce before the pandemic struck.  Just over ½ of the offers submitted to Redfin agents faced a bidding war in Jul, according to the national brokerage firm.  Competition was highest for single-family homes, followed by townhouses & then condominiums.

Consumers are less confident, but still curious, about the housing market

The US has surpassed 5M Covid-19 cases, a grisly milestone that represents roughly a quarter of all infections across the world confirmed since the coronavirus first emerged from Wuhan, China a little over 7 months ago.  It took just 6 weeks for the number of Covid-19 infections to double in the US, which logged the last 1M infections over the last 2 weeks, according to data compiled by Johns Hopkins University.  The latest grim record comes as growth in new cases in the US appears to be leveling off at an average of 54K new infections a day over the last week.  New cases peaked at 68K new cases on Jul 19, based on a 7-day average, after a resurgence of coronavirus cases ripped thru the Sun Belt states in Jun & Jul.  California & Florida have both reported more than 500K total cases since the outbreak hit the US in late Jan & Texas is closely approaching that number.  Total cases for each state now exceed New York, which was once considered the epicenter of the nation's outbreak earlier this year.  However, those states have reported far fewer deaths than the Empire State, which has lost more than 32K people to the coronavirus so far, according to Hopkins.  Doctors say they’ve been able to save more lives compared with the peak in New York in Mar & Apr because they know more about the virus & have discovered better treatments, such as remdesivir.  The recent surge in cases has also affected far more younger people, who also have higher survival rates.  US health officials fear the virus may be widely circulating in parts of the Midwest now.  White House coronavirus advisor Dr Anthony Fauci & coronavirus task force coordinator Dr Deborah Birx have voiced concern that states like Ohio, Tennessee, Kentucky & Indiana are beginning to see a tick up in their positivity rates (the percent of tests that are positive).

U.S. tops 5 million coronavirus cases as outbreak threatens America’s Midwest

Gold futures settled higher, resuming a strong uptrend for the precious metal after snapping a 5-session win streak on Fri, as China imposed fresh sanctions against US officials in apparent retaliation for similar measures against Hong Kong & mainland officials last week.  China said it would impose sanctions on 11 U.S. citizens, including Rep Sens Ted Cruz & Marco Rubio.  Dec gold added $11 to settle at $2039 an ounce after the metal lost 2% on Fri, cutting into its weekly gain of 2.1%.  The commodity has climbed for 9 consecutive weeks, marking its longest such streak since the period ended in 2006.  China's move comes as tensions between the US & China, partly centered on Beijing's perceived handling of the COVID-19 pandemic & national-security laws being imposed in Hong Kong, have been escalating on a number of fronts, including the decision by the superpowers to force the closures of respective consulates in Houston & the southwestern Chinese city of Chengdu.  Gold's weakness to end trade last week was largely pinned to a rebound in the $, which the metal is priced in, & a tilt higher in gov bond yields, which can undercut appetite for haven metals.  Bullish gold investors think the precious metal is on a long-term uptrend due to measures by govs & central banks to help stabilize economies hurt by COVID-19.  Investors also were watching developments around additional funding from the gov to help Americans who have lost jobs due to the deadly pandemic, after Congressional negotiations failed to reach an agreement on aid last week & Trump on Sat signed exec orders that aim to pause the collection of payroll taxes, provide help on rent, assist with student-loan payments & extend a portion of additional unemployment benefits that had lapsed at the end of last month.

Gold ends higher as China-U.S. tensions seen escalating

Oil futures ended higher, getting a lift from optimistic remarks about demand from the chief exec of the world's largest oil company & positive data out of China.  West Texas Intermediate crude for Sep rose 72¢ (1.8%) to close at $41.94 a barrel while the global benchmark Oct Brent crude rose 59¢ (1.3%) to finish at $44.99 a barrel.  Saudi Aramco CEO Amin Nasser over the weekend said there had been a “partial recovery” in demand, & lauded a strong rebound in crude appetite in major markets, including what he described as a return to nearly pre-COVID-19 levels of demand for gasoline & diesel fuel in China, the world;s biggest energy consumer.  The majority state-owned company’s net income plunged 50% in H1.

Oil ends higher, lifted by Saudi Aramco’s demand optimism, China data

This was an up day for stocks although tech stocks dragged down NAZ on growing trade tensions with China.  That does not look like they will be settled soon.  As expected, the US economy has had big recovery numbers off depression low levels.  Going forward the recovery will probably come in smaller steps with all the damage that has been.  Healing will take time.  Demand for gold & silver is substantial as a safe haven hedge.  The news on coronavirus seems to be getting better.  Graphs for NY show what the flattening curve should look like with the daily number of deaths for the last 2 months largely in single digits.  Data from the southern belt is looking better.  The number of new cases & deaths are improving but that is coming in small steps & continues to be choppy.  Hopefully those numbers will decline in the coming weeks.  And the work on new virus vaccines is very promising.  That is what's keeping investors buying stocks during these trying times.

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