Dow gained 73 (above session lows in the last our of trading), advancers over decliners 2-1 & NAZ crawled up 19. The MLP index slid back to the 137s & the REIT index was steady n the 367s. Junk bond funds inched higher & Treasuries were little changed in price. Oil climbed higher in a choppy session & gold rose 11 to 1894 (more on both below).
AMJ (Alerian MLP Index tracking fund)
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The number of Americans who signed contracts to buy homes declined last month, but was still a record high for Nov when a seasonal slowdown traditionally seeps into the real estate market. The National Association of Realtors said that its index of pending sales fell 2.6% to 125.7 in Nov, down from Oct's revised reading of 129.1. An index of 100 represents the level of contract activity in 2001. It was the 3rd straight monthly decline. Contract signings are a barometer of finalized purchases over the next 2 months, so the report may preview what could be a strong winter for the housing market. Contract signings are still 16.4% ahead of where they were last year, thanks to a big summer rebound that followed a spring washout due to the coronavirus outbreak. Contract signings in all 4 regions — the Northeast, South, Midwest & West — declined from Oct to Nov but are up double-digits year-over-year thru last month. Historically low-interest rates are drawing prospective buyers into the market, but home prices have risen significantly the past year as supply remains near all-time lows. Mortgage finance giant Freddie Mac reported last week that the average rate on the 30-year fixed-rate home loan remained at a record low 2.66%. US home prices jumped 7.9% in Oct, the most 2014, according to S&P CoreLogic Case-Shiller 20-city home price index.
Home contract signings hit record levels
Efforts to boost the direct payments in the year-& coronavirus relief bill to $2000 stalled as Senate Rep leaders & Dems appeared divided over whether to send more relief. The Dem-held House has approved a stand-alone bill to boost the checks to $2000 from $600, as 44 Reps prodded by Pres Trump joined nearly all Dems in backing the measure. The GOP-controlled Senate has showed less of an appetite for passing the checks without attaching other Trump priorities that Dems consider toxic — & would sink any legislation. At the same time, the Treasury Dept started to send out the payments of up to $600 yesterday. If Congress can overcome the thorny political dynamics to increase the deposits to $2000, the gov would later add on to the cash it already distributed. House Speaker Nancy Pelosi urged the Senate to approve the stand-alone bill before the new Congress starts at noon on Sun. “I do hope that in the days ahead — we only have a few days left in the session — that they will see the light and understand the suffering that is going on in this country,” she said of Reps. Meanwhile, Sen Pat Toomey has said he will move to block a potential vote on the $2000 payments. Delays could blow up any effort to pass legislation during the current session. “It doesn’t make sense to have these universal payments. Any relief should be targeted,” he said.
Efforts for $2,000 stimulus checks stall in the Senate
Officials from the Centers for Disease Control & Prevention said that a new strain of Covid-19 now circulating in the US could further stress hospitals that are already overwhelmed with coronavirus patients. Colorado health officials announced that they detected the first known case of the new & more infectious strain of the virus that was first discovered in the UK. A 2nd separate new strain first identified in South Africa may also already be circulating in the US as well, CDC officials said. “Because the variants spread more rapidly, they could lead to more cases and put even more strain on our already heavily burdened health-care systems,” Dr Henry Walke, the agency's Covid incident manager, said. Walke said the available data indicates that the new variant spreads “more easily and quickly than other strains,” but it does not appear to cause more severe disease or increased risk of death. He added that “experts believe our current vaccines will be effective against” both of the new strains. Scientists are still studying how the new strain responds to Covid-19 treatments like monoclonal antibodies & convalescent plasma.
CDC says new Covid strain in U.S. could further stress ‘already heavily burdened’ hospitals
The US trade deficit in goods climbed 5.5% in Nov to a new record high, reflecting weaker US exports tied to the coronavirus pandemic. The goods trade gap widened to $84.8B in Nov from a revised $80.4B in Oct, the gov said. Imports of goods such as consumer electronics & industrial supplies rose 2.6% to $212B in Nov. Goods imports were up 5.5% compared with a year earlier. Exports rose less than 1% to $127B, however, & they are down 6.6% compared with one year ago. The widening trade deficit largely stems from the different pace of economic recovery in the US & many of its major trading partners. The American economy has rebounded more strongly, & consumer spending has mostly returned to normal. As a result, the US is actually importing more foreign-made goods than it was a year ago. Exports, on the other hand, have lagged because certain trade partners' economies have not recovered. A fuller report on the US trade deficit that includes services such as tourism & finance will be issued next week. The US has usually run a strong surplus in services because of tourism, but services have suffered a blow during the pandemic. Large US trade deficits have persisted for years & aren't going away anytime soon despite a major effort by the outgoing Trump administration to lower the gap. Exports are likely to improve, on the other hand, as the coronavirus pandemic fades, other countries catch up economically & foreign customers can afford to buy more American-made goods.
U.S. trade deficit in goods jumps 5.5% in November to record high
Futures for gold finished solidly higher as precious metals traded against a backdrop of a weaker $ steady benchmark government bond yields. The competing factors for bullion—$ weakness that has provided recent support & rising debt yields that can undercut appetite for haven metals—has gold values hemmed to a relatively tight $1,800-$1,900 range in Dec. hThe $ was trading, off 0.3%, at 89.707, representing its lowest level since Apr 2018. Gold for Feb traded $10 (0.6%) higher to settle at $1893 an ounce, following a tiny gain yesterday. Gold’s moves today inspired some bullish outlooks for the haven asset among those hoping that it will soon break out of its rangebound trade.
Gold end near $1,900 as U.S. dollar slips to over 2 1/2-year low
Oil futures ended higher after fluctuating between gains & losses in the wake of data showing a larger-than-expected drop in US crude inventories. West Texas Intermediate crude for Feb delivery rose 40¢ (0.8%) to close at $48.40 a barrel. Feb Brent crude , the global benchmark, gained 25¢ (0.5%) to settle at $51.34 a barrel. The Energy Information Administration (EIA) said crude stocks dropped by 6.1M barrels last week. The forecast called for crude stocks to fall by 3.8M barrels, while the American Petroleum Institute, yesterday had reportedly seen a 4.8M barrel drop. Markets will be closed Fri for the New Year's Day holiday. The EIA said gasoline inventories fell by 1.2M barrels, while distillate inventories rose 3.1M barrels. Analysts had expected gasoline inventories to show a rise of 2.3M barrels & distillate stocks to rise by 1.3M barrels.
Oil ends higher in choppy trade after larger-than-expected drop in U.S. crude inventories
More positive news on the vaccine front helped buoy sentiment after AstraZeneca’s (AZN) COVID-19 vaccine became the 2nd inoculation to be authorized in the UK. However negative news brought out sellers in the PM & they erased much of the advance in early trading. Negotiations on the stimulus bill are expected to drag on thru tomorrow night, & maybe later. Dow squeaked out a record while NAZ is close to its record close.
Dow Jones Industrials
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