Markets struggle to climb higher after a weak jobs report

Dow lost 33, advancers slightly ahead of decliners & NAZ fell 21.  The MLP index added 3 to 140 & the REIT index was off 2 to the 368s.  Junk bond funds crawled higher & Treasuries were sold.  Oil climbed back to the 45s & gold rose 11 to 1830.

AMJ (Alerian MLP index tracking fund)

CL=F Crude Oil 44.91 +0.36 +0.8%

GC=F Gold  1,828.50 +9.60 +0.5%

 

 

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Pres-elect Biden said he will not immediately remove the Trump administration's tariffs on Chinese exports.  Instead, Biden said upon assuming office he plans to review the phase one trade deal that Pres Trump inked with China nearly one year ago.  The deal, signed at the beginning of Jan, requires China to purchase some $200B in additional US goods over the course of 2 years – a commitment that Beijing is nowhere close to meeting.  "I'm not going to make any immediate moves, and the same applies to the tariffs," Biden said.  "I’m not going to prejudice my options.”  Relations with China deteriorated under Trump, who made it a campaign priority to shrink the trade disparities between the US & its allies.  For nearly 2 years, the world's 2 largest economies engaged in a tit-for-tat trade war until Trump & Chinese Pres Xi Jinping signed a partial trade deal in Jan.  Under the agreement, the White House left in place a 25% tariff on about $250B in Chinese products.  Biden said he wants to conduct a full review of the existing agreement with China before making any decisions & consult with America's traditional Asian & European allies to "develop a coherent strategy."  “The best China strategy, I think, is one which gets every one of our – or at least what used to be our – allies on the same page. It’s going to be a major priority for me in the opening weeks of my presidency to try to get us back on the same page with our allies," he said.  The pres-elect said his goal is to pursue trade policies that "actually produce progress on China's abusive practices," including intellectual property theft, dumping products, illegal subsidies to corps & forcing "tech transfers" from US companies to their Chinese counterparts.

Biden says he won't immediately remove Trump's tariffs on China

Private payrolls grew at their slowest pace since Jul amid a deceleration in large business hiring for Nov, ADP's monthly payrolls report said.  Companies hired 307K workers last month, well below the 475K estimate.  The total represented a decline from the upwardly revised 404K in Oct & is the smallest gain since the 216K increase in Jul.  The revision added 39K to the original estimate from Oct, making the Nov miss not as bad as it appears.  The Labor Depat on Fri is expected to report that the economy in Nov added 440K jobs, down from the 638K in Oct.  Private payrolls are estimated to grow by 590K with a decline of about 93K Census workers during the survey period subtracting from the headline number.  Most of the hiring in the ADP report came from firms with 50-499 workers, which added 139K jobs.  Small companies added 110K while big business trailed with just 58K after adding 116K in Oct.  “While November saw employment gains, the pace continues to slow,” said Ahu Yildirmaz, VP & co-head of the ADP Research Institute.  “Job growth remained positive across all industries and sizes.”  As usual, service industries provided the bulk of jobs, with 276K.  Leisure & hospitality, which has been battered during the pandemic, added 95K workers despite increasing restrictions placed on bars & restaurants as coronavirus cases continue to climb.

Hiring falls off in November to slowest rate since July

Main Street has been clamoring for a new round of federal relief, with 83% of small business owners in the latest CNBC|SurveyMonkey Small Business Confidence Survey saying they would support a new economic stimulus package to help individuals & businesses impacted by the coronavirus pandemic.  After months of stalled talks between Capitol Hill & the White House & as coronavirus cases reach daily new highs, Congress unveiled a new stimulus proposal that seems tailored to meet the dire needs of small businesses across the country, though it was quickly shot down by Senate Majority Leader Mitch McConnell.  In what would be a boon for small business owners, a key aspect of the new proposal is the allotment of $288B in small business aid & to renew this summer's Paycheck Protection Program (PPP), which the survey results indicate is the leading hope for small business owners struggling to keep the lights on even if their doors are still closed due to the virus.  40% of small business owners support an extension or expansion of the PPP, making this proposal the only one that receives more support among small business owners than among the general public.  The PPP provided funds to businesses that could prove they maintained their payrolls despite business closures & general drop in demand earlier this year.  Hiring & retaining workers is always a challenge for small business owners, but it has been especially so in the pandemic.  In the latest update of the quarterly tracking survey, conducted Nov 10-17 among more than 2K small business owners nationwide, about 1 in 5 say they've had to furlough or lay off some or all employees as a result of the coronavirus.  Of those who have furloughed or laid off staff members, a majority (58%) have already hired some or all of their workers back, 23% haven't yet but expect to hire all or some of their workers back & 19% expect those departures to be permanent.  Those layoffs have been particularly concentrated by industry, with, for example, 33% of small business owners in the accommodation & food services industry but just 10% of those in the real estate industry saying they’ve had to resort to layoffs & furloughs to deal with coronavirus-related business setbacks this year.

83% of small biz owners want another round of stimulus from Washington: Survey 

The ADP jobs report showing the economy is moving forward in smaller steps was not encouraging for investors.  Much of the service industry, a major part of the economy, is still hurting.  But the work with new vaccines is going well & the popular averages are close to record highs.

Dow Jones Industrials

 

Markets pare gains after McConnell casts doubts about new stimulus bill

Dow gained 185, advancers over decliners 5-2 & NAZ went up 156.  The MLP index added 1+ to 137 & the REIT index climbed 4+ to 371.  Junk bond funds rose with stocks & Treasuries continued weak.  Oil slid back to the 44s & gold surged 37 to the 1818 (more on both below).

AMJ (Alerian MLP Index tracking fund)

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Hospital leaders in North Carolina & Ohio said they will soon be ready to distribute a coronavirus vaccine once emergency use authorization is granted by US regulators.  Atrium Health CEO Eugene Woods said the Charlotte-based health network is “locked and loaded” to combat the Covid-19 pandemic thru vaccinations.  “We have refrigeration units that can store up on Day One 300,000 vials,” Woods said.  “We also are training staff as we speak.”  2 coronavirus vaccines are awaiting clearance from the Food & Drug Administration (FDA), putting the complex logistics of distributing them into sharp focus.  “We are ready. We are anxious for the vaccine,” OhioHealth CEO Dr Stephen Markovich said alongside Woods in the same segment. OhioHealth, a 12-hospital system based in Columbus, is operating 2 of the state's 10 prepositioning sites for the vaccine.  The state health dept chose the locations based on a number of factors, including geography & access to ultra-cold storage freezers.  “We’re working on the protocols, working through the triaging of people, and it’s going to be an exciting time. It’s really, hopefully, going to be the beginning of the end” of the pandemic, Markovich said.  “It won’t be easy. It’s not going to be fast. It’s going to be complicated, but I really think it’s going to be an exciting time.”  The FDA is likely to authorize a vaccine for limited use at first & shipments could start before the end of the year.  A Centers for Disease Control & Prevention panel intends to vote Tues on who should receive the vaccine first.  High-risk populations & health-care workers should be the highest priorities, public health officials & medical experts have said.

‘We are ready’ — hospitals are prepared to receive Covid vaccines in a few weeks

Fewer holiday shoppers bought gifts during the five-day period from Black Friday to Cyber Monday & those who did spent less as discounts started early this year, according to the National Retail Federation (NRF).  The retail trade group said about 186M shoppers bought holiday gifts, food or decorations from Thanksgiving to Cyber Monday.  That's less than the 189M shoppers who bought items during that period last year, but higher than the 166M who shopped in 2018.  Over the weekend, average spending on gifts, decorations & food was $312 down, about $50 from last year.  NRF Pres Matt Shay said shoppers concentrated less of their shopping during the weekend since many began buying items in Oct.  Yet he said Americans are still enthusiastic about celebrating the season & indicated that they have half of their shopping to finish.  “We have seen that pretty much whatever segment, whatever brand, one consistent theme is that consumers have gotten a head start on holiday shopping,” Shay said.  This year, online shopping played a more important role for retailers during Black Friday weekend.  Shay said about 57% of holiday shoppers indicated they plan to shop more online because of the pandemic.  Those new habits cut across consumers of all ages & backgrounds, he added.  “As the coronavirus cases have spiked across the country over the past few weeks, we continue to see consumers prioritize their personal health and safety as well as public health and the health of the communities in which they live and work,” Shay said.  “They continue to adjust their shopping behavior online to avoid large crowds.”  The number of shoppers who bought items online only during the weekend increased by 44% to 96M shoppers.

Black Friday weekend spending drops as season starts early, trade group says

Oil futures fell with US prices settling at their lowest in just over a week as OPEC & their allies postponed a decision on output cuts to Thurs.  Jan West Texas Intermediate crude fell 79¢ (1.7%) to settle at $44.55 a barrel, the lowest front-month finish since Nov 23,

Oil futures fall to lowest finish in over a week

Gold futures bounced off a 5-month low to log the sharpest one-day gain in more than 3 weeks, buoyed by a sharp decline in the $.  Prices also got a boost from light ISM data.  The Institute for Supply Management said its US manufacturing index fell to 57.5% in Nov from a 21-month high of 59.3% in the prior month.  Feb gold rose $38 (2.1%) to settle at $1818 an ounce.  That was the largest single-session $ & percentage gain for a most-active contract since Nov 5.  Prices had declined by 0.4% yesterday to $1780, marking the lowest settlement since Jul 1.  They logged a 5.6% decline in Nov.  Some dealers say that a “technical breakdown” of gold prices that had come on the back of progress toward a COVID-19 vaccine has run its course & could pave the way for a reassertion of bullish momentum in the commodity.

Gold prices log biggest daily jump in over 3 weeks

Senate Majority Leader Mitch McConnell rejected a proposed bipartisan stimulus package amid months of congressional inaction on curbing the economic damage from the outbreak.  McConnell, who has supported about $500B in new aid spending, said he wants to pass what he called a “targeted relief bill” this year.  McConnell said he spoke to White House officials about what Pres Trump would sign into law.  He plans to offer potential solutions to GOP senators & get their feedback.  “We just don’t have time to waste time,” he said in response to the $908B plan put together by bipartisan members of the GOP-controlled Senate & Dem-held House.  He said a must-pass spending bill & pandemic relief provisions will “all likely come in one package.”  Congress needs to approve funding legislation by Dec 11 to avoid a gov shutdown.  The framework of the bipartisan relief bill released yesterday includes $288B in small business aid such as Paycheck Protection Program loans, $160B in state & local gov relief & $180B to fund a $300 per week supplemental unemployment benefit thru Mar.  It would put $16B into vaccine distribution, testing & contact tracing, funnel $82B into education & put $45B into transportation.  It would allocate funds for rental assistance, child care & broadband.  The proposal would not include another direct payment to most Americans. It also would offer temporary federal protection from coronavirus-related lawsuits — a provision Dems have opposed — while states determine their own laws.

McConnell shoots down bipartisan $900 billion coronavirus stimulus plan as stalemate drags on

The US economy will continue to expand but at a painstakingly incremental rate until the coronavirus pandemic is under control, said San Francisco Fed Pres Mary Daly.  “I am assuming a slow grinding recovery persists until we have the virus fully behind us — which is predicated on a vaccine that is widely available and distributed,” Daly said.  Some economists are concerned there could be another economic contraction in coming months.  But Daly said she only thought there would be a modest slowing as growth plateaued due to the resurgence of the coronavirus in recent weeks.  Cautious optimism in the stock market that the economy will be past the coronavirus by the middle of 2021 is a positive sign, but Daly said she's keeping her eye on the current state of employment & inflation.  “I’m just very interested in attending to the economy we have, while we wait for the economy of the future,” she said.  Daly thought Fed policy was in a good place.  The Fed has cut its benchmark interest rate to zero and is buying $120B each month of Treasuries & mortgage-related assets to support financial markets & bolster growth.  Some analysts think the Fed will tweak its bond-buying to weight it toward more longer-dated debt.

Fed’s Daly sees ‘slow grinding recovery’ until the coronavirus is fully behind us

After hope for a stimulus bill coming from those guys in DC, doubts just returned.  Time is running out as the yearend approaches   However others are getting ready to handle the Ms of vaccine doses which should be available soon.  Investors remain optimimstic, although that cooled in the last hour of trading.

Dow Jones Industrials

Markets begin the new month with a rally, hoping for a new relief bill

Dow advanced 368 to go over 30K & a new record, advancers over decliners 3-1 & NAZ gained 119 to another record.  The MLP index added 3+ to 139 & the REIT index went up 5 to 371.  Junk bond funds rose in price & Treasuries were sold while stocks were being pruchased.  Oil fell 1 to the 44s & gold jumped 33 to 1813.

AMJ (Alerian MLP index tracking fund)

CL=F Crude Oil 44.73    -0.61  -1.4%

GC=F Gold     1,810.80 +29.90 +1.7%

 

 

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Treasury Secretary Steve Mnuchin touted continued economic growth as the country recovers from being shut down earlier this year due to the coronavirus pandemic while warning that new restrictive measures are impeding that progress.  Mnuchin is testifying before the Senate Banking, Housing & Urban Affairs Committee to discuss a quarterly report on the CARES Act, which he said has helped curb unemployment, which spiked at the height of the pandemic.  “The historic, bipartisan CARES Act provided the economic relief critical to supporting our robust recovery,” Mnuchin said.  "Additional economic shutdowns, however, continue to impair this remarkable progress and cause great harm to American businesses and workers.”  Mnuchin said his prediction for a strong 3rd qtr came true, as the US saw GDP growth at an annual rate of 33.1%.  He recognized that “there is more work to be done” & suggested the best approach would be a limited new relief bill in conjunction with the nearly ½B $s remaining that was appropriated for the CARES Act.  “Based on recent economic data, I continue to believe that a targeted fiscal package is the most appropriate federal response,” he added.  “I strongly encourage Congress to use the $455 billion in unused funds from the CARES Act to pass an additional bill with bipartisan support. The administration is standing ready to support Congress in this effort to help American workers and small businesses that continue to struggle with the impact of COVID-19.”  Congress adjourns for the year on Dec 21, but in remarks on the Senate floor, Senate Majority Leader Mitch McConnell, expressed confidence that this is enough time for lawmakers to work thru their differences & pass a bill.

Mnuchin touts economic growth, warns of dangers of new COVID restrictions

Federal Reserve Chair Jerome Powell warned the pace of the US economic recovery from the coronavirus pandemic has moderated in recent months & said the outlook remains "extraordinarily uncertain" amid a recent surge in infections across the country.  In congressional testimony, Powell called the rise in COVID-19 cases "concerning," & said it could "prove challenging for the next few months."  "As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to keep the virus in check," Powell added in remarks for the Senate Finance Committee.  Powell said recent news of coronavirus vaccines are "very positive," but said he expects "significant challenges and uncertainties including timing, production and distribution, and efficacy across different groups."  "It remains difficult to assess the timing and scope of the economic implications of these developments with any degree of confidence," he continued.  He reiterated that the central bank remains prepared to utilize all of its tools to prop up the economy.  Over the past 4 months, the Fed slashed interest rates to near zero – where it has pledged to hold them for years to come – & injected nearly $2.8T into the economy, an unprecedented amount.  The Fed's balance sheet has surged to nearly $7T.

Powell, warning of moderating economic recovery, says outlook is 'extraordinarily uncertain'

Bipartisan lawmakers unveiled a coronavirus stimulus package after months of congressional inaction on curbing the economic damage from the outbreak.  The $908B proposal includes $288B in small business aid such as Paycheck Protection Program loans, $160B in state & local gov relief & $180B for supplemental unemployment insurance, according to a draft.  It would put $16B into vaccine distribution, testing & contact tracing, funnel $82B into education & allocate funds for rental assistance, child care & broadband.  The proposal would not include another direct payment to most Americans.  It also would offer temporary federal protection from coronavirus-related lawsuits — a provision Dems have opposed — while states determine their own laws.  Dem Sen Mark Warner, a member of the congressional group that has discussed a new relief plan, earlier called it an “interim package” to provide support until Pres-elect Biden takes office in Jan.  “If there’s one thing I’m hearing uniformly it’s: ‘Congress, do not leave town for the holidays leaving the country and the economy adrift with all these initial CARES [Act] programs running out,’” Warner said.  It is unclear whether congressional leaders will embrace the proposal or if it will lead to a breakthrough before the end of the year, when many programs expire.  Dems have opposed liability protections & pushed for a $600 per week supplemental jobless benefit, while the GOP has pushed against new state & local aid.  Still, it underscored the rumbling among rank-&-file lawmakers to pass more aid even as party leaders fail to break a months long impasse.

Lawmakers unveil bipartisan $900 billion coronavirus stimulus package as stalemate drags on

Enthusiasm by investors remains high & they are hoping another attempt to pass a relief bill along with advances on the coronavirus vaccines will bring help to a struggling economy.  Meanwhile negative thinking investors are buying gold.

Dow Jones Industrials