Dow dropped 308 (due to selling in the last 2 hours), decliners over advancers more than 3-1 & NAZ fell 149. The MLP index lost 6 to 161 (along with selling in oil) & the REIT index was down 1+ to the 394s. Junk bond funds continued mixed & Treasuries rose, taking the yield on the 10 year Treasury up 4 basis points to 1.64%. Oil plunged almost 4 to the 57s & gold declined 12 to 1725 (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)
Sales of newly built homes fell more than expected in Feb, as builders faced higher costs & persistent delays, &, consequently, raised their prices. Taken together with rising mortgage rates during the month, affordability for buyers took a major hit. The headline sales numbers were disappointing, with an 18% monthly drop to the slowest pace since last May, according to the US Census. But some of the technical numbers are more telling of where builders expect their business to go. “Though buyer traffic remains strong, some home building activity is being delayed due to material shortages,” said Chuck Fowke, chair of the National Association of Home Builders. “This is forcing builders and buyers to grapple with rising affordability issues, as soaring lumber prices have added more than $24,000 to the price of a new home.” Higher interest rates, supply shortages & rising material prices are weakening affordability, pushing the median price of a new home in Feb up just over 5% annually. There are other, more telling data points, as well. The number of homes sold before construction began rose 20% year over year in Feb, according to the Census Bureau. This shows that, in the context of the broader housing market, builders are seeing increased delays in getting their products to their buyers. Some of the big public builders have said that they are delaying construction, so as not to be building while material costs are at their latest peaks. Likewise, the number of homes for sale that haven't started construction was up 64% in Feb. This shows that builders are seeing demand in front of them & expect sales to rise, so they are offering more unbuilt homes. It also shows how lean their current supply of built homes is. In the latest builder sentiment survey from the NAHB, the component measuring current sales conditions fell, buyer traffic remained high & steady, & sales expectations over the next 6 months rose.
New home sales take a hit as builders grapple with big delays and bigger costs
Gold futures settled with a loss, as strength in the $ contributed to the metal’s price settlement at the lowest in more than a week. Gold investors showed little reaction to the first of 2 days of congressional testimony from Federal Reserve Chair Jerome Powell & Treasury Secretary Janet Yellen on the health of the US economy as America wrestles with the impact of the COVID-19 pandemic. Gold for Apr shed $13 (0.8%) to settle at $1725 an ounce, following a 0.2% decline yesterday. That was the lowest settlement since Mar 12 for a most-active contract. Optimism about the speed of the recovery from the pandemic & the possibility of rising inflation have left investors skeptical about the Fed's plans for interest rates & bond purchases. That has made Powell & Yellen's testimony a more highly anticipated event as investors reassess their expectations for a fast & widespread global recovery. During testimony, Powell said he doesn't believe any surge in inflation this year will be large or persistent. He also said the Fed has the tools to deal with higher inflation.
Gold settles at lowest in over a week as dollar firms, investors weigh Powell-Yellen testimony
Dems may soon be raising taxes on the rich, as lawmakers pivot to priorities beyond pandemic relief. A change in the way gov taxes the wealth, capital gains & estates of the super wealthy may be on the table, according to tax experts. The White House & congressional Dems have eyed higher taxes to raise Ts of $s in additional revenue to, for example, improve the country's infrastructure & combat climate change. Pres Biden & advisors are considering up to $3T in new spending. There's a chance sweeping changes to the tax code may not come to pass, especially if they require Rep backing. But the richest Americans can expect at least some kind of tax hike. At its core, Biden's tax plan centers on raising taxes for Americans earning more than $400K (it’s still unclear whether that's for families or per individual). The plan would boost the top income tax rate & tax more of their income for Social Security, for example. And Biden would increase levies more for millionaires & billionaires. For example, he wants to tax long-term capital gains at the same rate as wages for households making more than $1M a year. Wealthy Americans currently pay a 37% rate on wages & a lower 20% rate on investment earnings (plus a 3.8% surtax). The Biden tax plan would up the capital gains tax for millionaires to 39.6% — the same rate at which the pres would tax job income for high earners. Biden has also proposed changing rules around wealth transfers, like with the estate & gift tax.
Wealth tax, estate tax, capital gains: Here’s how Democrats want to tax the super rich
Pfizer (PFE) said it has begun an early stage clinical trial of an experimental oral antiviral drug for Covid-19. The
company said the phase one trial of the drug – called
PF-07321332 – is being conducted in the US. The drug is part
of a class of medicines called protease inhibitors & works by
inhibiting an enzyme that the virus needs to replicate in human cells. Protease inhibitors are used to treat other viral pathogens such as HIV & hepatitis C. “Tackling
the COVID-19 pandemic requires both prevention via vaccine and targeted
treatment for those who contract the virus,” chief scientific
officer, Mikael Dolsten, said. “Given the way that
SARS-CoV-2 is mutating and the continued global impact of COVID-19, it
appears likely that it will be critical to have access to therapeutic
options both now and beyond the pandemic.” The trial comes as
PFE is also working on an intravenously administered protease
inhibitor, known as PF-07304814. That drug is currently in a phase 1b
clinical trial in patients hospitalized with Covid-19. The company said preclinical studies have shown the oral drug, the
first protease inhibitor taken by mouth for Covid-19 to be evaluated in
clinical studies, demonstrates “potent” antiviral activity against the
virus. Because
it is taken by mouth, the drug could be used outside of hospitals for
people who are newly infected with the virus. Researchers hope the
medication will keep the disease from progressing & keep people out of
the hospital. The stock fell 60¢.
If you would like to learn more about PFE, click on this link:
club.ino.com/trend/analysis/stock/PFE?a_aid=CD3289&a_bid=6ae5b6f7
Pfizer begins early stage clinical trial testing oral antiviral drug for Covid
Oil prices drop 6% to enter correction territory
Gloomy housing data along with the prospect of higher taxes in the
economy brought on sellers in late day trading (with a little bargain hunting the last few minutes of trading). Oil is now in
correction territory following a major rally in the last year. Higher interest rates is another dark cloud that won't go away. The Dow is back to where it was about Mar 11.
Dow Jones Industrials
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