Dow fell 44, decliners slightly ahead of advancers & NAZ gained 63 (another record. The MLP index fell 1+ to the 148s & the REIT index was about even near 371. Junk bond funds edged higher & Treasuries continued flattish in trading. Oil inched higher in the 47s & gold added 11 to 1866 (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 Federal Reserve said during its final meeting of a turbulent year that the coronavirus pandemic continues to dictate the course of the US economy & reiterated its pledge to hold interest rates near zero & act as needed to aid the nation's recovery. The central bank, as widely expected, held the benchmark federal funds rate at 0-0.25%, where it has been since mid-Mar. Updated guidance shows that Fed officials expect rates to remain near 0 thru 2023. Officials also changed their projections to reflect a smaller decline in the nation's GDP & a lower unemployment rate of 5% next year. The economic outlook has changed drastically since policymakers met at the beginning of Nov with the approval of one COVID-19 vaccine that's already being administered across the country & optimism rising that Congress will pass another round of emergency aid before the end of the year. At the same time, coronavirus infections are surging across the nation, prompting state & local govs to issue new lockdown measures. The meeting caps a volatile year for the economy & the Fed, which sprang into action at the beginning of Mar to prevent an economic collapse, slashing interest rates, launching a dozen lending facilities to support the credit market & injecting nearly $2.8T into the economy, an unprecedented amount.
Fed holds rates steady, expects to remain near zero through 2023
Congressional leaders are closing in on a long-awaited coronavirus relief bill that could include a 2nd round of direct payments to Ms of Americans still reeling from the pandemic-induced recession. The measure under discussion, which costs about $900B, is expected to exclude 2 of the most contentious issues: funding for state & local govs & a liability shield for businesses against coronavirus-related lawsuits. But the 4 leaders are also discussing adding another stimulus check to the package. It's unclear whether the payments would match the size of the checks in the Mar CARES Act, which sent up to $1200 to adults earning less than $99K & included $500 for dependents under the age of 17. The Trump administration previously proposed sending $600 stimulus checks as a way to placate deficit-weary Reps. House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer & House Minority Leader Kevin McCarthy met multiple times today to discuss a relief package & were expected to continue negotiations. "We made major headway for hammering out a targeted relief package," McConnell said today on the Senate floor. Schumer also said that lawmakers are close to striking a deal, but said his party would push for another aid package next year when Pres-elect Joe Biden is sworn into office. "It's not a done deal yet," Schumer said today. "But we are very close. For Democrats, this has always been about getting the American people the relief they need." Pres Trump has been a vocal supporter of sending a 2nd stimulus check to Americans & has received the backing from lawmakers across the political aisle, including Sens Bernie Sanders & Josh Hawley. Both senators had threatened to use the Fri gov funding deadline to try to force a vote on the stimulus checks. The bill is also expected to include an extension of boosted federal unemployment benefits — though it will likely fall short of the $600-a-week payments that expired at the end of Jul — as well as another tranche of funding for small businesses. Other components of the deal include funding for vaccine distribution, education, transportation & health care.
Congress closing in on $900B relief deal that could include stimulus check
Most small-business owners in the US believe the worst of the coronavirus pandemic is still ahead of them, with ½ saying their operations would permanently close within a year unless the business environment improves, according to the US Chamber of Commerce. A new Chamber-MetLife poll of small businesses taken from Oct 30-Nov 10 showed that 74% of the owners said they need further gov assistance to weather the pandemic. That percentage rises to 81% for minority-owned businesses. The quarterly poll found that the 62% of small-business owners fear that the worst is still to come with COVID-19’s economic impact. Only 40% said they believe their small businesses can operate indefinitely during the current business environment. “We must ensure small businesses across the country receive the assistance they need from the federal government,” said Neil Bradley, the Chamber's chief policy officer. “Not passing the bipartisan compromise for temporary and targeted relief risks the permanent loss of tens of thousands of small businesses, financial hardship for Ms of Americans, and unnecessary delays in combating the pandemic.” Bradley said the quarterly survey found that 14% of small businesses are currently planning to cut staff, up from 9% in Jul & Sep. Staff reduction plans are back up to the 13% level that the survey saw in Apr during the pandemic’s first peak, he said.
Most small business owners feel the worst is yet to come in pandemic
Gold futures settled higher for a 2nd straight session, as investors focused progress toward another fiscal stimulus package. Prices for the precious metal then moved lower in electronic trading after the Federal Reserve said it would maintain asset purchases at current levels. After gold futures settled for the session, the Fed announced it would buy at least $80B per month of Treasury bonds & $40B of agency mortgage-backed securities “until substantial forward progress has been made toward the FOMC’s maximum employment and price stability goals.” The phrase added new forward guidance for the market, but the central bank did not change its focus to buy more longer-dated paper as some economists had predicted. Feb gold was at $1851 an ounce in electronic trading & ended today's session at $1859 an ounce, up $3. Prices today marked the highest finish for a most-active contract in a week. Meanwhile, over the past 24 hours, a quartet of key lawmakers from both parties met face-to-face to hammer out a coronavirus aid package, though the negotiations showed few clear signs of progress. US economic data today was downbeat, offering support for haven gold. A report on US retail sales showed a drop of 1.1% in Nov. A reading for Oct was lowered as the resurgence of coronavirus cases took its toll on consumer activity. Separately, a pair of surveys of US businesses added to mounting evidence that the economy is slowing. The IHS Markit US manufacturing PMI dipped to 56.5 in Dec, from 56.7 & the IHS Markit US services PMI declined to 55.3 this month from 58.4. Meanwhile, European Commission Pres Ursula von der Leyen said that UK & EU negotiators had “found a way forward on most issues” that remained the major stumbling blocks in their talks about a trade deal. Her comments lifted the £ to its highest level in 2½ years.
Gold settles higher, then falls as Fed keeps size of bond purchases unchanged
Oil futures turned slightly higher, as hopes built for progress toward another economic relief package & data from the US gov revealed a weekly decline in crude inventories. The continued rollout of the US COVID-19 vaccine to help restore economic growth also provided support, but recent forecasts for weaker demand limited oil’s price rise. Efforts in the US continued toward another round of economic relief as congressional leaders met today. A 2nd round of stimulus checks, similar but smaller than the $1200 ones doled out to most Americans in Mar, are a part of the emerging deal, according to Sen John Thune, the 2nd-ranking Rep in the Senate. West Texas Intermediate crude for Jan edged up by 20¢ (0.4%) to settle at $47.82 a barrel. Feb Brent crude, the global benchmark, added 32¢ (0.6%( at $51.08 a barrel. Both benchmarks marked another finish at their highest in more than 9 months. The IEA cut its forecast for a 2021 recovery in demand by 170K barrels a day to 5.7M barrels a day. Among the bullish factors for oil, the Energy Information Administration (EIA) reported that US crfode ionvesntories fell 3.1M barrels last week. The EIA data also showed crude stocks at the Cushing, Okla, storage hub edged up by 200K barrels for the week.
Oil prices end higher on stimulus hopes, EIA supply decline, but demand outlook remains dim
The Federal Reserve said the US unemployment rate would fall faster in 2021 than it previously believed, but it stuck to a cautious forecast for the broader US economic recovery. A few months ago, the Fed had estimated the unemployment rate would decline to 5.5% in 2021. The official unemployment rate slid to a new pandemic low of 6.7% in Nov & has declined a lot faster than expected, but economists also say it likely underestimates the true number of jobless Americans. More than 4M people have dropped out of the labor force during the pandemic, for instance,& they aren't counted in the unemployment rate. The Fed's outlook for unemployment also suggests the central bank thinks the damage from the latest — & biggest — coronavirus outbreak won't do lasting damage to the labor market. Layoffs appear to have risen in the past month & companies have scaled back hiring plans to cope with new gov restrictions & a decline in consumer spending. The Fed slightly raised its forecast for economic growth next year to 4.2% from 4%, indicating continued caution on the part of central bank officials as they wait to see how effective the new vaccines for the coronavirus perform which began rolling out in the past week. By 2023, the Fed expects the jobless rate to fall back to 3.7% & return close to pre-pandemic levels, showing the central bank thinks the economy will return to normal over the next several years. 5 members of the Fed's policy-setting board even think the bank will raise interest rates in 2023.
Fed predicts faster decline in unemployment in 2021, but sticks to cautious forecast for the U.S. economy
The Federal Reserve provided little excitement after its meeting, that was widely expected. Those guys in DC keep sputtering around with the relief package. The economic data continues to come out so-so with improvement coming in small steps Nothing new in DC is expected until Fri at the earliest. At least the popular stock averages remain at or close to record levels
Dow Jones Industrials
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