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Check this eBook out on Kindle amazon. The Author John R. Taylor, the World's Leading Precious Metals expert, predicted the Great Economic Crash, Published on December 6, 2019 (just 90 days before) the (Great Economic Crash) started in March 2020! If you want to survive the Great Great Economic Depression, read this Ebook!:
#ALTCOINGAZETTE.COM THE CASE FOR OWNING PHYSICAL PURE .999 SILVER BULLION @ $16.50 USD PER OUNCE: #.999 PURE SILVER BULLION
Quote from eBook: As of the writing of this eBook in December 2019, the U.S. stock markets are flying high and achieving “all-time” record high closing prices. The Dow Jones Industrial Average is now above 28,000 and the S&P 500 is above 3,100 and looks to be going higher still! Bubble time in the stock markets?
I guess most people think that just because the U.S. stock market is at “all-time” record high prices, that the economy is doing great, right? Didn’t people say the same thing about the economy in 1928? “Early 1929-A new age of prosperity for all!” “1927, everyone is getting rich in the stock market”! = Warning Sign? Does history repeat over and over again?
As of the writing of this eBook in December 2019, the price of .999 silver bullion in USD is tanking in a “Strong Downtrend”, while stock markets go higher and higher. Time to “Buy” the pure .999 silver bullion dip?
This eBook was worth $trillions in value if you had read this eBook, when it was published on December 6, 2019.
Mixed Finish On Wall Street As Worldwide Rally Takes A Pause
Wall Street tapped the brakes on its recent record-setting rally Friday with a mixed finish for the major stock indexes, though the S&P 500 still ended the week with its third weekly gain in four.
The benchmark index fell 0.3%, snapping a three-day winning streak, but notched a 1.9% gain for the week. The Nasdaq eked out another record high. So did the Russell 2000 index of smaller companies, which traders have been favoring amid expectations of stronger economic growth later this year.
The uneven finish for U.S. stock indexes followed a slide in global markets that began in Asia amid worries about resurgent coronavirus cases in China and weak economic data from Europe. In the United States, disappointing earnings reports from IBM and some other companies gave cover for investors to sell and book profits after big recent gains.
“The big picture is, it’s still a pretty friendly environment for stocks,” said David Lefkowitz, head of Americas equities at UBS Global Wealth Management. ”The pandemic will wind down, you’ll see a surge in corporate profits this year and the Fed made very clear they’re not going to take the punch bowl away anytime soon."
The S&P 500 slipped 11.60 points to 3,841.47. The index was coming off two straight all-time highs. The Dow Jones Industrial Average dropped 179.03 points, or 0.6%, to 30,996.98. The Nasdaq inched up 12.15 points, or 0.1%, to 13,543.06. The Russell 2000 added 27.34 points, or 1.3%, to 2,168.76.
Investors weighed another batch of company earnings reports Friday. The big theme in the early part of this earnings season is that most companies are handily beating Wall Street's profits expectations for the last three months of 2020, with banks and some other industries leading the way. About 13% of the companies in the S&P 500 have reported results so far.
“Earnings have been spectacular,” said David Lyon, global investment specialist at J.P. Morgan Private Bank.
Seagate Technology fell 4.7% despite joining that cavalcade of companies reporting better earnings than analysts expected. It also gave a forecast for revenue and profit in the current quarter that matched or topped Wall Street’s. Analysts said a lot of that optimism may have already been built into the stock’s price.
IBM dropped 9.9% for the market's sharpest loss after reporting weaker revenue for the last three months of 2020 than analysts had forecast. The tech giant’s revenue has been mostly shrinking for years. IBM nevertheless also reported a higher-than-expected profit.
Markets have been mostly rallying recently on hopes that COVID-19 vaccines will lead to a powerful economic recovery later this year as daily life gets closer to normal. Hopes are also high that Washington will deliver another dose of stimulus for the economy now that the White House and both houses of Congress are under single control of the Democrats.
President Joe Biden has proposed a $1.9 trillion plan to send $1,400 to most Americans and deliver other stimulus for the economy. But his party holds only the slimmest possible majority in the Senate, raising doubts about how much can be approved. Several Republicans have already voiced opposition to parts of the plan.
The coronavirus pandemic is also worsening and doing more damage to the economy by the day. In Europe, a survey of purchasing managers showed on Friday that activity in the manufacturing and services sectors shrank during January in the 19-country eurozone. The data suggests the eurozone’s economy may contract again this quarter.
In China, where the pandemic began in late 2019, the government has reimposed travel controls after outbreaks in Beijing and other cities. A spike in infections has authorities calling on the public to avoid travel during February’s Lunar New Year holiday, normally the year’s most important family event.
The U.S. economy has also been taking hits recently, with reports showing weakness in the job market and falling confidence among shoppers. But the data has been mixed.
One report on Friday showed the housing industry continues to be a bright spot for the economy. Sales of previously occupied homes were stronger last month than economists expected. A separate report from IHS Markit gave a preliminary reading on U.S. business activity for January that was also stronger than expected, indicating an acceleration in growth.
One major underpinning for the market seems to have little chance of going away soon: massive support from the Federal Reserve. The central bank is holding short-term interest rates at a record low and making other moves in hopes of boosting markets and the economy.
The yield on the 10-year Treasury note slipped to 1.08% from 1.09% late Thursday. It has been mostly climbing this month, up from roughly 0.90% at the start of the year, with expectations for increased government borrowing, economic growth and inflation.
A big question on Wall Street is how much more it can climb before criticism blares even louder that stock prices have grown too expensive relative to corporate profits.
So what causes Wall Street to have Record prices? Is it core earnings or Stimulus, QE? Is this 1919 all over again, ready for the roaring 1920's or is this "Party like it's 1999", or better yet January, 1929? You be the judge.
Record number of Technology stocks at all time high prices, with no earnings. Is this a stock market bubble? Current Shiller PE Ratio: 35.02 +0.48 (1.39%), Mean:16.78 Median:15.81 Min:4.78(Dec 1920) Max:44.19(Dec 1999). Not really adjusted for M1 Fred inflation? See M1 Fred Parabolic money supply chart below for inflation.
Current Shiller PE Ratio: 35.02 vs. party like it's Max:44.19(Dec 1999)? The Shiller PE Ratio has been higher? On Black Monday the Shiller PE Ratio was 30, then three years of stock market crash, 1929 - 1933.
Massive QE and Stimulus to cause huge inflation to a Max 44.19 bubble that burst in 2029, just like 1929?
Readers, what comes first: Inflation, Stagflation or Hyperinflation? .999 Silver Bullion .999 Gold Bullion and #Bitcoin #BTCUSD should be a good hedge against Inflation, Stagflation or Hyperinflation?
Crude Oil WTI is up with a Strong up trend, .999 Silver Bullion should follow? Crude Oil WTI up because industrial economy is strong or because of inflation?
So what do we have, 1999, 1929, or the beginning of the roaring 1920's all over again? Welcome to hyperinflation econometric depression nation?
Value stocks have the worst decade (2010 - 2020). Worse performing sector in S&P 500 is "Value" oil\energy sector vs Technology flying high with no earnings for most of tech stocks. Just a thought.
Shiller PE Ratio above. Is it truly "Inflation adjusted"?
FRED M1 has the printing press turbo booster on full throttle = Hyper stock market bubble? This doesn't add up, right. Since 2010ish to 2020, M1 value at 1,500 to current 5,500. So what is the percentage gain in FRED M1 from 2010ish to 2020, what 400ish%? Ok, I know my math sucks.
During the same time frame, Shiller PE Ratio goes from 15ish to a current 35ish. As my readers know, i am no financial expert. The Shiller PE Ratio vs FRED M1 ratios don't add up, or am I missing something, right? As they say, "The Devil is always in the details".
My best guess (assuming it's still a free country), is that it is, 1920ish, all over again (soon the Spanish Flu second and third wave will be over) and the roaring 2020's (1920's) are going to begin, everyone get rich in the stock market (thank goodness margin debt is limited to 50%), or its January 1929 all over again?
Wall Street Hits Records As Hopes Build For More Stimulus
Wall Street marked the dawn of President Joe Biden's administration with stocks rallying to record highs as hopes build that new leadership in Washington will mean more support for the struggling U.S. economy.
The S&P 500 rose 1.4%, topping its previous all-time high set earlier this month. The Dow Jones Industrial Average, Nasdaq composite and Russell 2000 index of smaller companies also notched record highs, powered by gains in technology, communications, health care and most other sectors.
Biden, now the nation's 46th president, has a flurry of executive actions at the ready. He has also pitched a plan to pump $1.9 trillion more into the struggling economy, hoping to act quickly as his Democratic party takes control of the White House and both houses of Congress.
The hope on Wall Street is that such stimulus will help carry the economy until later this year, when more widespread COVID-19 vaccinations get daily life closer to normal. Such hopes have helped stocks and Treasury yields rise, even as the worsening pandemic digs a deeper hole for the economy. Spiraling coronavirus counts and deaths have more workers applying for unemployment benefits and shoppers feeling less confident.
“Most of Wall Street is assuming that the second half (of 2021) is when we will see pent-up demand start to show up in the economy, and that will push economic indicators higher and will likely cause a ramp up in earnings projections," said Sam Stovall, chief investment strategist at CFRA.
The S&P 500 rose 52.94 points to 3,851.85. The Dow gained 257.86 points, or 0.8%, to 31,188.38. The Nasdaq climbed 260.07 points, or 2%, to 13,457.25. The Russell 2000 picked up 9.48 points, or 0.4%, to 2,160.62.
A better-than-expected start to earnings reporting season also helped lift the market Wednesday. Analysts came in with low expectations, forecasting the big companies in the S&P 500 will report a fourth straight drop in earnings per share because of the damage from the pandemic. But the vast majority of the earliest reports have managed to top forecasts.
Netflix jumped 16.9% for the S&P 500′s biggest gain after it said it ended last year with more than 200 million subscribers. It also said it made more in revenue during the end of 2020 than analysts expected, though its earnings fell short of forecasts. Business is good enough for the company that it says it likely doesn’t need to borrow anymore to cover its day-to-day operations.
In Washington, the Biden administration took control of the White House from Donald Trump, who pointed again on Wednesday to the stock market's level as validation of his work.
Trump's preferred measure is often the Dow Jones Industrial Average, even though the S&P 500 is much more important to most workers' 401(k) accounts. Under Trump, the Dow had an a annualized return of 11.8% from his inauguration until his last day in office, according to Ryan Detrick, chief market strategist for LPL Financial. That's better than any Republican president since Calvin Coolidge during the roaring 1920s, but it's not as good as the returns for Bill Clinton or Barack Obama.
Trump has said in the past that he should get credit for the stock market's gains following his election but before his inauguration. The market got a “Trump bump” then on anticipation of lower tax rates, less regulation on companies and faster economic growth. Much of that did come to fruition, but the COVID-19 pandemic and the government's response to it upended everything in 2020.
Gains for stocks have also been accelerating since Biden's election, before his inauguration, on enthusiasm about COVID-19 vaccines and hopes that he and Congress can deliver more stimulus for the economy. The bump for stocks between the most recent Election Day and Biden's inauguration is bigger than Trump's bump before his inauguration.
“The market is up more than 13% since Election Day," Stovall said, noting that since World War II, the S&P 500 has risen an average of 3.5% in the first 100 days of a Democratic president's administration, versus an average gain of 0.5% when a Republican was in the White House.
Janet Yellen , Biden’s nominee to be Treasury secretary, told the Senate Finance Committee during her confirmation hearing on Tuesday that the incoming administration would focus on winning quick passage of its $1.9 trillion plan.
“More must be done,” Yellen said. “Without further action, we risk a longer, more painful recession now — and long-term scarring of the economy later.”
Analysts have been expressing concerns about pricey stock values heading into the latest round of corporate earnings, but they look more reasonable amid the backdrop of historically low interest rates, said Solita Marcelli, chief investment officer, Americas, at UBS Global Wealth Management. The low rates, along with new stimulus and the continued rollout of vaccines, will likely help bolster markets and the recovery.
“We think that global growth is going to continue to pick up,” she said.
Companies will need to meet the market's expectations — including for a huge rebound in profit growth through 2021 — to validate the big runs for their stock prices during 2020, even as their profits plummeted. Stocks of several companies slipped on Wednesday, even though they reported stronger profits than expected. Procter & Gamble fell 1%, for example.
The yield on the 10-year Treasury rose to 1.09% from 1.07% late Tuesday.
Stocks Fall As Economic Pain Deepens, Rally Runs Out Of Gas
NEW YORK (AP) — Wall Street closed out its first losing week in three with another drop on Friday after reports showed the pandemic is deepening the hole for the economy, as Washington prepares to throw it another lifeline.
The S&P 500 fell 27.29, or 0.7%, to 3,768.25, with stocks of companies that most need a healthier economy taking some of the sharpest losses. The Dow Jones Industrial Average lost 177.26, or 0.6%, to 30,814.26, and the Nasdaq composite dropped 114.14, or 0.9%, to 12,998.50.
Treasury yields also dipped as reports showed shoppers held back on spending during the holidays and are feeling less confident, the latest in a litany of discouraging data on the economy.
Stocks have run out of steam since the S&P 500 set a record high a week ago amid optimism that COVID-19 vaccines and more stimulus from Washington will bring an economic recovery. The S&P 500 fell 1.5% over the week.
Friday offered the first chance for traders to act after President-elect Joe Biden unveiled details of a $1.9 trillion plan to prop up the economy. He called for $1,400 cash payments for most Americans, the extension of temporary benefits for laid-off workers and a push to get COVID-19 vaccines to more Americans. It certainly fit with investors’ expectation for a big and bold plan, but markets had already rallied powerfully in anticipation of it.
“To some extent, most of this optimism had been priced in, but the huge figures had also invited some contemplation as to whether the necessary bipartisan support will materialize for this huge sum,” Jingyi Pan of IG said in a commentary. “The market appears to be playing it safe,” she said.
Biden’s Democratic allies will have control of the House and Senate, but only by the slimmest of margins in the Senate. That could hinder the chances of the plan’s passage.
The urgency for providing such aid is ramping by the day. One report on Friday showed that sales at retailers sank by 0.7% in December, a crucial month for the industry. The reading was much worse than the 0.1% growth that economists were expecting, and it was the third straight month of weakness.
Other reports showed that a preliminary reading on consumer sentiment weakened more than economists expected, while inflation at the wholesale level remains low as the worsening pandemic keeps a lid on prices and economic activity. They follow a dismal report from Thursday showing that the pace of layoffs is accelerating across the country.
Falling bank stocks were some of the heaviest weights on the market, even though several of the industry's biggest names reported stronger profits for the end of 2020 than analysts expected. Wells Fargo slumped 7.8%, for example, and Citigroup dropped 6.9%.
While the overall results were good, “bank earnings didn't exactly wow anybody,” said J.J. Kinahan, chief strategist with TD Ameritrade.
Bank stocks had run up in prior weeks on expectations that a stronger economy later this year and higher interest rates would mean bigger profits from making loans.
Like banks, stocks of smaller companies also fell more than the rest of the market in a mirror image of recent weeks. Smaller companies are seen as benefiting more from a healthier economy and stimulus from Washington than their bigger rivals, in part because they tend to have smaller financial cushions.
The Russell 2000 index of small-cap stocks lost 32.15, or 1.5%, to 2,123.20.
Even with Friday's drops, ebullience about a brighter economic future because of vaccines is keeping stocks near records and Treasury yields close to their highest levels since last spring. The Russell 2000 remains 7.5% higher for 2021 so far, towering over the S&P 500′s 0.3% gain.
A big question for investors is what big stimulus for the economy from Washington would mean for interest rates.
“There are consequences to putting money into the system and the consequence is inflation," Kinahan said.
Treasury yields have been climbing on expectations that the government will borrow a lot more to pay for its stimulus, as well as rising forecasts for economic growth and inflation. The yield on the 10-year Treasury zoomed above 1% last week for the first time since last spring and briefly topped 1.18% this week.
That is raising worries about how much further interest rates can go before upsetting the stock market. Federal Reserve Chair Jerome Powell helped to calm some of those concerns on Thursday with comments that investors took as leaning toward lower rates for longer.
The yield on the 10-year Treasury dipped to 1.09% from 1.11% late Thursday.
In markets abroad, European stocks slumped, while Asian indexes were mixed.
Ok here is what we think here at the #Altcoingazette. Perspective and opinion only. So here in the U.S., we have the upcoming Inauguration of Joe Biden on Wednesday, January 20, 2021. We try to stay independent on politics. We have seen the global rise of populism. I remember the old days in my youth, when I couldn't tell the difference between right and left or left or right.
The politics spectrum is so divided today. You are either for us or against us. What team are you on, the Blue team or the Red team. One Nation indivisible with Liberty and Justice for all?
Don't forget bout PC (Not Personal Computer), Political Correctness. If an individual says the wrong thing today, forget it, you get Tar and Feathers.
I preference the old form of government of Monarchy: A monarchy is a form of government in which a person, the monarch, is head of state for life or until abdication. The political legitimacy and authority of the monarch may vary from purely symbolic, to restricted, to fully autocratic.
All this fussing and fighting on the globe. In a monarchy system, you have the Royals, elites and then everyone else.
In democratic forms of government "All Men are created equal"? (Gender Bias?) Everyone can have equality (as long as you have decent credit and a decent reputation, right)?
No one actually thinks that the equality B.S. is true?
Soon we will have UBI, Universal Basic Income and everyone will work for the state.
Another Brick In the Wall Lyrics
by Pink Floyd
Another Brick in the Wall Lyrics - Part 1 (Waters) 3:41
Daddy's flown across the ocean
Leaving just a memory
Snapshot in the family album
Daddy what else did you leave for me?
Daddy, what'd'ja leave behind for me?!?
All in all it was just a brick in the wall.
All in all it was all just bricks in the wall.
"You! Yes, you! Stand still laddy!
Another Brick in the Wall Lyrics - Part 2 (Waters) 3:56
We don't need no educationÂ
We dont need no thought control
No dark sarcasm in the classroom
Teachers leave them kids alone
Hey! Teachers! Leave them kids alone!
All in all it's just another brick in the wall.
All in all you're just another brick in the wall.
We don't need no education
We dont need no thought control
No dark sarcasm in the classroom
Teachers leave them kids alone
Hey! Teachers! Leave them kids alone!
All in all it's just another brick in the wall.
All in all you're just another brick in the wall.
"Wrong, Do it again!"
"If you don't eat yer meat, you can't have any pudding. How can you
have any pudding if you don't eat yer meat?"
"You! Yes, you behind the bikesheds, stand still laddy!"
Another Brick in the Wall Lyrics - Part 3 (Waters) 1:17
[Sound of many TV's coming on, all on different channels]
"The Bulls are already out there"
"This Roman Meal bakery thought you'd like to know."
I don't need no arms around me
And I dont need no drugs to calm me.
I have seen the writing on the wall.
Don't think I need anything at all.
No! Don't think I'll need anything at all.
All in all it was all just bricks in the wall.
All in all you were all just bricks in the wall.
Bring on the thought control laddy.
P.S> Remember, don't fart in the wrong direction...Big Brother (Deep State) is watching.
P.S.S. Is the stock market going to crash 50% - 80% post Inauguration, like it did in 2008 -2009, does history repete? Time to "Buy the Dip" after the big dip on 2021?
The 50% stock market dip in 2008 - 2009 was a Great time to purchase the Dow Jones Industrial Average. Today, the name of the game is inflation nation.
Stocks Slip As Wall Street Takes A Breather After 4-Day Run
Stocks are slipping Monday as trading cools on Wall Street and in markets around the world following record-setting runs.
The S&P 500 was 0.6% lower in afternoon trading and on pace to take a breather from a four-day winning streak that carried it to more all-time highs. The Dow Jones Industrial Average was down 89 points, or 0.3%, at 31,007, as of 2:47 p.m. Eastern time, and the Nasdaq composite was 1% lower.
Analysts said a pullback was no surprise following the big rally recently for everything from stocks to bond yields to commodities amid a wave of optimism. With Democrats set to take control of Washington, investors expect Congress to try soon to deliver more stimulus to the economy through larger cash payments for Americans and other programs. That’s building on top of enthusiasm already built about a powerful economic recovery coming later this year as COVID-19 vaccines roll out.
The market managed to essentially shrug off much of last week's bad news, including the attack on the U.S. Capitol on Wednesday, surging virus cases, and a disappointing employment report, said Julian Emanuel, BTIG chief equity and derivatives strategist. That both speaks to the market's resiliency and could signal a change in attitudes.
“The fact that the market shrugged all of this news off, it's ushering in a more speculative stage in the bull market,” he said.
The big rally means stocks and other investments are even more expensive, leaving critics to say they’ve gone too high. One of the main ways professional investors gauge a stock’s value is by measuring its price against how much profit it made in the prior 12 months. Stocks in the S&P 500 are trading at roughly 29 times their earnings. That’s a much more expensive price tag than their average over the last decade of a little below 18, according to FactSet.
“Given where we are in terms of valuation, there’s not going to be tolerance for news that isn’t good,” Emanuel said.
At the same time, the worsening pandemic continues to slam the economy. U.S. employers cut more jobs last month than they added, for example, the first month of job losses since last spring. New, potentially more contagious strains of the coronavirus are helping the pandemic to tighten its grip on the economy around the world.
In the background, political uncertainty also continues to hang over markets. Democrats are pushing for the removal of President Donald Trump , who has less than two weeks left in his term, after his words helped incite a group of loyalists to storm the Capitol last week.
“The equity markets remain forward-looking and focused on what is to come beyond the next 10-15 days," said Bill Northey, senior investment director at U.S. Bank Wealth Management.
Shares of Twitter slid 6.5% for the largest loss in the S&P 500 after it banned Trump from his account and his 89 million followers. Twitter cited “the risk of further incitement of violence,” but the move has drawn a lot of anger from conservatives who may abandon the service and ask for more regulatory scrutiny of the company. Facebook fell 3.7% after it suspended Trump’s accounts.
Other areas of the market were also losing momentum, but not by as much as social media stocks and Big Tech. Stocks of smaller companies were down, for example, with the Russell 2000 index slipping 0.2%. It remains 5.7% higher for 2021 so far, more than quadruple the gain of the big stocks in the S&P 500. Investors have been rotating out of the winners of the stay-at-home pandemic economy and looking for potential winners of a recovering economy.
One area of the market that continues to climb is in the bond market. Treasury yields have been shooting higher, in part on expectations that the U.S. government is set to borrow a lot more money for stimulus programs. That has investors raising their expectations for economic growth and inflation, and the yield on the 10-year Treasury climbed to 1.13% from 1.09% late Friday. It was at just 0.89% at the end of 2020 after setting a record low during the year.
Higher long-term yields can put pressure on stock prices and make them look even more expensive. That’s because when bonds are paying investors more in interest to own them, they can pull buyers away from stocks. In general, higher interest rates make investors less willing to pay higher prices for stocks relative to their earnings.
Strategists at Morgan Stanley have been saying for months that bond yields may be set for a big rise, and they said in a report on Monday that stocks may have hit their peak for how much investors are willing to pay for each $1 of corporate earnings. That would put more pressure on companies to grow their earnings for their stock prices to rise further or even to hold steady.
Analysts expect strong profit growth to return for companies later this year as the economy recovers. But in upcoming weeks, when CEOs are scheduled to tell shareholders how much profit they made during the last three months of 2020, Wall Street expects to see a sharp drop. Analysts forecast S&P 500 companies to report a decline of nearly 9% in earnings per share from a year earlier, according to FactSet. If they’re right, it would be the third-worst drop since the summer of 2009.
European markets closed lower and Asian markets were mixed.
AP Business Writer Yuri Kageyama contributed.
Has the U.S.A gone full #WeimarRepublic, with #HelicopterMoney?
Hyperinflation affected the German Papiermark, the currency of the Weimar Republic, between 1921 and 1923, primarily in 1923. It caused considerable internal political instability in the country, the occupation of the Ruhr by France and Belgium as well as misery for the general populace.
To pay for the large costs of the ongoing First World War, Germany suspended the gold standard (the convertibility of its currency to gold) when the war broke out. Unlike France, which imposed its first income tax to pay for the war, German Emperor Wilhelm II and the Reichstag decided unanimously to fund the war entirely by borrowing, a decision criticized by financial experts such as Hjalmar Schacht as a dangerous risk for currency devaluation.
The government believed that it would be able to pay off the debt by winning the war and plundering the defeated Allies. This was to be done by annexing resource-rich industrial territory in the west and east and imposing cash payments to Germany, similar to the French indemnity that followed German victory over France in 1870. Thus, the exchange rate of the mark against the US dollar steadily devalued from 4.2 to 7.9 marks per dollar, a preliminary warning to the extreme postwar inflation.
This strategy failed as Germany lost the war, which left the new Weimar Republic saddled with massive war debts that it could not afford, a problem exacerbated by printing money without any economic resources to back it. The demand in the Treaty of Versailles for reparations further accelerated the decline in the value of the mark, with 48 paper marks required to buy a US dollar by late 1919.
Afterwards, German currency was relatively stable at about 90 marks per dollar during the first half of 1921. Because the Western Front of the war had been mostly fought in France and Belgium, Germany came out of the war with most of its industrial infrastructure intact, leaving it in a better position to become the dominant economic force on the European continent after an Allied ultimatum to impose economic sanctions that would force Germany to meet payments.
The first payment was made when it came due in June 1921, and marked the beginning of an increasingly rapid devaluation of the mark, which fell in value to approximately 330 marks per dollar. The total reparations demanded were 132 billion gold marks, but Germany had to pay only 50 billion marks at the time, as the reparations were required to be repaid in hard currency, not the rapidly depreciating paper mark.
From August 1921, Germany began to buy foreign currency with marks at any price, but that only increased the speed of the collapse in value of the mark, meaning more and more marks were required to buy the foreign currency that was demanded by the Reparations Commission.
In the first half of 1922, the mark stabilized at about 320 marks per dollar. International reparations conferences were being held. One, in June 1922, was organized by US investment banker J. P. Morgan, Jr. The meetings produced no workable solution, and inflation erupted into hyperinflation, the mark falling to 7,400 marks per US dollar by December 1922. The cost-of-living index was 41 in June 1922 and 685 in December, a nearly 17-fold increase. By fall of 1922, Germany found itself unable to make reparations payments.
The strategy that Germany had been using to pay war reparations was the mass printing of bank notes to buy foreign currency, which was then used to pay reparations, but this strategy greatly exacerbated the inflation of the paper mark. Since the mark was, by fall of 1922, practically worthless, it was impossible for Germany to buy foreign exchange or gold using paper marks. After Germany failed to pay France an installment of reparations on time in late 1922, French and Belgian troops occupied the Ruhr valley, Germany's main industrial region, in January 1923. Reparations were to be paid in goods, such as coal, and the occupation was supposed to ensure reparations payments.
The German government's response was to order a policy of passive resistance in the Ruhr, with workers being told to do nothing which helped the invaders in any way. While this policy, in practice, amounted to a general strike to protest the occupation, the striking workers still had to be given financial support. The government paid these workers by printing more and more banknotes, with Germany soon being swamped with paper money, exacerbating the hyperinflation even further.
A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923.
By November 1923, the US dollar was worth 4,210,500,000,000 German marks.
50,000 marks, Aachen, 1923
500,000 marks, Leipzig, 1923
A 5 Million Mark coin, Westphalia, 1923
5,000,000 marks, Danzig, 1923
50,000,000 marks, Trier, 1923
500,000,000 marks, Dresden, 1923
5 billion (5 Milliarden) marks, Berlin, 1923
50 billion (50 Milliarden) marks, Plauen, 1923
500 billion (500 Milliarden) marks, Berlin, 1923
5 trillion (5 Billionen, 5×10¹²) marks, Stuttgart, 1923
50 trillion (50 Billionen, 50×1012) marks Eschweiler, 1923
The hyperinflation crisis led prominent economists and politicians to seek a means to stabilize German currency. In August 1923, an economist, Karl Helfferich, proposed a plan to issue a new currency, the "Roggenmark" ("rye mark"), to be backed by mortgage bonds indexed to the market price of rye grain. The plan was rejected because of the greatly fluctuating price of rye in paper marks.
Agriculture Minister Hans Luther proposed a plan that substituted gold for rye and led to the issuance of the Rentenmark ("mortgage mark"), backed by bonds indexed to the market price of gold. The gold bonds were indexed at the rate of 2,790 gold marks per kilogram of gold, the same as the pre-war gold marks. Rentenmarks were not redeemable in gold but only indexed to the gold bonds. The plan was adopted in monetary reform decrees on October 13–15, 1923. A new bank, the Rentenbank, was set up and controlled by new German Finance Minister Hans Luther.
After November 12, 1923, when Hjalmar Schacht became currency commissioner, Germany's central bank (the Reichsbank) was not allowed to discount any further government Treasury bills, which meant the corresponding issue of paper marks also ceased. The discounting of commercial trade bills was allowed and the amount of Rentenmarks expanded, but the issue was strictly controlled to conform to current commercial and government transactions. The Rentenbank refused credit to the government and to speculators who were not able to borrow Rentenmarks, because Rentenmarks were not legal tender.
On November 16, 1923, the new Rentenmark was introduced to replace the worthless paper marks issued by the Reichsbank. Twelve zeros were cut from prices, and the prices quoted in the new currency remained stable.
When the president of the Reichsbank, Rudolf Havenstein, died on November 20, 1923, Schacht was appointed to replace him. By November 30, 1923, there were 500,000,000 Rentenmarks in circulation, which increased to 1,000,000,000 by January 1, 1924 and to 1,800,000,000 Rentenmarks by July 1924. Meanwhile, the old paper Marks continued in circulation. The total paper marks increased to 1.2 sextillion (1,200,000,000,000,000,000,000) in July 1924 and continued to fall in value to a third of their conversion value in Rentenmarks.
On August 30, 1924, a monetary law permitted the exchange of a 1-trillion paper mark note to a new Reichsmark, worth the same as a Rentenmark. By 1924 one dollar was equivalent to 4.2 Rentenmark.
Eventually, some debts were reinstated to compensate creditors partially for the catastrophic reduction in the value of debts that had been quoted in paper marks before the hyperinflation. A decree of 1925 reinstated some mortgages at 25% of face value in the new currency, effectively 25,000,000,000 times their value in the old paper marks, if they had been held for at least five years. Similarly, some government bonds were reinstated at 2.5% of face value, to be paid after reparations were paid.
Mortgage debt was reinstated at much higher rates than government bonds were. The reinstatement of some debts and a resumption of effective taxation in a still-devastated economy triggered a wave of corporate bankruptcies.
One of the important issues of the stabilization of a hyperinflation is the revaluation. The term normally refers to the raising of the exchange rate of one national currency against other currencies. As well, it can mean revalorization, the restoration of the value of a currency depreciated by inflation. The German government had the choice of a revaluation law to finish the hyperinflation quickly or of allowing sprawling and the political and violent disturbances on the streets. The government argued in detail that the interests of creditors and debtors had to be fair and balanced. Neither the living standard price index nor the share price index was judged as relevant.
The calculation of the conversion relation was considerably judged to the dollar index as well as to the wholesale price index. In principle, the German government followed the line of market-oriented reasoning that the dollar index and the wholesale price index would roughly indicate the true price level in general over the period of high inflation and hyperinflation. In addition, the revaluation was bound on the exchange rate mark and United States dollar to obtain the value of the Goldmark.
Finally, the Law on the Revaluation of Mortgages and other Claims of 16 July 1925 (Gesetz über die Aufwertung von Hypotheken und anderen Ansprüchen or Aufwertungsgesetze) included only the ratio of the paper mark to the gold mark for the period from January 1, 1918, to November 30, 1923, and the following days. The galloping inflation thus caused the end of a principle, "a mark is worth a mark", which had been recognized, the nominal value principle.
The law was challenged in the Supreme Court of the German Reich (Reichsgericht), but its 5th Senate ruled, on November 4, 1925, that the law was constitutional, even according to the Bill of Rights and Duties of Germans (Articles 109, 134, 152 and 153 of the Constitution). The case set a precedent for judicial review in German jurisprudence.
The hyperinflation episode in the Weimar Republic in the early 1920s was not the first or even the most severe instance of inflation in history (the Hungarian pengő and Zimbabwean dollar, for example, have been even more inflated). However, it has been the subject of the most scholarly economic analysis and debate. The hyperinflation drew significant interest, as many of the dramatic and unusual economic behaviors now associated with hyperinflation were first documented systematically: exponential increases in prices and interest rates, redenomination of the currency, consumer flight from cash to hard assets and the rapid expansion of industries that produced those assets.
German monetary economics was at that time heavily influenced by Chartalism and the German Historical School, which conditioned the way the hyperinflation was analyzed.
John Maynard Keynes described the situation in The Economic Consequences of the Peace: "The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent Governments, unable, or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance."
It was during then that French and British economic experts began to claim that Germany deliberately destroyed its economy to avoid war reparations, but both governments had conflicting views on how to handle the situation. The French declared that Germany should keep paying reparations, but Britain sought to grant a moratorium to allow financial reconstruction.
Reparations accounted for about a third of the German deficit from 1920 to 1923 and so were cited by the German government as one of the main causes of hyperinflation. Other causes cited included bankers and speculators (particularly foreign). Hyperinflation reached its peak by November 1923 but ended when a new currency (the Rentenmark) was introduced. To make way for the new currency, banks "turned the marks over to junk dealers by the ton" to be recycled as paper.
Since the hyperinflation, German monetary policy has retained a central concern with the maintenance of a sound currency, a concern that had an effect on the European sovereign debt crisis.
The hyperinflated, worthless marks became widely collected abroad. The Los Angeles Times estimated in 1924 that more of the decommissioned notes were spread about the US than existed in Germany.
The cause of the immense acceleration of prices seemed unclear and unpredictable to those who lived through it, but in retrospect, it was relatively simple. The Treaty of Versailles imposed a huge debt on Germany that could be paid only in gold or foreign currency. With its gold depleted, the German government attempted to buy foreign currency with German currency, equivalent to selling German currency in exchange for payment in foreign currency, but the resulting increase in the supply of German marks on the market caused the German mark to fall rapidly in value, which greatly increased the number of marks needed to buy more foreign currency.
That caused German prices of goods to rise rapidly, increasing the cost of operating the German government, which could not be financed by raising taxes because those taxes would be payable in the ever-falling German currency. The resulting deficit was financed by some combination of issuing bonds and simply creating more money, both increasing the supply of German mark-denominated financial assets on the market and so further reducing the currency's price. When the German people realized that their money was rapidly losing value, they tried to spend it quickly. That increased monetary velocity caused an ever-faster increase in prices, creating a vicious cycle.
The government and the banks had two unacceptable alternatives. If they stopped inflation, there would be immediate bankruptcies, unemployment, strikes, hunger, violence, collapse of civil order, insurrection and possibly even revolution. If they continued the inflation, they would default on their foreign debt.
However, attempting to avoid both unemployment and insolvency ultimately failed when Germany had both.
US Stocks Mostly Unchanged While Global Markets Climb
Wall Street set fresh records on Monday after Trump signed the bill, helping to stanch uncertainty as governments reimpose pandemic-fighting travel and business curbs weighing on global economic activity.
The hope is that the measures will help tide the economy over until vaccinations can bring surging infections under control, allowing precautions to be relaxed and life to begin returning to normal.
The only other pending set of business from Washington is whether Senate Republicans will pass President Trump's push to get $2,000 stimulus checks to Americans instead of the current $600.
The S&P 500 was up 0.1% as of 11 a.m. Eastern, with health care stocks being among the gainers while energy and consumer discretionary stocks fell. The Dow Jones Industrial Average was up 20 points, or 0.1%, to 30,427 and the Nasdaq was mostly unchanged..
Trading has been thin as a tumultuous 2020 draws to a close. The market will be closed for New Year's Day Friday.
In Tokyo, the Nikkei 225 jumped 2.7% to 27,568.15, the first time it has traded above 27,000 since August 1990, according to FactSet. The market hit its all-time peak close of 38,915.87 on Dec. 29, 1989.
The benchmark was buoyed by strong gains in heavyweights like Mitsubishi Heavy Industries, which surged 4.6%, apparel maker Fast Retailing, also up 4.6%, and technology and energy company SoftBank, which gained 4.2%.
US Stocks Slide From Records As Wait Continues For Congress
Wall Street capped a solid week of gains on a down note Friday as the wait drags on to see if Congress can reach a deal to send more cash to struggling workers and businesses.
The S&P 500 fell 0.4%, a day after it and other major indexes returned to record heights. The decline snapped a three-day winning streak for the benchmark index, but it still notched a 1.3% weekly gain that more than made up its prior week's loss.
Hope that Congress may be nearing a deal to offer more financial support for the economy has helped stocks set more record highs. The S&P clocked its 31st all-time high this year on Thursday. Enthusiasm about vaccines for COVID-19 , which investors hope will get the economy back on the road to normalcy next year, has also fueled traders' optimism.
Friday's selling came on a particularly busy day on Wall Street. Index funds were expected to snap up more than $80 billion worth of shares in Tesla as they moved to rebalance their holdings for the quarter ahead of the electric car maker's entry into the S&P 500, effective Monday. In addition, Friday was also quadruple witching day, Wall Street-speak for the quarterly expiration of stock options and futures contracts, which forces traders to tie up loose ends in contracts they hold, leading to particularly heavy trading volume.
“This is an unusual day because we have Tesla entering the S&P and it’s quadruple witching day," said Andrew Slimmon, portfolio manager at Morgan Stanley Investment Management.
The S&P 500 index fell 13.07 points to 3,709.41. The Dow Jones Industrial Average lost 124.32 points, or 0.4%, to 30,179.05. The Nasdaq composite gave up 9.11 points, or 0.1%, to 12,755.64. The Russell 2000 dropped 8.06 points, or 0.4%, to 1,969.99.
Some 57% of the companies in the S&P 500 closed lower. Technology stocks, banks and companies that rely on consumer spending accounted for a big slice of the decline. They outweighed gains by household goods makers and materials stocks, among others.
Much of the market’s focus recently has been on Capitol Hill, where momentum has kicked back up for on-and-off-again talks for financial aid for the economy. Negotiations on nearly $1 trillion in relief had seemed to be on the brink of success, but a final agreement has yet to be sealed. The package could include benefits for laid-off workers and cash payments sent to most Americans.
Economists and investors say the need for such action is urgent, as the worsening pandemic tightens its chokehold on the economy. Reports this week showed that more workers are applying for jobless benefits and that sales for retailers slumped by more last month than economists expected.
The rising coronavirus counts and deaths are pushing governments around the world to bring back varying degrees of restrictions on businesses, and fear is keeping people and companies away from normal economic activity.
Wall Street’s hope is that Congress can approve big stimulus for the economy, which could carry it through what’s expected to be a dismal winter, before the widespread rollout of COVID-19 vaccines can help it begin to stand on its own next year.
The nation’s first coronavirus vaccine just began being administered this past week, and Vice President Mike Pence got a shot on live television Friday in hopes of assuring Americans that it’s safe. That vaccine was developed by Pfizer and BioNTech. A second vaccine from Moderna and the National Institutes of Health may also be on the brink of regulatory approval after a government advisory panel endorsed it on Thursday.
Of course, it will be months before most people will be able to get access to a vaccine, and the pandemic is likely to do even more damage in the interim.
Within the S&P 500, FedEx dropped 5.7% for one of the sharpest losses in the index, even though it reported stronger revenue and profit for its latest quarter than Wall Street expected. Analysts said some of the weakness may have been due to expectations simply building too high for the company, which has been a winner of the suddenly shop-from-home economy. FedEx also reported higher costs, including expenses for keeping workers safe from the coronavirus.
Shares of Tesla surged 6%. Roughly $4.6 trillion in investments directly mimics the index, and those funds will collectively be adding tens of billions of dollars of Tesla shares, which is set to become one of the 10 biggest stocks in the S&P 500.
Stock markets overseas made mostly modestly moves.
In Asia, some of the sharpest swings came from Hong Kong, where the Hang Seng index fell 0.7% and shares of Semiconductor Manufacturing International Corp. lost 5.2%. The U.S. Commerce Department said Friday it will restrict exports to China's top chipmaker , alleging it has ties to the military. The company has previously said it has no ties to the Chinese government
It's the latest escalation in trade tensions between the world's two largest economies.
Other Asian markets were mixed. European markets ended mostly lower.
In the bond market, the yield on the 10-year Treasury rose to 0.94% from 0.91% late Thursday.
US Stock Indexes Edge Higher A Day After Setting Records
The S&P 500 rose 0.1% Wednesday and is hovering around its record high after a broad rally on Tuesday broke a four-day losing streak. Those gains pushed the tech-heavy Nasdaq to a record high.
The Dow Jones Industrial Average fell 58 points, or 0.2%, to 30,141 as of 1:01 p.m. Eastern time. The tech-heavy Nasdaq rose 0.4%.
Smaller stocks slipped. The Russell 2000 index fell 0.3% and slightly backed off the record high it set a day earlier.
Top congressional leaders are nearing agreement on a long-delayed COVID-19 relief package and a deal could be sealed as early as Wednesday. Investors have been hoping that Democrats and Republicans might be able to move past their partisan bickering to give businesses and people another financial lifeline.
At the same time, more evidence emerged that the economic recovery is stalling. The Commerce Department reported Wednesday that retail sales fell 1.1% in November . The slump in spending comes amid rising unemployment as virus cases again surge and prompt tighter restrictions on businesses and people.
Wall Street has also been looking further ahead with optimism as vaccines for the virus start rolling out. So far, Pfizer and partner BioNTech’s coronavirus shots have gained emergency approval and are already being given to key health care workers. The Food and Drug Administration has given another vaccine, developed by Moderna, a positive analysis and could it be on a path to approval this week.
Distribution of vaccines to the wider population will likely take months, but more vaccines on the market will speed up the process and put the economy on a path to normalcy sooner.
“If markets can continue to look forward, that clearly bodes well,” said Jeff Buchbinder, equity strategist at LPL Financial. “The combination of stimulus and signs that the latest wave of COVID-19 has started to peter out, those are clear positives.”
While the long-term view for the economy and markets remains positive, investors are likely in for more volatility in the coming months.
“We could be in for a choppy January and February until we can get more people inoculated and really put this pandemic to bed,” Buchbinder said.
Treasury yields rose in a sign that investors were becoming a bit more optimistic about the economy. The yield on the 10-year Treasury rose to 0.92% from 0.91% late Tuesday.
Technology stocks, which have given much of the weight to the markets gains over the last few months, were the biggest gainers Wednesday. Microsoft rose 2.2% and Adobe rose 1.4%.
Elsewhere, the market was churning. Companies that would benefit from a broader reopening of the economy were mixed, while industrial stocks were mostly lower.
Bitcoin, the world's largest cryptocurrency, topped $20,000 for the first time.
Investors also have been encouraged by signs that the European Union and United Kingdom may finally broker a trade deal following the UK’s departure from the bloc. Germany’s DAX rose 1.5% and France’s CAC 40 gained 0.3%. The FTSE 100 in London rose 0.9%
Stocks Extend Losses As Virus Aid Languishes In Congress
NEW YORK (AP) — U.S. stocks fell in midday trading Friday as prospects for another aid package from Washington faded while a surge in virus cases threatens to inflict more damage on an already battered economy.
Investors have been hoping for another financial lifeline to help cushion the latest blow from COVID-19 to people, businesses and state governments. However an emerging $900 billion aid package from a bipartisan group of lawmakers has essentially collapsed because of continued partisan bickering.
The S&P 500 fell 0.6%, further backing off the record high it set on Tuesday. It is now on track for a 1.5% dip this week after two weeks of solid gains. The Dow Jones Industrial Average fell 95 points, or 0.3%, to 29,903 as of 11:37 a.m. Eastern time. The Nasdaq shed 0.8%.
Technology companies and banks led the decline. Apple fell 1.7% and Bank of America slipped 1.8%. Investors sought shelter in less risky holdings. Utilities, real estate companies and makers of essential consumer products held up better than the rest of the market.
Bond yields fell slightly. The yield on the 10-year Treasury edged lower to 0.88% from 0.89% from late Thursday.
Disney jumped 14% after giving investors an encouraging update on subscriber growth and future plans for its Disney Plus streaming service.
Stocks have been climbing over the last few weeks as advances in vaccine development raised hopes that the pandemic could be tamed in the coming months and set the global economy on a path to normalcy.
“The excitement over the vaccine has already been priced in and the market is fairly overbought, based on where we are in the economy right now,” said Kenny Polcari, managing partner at Kace Capital Advisors.
The U.K. has already started vaccinating people with Pfizer and BioNTech’s vaccine. A U.S. government advisory panel on Thursday endorsed widespread use of that vaccine, putting the country just one step away from launching an epic vaccination campaign against the outbreak that has killed close to 300,000 Americans.
Widespread vaccination will take months and the virus pandemic is prompting tighter restrictions on businesses. An already slow economic recovery appears to be stalling in the wake of the latest surge and unemployment is rising.
Polcari said markets are simply churning and consolidating following a strong November and he expects that to continue through December as stimulus talks continue. Wall Street is also waiting for a special election in Georgia in early January, which could potentially switch the balance of power in the U.S. Senate.
European stocks slipped over the increased possibility that the U.K. and the European Union will fail to strike a deal on a new economic relationship heading into next year. Britain left the EU on Jan. 31 but has continued to follow the trading bloc’s rules during a transition period that lasts until the end of the year. A no-deal split would bring overnight tariffs and other economic barriers that would hurt both sides.
Survey: Business Economists See Full Recovery By End Of 2021
Wall Street Ticks Back Toward Highs Despite Dour Jobs Report
NEW YORK (AP) — U.S. stocks are ticking higher and heading back toward record highs on Friday, despite discouraging data detailing how much damage the deepening pandemic is doing to the job market.
The much weaker-than-expected jobs report may perversely have been bad enough to help kick Congress out of its paralysis and deliver more support for the economy. Hopes also remain deeply rooted on Wall Street that one or more coronavirus vaccines are on the way to rescue the global economy next year.
The S&P 500 was 0.5% higher in early trading, putting it on pace to erase its slight loss from the day before and return to a record. The Dow Jones Industrial Average was up 136 points, or 0.5%, at 30,105, as of 9:43 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.
The initial reaction in financial markets to November’s disappointing jobs report was to fall. Treasury yields sank, and U.S. stock futures wobbled after the data showed employers added just 245,000 jobs last month, half of what economists were expecting. It marked a sharp step down from October’s gain of 610,000 and was the fifth straight month of slowing growth.
Economists called the numbers disappointing and evidence that the worsening pandemic will likely destroy more jobs and income for the economy in the coming months, which are shaping up to be a bleak winter.
But markets quickly recovered amid expectations that the dour data could spur some action from Congress, which has dithered for months after much of its last round of financial support for the economy expired during the summer.
“Overall, today’s report is beckoning lawmakers to act on additional fiscal stimulus measures in order to bridge the output gap in the economy until a vaccine is deployed, and the longer they hold out the wider the gap may become,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
Democrats and Republicans have been making on-and-off progress on talks for another round of support for the economy, including aid for laid-off workers and industries hit hard by the pandemic. Momentum this week has seemed to swing back to “on” after Democrats signaled willingness to accept a smaller package than they were earlier demanding.
House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell spoke on the phone about a possible deal on Thursday, and lawmakers from both parties have been voicing support for a bipartisan deal. Many obstacles remain, though.
The hope in markets is that financial support from Washington could help carry the economy through a dark winter. Surging coronavirus counts, hospitalizations and deaths are pushing governments around the world to bring back varying degrees of restrictions on businesses. They’re also scaring consumers away from stores, restaurants and other normal economic activity.
Hopefully, the economy will be able to stand more on its own accord next year after one or more COVID-19 vaccines help start a slow return to more normal conditions.
Such hopes have helped stocks muscle higher since early November, though the momentum has slowed a bit recently as the pandemic accelerates at a troubling rate. The S&P 500 is on pace to close this week with a 1.2% gain, following up on November’s 10.8% surge.
In European stock markets, the German DAX was up 0.1%, while the French CAC 40 rose 0.3%. The FTSE 100 was up 0.7%.
In Asia, Japan’s Nikkei 225 slipped 0.2%, but other markets were stronger. South Korea’s Kospi gained 1.3%, Hong Kong’s Hang Seng gained 0.4% and stocks in Shanghai added 0.1%.
The yield on the 10-year Treasury shook off an initial stumble following the release of the jobs report to rise to 0.96%, up from 0.91% late Thursday.
Read Full Article here: https://apnews.com/article/financial-markets-tokyo-health-hong-kong-shanghai-3e3e3e453bf1ced6e37999a109c88964
Dollar Sinks To A 2-1/2 Year Low On Strong Stocks And The Outlook For The Fed To Maintain Stimulus
Titled "Bitcoin Cheese".
"Captain Smith, all of the rats in the bilge area on the QE Fiat ship Titanic, are eating vast amounts of Cheese"! Captain Smith then asks, "What is the name of this so called "cheese" these rats are eating"? Answer #"Bitcoin Cheese", "they appear to be intoxicated and with much singing"
The Rats "Breakout" and sing: "Arrr Matey get me another piece of that #BTC Cheese and lets all wash it down with some Ethereum"!
"Captain Smith, the QE Titanic...she's listing 20, then 30 and now 40 degrees, what should we do, abandon ship"? Captain Smith replies, "No just not yet, get me another bottle of QE hyperinflation Fiat scotch, we will go down with the hyperinflation QE Fiat Titanic, besides all of the rats are in all of the lifeboats any way"...Just crank up the printing press bilge pumps...this will "Bail Out" sinking good ship, "QE Hyperinflation Fiat Titanic".
Captain Smith then orders: "Set a course for Zimbabwe...Full QE steam ahead"!
Captain Smith, "How many life boats are available and how is it that these, "limited" lifeboats, are only available to the rats...they are jumping into the lifeboats ASAP"!
Captain Smith (totally intoxicated with QE hyperinflation scotch), (grumbles underneath his breath) replies, "Only 21 million Bitcoin lifeboats available...Rats have always been much wiser then Captain Smith....Always...., Arrrr, Arrrr and Arrrr"!
US Jobless Claims Increase To 742,000 As Pandemic Worsens
WASHINGTON (AP) — The number of Americans seeking unemployment aid rose last week to 742,000, the first increase in five weeks and a sign that the resurgent viral outbreak is likely slowing the economy and forcing more companies to cut jobs.
The Labor Department's report Thursday showed that applications for benefits rose from 711,000 in the previous week. Claims had soared to 6.9 million in March when the pandemic first intensified. Before the pandemic, applications typically hovered about 225,000 a week.
The economy’s modest recovery is increasingly at risk, with newly confirmed daily infections in the United States having exploded 80% over the past two weeks to the highest levels on record. More states and cities are issuing mask mandates, limiting the size of gatherings, restricting restaurant dining, closing gyms or reducing the hours and capacity of bars, stores and other businesses. At least 15 states have tightened curbs on businesses to try to slow infections.
Evidence is emerging that consumers are losing confidence in the economic outlook and pulling back on shopping, eating out and other activities. Spending on 30 million credit and debit cards tracked by JPMorgan Chase fell 7.4% earlier this month compared with a year ago. That marked a sharp drop from two weeks earlier. Consumer sentiment also declined in early November and is down nearly 21% from a year ago, according to a University of Michigan survey.
The number of people who are continuing to receive traditional unemployment benefits fell to 6.4 million, the government said, from 6.8 million. That shows that more Americans are finding jobs and no longer receiving unemployment aid. But it also indicates that many jobless people have used up their state unemployment aid — which typically expires after six months — and have transitioned to a federal extended benefits program that lasts 13 more weeks.
The worsening viral outbreak coincides with the impending expiration of two federal unemployment programs at year’s end that could eliminate benefits for 9.1 million people, according to a report from The Century Foundation. Congress has so far failed to agree on any new stimulus package for jobless individuals and struggling businesses. The cutoff of aid will sharply reduce income for the unemployed, force a further reduction in their spending and perhaps weaken the economy.
One of those programs is Pandemic Unemployment Assistance, which made self-employed and contract workers eligible for unemployment aid for the first time. PUA was established by a multi-trillion-dollar aid package that Congress enacted in the spring.
The second measure in the stimulus package provided the additional 13 weeks of benefits for unemployed people who have used up their state benefits.
When those two programs expire on Dec. 26, the Century Foundation estimates that 12 million people will lose their benefits. About 2.9 million might be able to transition to a state extended benefit program that can last from six to 20 weeks, the report said. But the rest will lose benefits that average about $320 a week nationally.
The expiration of benefits will make it harder for the unemployed to make rent payments, afford food or keep up with utility bills. Most economists agree that because unemployed people tend to quickly spend their benefits, such aid is effective in boosting the economy.
Cutting off benefits with several million people still unemployed would be unusually early compared with previous recessions. In the Great Recession of 2008-2009, the government extended unemployment benefits to 99 weeks, and the additional aid lasted through 2013. When that program ended, about 1.3 million people lost benefits -- a fraction of the number who would lose their aid at the end of this year.
Read full article here: https://apnews.com/article/pandemics-jobless-claims-unemployment-coronavirus-pandemic-united-states-a9abee07cc3eb7246e7e3c8603430a49
US Stocks Moderately Higher, Headed For Another Weekly Gain
709,000 Seek US Jobless Aid As Pandemic Escalates
Stocks open higer as Big Tech companies recover from losses
NEW YORK (AP) — Stocks are opening broadly higher on Wall Street as technology companies turned higher after several days of weakness. The S&P 500 rose 0.6% in the early going on Wednesday, adding to its significant gain for the month. The Nasdaq climbed 0.8%. Big Tech companies had taken some rare losses this week as hopes built that progress was being made toward developing a coronavirus vaccine, which could eventually get more people back to work, travelling and going to school. Big Tech has been thriving during the stay-at-home economy as yet more of life moves online. Bond trading was closed for a holiday.
#Dow Jones Industrial average all time high! #DIA and #SPY Never to high to buy! Stocks Burst Higher, S&P 500 At Record On Vaccine Hopes.
Readers, now that the #Dowjonesindustrial average is at a new "All time high", the #DIA could very easily double in price, as predicted on this blog...Dow Jones Industrial Average to $60,000 soon...prepare for huge potential breakout in the #DIA!
NEW YORK (AP) — Stocks are surging Monday, and Wall Street is catapulting back to record heights on a burst of hope that the world and corporate profits can get back to normal following encouraging data about a potential coronavirus vaccine .
The S&P 500 was 3.3% higher in afternoon trading after Pfizer said an early peek at its vaccine data suggests the shots may be 90% effective at preventing COVID-19, though that doesn't mean its release is imminent. The index at the heart of many 401(k) accounts is on track to close at an all-time high for the first time in more than two months.
Hiring Held Last Month But Signs Of Caution As Virus Worsens
Fed Signals Readiness To Do More For Economy As Virus Rages
EU Cuts 2021 Economic Outlook As Virus Spreads
BRUSSELS (AP) — As COVID-19 cases keep rising, the European Union’s executive commission lowered its forecast for the economic rebound from the coronavirus pandemic next year and said the economy wouldn’t reach pre-virus levels until 2023.
The regular autumn forecast foresees growth of only 4.2% in 2021 for the 19 countries that use the euro, instead of the previous estimate of 6.1%.
The downgrade comes as governments record increasing numbers of infections, sick people in hospitals and deaths, and as they reimpose some restrictions on businesses and activity. The commission added a warning that the situation with the virus is so unpredictable means that its growth forecasts “are subject to an extremely high degree of uncertainty.”
Read full article here: https://apnews.com/article/pandemics-virus-outbreak-economic-outlook-europe-economy-241eb1e4d22b050b86b50cafb1445aa4
Market Debut Of Chinese E-Finance Giant Ant Postponed
HONG KONG (AP) — The planned stock market debut of the world’s biggest online finance company, Ant Financial was suspended in Shanghai and Hong Kong, disrupting a record-setting $34.5 billion initial public offering that highlighted China’s recovery from the coronavirus pandemic.
Management of the Shanghai stock exchange on Tuesday cited regulatory changes in Ant’s industry and a possible failure to meet disclosure requirements, but it offered no details. Ant Group later said in a filing with the Hong Kong stock exchange that it would also suspend its listing there following its suspension in Shanghai.
The suspension comes one day after meeting between regulators and company executives, including Ant founder Jack Ma, China’s richest entrepreneur.
Read full article here:
Wall Street rallies ahead of a potentially turbulent week
NEW YORK (AP) — U.S. stocks are climbing Monday, kicking off a potentially turbulent stretch for markets, as Wall Street recovers some of its sharp sell-off from last week.
The S&P 500 was 1.2% higher in afternoon trading after more companies reported stronger profits for the summer than Wall Street feared and reports on manufacturing came in better than expected. The Dow Jones Industrial Average was up 409 points, or 1.5%, at 26,906, as of 12:21 p.m. Eastern time, and the Nasdaq composite was 0.3% higher.
The rally came on the heels of gains for European and Asian stocks following their own better-than-expected economic data.
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Stocks Slump Again As Wall Street's Miserable Week Continues
NEW YORK (AP) — Stocks are tumbling again Friday as Wall Street closes out a punishing week and its first back-to-back monthly loss since worries about the pandemic first peaked in March.
The S&P 500 was 1.7% lower in morning trading, putting it on pace for a 6.1% loss for the week, which would be its worst since March. It’s also on track for a 3.2% drop for October. The Dow Jones Industrial Average was down 388 points, or 1.5%, at 26,270, as of 11 a.m. Eastern time, and the Nasdaq composite was down 2.6%.
Worries about whether expectations built too high for some of the stock market’s biggest stars helped drive the losses. They piled on top of fears that built earlier this week about the economic damage coming due to surging coronavirus counts around the world, uncertainty surrounding the upcoming presidential election and Washington’s inability to provide more support for the economy.
Read full article here: https://apnews.com/article/election-2020-technology-virus-outbreak-beijing-seoul-34922afe38ee570cab2c72375050d864
Exxon, Chevron To Cut US Jobs As Oil Industry Struggles
Stocks Sink On Wall Street As Virus Cases Continue To Spread
NEW YORK (AP) — Stocks are opening sharply lower on Wall Street as virus cases spread and as European countries move toward imposing more restrictions. The S&P 500 index fell 1.9% in the early going Wednesday, and European markets were taking bigger losses. France and Germany were bracing for more lockdowns as hospitals began to fill with coronavirus patients. Crude oil prices fell sharply on expectations that demand for energy would weaken even more than it already has, and Treasury yields dropped as investors sought shelter in lower-risk investments. The selling was widespread, pushing 97% of the stocks in the S&P 500 lower.
Read full article here: https://apnews.com/article/virus-outbreak-financial-markets-japan-financial-markets-asia-3b0a88ca290a066e13d57db87b41e50f
Dollar Rallies To A 1-Week High As A Slump In Stocks Spurs Liquidity Demand For The Dollar
The dollar index (DXY00) this morning is up +0.644 (+0.69%). Dec euro-fx futures (E6Z0) are down -0.0089 (-0.76%), and EUR/USD (^EURUSD) is down -0.0071 (-0.60%). Dec yen futures (J6Z0) are up +0.0008 (+0.08%), and USD/JPY (^USDJPY) is down -0.08 (-0.08%).
The dollar index this morning is moderately higher and posted a 1-week high. A sell-off in global equity markets today is boosting liquidity demand for the dollar. EUR/USD is moderately lower and posted a 1-week low on concern a surge in Covid infections throughout Europe will lead to additional lockdowns and stay-at-home orders. USD/JPY dropped to a 5-week low as the slump in global stock markets has fueled safe-haven buying of the yen.
Read full article here: https://www.barchart.com/story/futures/518476/dollar-rallies-to-a-1-week-high-as-a-slump-in-stocks-spurs-liquidity-demand-for-the-dollar
Norfolk Southern's 3Q Profit Down 13% As Railroad Hauls Less
As Virus Resurges, So Does Fear Of More Economic Pain Ahead
WASHINGTON (AP) — With winter looming and confirmed viral cases rising, Bob Szuter's craft brewery and restaurant in Columbus, Ohio, could use another government lifeline to help survive until spring.
So could many restaurants and bars that buy his beer. Szuter knows of nearly 20 in the region that have folded, with many others “limping along.”
As a small businessman, Szuter benefited from the multi-trillion-dollar stimulus aid that Congress passed in March after the pandemic recession flattened the economy. Countless other business people did, too, along with millions of laid-off workers, struggling states and localities and individual Americans.
All that aid is gone. Yet prospects for more federal stimulus this year appear all but dead, clouding the future for the unemployed, for small businesses like Szuter's and for the economy as a whole.
To read full article check out: https://apnews.com/
Stocks Are Down On Wall Street As More Earnings Come In
U.S. stock indexes are modestly lower in midday trading Friday as Wall Street weighs another batch of corporate results from the summer earnings period.
The S&P 500 was down 0.2%, after shedding a slight early gain. The benchmark index is on track for its first weekly loss in four weeks. Losses in technology stocks outweighed small gains in health care and other sectors. Treasury yields remained near their highest levels since June.
The Dow Jones Industrial Average was down 111 points, or 0.4%, to 28,254 as of 11:54 a.m. Eastern time. The Nasdaq composite, which is heavily weighted with technology stocks, was down 0.6%. European markets were broadly higher.
Stocks have been mostly pushing higher this month after giving back some of their big gains this year in a sudden September swoon. The S&P 500 notched a gain in each of the past three weeks and is up about 2.5% for the month heading into the final week of October.
More recently, trading on Wall Street has been choppy as investors keep an eye on the ongoing negotiations between Republican and Democractic leaders in Washington over another round of aid for businesses and millions of people who have lost their jobs during the coronavirus pandemic. The last round of supplemental aid for unemployed Americans expired at the end of July.
While House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been negotiating daily this week on a possible aid package. On Thursday, Pelosi said that progress is still being made, but any compromise will likely face stiff resistance from Republicans in the Senate.
In their debate late Thursday, President Donald Trump and his Democratic challenger Joe Biden managed a more substantive exchange than during their first raucous clash several weeks ago. There were no major market-moving surprises.
“The final U.S. presidential debate was less chaotic than the first but offered little new information to inform the result for markets,” Stephen Innes of Axi said in a commentary. “Meanwhile, discussion relevant to the post-election economic outlook was limited, particularly from President Trump.”
Big companies, meanwhile, continue to report profits for the summer that took a hit from the coronavirus-caused recession. But they’re mostly not as bad as feared.
Barbie maker Mattel jumped 12.6% after its latest earnings blew past analysts’ forecasts. Capital One Financial gained 1% after turning in robust results.
Some companies' results didn't live up to Wall Street's expectations. American Express was down 2.7% and chipmaker Intel sank 11%, the biggest decline in the S&P 500.
Drugmaker Gilead rose 1.4% after U.S. regulators gave formal approval to its antiviral drug remdesivir to treat patients hospitalized with COVID-19.
Treasury yields dipped but remain near their highest levesl since June, reflecting recent encouraging data on residential construction, homebuying and retail sales. The 10-year Treasury yield slipped to 0.85% from 0.87% late Thursday.
Markets in Europe were moving higher. Germany’s DAX gained 0.7%, while the CAC 40 in Paris rose 1% as investors welcomed strong corporate earnings from the likes of automaker Daimler and took in their stride a gloomy economic report. Britain’s FTSE 100 gained 1.2% after Japan and the U.K. signed a trade agreement to replace the pact with the EU, which will no longer apply after Britain’s exit from the bloc.
U.S. Stock Indexes Fall To 2-Week Lows On Diminished Chances For Any Near-Term Pandemic Stimulus
The S&P 500 Index ($SPX) this morning is down -0.21%, the Dow Jones Industrials Index ($DOWI) is down -0.28%, and the Nasdaq 100 Index ($IUXX) is down -0.58%.
U.S. stock indexes this morning fell to 2-week lows. Stocks are under pressure on reduced chances that U.S. lawmakers will be able to agree on additional pandemic stimulus anytime soon. Stocks are also under pressure from the worsening global Covid pandemic. Losses were limited, though, on better-than-expected U.S. economic data and solid company quarterly earnings results.
Stocks are also under pressure on increasing evidence that the Covid pandemic is worsening. Germany reported a record 12,331 new Covid infections today, Poland reported a record 12,107 new Covid cases, and Spain's Health Minister said the spread of Covid is out of control in certain parts of Spain. Also, the U.S. hospitalizations for Covid rose to a 2-month high. The ongoing Covid pandemic has undercut global growth and is a bearish factor for stocks. Infections have risen above 41.593 million around the world, with deaths exceeding 1.137 million.
Today's U.S. economic data is better-than-expected and supportive for stocks. U.S. weekly initial unemployment claims fell -55,000 to 787,000, showing a stronger labor market than expectations of 870,000. Also, Sep existing home sales rose +9.4% to a 14-1/4 year high of 6.54 million, stronger than expectations of 6.30 million. In addition, Sep leading indicators rose +0.7% m/m, stronger than expectations of +0.6% m/m.
Another supportive factor for stocks today is solid quarterly earnings results. Tesla is up more than +1% after it reported a fifth consecutive quarter of profits, and AT&T is up more than +6% this morning after it added more wireless subscribers than analysts estimated.
The VIX S&P 500 Volatility Index ($VIX) this morning is up +0.46 at 29.11, remaining just below Wednesday's 1-month high of 30.55. The VIX is consolidating moderately above August's 7-3/4 month low of 20.28 and remains well below September's 4-month high of 38.28.
Dollar Slumps To A 1-1/2 Month Low On Concern New Fiscal Stimulus Will Explode U.S. Budget Deficit
The dollar index (DXY00) this morning is down -0.359 (-0.37%). Dec euro-fx futures (E6Z0) is up +0.0029 (+0.24%), and EUR/USD (^EURUSD) is up +0.0032 (+0.28%). Dec yen futures (J6Z0) are up +0.0078 (+0.82%), and USD/JPY (^USDJPY) is down -0.95 (-0.90%).
The dollar index this morning is falling for the fourth consecutive session and posted a 1-1/2 month low. Speculation that U.S. lawmakers will pass pandemic stimulus is weighing on the dollar on concern that the additional stimulus spending will explode the U.S. budget deficit. EUR/USD climbed to a 1-month high on dollar weakness and USD/JPY tumbled to a 4-week low on hawkish BOJ comments.
The dollar is falling today on optimism U.S. lawmakers will agree on a Covid relief package. White House Chief of Staff Meadows said today that "the last 24 hours have moved the ball down the field," and the goal is "some kind of stimulus deal in the next 48 hours or so." Treasury Secretary Mnuchin and House Speaker Pelosi are scheduled to speak again Wednesday afternoon, although Senate Majority Leader McConnell has warned the White House not to rush into any agreement before the election.
Comments today by Fed Governor Brainard were dollar-negative when she said the pace of labor market improvement is decelerating, and the economy needs strong monetary and fiscal help for recovery. She also said that she sees inflation remaining short of 2% over the next few years and that a failure by Congress to deliver more fiscal aid is a downside risk to the economy.
The ongoing Covid pandemic is a supportive factor for the dollar since it boosts liquidity demand for the dollar. The Covid virus has now infected 41.154 million persons globally, with deaths exceeding 1.131 million.
EUR/USD this morning rose for the third day and posted a new 1-month high. Dollar weakness is the main bullish factor for the euro today. EUR/USD fell back from its best levels on dovish ECB comments. ECB President Lagarde said the unexpected early second wave of Covid infections is a "clear risk" to the economic outlook. Also, ECB Vice President Guindos said the economic recovery is uncertain and incomplete, and if the stimulus is removed too early, it may harm the recovery. In addition, ECB Chief Economist Lane said price stability is at the center of the ECB's work, and it is a very bad idea for inflation to go negative.
USD/JPY this morning sank to a 4-week low on dollar weakness along with hawkish BOJ comments. The yen rallied today after BOJ member Sakurai said there is no need to rush a decision on whether the BOJ needs to extend its pandemic stimulus measures and that the BOJ has time to carefully consider if it needs to extend the measures beyond March.
The yuan this morning is up +0.35% against the dollar as it rallies for a fourth day and posted a 2-1/4 year high today of 6.6413 yuan/USD. Gains in the yuan are accelerating as recent data shows China's economy is expanding. The yuan also has support on strong interest rate differentials as China's 10-year bond yield of 3.17% is well above the yields of other countries.
US Layoffs Remain Elevated As 898,000 Seek Jobless Aid
WASHINGTON (AP) — The number of Americans seeking unemployment benefits rose last week to 898,000, a historically high number and evidence that layoffs remain a hindrance to the economy’s recovery from the pandemic recession that erupted seven months ago.
Thursday’s report from the Labor Department shows that the job market remans fragile, and it coincides with other recent data that have signaled a slowdown in hiring. The economy is still roughly 10.7 million jobs short of recovering all the 22 million jobs that were lost when the pandemic struck in early spring.
The recession has disproportionately hurt in-person service industries, especially restaurants, hotels, travel companies and entertainment venues. The damage to those industries has left millions of people unemployed, likely for an extended period until they are either finally recalled to their previous jobs or switch to new careers.
The government’s report Thursday said the number of people who are continuing to receive unemployment benefits dropped 1.2 million to 10 million. The decline signals that many of the unemployed are being recalled to their old jobs.
But it also reflects the fact that potentially even more people have used up their regular state benefits — which usually expire after six months — and have transitioned to extended benefit programs that last an additional three months. The extended aid programs were established by the financial aid package that Congress enacted in the spring. https://libertystreeteconomics.newyorkfed.org/2020/10/how-have-households-used-their-stimulus-payments-and-how-would-they-spend-the-next.html
Indeed, the number of people receiving extended benefits in late September, the latest data available, jumped 800,000 to 2.8 million. The government also said 373,000 people applied for jobless aid under a separate program that made the self-employed, contractors and gig workers eligible for unemployment benefits for the first time.
That figure was 90,000 lower than in the previous week. These figures aren’t adjusted for seasonal trends, so the government reports them separately from the traditional jobless claims.
Many jobless benefit recipients are now receiving only regular state unemployment payments because a federal weekly supplement of $300 has ended in nearly all states. A $600-a-week federal benefit expired over the summer.
Economists have warned that without further aid, families across the country will struggle in coming months to pay bills, make rent, afford food and avoid eviction. But Congress has hit a stalemate in negotiations to provide further rescue aid to jobless individuals and struggling businesses, states and localities. Negotiations, led by Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi, are continuing, although prospects appear dim.
The end of federal aid for the unemployed will likely force many of the jobless to sharply cut their spending, thereby weakening the economy. The full impact may have been delayed, though, by the fact that most of the federal aid was saved or was used to pare debt, according to research by the Federal Reserve Bank of New York.
According to the New York Fed, at the end of June nearly one-quarter of jobless aid payments had been saved. Nearly half were used to pay down debt. Just 28% of the money was spent.
And more than one-third of the $1,200 stimulus checks that went to most adults was saved, with an additional one-third of that money used to pay off debt. Overall, Americans’ saving rate remains sharply higher than pre-pandemic levels, suggesting that some people will be able to continue paying some bills out of their savings, at least for now.
The end of the federal payments has also underscored the dramatically uneven nature of unemployment benefits across states. In Arizona, for example, the maximum weekly payment is only $240, while in neighboring California it’s $450. In Florida and Tennessee, the maximum is just $275. In New Jersey, the top weekly benefit is $713.
And about a dozen states lowered or froze their maximum weekly payment after the 2008-2009 recession, according to a report from the Century Foundation. In North Carolina and Wisconsin, for example, the maximum payments are no longer set as a proportion of average weekly wages in the state, which typically rise each year. Instead, they are set according to formulas related to a recipient’s previous earnings.
Most states had to borrow billions of dollars to fund unemployment benefits during and after the Great Recession. To cut costs, many responded by cutting the amount or length of weekly payments. Only a few have since reversed their cuts.
Nationwide, on average, unemployment benefits replace about 33% of what recipients earned at their previous job. That is down from 36% in 2009.
“It is a steady downward trend,” said Andrew Stettner, a senior fellow at the Century Foundation. “The formulas have gradually gotten more stingy.”
Some of the lowest benefits are provided in states where Black Americans make up the largest proportion of jobless aid recipients. In Mississippi, for instance, 54% of unemployment aid recipients in August were Black, according the Century Foundation. The maximum benefit in that state is $235 a week.
In South Carolina, more than one-third of people receiving unemployment aid are Black. The maximum benefit is $326.
IMF Envisions A Sharp 4.4% Drop In Global Growth For 2020
WASHINGTON (AP) — The International Monetary Fund foresees a steep fall in international growth this year as the global economy struggles to recover from the pandemic-induced recession, its worst collapse in nearly a century.
The IMF estimated Tuesday that the global economy will shrink 4.4% for 2020. That would be the worst annual plunge since the Great Depression of the 1930s. By comparison, the international economy contracted by a far smaller 0.1% after the devastating 2008 financial crisis.
The monetary fund's forecast for 2020 in its latest World Economic Outlook does represent an upgrade of 0.8 percentage point from its previous forecast in June. The IMF attributed the slightly less dire forecast to faster-than-expected rebounds in some countries, notably China, and to government rescue aid that was enacted by the United States and other major industrial countries.
While forecasting a global contraction this year, after 2.8% growth in 2019, the IMF predicts a rebound to global growth of 5.2% next year, 0.2 percentage point lower than in its June forecast.
The 189-nation lending agency cautioned that many developing countries, notably India, are faring worse than expected, in large part because of a resurgent virus. Many nations face the threat of economic reversals if government support is withdrawn too quickly, the IMF warned.
“While the global economy is coming back, the ascent will be long, uneven and uncertain,” Gita Gopinath, the IMF's chief economist, wrote in the new outlook. “Recovery is not assured while the pandemic continues to spread.”
At a news conference, Gopinath said it was critical that government economic support not be withdrawn too quickly.
“This crisis will leave scars,” she told reporters, stemming from damage to labor markets that will take time to regain lost jobs, lost business investment and diminished schooling that will reduce the development of human capital around the world.
For the United States, the IMF forecasts an economic contraction of 4.3% this year, 3.7 percentage points better than in its June forecast. The less-pessimistic outlook reflects a stronger-than-expected bounce from the $3 trillion in relief aid that Congress enacted earlier this year.
For next year, the IMF envisions 3.1% growth in the United States, 1.4 percentage points less than in its June outlook and in line with the view of private forecasters. Last year, the U.S. economy grew 2.2%.
China, the world’s second-largest economy, is expected to grow 1.9% this year, a sharp slowdown from the 6.1% gain in 2019, and then expand 8.2% in 2021.
The IMF said that while a swift recovery in China had surprised forecasters, the global rebound remains vulnerable to setbacks. It noted that “prospects have worsened significantly in some developing countries where where infections are rising rapidly” and that in India and in poorer nations in Africa and Asia, the pandemic has continued to spread and in some areas even accelerate.
“Preventing further policy setbacks,” the IMF said, “will require that policy support is not prematurely withdrawn.”
In the United States, a variety of economic aid programs, including small business loans to prevent layoffs and a $600-a-week unemployment benefit, have expired. Congress has so far failed to reach a compromise agreement to provide further financial assistance to individuals and businesses.
The scale of disruptions in hard-hit economic sectors of the U.S. economy, notably restaurants, retail stores and airlines, suggests that without an available vaccine and effective drugs to combat the virus, many areas of the economy “face a particularly difficult path back to any semblance of normalcy,” the IMF said.
Even as China has rebounded much faster than many expected, India, another populous country in Asia, is enduring difficulties. India’s economy is expected to contract 10.3% this year — 5.8 percentage points deeper than the decline the IMF had forecast in June.
The monetary fund predicted that the euro area, which covers the 19 European nations that use the euro currency, would contract 8.3% this year but rebound 5.2% next year.
The IMF produced the updated outlook for this week’s virtual meetings of the 189-nation lending institution and its sister institution, the World Bank. Those meetings are expected to be dominated by discussions of how to provide more aid to the world’s poorest countries in the form of medical aid and debt relief.
Finance ministers and central bank presidents from the Group of Seven wealthy industrial countries — the United States, Japan, Germany, France, Britain, Italy and Canada — held a videoconference led by U.S. Treasury Secretary Steven Mnuchin to discuss debt relief proposals for poor nations and their efforts to support the global economy, the Treasury said.
One idea being considered is to extend for six months a debt-payment freeze for the poorest nations that took effect May 1 but is due to expire at year’s end. Many aid groups are pressing for rich nations to go further and forgive part of the debt rather than just halt repayments.
Poor countries have been hurt the most by the pandemic. The World Bank has estimated that the pandemic has thrown between 88 million and 114 million people into extreme poverty, which is defined as living on less than $1.90 a day. That would mark the largest increase in extreme poverty on data going back to 1990. And it would end a period of more than two decades in which the rate of extreme poverty had declined.
US Layoffs Still High, But So Is Skepticism On Jobless Data
WASHINGTON (AP) — The number of Americans seeking unemployment benefits dipped last week to a still-high 840,000, evidence that layoffs remain elevated seven months into the pandemic recession.
Yet economists say they are increasingly dubious about the unemployment claims figures, even though there is little doubt that hiring has slowed and employers have continued to lay off workers.
One reason layoffs remain high is that companies often hold on to workers when a recession begins, if they can, in hopes of outlasting the downturn. Yet if the recession drags on, many will eventually give up and cut jobs.
“Some of these new layoffs are coming from firms that didn’t want or didn’t have to lay people off at first,” said Constance Hunter, chief economist at KPMG. Now, “they have no choice but to start reducing their workforce.”
Consider Luke McCann. He had hoped through September that business would finally pick up at his online marketing company, CollectionAgencyMatch.com, based in Winston-Salem, North Carolina.
It didn’t. So McCann was forced to lay off seven of the 15 staffers at his company, which helps businesses find collection agencies. His revenue had shrunk as small businesses either closed down or decided not to pursue customers who hadn’t paid their bills, McCann said.
A loan from the government’s Paycheck Protection Program had helped McCann stave off cutting workers. But “without more (government help) on the way and demand not picking up, we had to lay off employees to help save expenses to stay in business.”
At face value, the Labor Department's report Thursday indicated that more than 800,000 people are still being laid off each week, a historically huge number — more than in any week during the 2008-2009 Great Recession. Weekly applications for unemployment benefits have long been considered a proxy for job cuts.
But the flood of layoffs during the pandemic recession and the creation of some new jobless-aid programs have overwhelmed state unemployment agencies. A result is that the jobless claims figures the government has been reporting have become an object of skepticism.
“We can't view it as real-time job separation data,” said Elizabeth Pancotti, a policy adviser at Employ America, a left-leaning advocacy group, referring to layoffs. “We're still seeing massive overcounting of initial claims.”
Some states are still processing backlogged applications from this summer, Pancotti noted. California, for example, stopped accepting new claims for two weeks so it could clear a backlog of 600,000 applications that are more than three weeks old.
In many states, the data for initial jobless claims also includes workers who had been laid off previously, then found temporary work or were recalled temporarily — only to lose their jobs again and reapply for unemployment benefits. These repeat applicants account for roughly half of jobless claims in California, according to the California Policy Lab.
Till von Wachter, an economist at UCLA and director of the Policy Lab, said that initial applications can also include workers who have used up their 26 weeks of state unemployment and are transitioning to an extended benefits program that provides three additional months of payments.
And this spring, Congress created a new program, Pandemic Unemployment Assistance, or PUA, that made self-employed and gig workers eligible for unemployment aid for the first time. Yet in many states, to qualify for the PUA program, the unemployed must first apply for regular jobless benefits. Only after they have been rejected under that system can they apply for PUA.
Last week, more than 464,000 people applied for aid through PUA. These figures aren’t adjusted for seasonal trends, so the government reports them separately from the traditional jobless claims. Yet the figure may include some people who applied under the traditional benefits program.
Organized fraud has also been a problem , particularly in the PUA program, in which it's difficult for states to verify applicants’ incomes. Contractors and gig workers, for example, rarely have W-2 tax forms, which employees in traditional jobs receive.
Thursday’s report from the Labor Department said the number of people who are continuing to receive unemployment benefits dropped 1 million to 11 million. The decline suggests that many of the unemployed are finding work. But it also reflects the fact that some have used up the 26 weeks of their regular state benefits and have transitioned to extended benefit programs.
About 2 million people are receiving aid under a federal extended benefit program created this spring, and an additional 11.4 million people are doing so through PUA. All told, 25.5 million people were receiving some form of unemployment aid in the week that ended Sept. 19, the government said.
Yet those figures are also likely inflated, mostly by double-counting. California and other states have counted retroactive payments under PUA as multiple payments to separate individuals.
“Nobody knows exactly how many people are receiving unemployment insurance benefits right now,” said Heidi Shierholz, policy director at the Economic Policy Institute and former chief economist at the Labor Department. That is a “reminder that we need to invest heavily in our data infrastructure and technology.”
The figures nevertheless point to a flagging recovery and come two days after President Donald Trump cut off talks over a new rescue aid package that economists say is urgently needed. A failure to enact another round of government aid would crimp household income and spending, and some economists say it would raise the risk of a double-dip recession.
In the meantime, the pace of layoffs shows little sign of flagging. Disney said last week that it would cut 28,000 jobs. And American Airlines and United Airlines combined furloughed 32,000 employees last week. Airlines had been barred from cutting jobs as long as they were receiving federal aid, which expired this month. The American Hotel & Lodging Association has said that nearly three-quarters of hotels say they’ll have to lay off more workers without further financial aid.
Congress is still considering extending the airline aid in stand-alone legislation. But there is little sign that a deal will be reached with the White House.
Across the country, hiring has slowed just as federal rescue aid has run out, hampering an economy still climbing out of the deep hole created by the pandemic. Employers added just 661,000 jobs in September, less than half of August’s gain and the third straight monthly decline.
Just over half the 22 million jobs lost to the coronavirus have been recovered, leaving the economy with 10.7 million fewer jobs than in February — a figure that exceeds all the job losses from the Great Recession.
US Trade Deficit Up To $67.1 Billion In August, 14-Year High, Nasty Tariffs coming home to roost.
WASHINGTON (AP) — The U.S. trade deficit rose in August to the highest level in 14 years.
The Commerce Department reported Tuesday that the gap between the goods and services the United States sells and what it buys abroad climbed 5.9% in August to $67.1 billion, highest since August 2006. Exports rose 2.2% to $171.9 billion on a surge in shipments of soybeans, but imports rose more — up 3.2% to $239 billion — led by purchases of crude oil, cars and auto parts.
The politically sensitive deficit in the trade of goods with China fell 6.7% to $26.4 billion.
So far this year, the United States has recorded a trade gap of $421.8 billion, up 5.7% from January-August 2019.
Hammered by the coronavirus and its fallout on the world economy, total U.S. trade -- exports plus imports -- is down 15.1% so far this year to $3.2 trillion.
“Overall, trade flows remain subdued and the outlook is uncertain given a muted global growth and demand backdrop," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
President Donald Trump campaigned on a pledge to bring down America's persistent trade deficits. He imposed taxes on imports of steel, aluminum and most products from China, among other things; and renegotiated a North American trade pact in an effort to encourage more production in the United States.
But the trade deficit won't yield easily to changes in trade policy. As the U.S. economy recovers from springtime shutdowns, Americans are buying more imported goods while foreign demand for U.S. products remains weak.
In an unusual move, U.S. Trade Representative Robert Lighthizer issued a statement on the monthly trade deficit report Tuesday, defending the president's record. Lighthizer noted that the U.S. deficit in the trade of goods is down 2.4% so far this year and would have fallen more if it weren't for a surge in gold imports by investors using the precious metal to hedge against risks at a time of considerable uncertainty.
He also said: ”The trade deficit increased in August because America’s economy has recovered more quickly than our trade partners.''
Fed's Powell: Lack Of Further Stimulus Imperils Recovery
Powell said that government support — including expanded unemployment insurance payments, direct payments to most U.S. households and financial support for small businesses — has so far prevented a recessionary “downward spiral” in which job losses would reduce spending, forcing businesses to cut even more jobs.
But the U.S. economy still faces threats, and without further aid, those downward trends could still derail the recovery, the chairman said.
On Tuesday afternoon, though, President Donald Trump tweeted that he had “instructed my representatives to stop negotiating until after the election.” Trump's tweet immediately sent stock prices falling.
In his speech earlier in the day to the National Association for Business Economics, a group of corporate and academic economists, Powell said:
“The expansion is still far from complete. Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses. Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth.”
Powell noted that the economic recovery has slowed in recent months compared with its rapid improvement in May and June. Incomes fell in August . And job growth weakened in September , slowing to just 661,000, less than half the gains of 1.5 million in August and 1.8 million in July. The economy has recovered only slightly more than half the 22 million jobs that were lost in March and April.
“A prolonged slowing in the pace of improvement over time could trigger typical recessionary dynamics, as weakness feeds on weakness,” he said.
During a question-and-answer session with economists, Powell noted that the pandemic recession has disproportionately harmed in-person service industries, especially restaurants, bars, hotels, travel companies, movie theaters and other entertainment venues. The heavy damage to those industries has left millions of people unemployed, likely for an extended period, until they are either finally recalled to their previous jobs or switch to new careers.
“The right thing to do and the smart thing to do in the long run is to support those people as they return to their old jobs or find new jobs,” the chairman said.
In recent months, in speeches and in testimony to Congress, Powell has repeatedly urged lawmakers to enact an additional economic aid package. Fed chairs typically avoid inserting themselves into policy debates, but Powell has stressed that the Fed can only lend money to help spur growth.
Actual spending — further aid for small businesses, for example, or another round of stimulus checks for individual Americans — would have to come from Congress. Though negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on a new spending package are ongoing, prospects for a deal remain dim.
A $2 trillion financial rescue package that Congress approved in March, as well as previous aid measures, were “truly extraordinary," Powell said, enabling U.S. households to pay bills and maintain their spending even as unemployment soared to 14.7% in April.
Spending on autos and other long-lasting goods is actually higher now that before the pandemic, the Fed chair noted.
“Still, since it appears that many will undergo extended periods of unemployment , there is likely to be a need for further support,” Powell said.
Powell also acknowledged during the Q&A that women are increasingly being forced to quit jobs to oversee children who are engaged in online schooling. This trend poses a threat to their careers, he noted, and to the economy in the longer run.
“The longer it goes on, the more likely there is some lasting damage,” Powell said. "Someone told me the other day, there’s no online preschool. So for many people, and it’s a lot of women, it’s winding up being in the home with young children, who really should be in school, and you much prefer to be working, so it’s a real issue.”
In his prepared remarks, Powell also discussed the Fed's new framework for its interest rate policy but provided no new details about how it will work in practice. Last month, the Fed said it was now seeking to let inflation run above 2% “for some time" before considering higher short-term interest rates. That is a substantial shift from its previous approach, which potentially involved rate hikes once unemployment fell too low or inflation hit 2%.
Stocks Drop After President Trump Calls Off Stimulus Talks
Stocks turned sharply lower on Wall Street Tuesday afternoon after President Donald Trump ordered a stop to negotiations with Democrats on a coronavirus economic stimulus bill until after the election.
The S&P index slid 1.3% after Trump tweeted his mandate. The benchmark index had been up 0.7% just prior to the president’s announcement with about an hour of trading left.
In a series of tweets about the negotiations between the White House and Speaker Nancy Pelosi, Trump said: “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major stimulus bill that focuses on hardworking Americans and small business.” He also accused Pelosi of not negotiating in good faith.
The comments from the president came just hours after Federal Reserve Chair Jerome Powell urged Congress to come through with more aid, saying that too little support “would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
Trump’s announcement dashes Wall Street’s hopes that another round of stimulus for the economy, which has been punched into a recession by shutdowns related to the coronavirus pandemic, could soon be on the way. Bitter partisanship on Capitol Hill has been preventing a compromise on more aid. Reports on the economy have been mixed recently, as some areas show a slowdown after extra unemployment benefits and other stimulus earlier approved by Congress expired.
The Dow Jones Industrial Average was down 359 points, or 1.3%, to 27,785 as of 3:19 p.m. Eastern time. The Nasdaq composite was down 1.4%. Small stocks were holding up better than the rest of the market. The Russell 2000 index of small-cap stocks was up 0.2%.
The market’s slide comes a day after the S&P 500 posted its best day in more than three weeks. Other stock markets around the world made mostly modest gains. Longer-term Treasury yields veered lower after Trump's remarks. They had earlier been hanging close to their highest levels in months.
The selling was widespread, led by technology stocks and companies that rely on consumer spending. Utilities were the only gainers among the 11 sectors in the S&P 500.
A report on Tuesday showed that U.S. employers advertised slightly fewer job openings in August than the prior month. But the number was nevertheless better than economists expected.
Trading on Wall Street has gotten even shakier recently as investors contend with a long list of uncertainties, from Trump’s COVID-19 diagnosis to waxing and waning expectations about Congress’ ability to deliver another round of stimulus for the economy.
The S&P 500 jumped 1.8% on Monday after Trump said he’s returning to the White House to complete his recovery from the coronavirus, though his medical team said he’s not yet fully “out of the woods.”
Powell has repeatedly urged Congress to provide additional aid, saying the Fed can't prop up the economy by itself, even with interest rates at record lows. “The expansion is still far from complete,” Powell said in a speech to the National Association for Business Economics, group of corporate and academic economists.
Several big challenges lie ahead of markets. Chief among them is the still-raging pandemic, as so clearly illustrated by Trump’s stay in the hospital. The worry is that a ramp-up in infections could cause governments to bring back some of the restrictions they put on businesses early this year, which sent the economy hurtling into a recession.
“We’re on the eve of earnings season and people are reasonably undecided as to whether the correction that started in September has further to run,” said Julian Emanuel, BTIG chief equity and derivatives strategist.
The upcoming election also still means a host of uncertainty about tax rates and regulations on businesses, while tensions between the United States and China continue to simmer.
The yield on the 10-year Treasury note fell to 0.75% from 0.78% late Monday. While that’s still very low, the yield has been generally climbing since dropping close to 0.50% in early August.
European and Asian markets closed broadly higher.
US Hiring Slows For 3rd Month In Sign Of Struggling Economy
WASHINGTON (AP) — America’s employers added 661,000 jobs in September, the third straight month of slower hiring and evidence from the final jobs report before the presidential election that the economic recovery has weakened.
With September’s hiring gain, the economy has recovered only slightly more than half the 22 million jobs that were wiped out by the viral pandemic. Nearly 10 million jobs remain lost — more than were shed during the entire 2008-2009 Great Recession. And the pattern of slower hiring will delay a full recovery of jobs: Compared with September's more modest gain, employers added nearly 1.5 million jobs in August, 1.8 million in July and 4.8 million in June.
The unemployment rate fell last month to 7.9% from 8.4% in August, the Labor Department said Friday. Since April, the rate has tumbled from 14.7%. But last month's drop in joblessness reflected mainly a drop in the number of people seeking work, rather than a surge in hiring. The government doesn't count people as unemployed if they aren't actively looking for a job.
“There seems to be a worrisome loss of momentum,” said Drew Matus, an economist at MetLife Investment Management. “There's a lot of caution on the part of employers."
The September figures, Matus said, show that employers are working their existing employees for longer hours, particularly in services such as retail, warehousing, and restaurants and hotels, and may be reluctant to hire new people. Indeed, last month’s gains appeared to reflect mainly temporarily laid-off workers being recalled to their old jobs, continuing a trend in place since April, rather than people joining new employers. In a worrisome sign, the number of laid-off workers who say their jobs are gone for good rose from 3.4 million to 3.8 million.
The jobs report coincided with other data that suggests that while the economic picture may be improving, the gains have slowed since summer. The economy is under pressure from a range of threats. They include the expiration of federal aid programs that had fueled rehiring and sustained the economy — from a $600-a-week benefit for the unemployed to $500 billion in forgivable short-term loans to small businesses.
Friday’s numbers offered voters a final look at the most important barometer of the U.S. economy before the Nov. 3 presidential election — an election whose outcome was thrown into deeper uncertainty by the announcement early Friday that President Donald Trump has tested positive for the coronavirus.
Still-high unemployment is a potential political liability for Trump. Yet President Barack Obama was re-elected in 2012 even with unemployment at 7.8% on the eve of the election. And even as the economy has struggled to sustain a recovery, it has remained one of the few bright spots in Trump’s otherwise weak political standing. Roughly half of voters approve of his performance on the economy even though only about three in 10 voters believe the country is moving in the right direction.
But the president’s coronavirus diagnosis threatens to upend any political benefit he might derive from public views of the economy. With just a month to go before Election Day, Trump’s health status and his downplaying of a pandemic he has been accused of mishandling could overshadow almost everything else.
The September jobs report showed that women in their prime working years are quitting their jobs and leaving the workforce at much higher rates than men, a sign that remote schooling may be pushing many women to stay home.
“Women continue to bear the brunt of this recession,” said Julia Pollak, a labor economist at ZipRecruiter. “They are supervising at-home schooling."
This is the first U.S. recession in which services jobs have been hardest hit, instead of goods-producing industries like manufacturing, and women make up a greater share of the workforce in service industries like retail and health.
And while the unemployment rate for Black workers fell sharply last month, it remained much higher than for whites. The African-American rate fell to 12.1% in September from 13% the previous month. For whites, unemployment dropped rom 7.3% to 7%. For Hispanics, the jobless rate fell from 10.5% to 10.3%.
A recent wave of layoffs by large companies has heightened fears that the viral outbreak still poses a serious threat to the economy.
Disney said this week that it’s cutting 28,000 jobs, a consequence of reduced customer traffic and capacity limits at Disney World in Florida and the ongoing closure of Disneyland in California.
Allstate said it will shed 3,800 jobs, or 7.5% of its workforce. Marathon Petroleum, the Ohio refiner, is slashing 2,000 jobs. And tens of thousands of airline workers are losing their jobs this month as federal aid to the airlines expires. The airlines had been barred from cutting jobs as long as they were receiving the government assistance.
While congressional negotiations, led by House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, continue, the prospect of a major new economic aid package before the November elections is highly uncertain.
The United States is hardly alone in struggling with a weakened job market. Unemployment has risen for a fifth straight month in Europe in August and is expected to grow further amid concern that government support programs won’t be able keep many businesses hit by coronavirus restrictions afloat indefinitely.
Until a vaccine is developed, many economists say hiring and economic growth won’t fully recover. Restaurants, for example, rehired many employees over the summer as outdoor dining picked up. But as temperatures cool, business may fall off again , which could force many restaurants to lay off workers again. One in six restaurants have shut down because of the viral pandemic, the National Restaurant Association says.
Slowing job growth has raised the specter of a prolonged downturn that feeds on itself and becomes harder to fully reverse. Many temporary layoffs are becoming permanent as hotels, restaurants, airlines, retailers, entertainment venues and other employers anticipate a longer slump than they initially expected. There is also growing fear of a resurgence of the virus, which would compound the threat.
The longer that laid-off workers fail to find jobs, the more likely it is that they will have to look for new work with new employers or in different occupations.
WTI Crude Oil Tumbles To A 3-Week Low On Dollar Strength, Slump In Stocks, And Weak U.S. Economic Data...What happens if #WTI goes negative once again into a rather deep economic recession \ depression?
The energy complex this morning is sharply lower with WTI crude at a 3-week low, Brent crude at a 3-1/2 month low, and RBOB gasoline at a 2-1/2 week low. A stronger dollar and a decline in stocks today are undercutting energy prices. Energy prices remained under pressure on today's mostly weaker-than-expected U.S. economic data and an increase in OPEC crude production.
A slump in stocks today undercut confidence in the economic outlook and is bearish for crude prices. Stocks slumped on political uncertainty after President Trump tested positive for Covid late Thursday evening. Stocks are also weaker after U.S. lawmakers failed to agree on a new pandemic stimulus package.
Increased OPEC output is negative for oil prices after OPEC Sep crude production rose +40,000 bpd to a 4-month high of 24.430 million bpd, the third consecutive monthly increase.
An increase in Russian crude production is bearish for crude prices after Russia Sep crude production rose +0.6% m/m to 9.932 million bpd.
Today's U.S. economic data was mostly weaker-than-expected and bearish for crude prices. U.S. Sep nonfarm payrolls rose +661,000, weaker than expectations of +859,000. Also, Aug factory orders rose +0.7% m/m and +0.7% m/m ex-transportation, weaker than expectations of +0.9% m./m and +1.1% ex-transportation. On the positive side, the Sep University of Michigan U.S. consumer sentiment index rose +1.5 to a 6-month high of 80.4, stronger than expectations of +0.1 to 79.0.
Global jet fuel demand remains tepid and is bearish for crude prices after Thursday's data from Flightradar24, a website that tracks flights in real-time, showed the 7-day moving average of worldwide commercial flights fell to the lowest since mid-August.
The ongoing Covid pandemic has undercut global growth and energy demand and is bearish for crude prices. Infections have risen above 34.543 million around the world, with deaths exceeding 1.028 million.
Additional crude supplies from Libya are a bearish factor for crude prices. After a blockade was partially lifted last week, Libya's crude output as of Wednesday has risen to around 300,000 bpd, up from 80,000 bp at the start of last month.
Wednesday’s weekly EIA data showed that (1) U.S. crude oil inventories as of Sep 25 were +12.4% above the seasonal 5-year average, (2) gasoline inventories were +0.7% above the 5-year average, and (3) distillate inventories were +20.4% above the 5-year average. U.S. crude oil production in the week ended Sep 25 was unchanged at 10.7 million bpd and is down by -2.4 million bpd (-18.3%) from Feb's record-high of 13.1 million bpd.
Last Friday's data from Baker Hughes showed that active U.S. oil rigs rose by +4 rigs in the week ended Sep 25 to 183 rigs, moderately above the 15-year low of 172 rigs posted in the week ended Aug 14. Baker Hughes reported Sep 4 that the number of global active oil rigs in Aug rose by +20 to 1,050, the first increase in six months after the rig count in July fell to a record low of 1,030 rigs (data since 1975).
Expect great numbers of layoffs in the Oil, cruise ship, airline and travel industry and then other so called "non essential" industry groups. This could be the beginning of just massive layoffs and unemployment readers.
As for me, I am constantly researching what sectors in the economy and the "new economy" are doing well. Big tech is doing well...#FAANG + Tesla are doing well. The state of California just signed no gasoline engine motor vehicles in so many years...it is no wonder that Tesla is doing so well. We should expect every other state in the union to signoff on the same anti combustion engine rules, because most of the trends in the U.S. usually start in California and then work East into the rest of the country?
Blockchain, Bitcoin #BTC and the crypto economy are here to stay. I am always now researching the blockchain and how to upgrade my skillset into the future in the new...new economy in precious metals and the cryptospace and will be publishing such findings for my readers, thanks.
Crude Oil Prices Slump On Global Demand Concerns
The energy complex this morning is weaker as demand concerns weigh on prices. Also, rising Covid infections in Europe are raising concern fresh lockdowns may be needed to slow the spread of the virus, which would slow economic growth and energy demand. Crude prices are moving lower today despite the bullish factors of a fall in the dollar index to a 1-week low today and hopes for additional U.S. fiscal stimulus.
Global jet fuel demand remains tepid and is bearish for crude prices after today's data from Flightradar24, a website that tracks flights in real-time, shows the 7-day moving average of worldwide commercial flights fell to the lowest since mid-August.
Rising Covid infections in Europe may force countries to re-impose lockdown measures to try to slow the spread of the virus that will curb economic growth and energy demand. Germany today reported 2,442 new Covid infections, the most since April, and Poland today reported a record new 2,543 infections. Also, the regional director for Public Health England said today that new Covid cases in London have been "steadily increasing" and the crisis is at a "tipping point" in the pandemic. The ongoing Covid pandemic has undercut global growth and energy demand and is bearish for crude prices. Infections have risen above 34.213 million around the world, with deaths exceeding 1.019 million.
Today's U.S. economic data was mixed for energy demand and crude prices. On the positive side, U.S. initial weekly unemployment claims fell -36,000 to a 6-1/2 month low of 837,000, showing a stronger labor market than expectations of 850,000. Also, Aug personal spending rose +1.0% m/m, stronger than expectations of +0.8% m/m. Conversely, the Sep ISM manufacturing index unexpectedly fell -0.6 to 55.4, weaker than expectations of +0.5 to 56.5.
Additional crude supplies from Libya are a bearish factor for crude prices. After a blockade was partially lifted last week, Libya's crude output as of Wednesday has risen to around 300,000 bpd, up from 80,000 bp at the start of last month.
Wednesday’s weekly EIA data showed that (1) U.S. crude oil inventories as of Sep 25 were +12.4% above the seasonal 5-year average, (2) gasoline inventories were +0.7% above the 5-year average, and (3) distillate inventories were +20.4% above the 5-year average. U.S. crude oil production in the week ended Sep 25 was unchanged at 10.7 million bpd and is down by -2.4 million bpd (-18.3%) from Feb's record-high of 13.1 million bpd.
Last Friday's data from Baker Hughes showed that active U.S. oil rigs rose by +4 rigs in the week ended Sep 25 to 183 rigs, moderately above the 15-year low of 172 rigs posted in the week ended Aug 14. Baker Hughes reported Sep 4 that the number of global active oil rigs in Aug rose by +20 to 1,050, the first increase in six months after the rig count in July fell to a record low of 1,030 rigs (data since 1975).
Disney To Lay Off 28,000 At Its Parks In California, Florida
ORLANDO, Fla. (AP) — Squeezed by limits on attendance at its theme parks and other restrictions due to the pandemic, The Walt Disney Co. said Tuesday it planned to lay off 28,000 workers in its parks division in California and Florida.
Two-thirds of the planned layoffs involve part-time workers but they ranged from salaried employees to hourly workers, Disney officials said.
Disney’s parks closed last spring as the pandemic started spreading in the U.S. The Florida parks reopened this summer, but the California parks have yet to reopen as the company awaits guidance from the state of California.
In a letter to employees, Josh DÁmaro, chairman of Disney Parks, Experience and Product, said California's “unwillingness to lift restrictions that would allow Disneyland to reopen" exacerbated the situation for the company.
DÁmaro said his management team had worked hard to try to avoid layoffs. They had cut expenses, suspended projects and modified operations but it wasn’t enough given limits on the number of people allowed into the park because of social distancing restrictions and other pandemic-related measures, he said.
“As heartbreaking as it is to take this action, this is the only feasible option we have in light of the prolonged impact of COVID-19 on our business, including limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic,” he said.
Disney officials said the company would provide severance packages for the employees, where appropriate, and also offer other services to help workers with job placement.
Disney officials didn't offer a breakdown of the layoffs between the Florida and California operations. Walt Disney World in Florida has around 77,000 employees, while the Disneyland Resort in California has more than 30,000 workers.
With its parks closed due to the pandemic in April, Disney furloughed up to 43,000 workers while still paying for their health insurance at its Florida resort. It brought many of them back after it reopened in July. Furloughed workers in California also received health benefits.
In a statement, U.S. Rep. Val Demings, a Democrat from Orlando, said the layoffs showed the need for more coronavirus-related relief from Congress.
“These layoffs show yet again how desperately that assistance is needed by American households and businesses,” Demings said.
Unfriendly Skies: Airline Workers Brace For Mass Layoffs
DETROIT (AP) — The worries are growing for United Airlines flight attendant Jordy Comeaux.
In a few days, he’ll be among roughly 40,000 airline workers whose jobs are likely to evaporate in an industry decimated by the coronavirus pandemic.
Unless Congress acts to help for a second time, United will furlough Comeaux on Thursday, cutting off his income and health insurance. Unemployment and the money made by his husband, a home health nurse, won’t be enough to pay the bills including rent near Chicago’s O’Hare International Airport.
“I don’t have enough, unfortunately, to get by,” said Comeaux, 31, who has worked for United for four years. “No one knows what’s going to come next and how to prepare.”
Since the pandemic hit, thousands of flight attendants, baggage handlers, gate agents and others have been getting at least partial pay through $25 billion in grants and loans to the nation’s airlines. To receive the aid, companies agreed not to lay off employees through Sept. 30. That “Payroll Support Program” helped many stay on, and keep health care and other benefits.
It all runs out on Thursday.
With air travel down about 70% from last year, many carriers including United and American say they’ll be forced to cut jobs without additional aid. Delta and Southwest, two other big carriers, tapped private capital markets and say they’ll avoid layoffs.
Industry analysts say fear of air travel and businesses keeping employees close to home have brought an unprecedented crisis to the industry, resulting in cataclysmic losses. The four largest U.S. airlines — Delta, United, American and Southwest — together lost $10 billion in the second quarter alone.
Fewer airline passengers also means less demand for rental cars, hotels and restaurants. With demand for new planes down, airplane manufacturer Boeing has cut thousands of jobs. And with tourism down, The Walt Disney Co. said Tuesday it planned to lay off 28,000 workers in its parks division in California and Florida.
“To my understanding, this is the steepest demand shock for commercial aviation in human history,” said Morningstar aviation analyst Burkett Huey.
The International Air Transport Association on Tuesday lowered its full-year traffic forecast. The trade group for airlines around the world now expects 2020 air travel to fall 66% from 2019, compared to its previous estimate of a 63% decline.
Airlines in Europe are expecting years of trouble and have acted quickly to cut jobs even as they get government rescue loans.
Germany’s Lufthansa won a 9 billion-euro government bailout, but announced an additional round of cuts after a summer bump in vacation travel dwindled in September. The company has parked its jumbo jets and has plans to eliminate 22,000 full-time positions. British Airways parent company IAG has said it would cut some 12,000 of its 42,000-person workforce.
In the U.S., Congress has been considering a second round of airline aid for weeks, but it’s hung up in the debate over a larger national relief package. The Airlines for America trade group said a House proposal unveiled Monday raises some hope because Democrats and Republicans appear to be talking. Layoffs could be delayed if a deal is imminent.
Toni Valentine, 41, a United reservations agent in Detroit who has been with the airline for 15 years, has been told she’ll be laid off this week. She has six children ranging in age from 2 to 22, and her husband can’t work because he’s recovering from a massive stroke.
“Knowing that I may not have insurance benefits, I feel like I have failed,” she said on a conference call set up by the Machinists Union. “I’m the primary breadwinner in this family.”
Before the pandemic, the airlines were thriving. Planes were full, profits were fat and workers were getting big overtime checks. That helped Valentine, who said she worked 80 hours per week but still was barely making it after her husband’s illness.
Now, her 19-year-old son has dropped out of college to help support the family, she said. “We’re crying for help and no one is hearing,” she said.
Tevita Uhatafe also was a big beneficiary of overtime pay, working 60 hours a week hauling baggage and loading airplanes for American Airlines in Dallas. He and his wife, who holds the same fleet service job, earned enough to buy a house and purchase a new car in January.
Then came the pandemic. Overtime went away. Uhatafe and his wife cut expenses and staggered their shifts so one could stay home to supervise remote learning for two sons and a niece.
But come Thursday, they both are likely to get only part-time hours, meaning their household income could be halved. “We can’t afford our mortgage, our car payment, our other utilities,” he said.
They also fear they won’t be able to make health care copays and deductibles. They’ve looked for jobs, but in a market with high unemployment “there really isn’t anything out there for us right now,” Uhatafe said.
Allie Malis, an American Airlines flight attendant in Washington, D.C., also faces layoff Thursday. “At this point I don’t have a Plan B,” she said.
With early retirements and other incentives to quit, U.S. airlines have already shed about 45,000 jobs during the pandemic, or 48,000 including cargo carriers. Government figures are only available through July, however.
Compare that to the first six months after the Sept. 11, 2001, terror attacks, when passenger and cargo airlines cut more than 90,000 jobs, and employment drifted lower for the next two years.
Two decades later, airline employment still had not fully recovered. Malis said American didn’t hire any new flight attendants until 2013 because it was still calling back those who were laid off.
While job losses in the airline industry since the pandemic could be about 20% of the total workforce when accounting for the next round of cuts, there are other sectors feeling even more pain, including the restaurant, bar and hotel businesses. From February, before the coronavirus took hold in the U.S., through August, those businesses shed nearly 5.8 million jobs, or around 22% of the total number employed, according to federal statistics.
Flight attendants likely will be the hardest hit if the airline layoffs come this week because there are over 25,000 of them, more than any other job in the industry, said Savanthi Syth, an airlines analyst for Raymond James.
Pilots may not be affected as much because airlines want to avoid the cost of retraining them once they’re in a position to rehire. On Monday, United Airlines pilots ratified an agreement that the union and the airline say will avoid about 2,850 furloughs set to take effect later this week, and another 1,000 early next year.
It’s anyone’s guess when or even if air travel will recover from the pandemic and if airlines can fly through the turbulence. Morningstar expects a vaccine to be available by the end of this year with widespread distribution by the middle of 2021, but recovery could still take years.
Comeaux holds out hope that his union, the Association of Flight Attendants, can successfully lobby Congress for help in the next few days. Many United flight attendants, he said, took special leaves with no pay to preserve jobs for others.
“How long is it going to take for us to get back up and going?" he asked. "That’s the really difficult part.”
Hey readers, it looks like the major stock markets are rolling over into bearish price action. Lots of need for much more stimulus, except not to be had until after the U.S. election if at all?
$DOWI and #SPY and #NASDAQ now below 50 day moving averages? If selloff continues, could cause institutions to begin the exit from the stock market and short selling to begin? #FAANG bubble bursting? Is #Tesla stock going to crash?
Interest rates to zero so the U.S. Economy becomes like the Japan economy? Hyperinflation, inflation and stagflation are pending big time? Fred M1 goes up huge parabolic, interest rates go negative in the global economy.
Is this September 23, 1929 all over again? Even .999 gold and .999 silver are selling off and acting bearish. The world's major global economies are so over leveraged in debt, that when the stock markets go bearish, the price of precious metals also go bearish because of massive margin calls in equities? The #QQQ and #SPY and #DOW a drunken orgy of speculation?
Famous quote: Don't worry the Federal Reserve will always bailout the stockmarket because it is to big to fail, right? I have spooky Halloween feeling bout the stockmarket. Or Tesla, Facebook, Apple, Amazon and Netflix stock shares will always go up in price and you don't want to sell short Tesla stock because it is undervalued at only 1,000 forward PE and Nikola NKLA is not a total shama' ding dong!
Stocks Are Mixed On Wall Street As September Keeps Churning
New York (AP) — U.S. stock indexes are mixed in early trading Wednesday, as Wall Street’s tumultuous month continues to churn.
The S&P 500 was 0.2% higher, but trading has been erratic recently with several sudden turns of momentum, even within the same day. The Dow Jones Industrial Average was up 144 points, or 0.5%, at 27,432, as of 9:49 a.m. Eastern time, and the Nasdaq composite was down 0.1%.
This week alone, a Monday swoon brought the S&P 500 near the edge of a 10% drop from its record high set on Sept. 2. But stocks have stabilized since then, and the S&P 500 is trying for a second day of gains following its first four-day slide since stocks were selling off in February.
Nike jumped 8.8% for one of the biggest gains in the S&P 500 after it reported much stronger profit than analysts expected. Most of the stocks in the index were higher.
Johnson & Johnson rose 1.5% as it begins a huge final study to try to prove if a single dose COVID-19 vaccine can protect against the virus. A handful of other vaccines are already in final-stage study, and investors increasingly expect one to be available within the first three months of 2021. The hope is that it can help the economy get close to normal again and allow strong growth to resume.
At the center of the market’s big swings this month have been Apple, Amazon and other Big Tech stocks. They soared through the pandemic on expectations that their growth will only accelerate as the pandemic accelerates work-from-home and other trends that benefit them. But they began falling early this month amid fears that they had grown too expensive.
Several were weakening again on Wednesday, with Amazon down 1.2% and Microsoft down 0.6%. Apple was swinging between small gains and losses.
Stocks that would benefit from a return to normal were counterbalancing those declines, though. Norwegian Cruise Line Holdings rose 4%, and American Airlines Group gained 2.4%.
Part of this week’s early stumble for stocks was due to worries about European governments imposing tougher restrictions on businesses to slow the spread of the coronavirus, which hurt travel-related companies in particular. But analysts said the U.K. orders announced Tuesday weren’t as extreme as some investors had feared.
European stocks rose despite data showing the region’s economic recovery may be faltering. Business activity is slowing as weakness in the service sector is countering strength in manufacturing, according to preliminary data from a survey of purchasing managers by IHS Markit.
The survey’s composite reading was at a three-month low, though manufacturing was at a 25-month high.
Germany’s DAX returned 1.2%, France’s CAC 40 rose 1.4% and the FTSE 100 in London gained 2%.
In Asia, markets were more subdued. Japan’s Nikkei 225 slipped 0.1%, South Korea’s Kospi was virtually flat and Hong Kong’s Hang Seng ticked up by 0.1%.
Treasury yields were holding relatively steady, and the 10-year yield slipped to 0.67% from 0.68%.
Yields have remained very low as the Federal Reserve has said it expects to keep short-term rates low for years. Such support helped Wall Street halt its sell-off of nearly 34% earlier this year, along with a big stimulus effort by Congress.
But extra unemployment benefits and other aid from Congress have already expired. Some areas of the economy have seen growth slow as a result, and investors say a renewal is crucial. But partisan disagreements have kept Congress stymied. The vacancy on the Supreme Court following Justice Ruth Bader Ginsburg’s death has deepened the country’s partisan split even more.
Fed Chair Jerome Powell said on Tuesday that the economy would benefit from support by both the central bank and Congress. He is set to testify again Wednesday at a hearing for a House subcommittee on the coronavirus crisis.
Stocks Drop Heavily On US-China Spat, Fear Of More Lockdowns...short stock market ETFs looking good a a hedge. October here we come...
BEIJING (AP) — Global stock markets and U.S. futures tumbled Monday due to U.S.-Chinese tension over technology and security and the prospect of tougher restrictions on public life in Europe to limit coronavirus cases.
The sell-off gathered pace in European trading hours, with shares in many travel-related companies falling upward of 10%. Futures are pointing to a drop on Wall Street when it opens.
On Friday, the White House added to tension with the Chinese government by announcing downloads of the popular Chinese-owned messaging app WeChat would be banned as a security risk.
A federal judge agreed Saturday to postpone the WeChat restrictions on the grounds they might interfere with free speech. The same day, President Donald Trump endorsed an agreement for TikTok, a unit of China’s ByteDance Ltd., to form a U.S. company with Oracle Corp. and Walmart Inc.
China responded over the weekend with a statement saying it may take “necessary measures” to protect Chinese companies.
Futures for the S&P 500 index and the Dow Jones Industrial Average were off 1.7% and 2%, respectively. In Europe, the FTSE 100 in London tumbled 3.3% to 5,808. Frankfurt’s DAX sank 3.2% to 12,695 and the CAC 40 in Paris lost 3.2% to 4,821.
Shares in travel stocks were hit particularly hard after British authorities warned about an exponential growth in the number of new coronavirus cases. Prime Minister Boris Johnson later this week is expected to announce a slate of short-term restrictions that will act as a “circuit breaker” to slow the spread of the disease.
The number of cases has been rising quickly in many European countries and while authorities don't seem ready to return to the tough restrictions on public life that they imposed in the spring, the new wave of the pandemic threatens the economic outlook.
In Asia, the Shanghai Composite Index lost 0.6% to 3,316.94 and the Hang Seng in Hong Kong shed 2.1% to 23,950.69. The Kospi in Seoul was 1% lower at 2,389.39 while Sydney’s S&P-ASX 200 declined 0.7% to 5,822.60.
India's Sensex fell 2% to 38,065.67. New Zealand and Southeast Asian markets declined.
Global markets have recovered most of this year’s losses, though the bulk of gains went to big tech and some other stocks, while most issues still are down.
Investors have been encouraged by central bank infusions of credit into struggling economies and hopes for a vaccine to end the coronavirus pandemic that plunged the global economy into its deepest downturn since the 1930s.
But market momentum has faded with a rise in virus cases and after the Federal Reserve said last week that the U.S. economic outlook is uncertain. U.S. lawmakers also have yet to agree on a new support package ahead of elections for president, Congress and some Senate seats.
“With 43 days to the U.S. election, fingers crossed may be what little one can do when it comes to the fiscal stimulus hopes,” said Jingyi Pan of IG in a report.
In energy markets, benchmark U.S. crude lost 88 cents to $40.23 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the price standard for international oils, declined 90 cents to $42.25 per barrel in London.
The dollar declined to 104.11 yen from Friday's 104.18 yen. The euro retreated to $1.1773 from $1.1843.
US Stocks Fall As Market Decline Extends For Third Week, #FAANG stocks Tank-a-ro'
The S&P 500 fell 1.1%, led once again by a sell-off in technology companies, with Apple, Amazon and Alphabet weighing particularly on the market. Technology stocks and other companies that powered the market's strong comeback this year have suddenly lost momentum this month amid worries that they have become too expensive.
The sell-off wiped out the last of the solid gains the market saw to start the week. The S&P 500 is on track for its first monthly loss since March. September is historically the worst month for stocks.
“The market has been poised to just pull back, take a breather," said Quincy Krosby, chief market strategist at Prudential Financial. "Raising capital is prudent during a month that is known statistically, historically for being difficult for the market.”
The S&P 500 fell 37.54 points to 3,319.47. The decline marks the the first 3-week losing streak for the benchmark index since last October. The Dow Jones Industrial Average dropped 244.56 points, or 0.9%, to 27,657.42. The Nasdaq composite shed an early gain, losing 116.99 points, or 1.1%, to 10,793.28. Smaller stocks also fell, with the Russell 2000 index of small caps giving up 5.82 points, or 0.4%, to 1,536.78.
Momentum in the market shifted Wednesday after the Federal Reserve said the outlook for the U.S. economy remains uncertain and policymakers expect short-term interest rates to stay at record lows through 2023. Low rates typically turbocharge the market by encouraging investors to pay higher prices for stocks, but some investors may have been looking for the Fed to be more aggressive.
Growth in some areas of the economy has also slowed after supplemental unemployment benefits and other aid from the federal government expired, and partisan disagreements in Congress are holding up a possible renewal of support. Investors say it’s essential that such aid arrives.
“To the extent that you don’t get an additional fiscal cushion, the economy is going to be impacted by it,” said Brian Levitt, global market strategist at Invesco.
Rising tensions between the world’s two largest economies are also continuing to keep markets on edge. The United States said on Friday that it will ban downloads of the Chinese apps TikTok and WeChat on Sunday. It cited national security and data privacy concerns.
President Donald Trump’s targeting of the Chinese tech industry has caused intermittent worries in the market about a possible retaliation against the U.S. industry.
Big Tech stocks have stumbled sharply this month on worries that their prices have grown too expensive following their virtuosic performance through the pandemic. Surging shares of Apple, Microsoft, Amazon and others helped carry Wall Street back to record heights, even as the pandemic walloped much of the economy, as the coronavirus accelerated work-from-home and other trends that benefit them.
But they suddenly lost momentum two weeks ago, causing the market to swing with them. Because these companies have grown so massive, their stock movements have huge sway over broad market indexes, such as the S&P 500.
“We certainly got a little short-term overbought and we headed into a time of the year that is not great for markets,” Levitt said.
On Friday, several Big Tech stocks continued slipping. Apple dropped 3.2%, Microsoft fell 1.2% and Amazon slid 1.8%.
Also on the long list of concerns for markets is how the pandemic progresses, whether a vaccine for COVID-19 could indeed be available in early 2021 as many investors expect and what November’s U.S. presidential election will do to the economy.
Treasury yields remain very low, showing the powerful strength of the Federal Reserve and continued expectations by bond investors for only modest economic growth and inflation. The yield on the 10-year Treasury rose to 0.70% from 0.69% late Thursday.
A preliminary report on Friday said that consumer sentiment is improving at a faster pace than economists expected, which is key for an economy where spending by consumers is the main driver. But it follows other reports this week that showed growth in retail sales slowed last month and the number of layoffs across the country remains stubbornly high.
One factor that may have helped make trading bumpier than usual Friday is an event known as “quadruple witching,” which marks the expiration of futures and options on stocks and indexes. The event can drive swings in prices.
Other stock markets around the world made mostly modest moves.
In Europe, the German DAX lost 0.7%, and the French CAC 40 sank 1.2%. The FTSE 100 in London fell 0.7%. Markets in Asia closed mostly higher.
Benchmark U.S. crude oil fell 0.2% to $40.89 to per barrel. Brent crude, the international standard, fell 0.8% to $42.95 per barrel.
US Stocks Fall As Another Bumpy Week Of Trading Nears End...careful October 1929 right around the corner?
NEW YORK (AP) — Stocks are falling in afternoon trading on Wall Street Friday, as another zig-zag week for markets closes out following their abrupt loss of momentum this month.
The S&P 500 was down 1% and is on pace for its third straight weekly loss.
The Dow Jones Industrial Average fell 150 points, or 0.5%, to 27,759, as of 12:43 p.m. Eastern time, and the Nasdaq composite fell 1.7% after initially eking out a gain earlier in the day. Smaller stocks also fell, with the Russell 2000 index of small caps down 0.7%.
Analysts warned that the day’s trading could be even bumpier than usual. Futures and options on stocks and indexes are set to expire in an event known as “quadruple witching,” which can drive swings in prices.
Stocks have already swirled this week despite the Federal Reserve’s saying it expects to keep short-term interest rates at record lows through 2023. Low rates typically turbocharge the market by encouraging investors to pay higher prices for stocks, but some investors may have been looking for the Fed to be even more aggressive.
Growth in some areas of the economy has also slowed after unemployment benefits and other aid from the federal government expired, and partisan disagreements in Congress are holding up a possible renewal of support. Investors say it’s essential that such aid arrives.
“To the extent that you don’t get an additional fiscal cushion, the economy is going to be impacted by it,” said Brian Levitt, global market strategist at Invesco.
Rising tensions between the world’s two largest economies are also continuing to keep markets on edge. The United States said on Friday that it will ban the downloads of the Chinese apps TikTok and WeChat on Sunday. It cited national security and data privacy concerns.
President Donald Trump’s targeting of the Chinese tech industry has caused intermittent worries in the market about a possible retaliation against the U.S. industry.
Big Tech stocks already stumbled sharply this month on worries that their prices have grown too expensive following their virtuosic performance through the pandemic. Surging shares of Apple, Microsoft, Amazon and others helped carry Wall Street back to record heights, even as the pandemic walloped much of the economy, as the coronavirus accelerated work-from-home and other trends that benefit them.
But they suddenly lost momentum two weeks ago, causing the market to swing with them. Because these companies have grown so massive, their stock movements have huge sway over broad market indexes, such as the S&P 500.
“We certainly got a little short-term overbought and we headed into a time of the year that is not great for markets,” Levitt said.
On Friday, several Big Tech stocks continued slipping. Apple was down 3.2%, and Microsoft was down 2.4%, but Facebook was up 1%.
Also on the long list of concerns for markets is how the pandemic progresses, whether a vaccine for COVID-19 could indeed be available in early 2021 as many investors expect and what November’s U.S. presidential election will do to the economy.
Treasury yields remain very low, showing the powerful strength of the Federal Reserve and continued expectations by bond investors for only modest economic growth and inflation. The yield on the 10-year Treasury remained at 0.69% from late Thursday.
A preliminary report on Friday said that consumer sentiment is improving at a faster pace than economists expected, which is key for an economy where spending by consumers is the main driver. But it follows other reports this week that showed growth in retail sales slowed last month and the number of layoffs across the country remains stubbornly high.
Other stock markets around the world made mostly modest moves.
In Europe, the German DAX lost 0.7%, and the French CAC 40 sank 1.2%. The FTSE 100 in London fell 1.1%.
Asian markets rose. Japan’s Nikkei 225 added 0.2%, South Korea’s Kospi gained 0.3% and Hong Kong’s Hang Seng climbed 0.5%. Stocks in Shanghai rose 2.1%.
Benchmark U.S. crude oil rose 0.2% to $41.06 to per barrel. Brent crude, the international standard, fell 0.3% to $43.14 per barrel.
Is #Tesla #TSLA stock shares overvalued: Price/Earnings ttm 1,171.25, Price/Cash Flow 273.87 and a conservative Price/Book 39.08. Is it time to sell short #Tesla stock? $424.40 is way to high of a stock price? Time will tell on #TSLA short at $424 per share.
Wall Street Slumps As Big Tech Once Again Leads Decliners #FAANG + Tesla tech bubble burst...October fast approaches?
NEW YORK (AP) — U.S. stocks are lower Thursday as Wall Street continues to swirl after the Federal Reserve said it will keep interest rates at nearly zero for years to help nurse the wheezing economy.
The S&P 500 was 1% lower in morning trading, after trimming an earlier loss that reached 1.6%. It follows up on a volatile day, where the index at first rose following the Fed’s announcement before giving out in the last hour of trading to drop to its first loss in four days.
The Dow Jones Industrial Average fell 165 points, or 0.6%, to 27,866, as of 10:25 a.m. Eastern time, and the Nasdaq composite was down 1.7%. The selling was widespread, with all 11 sectors that make up the S&P 500 lower and the heaviest losses in those that are homes to Amazon, Facebook and Apple.
Low interest rates are usually a boon for investors, sending stocks soaring, and analysts gave varying possible reasons for the market's weakness. Among them: the gloomy outlook Fed Chair Jerome Powell gave for the economy’s prospects and built-up expectations in some corners that the Fed would be even more generous with its stimulus. This also isn’t the first hangover stocks have had following a rate announcement by the Fed.
Markets “hoped for the Fed to put policy money where the mouth is” but “ended up a tad disappointed,” Mizuho Bank said in a report. The Fed was “long on talk and short on action.”
Another possibility for the weakness is the diminishing odds that Congress will deliver more aid for the economy anytime soon after benefits for unemployed workers and other stimulus expired recently. Investors say such aid is crucial for the recovery, and Powell talked about the importance of it in a press conference Wednesday.
A report on Thursday showed that another 860,000 workers applied for unemployment benefits last week. But partisan disagreements on Capitol Hill have held up any renewal of Congressional support.
“Fundamentally, the economy is still moving in the right direction, but the risk of potentially jeopardizing the recovery from reduced fiscal support is becoming uncomfortably high,” Piper Sandler strategist Craig Johnson wrote in a report.
Economists say the impact of Congress’ inaction may already be showing in the data. Retail sales growth weakened last month, for example, as unemployed workers were no longer getting $600 in extra weekly benefits from the federal government. President Donald Trump issued an executive order in early August to provide a scaled-back version of the benefits, but that program is expiring.
Trump urged his fellow Republicans on Wednesday to move toward a big package of aid, which is what Democrats have been arguing for, but negotiations still remain far apart.
The number of workers applying for jobless benefits has been coming down slowly, but it remains incredibly high compared with history.
Big Tech stocks were again at the center of Wall Street's selling. After flying through the pandemic on expectations that their strong growth will only continue, Apple and other superstar stocks suddenly lost momentum earlier this month amid worries they had become too expensive.
Apple fell 2%, Amazon sank 3% and Facebook lost 2.4%.
Among the few gainers was Herman Miller, which jumped 28.9% after reporting much stronger profit for its latest quarter than analysts expected. It benefited from a rush of people buying furniture for home offices they had to suddenly set up due to the pandemic.
Treasury yields fell in a sign of increased caution in the market. The yield on the 10-year Treasury fell to 0.65% from 0.69% late Wednesday.
Stocks in markets around the world were also weak.
In Europe, the German DAX lost 0.5%, and the French CAC 40 fell 0.6%. The FTSE 100 in London sank 0.2%.
In Asia, Japan’s Nikkei 225 fell 0.7%, South Korea’s Kospi dropped 1.2% and Hong Kong’s Hang Seng lost 1.6%. Stocks in Shanghai slipped 0.4%
Federal Reserve Sees Rates Near Zero At Least Through 2023...Negative Rates after the election?
WASHINGTON (AP) — The Federal Reserve expects to keep its benchmark interest rate pegged near zero at least through 2023 as it strives to accelerate economic growth and drive down the unemployment rate.
The central bank also said Wednesday that it will seek to push inflation above 2% annually. The Fed left its benchmark short-term rate unchanged at nearly zero , where it has been since the pandemic intensified in March.
The Fed's benchmark interest rate influences borrowing costs for home buyers, credit card users, and businesses. Fed policymakers hope an extended period of low interest rates will encourage more borrowing and spending, though their new policy also carries risks of inflating stock or causing other financial market bubbles.
The Fed’s moves are occurring against the backdrop of an improving yet still weak economy, with hiring slowing and the unemployment rate at 8.4%.
Still, at a virtual conference with reporters following the statement, Fed chair Jay Powell said that the economy has recovered more quickly than the Fed had expected. The Fed updated its forecast for GDP to a decline of 3.7% compared to a June forecast of a 6.5% drop. On employment, the Fed projected an unemployment rate at the end of the year of 7.6% instead of the 9.3% it projected in June.
Still, Powell acknowledged the economic outlook remains highly uncertain and depends heavily on the ability of the U.S. to get control of the pandemic.
“A full economic recovery is unlikely until people are confident that it is safe to re-engage in a wide variety of activities," Powell said.
During his news conference, Powell, as he has in the past, supported more spending by Congress to help the economy recover. Congress is deadlocked on more financial relief because of disagreements on the size of the package between Democrats and Republicans.
“My sense is that more fiscal support is likely to be needed,” Powell said. “There are still roughly 11 million people out of work because of the pandemic.”
The Fed’s statement formalized a change in its policy toward inflation first announced by Powell last month.
The Fed said that that because inflation has mostly fallen below its target of 2% in recent years, Fed policymakers now “will aim to achieve inflation moderately above 2 percent for some time." It also says it will keep rates at nearly zero until “inflation has risen to 2% and is on track to moderately exceed 2% for some time."
The change reflects a growing concern at the Fed that in recessions, inflation often falls far below 2%, but it doesn’t necessarily reach 2% when the economy is expanding. Over time, that means inflation on average falls further from the target. As businesses and consumers come to expect increasingly lower inflation, they act in ways that entrench slower price gains.
The Fed prefers a little inflation because that gives the central bank more room to cut or raise short-term interest rates.
The Fed last month made two other key changes to its strategy framework after its first-ever public review of its policies and tools, which it launched in November 2018.
Powell said last month that the Fed will place greater weight on pushing unemployment lower and will no longer raise interest rates preemptively when the unemployment rate is low to forestall higher inflation. Instead, it will now wait for evidence that prices are rising.
Fed officials have acknowledged that economic models that predict higher inflation when unemployment is very low have been wrong, particularly since the 2008-2009 recession.
The Fed also said last month that its objective to maximize employment is “a broad and inclusive goal.” That language suggests that Fed officials will consider the unemployment rates of Blacks and Hispanics and other disadvantaged groups as well as the overall jobless rate when contemplating interest rate changes, something the Fed has never considered before. Democrats in Congress have introduced legislation that would require the Fed to consider racial inequities as it makes policy decisions.
The Fed also said Wednesday that it will continue purchasing about $120 billion in Treasurys and mortgage-backed securities a month, in an effort to keep longer-term interest rates low. Since March, the Fed has flooded financial markets with cash by making such purchases and its balance sheet has ballooned by about $3 trillion. But with the yield on the 10-year Treasury already at just 0.67%, economists worry that the Fed’s bond purchases will have a limited impact going forward.
Still, the Fed's moves to stabilize financial markets have contributed to the stock market's rally to new highs after plunging in February and March. On Wednesday, stocks got a short boost from the Fed's projections before turning lower. Still, market analysts liked what they heard from the Fed.
“A better economy and a dovish Fed, that is a nice combo,” said Ryan Detrick, chief market strategist for LPL Financial.
On Wednesday, the latest economic report seemed to support Powell's view of an economy on the mend but not fully healthy. The Commerce Department said retail sales rose 0.6% in August, the fourth straight gain but the slowest since sales started growing again in May. The figure suggests that the end of a $600 supplemental weekly unemployment payment weighed on spending.
The global economy is still expected to shrink this year, but by less than previously estimated, according to a report Wednesday from the Organization for Economic Development, an international think tank. The OECD now expects the world economy to shrink by 4.5%, up from an earlier estimate of a 6% contraction, mostly because of better-than-expected recoveries in the United States and China.
US Stocks Tick Up Ahead Of Federal Reserve’s Rate Decision
The S&P 500 was up 0.2% in morning trading, on pace for its third straight gain following its worst weekly slump since June. The Dow Jones Industrial Average was up 56 points, or 0.2%, at 28.052, as of 9:46 a.m. Eastern time, and the Nasdaq composite was 0.1% higher.
One of the primary reasons Wall Street has roared back to record heights despite the still-raging pandemic is the immense aid the Federal Reserve is providing. The central bank has cut short-term rates to nearly zero and is buying all kinds of bonds to support markets. Fed Chair Jerome Powell outlined a new strategy last month where it may keep providing support even if inflation rises above its target level.
Investors aren’t expecting anything major from this afternoon’s announcement by the Fed. They are looking for short-term rates to stay at their record low, though the central bank could announce more details around its change in strategy.
The Fed will also issue its quarterly economic projections, which will for the first time include estimates for growth, unemployment and the Fed’s benchmark interest rate for 2023.
FedEx jumped 7.7% for one of the biggest gains in the S&P 500 after reporting stronger profit growth for the latest quarter than analysts expected. The boom in online shopping caused by the coronavirus pandemic has helped its revenue climb. The company said that the growth it expected to see over the next three to five years has happened in just three to five months.
Wall Street has resumed its upward lift this week following a tumultuous two-week stretch where high-flying technology stocks abruptly lost their momentum. Big Tech stocks soared through much of the pandemic as investors increasingly bet their strong growth will continue as more of everyday life shifts online.
The gains were so powerful and consistent for these superstar stocks that critics warned they had become too expensive, and they tumbled sharply after carrying the S&P 500 to a record on Sept. 2. But they’ve stabilized this week. Their strong growth would continue to look very attractive to investors in a slow-growth economy if the Fed does indeed keep interest rates low for years as markets expect.
The economy has made some improvements since the worst of the lockdowns in the spring, but the budding recovery has been fitful. Investors say the economy and markets still crucially need all the support they can get from the Federal Reserve, as well as Congress.
Federal unemployment benefits and other Congressional aid for the economy approved earlier this year have expired, but partisan disagreements on Capitol Hill have prevented a renewal.
A report on Wednesday showed that U.S. retail sales strengthened last month, but less than economists expected. At least part of the shortfall is likely because unemployed workers are no longer getting the $600 boost to their weekly checks that used to come from the federal government.
Treasury yields dipped following the retail sales report, and the yield on the 10-year Treasury dropped to 0.66% from 0.68% late Tuesday.
Earlier, a separate report from the Organization for Economic Cooperation and Development had said the global economy is not doing as badly as previously expected, especially in the United States and China. It projected the world’s economy will shrink by 4.5% this year, less than the 6% plunge it had predicted in June.
Stock markets around the world were mostly subdued.
In Europe, the German DAX slipped 0.1%, and the French CAC 40 fell 0.5%. The FTSE 100 in London lost 0.7%.
In Asia, Japan’s Nikkei 225 rose 0.1%, but other markets were weaker. Hong Kong’s Hang Seng was virtually flat, South Korea’s Kospi fell 0.3%, and stocks in Shanghai lost 0.4%.
European Central Bank Expects To Use Full Extent Of Stimulus = Hyperinflation and negative interest rates
FRANKFURT, Germany (AP) — European Central Bank head Christine Lagarde said the bank would “likely” use all of the 1.35 trillion euros ($1.6 trillion) in planned stimulus to support the economy through the pandemic, which has caused a massive recession and is seeing a new rise in contagions.
After the ECB left its key rates and stimulus settings unchanged on Thursday, Lagarde said that strong central bank support was still necessary given high uncertainty about the recovery from the pandemic lockdowns. She repeated the bank's promise to keep the central bank's pandemic emergency bond-buying program running through mid-2021 - and in any case until the coronavirus crisis phase is over.
Lagarde said the economy's return to health will mainly depend on countries' ability to contain the outbreak. The recent increases in infection rates are “headwinds to the short-term outlook” while “a further sustained recovery remains highly dependent on the evolution of the pandemic and the success of containment policies.”
After some initial success in reversing large outbreaks in Spain, Italy and France, and after Germany’s success in containing a disastrous first wave, cases in Europe have started to rise again as people have returned from summer vacations and after some restrictions were eased.
The pandemic stimulus still has some 850 billion euros left unused, so even with no action Thursday the eurozone economy will still see substantial central bank support. The program pumps newly created money into the economy in an effort to keep credit flowing to businesses and promote growth and stronger inflation nearer to the bank's goal of just under 2%.
The decision by the ECB's governing council to leave its policy programs unchanged was widely expected, but some analysts expressed surprise at the lack of hints that the bank was ready to add more. Many observers have been predicting the bank will add to its bond purchase stimulus by year end. Lagarde indicated the bank's governing council had not discussed expanding the bond purchase efforts.
She also struck a relatively confident tone on two other issues regarded by some as signs of potential trouble: the stronger euro, which can hurt exporters just as they try to recover from the pandemic, and the inflation rate's drop below zero to 0.2%, far from the bank's target. Weak inflation is often a sign of economic weakness.
Lagarde indicated the low inflation reading was due to temporary factors and she made only a mild comment on the stronger euro. She said bank officials would “carefully assess incoming information, including the exchange rate.” The euro rose after the statement and traded about a cent higher at $1.19.
Economist Florian Hense at Berenberg bank found it surprising that Lagarde “refrained from almost any signal whatsoever for more stimulus.”
Oliver Rakau at Oxford Economics said that the ECB “may have sounded too confident for its own good.” He said Lagarde's lack of concern about the euro could help lift the euro even further, causing trouble that would demand more action. “So we still think the ECB will end up expanding the pandemic emergency purchase program by 200 billion euros later this year," he wrote in a research note. "In fact, the ECB's nonchalance may push it to do more.”
The Fed, meanwhile, has shifted its 2% interest rate target to an average, meaning that it could maintain stimulus for a longer period of time by letting inflation run higher than the target. That pro-stimulus stance could weaken the dollar further against the euro
The economy of the 19 euro currency countries plunged 11.8% in the April-June period from the previous quarter. Activity is picking up quickly but isn’t expected to regain pre-virus levels before 2022.
The ECB is also making 20 billion euros in monthly bond purchases from a stimulus effort launched before the outbreak. Other stimulus includes cheap, long-term credit for banks to help them lend to businesses, and a negative rate penalty of 0.5% on deposits left overnight by commercial banks as an incentive for them to lend the money rather than let it pile up at the central bank.
European governments have made big economic efforts at the national level, paying companies to keep workers on and extending loans. That has kept unemployment in the eurozone down at 7.9%, thought the rate is likely to rise after those programs expire.
At the EU level, governments have agreed to fund a 750 billion-euro recovery fund supported by common borrowing. The money would be spent from 2021 on projects aimed at supporting growth, digitalization and transforming the economy to reduce emissions of carbon dioxide, the main greenhouse gas blamed by scientists for climate change.
Global Stocks Mixed After Wall Street Rebounds From Slump...October only a few days away...Bear market rally? Babson Break in #FAANG + Tesla?
BEIJING (AP) — Global stock markets were mixed Thursday after Wall Street rebounded from a three-day slump for tech stocks.
London opened lower while Tokyo and Frankfurt advanced. Shanghai and Paris declined.
U.S. futures were lower after Wall Street's S&P 500 index ended Wednesday up 2% for its best day in three months.
Investors were encouraged by hopes of possible additional stimulus from the European Central Bank, analysts said. But they warned the recovery was fragile.
“To the extent that ‘buy the dip’ mentality persists, this market may possess a somewhat more stubborn bullish streak,” said Mizuho Bank. However, “markets will be prone to more volatility."
In early trading, the FTSE 100 in London lost 0.8% to 5,965.10 and the CAC 40 in Paris was 0.2% lower at 5,035.54. The DAX in Frankfurt advanced less than 0.1% to 13,249.15.
On Wall Street, futures for the S&P 500 and Dow Jones Industrial Average were up 0.2%.
In Asia, the Shanghai Composite Index lost 0.6% to 3,234.82 after spending most of the day in positive territory. The Nikkei 225 in Tokyo added 0.9% to 23,235.47 while the Hang Seng in Hong Kong gave up 0.2% to 24,428.23.
The Kospi in Seoul advanced 0.9% to 2,396.48 and Sydney's ASX-S&P 500 gained 0.5% to 5,908.50. India's Sensex added 1.3% to 38,676.69. New Zealand and Bangkok advanced while Singapore and Jakarta declined.
Global markets have recovered most of this year's losses, but that was based largely on strong gains for tech stocks while other companies are lower.
Forecasters warn the stock price recovery might be too big and too early to be supported by uncertain economic activity as coronavirus infection numbers rise in the United States, Brazil and some other countries. Some governments have re-imposed anti-disease controls that hamper business.
On Wednesday, Apple, Amazon and other U.S. tech companies that had lost momentum late last week all regained some ground.
The Dow climbed 1.6% while the tech-heavy Nasdaq composite rose 2.7%. It had dropped 10% over the previous three days.
The U.S. Congress is at an impasse on whether to approve a new economic aid package after additional unemployment benefits ran out. The Senate is due to vote this week on a Republican-proposed package but it has little chance of passage because Democrats want more aid.
A Senate vote this week on a trimmed-down relief package proposed by Republicans has only a slim chance of passage as Democrats insist on more sweeping aid.
In energy markets, benchmark U.S. crude lost 22 cents to $37.83 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.29 on Wednesday to settle at $38.05. Brent crude, the international standard, declined 13 cents to $40.66 per barrel in London. It added $1.01 the previous session to $40.79.
The dollar declined to 106.07 Japanese yen from Wednesday's 106.18. The euro gained to $1.1825 from $1.1823.
Question: What day did the Dow Jones industrial Average achieve a 89% stock market price correction? Was it in 1929? No it was in 1931, 1932 or 1933?
The economy cycles in a 90 and 60 year "time cycles". 1929 + 90 years = the year 2019...2019 was 1929 beginning all over again...The Dow Jones rally back after the 30% plunge from last March-April 2020 was impressive, however was the rally back just like the rally back in 1929? Take the all time low post crash "time cycle" date and price and add 90 years = 1931 + 90 = the year 2021? 1933 + 90 = 2023?
It's just an econometric "tunnel through the air". Study Ralph Nelson Elliott's work. Career Biography
Elliott was born in Marysville, Kansas, and later moved to San Antonio, Texas. He entered the accounting field in the mid-1890s and worked primarily in executive positions for railroad companies in Central America and Mexico. In 1903, Elliott married Mary Elizabeth Fitzpatrick (1869–1941), who accompanied him during his extended time working as an expatriate in Mexico. Civil unrest there brought the couple back to the United States and eventually to a residence in New York City, where Elliott started a successful consulting business. In 1924, the United States Department of State appointed Elliott to the post of Chief Accountant for Nicaragua (which at the time was under American control). Not long afterward, Elliott wrote two books based upon his professional experiences: Tea Room and Cafeteria Management and The Future of Latin America.
The Titanic floated back to the surface after it began to sink and people said, "Its the Titanic, its unsinkable". The smart ones go into the lifeboats (some cross dressed) and rowed as fast as they could away from the Titanic as it floated back to the surface. Look at the scene on the movie Titanic where the rich man tries to give $dollars to the Titanic employee. "What good is all of your $dollar wealth now"?
The moral of the story...is it time to cross dress and get into the life boat and row away from the "Economic Titanic...is a 1931-1933 89% stock market plunge pending after the rally back? Yes 1933 bottom for the $DOWI was a great "time" to purchase the stock market...
October is almost always a challenging time for the stock market, under normal or healthy economic conditions. This October has: Election uncertain times ahead, COVID second- third wave, global -negative GDP and currency crisis + 90 year economic cycle playing out just like it did from 1931 - 1933? Mark Twain was right "History doesn't repeat...it does rhyme".
Is .999 Gold bullion, .999 Silver bullion and #Bitcoin the "Titanic's remaining life boats"? I'm buying .999 Gold bullion, .999 Silver bullion and #Bitcoin into the next 1931-1933...the physical bullion markets...not ETFs. Paper will soon not be worth the paper it is printed on. .999 Gold bullion wants $12,500 and .999 Silver bullion wants $1,500ish in 2021-2023ish? I don't know about you, as for me...i'm joining the rowing crew!
Dow Jones falls to its lowest point, July 8, 1932 = a great day to invest in the $DOWI!
On this day in 1932, the Dow Jones Industrial Average fell to its lowest point during the Great Depression, presaging the defeat of President Herbert Hoover in November of that year and the victory of New York Gov. Franklin D. Roosevelt, his Democratic challenger.
The crash of 1929 in October and the ensuing collapse of economic activity saw the Dow eventually fall nearly 90 percent from its peak during the so-called Roaring Twenties. On this day, following an intraday low of 40.56, the Dow closed the session at 41.22.
The collapse of the Dow — an index of 30 major corporations — reflected panic selling in the U.S. stock market that devastated the holdings of many investors and caused major declines in consumption, industrial production and employment that reverberated throughout the economy and was felt for nearly a decade.
The largest one-day percentage gain in the index, 15.34 percent, was on March 15, 1933, in the depths of the extended bear market, when the Dow gained 8.26 points to close at 62.10.
However, as a whole, throughout the Great Depression, the Dow posted some of its worst performances, producing negative returns during most of the 1930s for both new and old stock market investors. From 1935 to 1940, the index fluctuated, reaching a high of 194 in early 1937 before falling to 98 a year later.
FDR’s rearmament policy, in the anticipation of U.S. entry in World War II, contributed to a major economic recovery and an ensuing post-war boom. It took a while for the Dow to follow in its wake. Still, during the 1960s, the Dow managed to make a respectable 30 percent gain from 616 at the start of the decade to 800 at its end.
Falling Prices Flash Warning Light For Europe's Economy
FRANKFURT, Germany (AP) — A startling fall in consumer prices and a stronger euro have increased pressure on the European Central Bank to provide another blast of monetary stimulus in support of a drawn-out economic rebound from the pandemic recession.
A 0.2% annual drop in prices in August in the 19 countries that use the euro underlined that demand from unsettled consumers across the economy remains weak despite the reopening of many businesses. While it also reflected one-time effects such as delayed summer sales, the drop is more evidence of how severely the pandemic has held back business activity in Europe, which along with the U.S. and China is one of three major pillars of the global economy.
The economy plunged by a dizzying 11.8% in the second quarter from the first quarter. And while experts say that the economy's recovery will be determined mainly by governments' ability to contain the pandemic, the ECB is doing what it can to help.
The focus after Thursday's policy meeting will be on President Christine Lagarde’s statements on the inflation outlook and the stronger euro, another risk factor for the economy because it can make life harder for exporters.
The bank's governing council is expected to keep interest rates unchanged at record lows and to leave its bond-purchase stimulus program at the current level of 1.35 trillion euros ($1.6 trillion). That stimulus program, which regularly injects newly printed money into the economy, still has 850 billion euros left to be used, giving the bank plenty of ammunition for now. Analysts, however, are predicting that the bank's leadership could add to that amount sooner than expected.
Analysts at Morgan Stanley originally expected more stimulus only next year. But after last week's “deflationary surprise, and with the drag from a stronger euro, we will be looking for any signal that the ECB may act earlier," for instance at the December meeting.
The fall in the consumer price index is mostly due to temporary factors such as a cut in German value-added tax and the slashing of prices by hotels, said Oliver Rakau at Oxford Economics. That means it doesn’t represent outright deflation, a dreaded downward price spiral that can become a long-term trap for an economy.
He expects a partial rebound in prices in the near term followed by a period of subdued inflation rather than a sustained fall in prices. “This won’t absolve the ECB from responding, but it does lessen the urgency,” he said. He predicted the bank would raise the amount of pandemic stimulus purchases this year.
The drop in inflation to below zero - the first time that has happened since 2016 - underlined how the ECB has struggled in recent years to consistently achieve its goal of keeping annual inflation close to but less than 2%. The U.S. Federal Reserve has also not been able to consistently hit its 2% inflation target but the ECB has fallen even farther short.
Low inflation may seem good for consumers but can make debt harder to repay and makes it harder for economically weaker eurozone countries to improve their competitiveness.
The ECB's chief economist, Philip Lane, said in a recent assessment on CNBC that “our baseline was built around that once the economy was unlocked there would be some recovery, but the reality is that while we still have to manage this virus in terms of social distancing and other restrictions, there’s not going to be a return to normal levels of economic activity for a considerable period.”
Recent economic indicators suggest the bounce back as businesses have reopened is losing some of its momentum as summer ended, says Jack Allen-Reynolds, senior Europe economist at Capital Economics.
Online retail sales have fallen without a corresponding upturn in in-store spending, and some indicators of business activity suggest the economy contracting again in Italy and Spain, two countries hardest hit by the virus and constraints on vacation spending. The rise in the value of the euro this summer, from about $1.12 in June to over $1.18 on Tuesday, has put more strain on exporters, among other things.
The most troubling factor, however, is that the number of infections has been rising again, raising fears of more restrictions on public life and commerce.
Special Report the September 1929 "Babson Break" was described as a "healthy correction" in stock market prices and a good time to use such as a "Buying Opportunity". Is this weeks #FAANG Break, a modern "Babson Break"?
Something is up with the stock markets, the $DOWI filled the gap, but did not close to new high, the DIA, SPY and QQQ ETF look way over priced? Tech bubble bursting? $DOWI pulled an old "Fill the gap and then crap". Are we in September 1928 or September 1929?
Stocks Claw Back Some Of Their Losses In Another Rocky Day...Has the #FAANG stock bubble burst?
The stock market closed out its worst week in more than two months Friday as a second straight day of turbulent trading ended with more losses.
The S&P 500 fell 0.8%, although the index did claw most of the way back from a 3.1% skid earlier in the day. A slide in technology stocks again did much of the damage.
The two-day sell-off came after the S&P 500 set new highs earlier in the week and had its best day in nearly two months. There wasn’t a particular catalyst for continued selling in the high-flying tech sector, but analysts noted that those stocks had posted gigantic gains so far this year that many thought were overdone.
“We had a fast and furious rally at the end of August and we’ve given it back,” said Barry Bannister, head of institutional equity strategy at Stifel. “Investors are like a herd of gazelle on the Serengeti; it doesn’t take much to spook them. They’re alarmed and on the move.”
The selling followed a Labor Department report showing that U.S. hiring slowed to 1.4 million last month, the fewest jobs added since the economy started bouncing back from the initial shock of the pandemic, even as the nation's unemployment rate improved to 8.4% from 10.2%. The U.S. economy has recovered about half the 22 million jobs lost to the pandemic.
The S&P 500 fell 28.10 points to 3,426.96. The Dow Jones Industrial Average lost 159.42 points, or 0.6%, to 28,133.31. The index had swung sharply during the day, between a loss of as much as 628 points and a gain of as much as 247.
The technology-heavy Nasdaq dropped 144.97 points, or 1.3%, to 11,313.13. The slide added to the index's 5% skid from the day before.
The VIX, a gauge of how much volatility investors expect in the market, has been rising. Even so, traders were not shifting funds into traditional safe-haven assets like U.S. government bonds and precious metals, a sign that the sell-off was not necessarily a reaction to jitters about the economy.
“A lot of people were piling into the (tech) trade and there are a lot of gains to be made," said Stephanie Roth, portfolio macro analyst at J.P. Morgan Private Bank. "This is more an instance of profit-taking, rather than true panic.”
She noted it's not unusual for traders to pocket recent gains ahead of a holiday weekend. U.S. markets will be closed Monday for Labor Day.
The 10-year Treasury yield rose to 0.72%, up from 0.62% late Thursday, a big move. The higher yields helped send financial stocks higher, since banks can lend money at higher rates once yields rise in the bond market. Capital One Financial rose 4.7%
Thursday’s sell-off followed a euphoric rise in recent weeks led by big technology stocks. Investors have been betting technology companies will keep making huge profits as people spend even more time online with their devices during the pandemic, making new market darlings of companies like Zoom Video Communications as many Americans work remotely and students do online learning.
Some of the tech high flyers racked up more losses Friday. Nvidia fell 3%, though the chipmaker is still up more than twofold this year.
Apple was down for much of the day before ending with only a 0.1% gain, Amazon dropped 2.2% and Zoom fell 3%. And yet, Apple is still up 64.8% this year, while Amazon is up 78.3%. And Zoom is up more than 443% for the year. Even with this week's pullback, technology is up 28.8% this year, well ahead of the S&P 500's 10 other sectors.
“The tech gains were so far, so quick that it was almost concerning, so the reversal of that is natural volatility," Roth said. “We should expect to see some larger corrections.”
Despite this week's stumble, the S&P 500 is up 6.1% for the year following a five-month comeback from its lows in the spring. The Nasdaq, meanwhile, is up 26.1% for the year. The market's turnaround has been driven by low interest rates, massive amounts of spending on bond purchases by the Federal Reserve and other central banks, and encouraging economic trends as businesses have begun to reopen.
Many investors are also betting that a coronavirus vaccine will arrive later this year and clear the way for a recovery for the economy and corporate profits. Hopes also remain that Congress and the White House will come up with another economic relief package.
“Unless Congress agrees to spend more money to stimulate the economy and close the output gap, it’s very hard for us to grow,” Bannister said.
Stock indexes in Europe fell, shedding early gains. Markets in China also closed broadly lower.
Valuation Concerns Spark Long Liquidation And Send Technology Stocks Tumbling
The Dow Jones Industrial Average "Filled the Gap", but no new record high close for the the $DOWI...is this the beginning of a large crash for the $DOWI or is this just a shakeout...October is ever closer...
U.S. stock indexes this morning are sharply lower with the Nasdaq 100 at a 1-week low as a slump in the FANG stocks (Facebook, Amazon, Apple, Netflix, and Alphabet/Google) lead technology stocks lower. Today's U.S. economic data was mixed for the overall market.
After the sharp run-up to new record highs in the Nasdaq 100 and S&P 500 on Wednesday, valuation concerns have prompted long-liquidation pressures and profit-taking in technology stocks today to lead the overall market lower.
Today's U.S. economic data was mixed for stocks. The U.S July trade deficit soared to a 12-year high of -$63.6 billion, wider than expectations of -$58.0 billion, which was negative for the GDP figures. Also, the Aug ISM services index declined by -1.2 to 56.9, slightly weaker than expectations for a decline to 57.0. On the positive side, weekly initial unemployment claims fell -130,000 to a 5-1/4 month low of 881,000, showing a stronger labor market than expectations for a decline to 950,000. Also, Q2 nonfarm productivity was revised upward to 10.1% (q/q annualized), stronger than expectations of 7.5% and the biggest increase in 49 years. In addition, Q2 unit labor costs were revised lower to 9.0% (q/q annualized), a smaller increase than expectations of +12.0%
The Covid pandemic remains a bearish factor for stocks. The Covid virus has now infected 26.214 million persons globally, with deaths exceeding 868,000.
The VIX S&P 500 Volatility Index ($VIX) this morning rose to a 1-1/4 month high of 28.34 and is currently up +1.18 to 27.83. The VIX has moved higher from the 6-month low from August 11 of 20.28 but is still far below March's 11-1/2 year high of 85.47.
In this blog we had predicted that the Dow Jones Industrial Average would fill the crash down gap achieved back on February 24, 2020...it is official the $DOWI has filled the gap 100%! $29,467 price is next?
All time high in the cards for the $DOWI? Dow Industrials SPDR (DIA) 291.21 +4.42 (+1.54%) on 09/02/20, so close to $295.87 52 week high just before $DOWI pulls 30% price drop. Every fundamental and technical trader on the planet is looking to see if the $DOWI achieves an all-time record high closing price like the #QQQ and #SPY ETFs have pulled. Time will tell.
The other question that all market watchers are asking is: What is driving stocks up so much? Is it core inflation, hyperinflation or stagflation? M1 is way up, the Fed super printing, the debtclock is spinning like no tomorrow. Negative GDP, hyperinflation, huge increase in M1.
Are investors "yield chasing" again? If interest rates go -4% and hyperinflation kicks in, then investors will go into stocks that go up, up and away...If the $DOWI achieves record new high close...then the Dow Jones doubles to $60,000+? $DOWI at $60,000 USD = FOMO Mania, "This time is different", "This is a new era of investing" or best one..."The Fed will always support the stock market, because it is to big to fail". The final phase of the bubble is always FOMO folks.
The October stockmarket crash season is < less than one month away, plus the election in November, and then the New Year 2021, exciting economic and stock market times ahead folks...Never bet against the Good Old U.S.A., as predicted the shorts were going to get burned...
#Tesla (#TSLA) Announces Plans To Sell Up To $5B In New Stock Shares, Plus a 5 for 1 stock split, #Apple Computer #AAPL huge very strong trend up. #AAPL only trading at 29X price to book value. Amazon.Com Inc (#AMZN)new high price above $3,500! #Ebay doing Great!, #Facebook #FB wants $500.00 per share after upside breakout? #Google # doing wonderful in the big San fran tech sector! And if you want to chill while your working from home don't forget about #Netflix. Note: Remember to shut off #Netflix if your boss calls you on a #zoom meeting! And also please remember to use #Nvidia graphics cards if your going to mine #Bitcoin (#BTC) and or #Ethereum on your mining rig that has #Advancedmicrodivices #AMD computer chips!
The U.S. dollar is sharply lower after Fed Chair Powell announced yesterday that the Fed is moving to average inflation targeting, suggesting that the U.S. central bank will remain accommodative for longer.
Some of the bears on the greenback for a while have speculated that the Federal Reserve may loosen its approach to inflation and now, it has.
Longer term, the U.S. dollar is likely to trend lower.
The euro zone August consumer confidence index was negative 14.7, as predicted.
Canadas second quarter gross domestic product contracted at an annualized rate of 38.7% when a contraction of 40.0% was expected.
INTEREST RATE MARKET FUTURES
Interest rate market futures at the short end of the curve are likely to be supported by ideas that major central banks, including the Federal Reserve, will keep short term interest rates low for an extended period.
However, futures at the long end of the curve, especially the 30-year Treasury bond futures may be undermined by the inflationary aspects of average inflation targeting.
The next Federal Open Market Committee meeting is scheduled for September 16. Financial futures markets are predicting there is a 90% probability that the FOMC will maintain its fed funds target rate at zero to 25 basis points.
The Dow Jones Industrial Average on related ETF DIA is only a few points away from "Filling the gap" down in price from the March 2020 crash, as this blog had predicted. It will be very interesting when DIA fills gap down price of $289.68! Are we setting up for a Huge up move in stock prices in the $DOWI to $60,000, or are we in "August of 1929" type economic situation?
What is driving stock prices higher and higher? Could it be inflation? Just watch for major possible stock market correction, thus forming a "double top" in the $DOWI? How many days until October? Checkout SPXS and SPDN Direxion 1X and 3X short S&P 500 ETF, SPXS looks way oversold? Not investment advise.
Stocks Rise After Fed Says Rates May Stay Low For Longer = Deflation Nation?
NEW YORK (AP) — Stocks are pushing further into record heights on Wall Street Thursday after the Federal Reserve made a major overhaul to its strategy, one that could keep interest rates lower for longer.
The S&P 500 was up 0.4% in afternoon trading, and longer-term yields were also climbing, with momentum swinging higher after a jumbled start to trading. Markets initially made several U-turns after Fed Chair Jerome Powell gave a highly anticipated speech , where he essentially said the Fed may continue efforts to prop up the economy even if inflation rises above its target level of 2%, as long as it had been weak before then. .
The change in the Fed's strategy is a huge deal for markets because the central bank has been the superhero repeatedly rescuing them from crises through the years, by slashing short-term interest rates and buying all kinds of bonds.
The Dow Jones Industrial Average was up 213 points, or 0.8%, at 28,545, as of 12:15 p.m. Eastern time, and the Nasdaq composite was up 0.2%.
The benchmark S&P 500 is coming off a five-day winning streak and has returned to a record level after the immense support of the Fed helped halt its free-fall earlier this year and erase its pandemic losses. Low rates often act like steroids for stocks, allowing their prices to rise faster than corporate profits.
“The era of easy money is here,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.
Treasury yields fell immediately after Powell began talking, but then started bouncing up and down. The yield of the 10-year Treasury was at 0.74%, up from 0.68% late Wednesday. The 30-year yield climbed to 1.48% from 1.41%.
Shorter-term Treasury yields were more subdued, with the two-year yield ticking up to 0.15% from 0.14%, and the widening gap between short- and longer-term yields could be an indication of higher expectations for the economy or inflation among investors.
Gold was down 0.8% at $1,936.40 per ounce after initially spiking as high as $1,987.00 after Powell began talking. It mirrored the movements of the 10-year Treasury yield. Lower yields can drive demand for gold from investors seeking safety but not interested in the lower interest payments coming from bonds.
Earlier in the morning, a report showed the pace of layoffs sweeping the country remains incredibly high but may be slowing. A little more than 1 million U.S. workers applied for unemployment benefits last week, which was a dip from the slightly more than 1.1 million the prior week.
In another report, the government also said that the economy looks like it shrank at an annual rate of 31.7% in the spring quarter. That would be the sharpest quarterly drop on record, but it’s not as bad as the Commerce Department’s earlier estimate of 32.9%.
Abbott Laboratories jumped 7.4% for one of the biggest gains in the S&P 500 after federal regulators gave emergency use authorization for its COVID-19 test , which can provide results in 15 minutes and will cost only $5.
Stocks of companies that sorely need people feeling comfortable enough with the pandemic to get back to “normal” life were also strong. Live Nation Entertainment rose 9.9%, Norwegian Cruise Line was up 7.2% and United Airlines rallied 6.5%.
Financial stocks had the biggest gain among the 11 sectors that make up the S&P 500, up 1.7%. A higher 10-year Treasury yield allows for higher rates on mortgages and other loans, which boosts profits for banks. JPMorgan Chase gained 3%, and Wells Fargo rose 2.1%.
In European stock markets, the German DAX lost 0.7%, and France's CAC 40 slipped 0.6%. The FTSE 100 in London was down 0.8%.
In Asia, Japan's Nikkei 225 slipped 0.4%, and South Korea's Kospi lost 1%. The Hang Seng in Hong Kong fell 0.8%, and stocks in Shanghai rose 0.6%.
Benchmark U.S. crude oil fell 0.9% to $43.00 per barrel. Brent crude, the international standard, lost 0.8% to $45.80 per barrel.
Question: What Is the Dow Jones Industrial Average (DIJA) All-Time High? Answer: The Dow all-time high was 29,551.42 points logged on Feb. 12, 2020.
The $DOWI is still in crash mode, even though we have seen the Dow Jones Industrial Average (DIJA) retrace much what is has lost since Feb. 12, 2020. The NASDAQ and the S&P 500 at record close prices with huge upward price action after crash early this year. If the $DOWI closes above 29,551.42, the $DOWI could double to 60,000?
After the 1929 initial crash, the stock market pulled a rather large bullish phase, only to plunge into 1931 etc.
Trying to compare the bullish market conditions as compared to the inflation \ hyperinflation and stagflation bug is the key. .999 gold bullion bull market appears to be on hold for now, but for how long?
We did in this blog predict a huge bullish event after the most recent spring 2020 crash, however upcoming election in the U.S. combined with the traditional and historic October stockmarket crash season pending is reason to be cautious in the stockmarket?
We love the good old U.S.A and certainly wants things to be wonderful. History does tend to repeat over and over again? Time will tell, with only a few days until the cold economic days of October are here again. Inflation vs. the Bull market, who is going to win?
Compare the DIA, QQQ and SPY ETF markets. The QQQ and SPY ETFs are at record close prices. The DIA is still not in record close like QQQ and SPY. We are still in stockmarket crash mode until the DIA closes at a record high price. The Dow Jones Industrial Average runs all of the world's stock markets. The rally back has been very strong, however much caution going into election season unknown and the historic October stockmarket crash history. The pre crash high for DIA is $295.87 and as of today, quoted at $278.20. $278.20 is not greater than $295.87.
The only reason the QQQ and SPY and DIA are up is because of hyperinflation. Just compare the rally back in QQQ, SPY and DIA to the M1 printing press chart below.
I would be very cautious watching the Dow Jones...it is not at a record close...careful. The U.S. Dollar is very weak, .999 Gold and .999 Silver Bullion are very strong...the M1 printing presses are working full time and #Bitcoin #BTC are strong. Hyperinflation and economic depression are at hand. My play is to continue building a position in physical metals gold silver etc. and Bitcoin.
Dollar Closes Mildly Lower As Review Of U.S/Chinese Trade Deal Is Postponed
The dollar index (DXY00) on Monday fell -0.25 (-0.26%). Sep euro-fx futures (E6U0) closed +0.00275 (+0.23%), and EUR/USD (^EURUSD) rose +0.0029 (+0.25%). Sep yen futures (J6U0) closed +0.00465 (+0.50%), and USD/JPY (^USDJPY) fell -0.597 (-0.56%).
The dollar index on Monday closed mildly lower on concern about the weekend news of the indefinite postponement of Saturday's 6-month review of the U.S./China phase-one trade deal. The dollar also saw reduced safe-haven demand with U.S. stocks closing the day mildly higher. The dollar saw support from Monday's news of an unexpectedly large increase in U.S. homebuilder confidence index to match a 35-year record high.
The U.S./China 6-month review of the phase-one trade deal was indefinitely postponed. That review was expected to be a teleconference on Saturday among U.S. Trade Representative Lighthizer, Treasury Secretary Mnuchin, and Chinese Vice Premier Liu. Scheduling delays were cited as the reason for the postponement, but the markets suspect there is a backstory that involves larger U.S./Chinese tensions. Chinese Foreign Ministry spokesman Zhao Lijian on Monday refused to answer a question about why Saturday's meeting was postponed.
China last week was reportedly trying to broaden the scope of Saturday's meeting to include the U.S. order for a shutdown of TikTok and WeChat. Recent moves by the Trump administration against China might have something to do with the postponement. The Trump administration last Friday approved the sale of F-16 military jets to Taiwan. President Trump last Friday also officially ordered ByteDance within 90 days to sell the U.S. assets of TikTok based on national security grounds and the findings of the Committee on Foreign Investment in the U.S. (CFIUS). The order has an option for a 30-day extension. Mr. Trump's previous order only ordered U.S. persons and companies to cease doing business with TikTok. President Trump on Saturday said in response to a question about whether there are more Chinese companies that might be blacklisted, "We're looking at other things, yes."
Meanwhile, there was a new move Monday by the Trump administration against China. The Commerce Department Monday added 38 Huawei affiliates in 21 countries to the U.S. economic blacklist, seeking to more thoroughly eliminate Huawei equipment from global 5G networks and restrict Huawei's access to chips.
The U.S./China phase-one trade deal still seems to be intact since White House advisor Kudlow last week said on several occasions that the trade deal is "fine." President Trump seemed to indicate support for the trade deal when he said on Saturday that, "China has been buying a lot of -- a lot of things, and they're doing that to keep me happy." White House trade advisor Navarro said Monday on CNBC that the phase-one trade deal is on track.
House Speaker Pelosi called House members back to Washington from their August recess to hold a vote on the Post Office on Saturday. However, there is no indication there will be any new talks on a pandemic bill after the talks collapsed and President Trump on August 8 issued four executive orders. The stimulus talks are not expected to be revived, if at all, until after Congress returns to Washington in September from its August recess.
The dollar saw support Monday from the +6 point increase to 78 in the NAHB housing market index, which was much stronger than expectations of +2 to 74. The index matched its record 35-year high, which was originally posted in 1998 (data since 1985). On the weaker side, today's Aug Empire manufacturing index fell by -13.5 points to 3.7, which was weaker than expectations for a smaller -2.2 point decline to 15.0.
China on Sunday complained about weakness in the dollar, which it said threatens global stability. The Chairman of China's Banking Regulatory Commission wrote in the Communist Party's Qiushi magazine on Saturday that, "The unprecedented, unlimited quantitative easing policy of the U.S. actually consumes the creditworthiness of the dollar and erodes the foundation of global financial stability."
Look what has happened to M1 money supply, right after and during times of economic recession \ depression. 2008 = huge bailouts and QE etc. 2020 huge increase in M1 = hyperinflation in the future? You can't have positive GDP unless you have a significant increase in M1?
The U.S. stock markets, (Nasdaq and the S&P 500) are flying high again, achieving record close prices, however compare such to the roaring inflation depicted in this M1 supply picture. Have stocks really done that well? The U.S. Dollar is losing its world reserve currency status?
In the future we are going to compare this M1 chart to the U.S. Dollar chart and also compared to the .999 Gold and .999 Silver bullion chart. The same thing happened economically in Venezuela?
Huge inflation nation pending with huge increase in M1 money supply.
S&P 500 Drifts Close To Record Heights After Jobless Report
NEW YORK (AP) — Wall Street is drifting close to its highest-ever levels on Thursday, and the market remains within a breath of erasing the last of its pandemic losses.
The S&P 500 was virtually unchanged in midday trading after earlier flipping between small gains and losses. It's within 0.2% of its record close, which was set in February before investors appreciated how much devastation the new coronavirus would cause for the global economy.
The Dow Jones Industrial Average was down 65 points, or 0.2%, at 27,911, as of 11:35 a.m. Eastern time, and the Nasdaq composite was up 0.8%.
Treasury yields were also holding relatively steady after a report showed that fewer than 1 million U.S. workers filed for unemployment benefits last week. It’s still an incredibly high number, but it’s the first time the tally has dropped below that threshold since March, before widespread business lockdowns caused a tsunami of layoffs.
Economists said the drop in jobless claims, which was better than the market was expecting, is an encouraging step. But they also cautioned that it could be more of an outlier than a trend, and more data reports are needed to confirm it.
The yield on the 10-year Treasury was sitting at 0.67% in midday trading. It was at 0.57% just on Monday.
Wall Street has erased almost all of the nearly 34% drop the S&P 500 suffered from late February into March, even though the economy is still hobbled despite some recent improvements.
Massive efforts to support the economy by the Federal Reserve and U.S. government helped trigger the rally, and investors are now waiting for Congress and the White House to deliver another round of aid after unemployment benefits and other measures in the last tranche expired.
Democrats and Republicans remain far apart, but hope remains on Wall Street that they’ll reach a deal on stimulus that investors say is crucially needed.
“The stalemate in Washington certainly looms large, and it’s unclear how long the market will tolerate the impasse,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.
Other analysts also urged caution following the market's huge run back to a record, even if numbers of new U.S. coronavirus cases are moderating and companies say they're making progress in developing a vaccine for COVID-19.
“Encouraging signs of U.S. COVID curve flattening alongside vaccine hopes are reason for cautious optimism, not unbridled exuberance,” said Hayaki Narita at Mizuho Bank in Singapore.
But through it all, the power of the Fed's massive actions continue to support the market. The central bank has slashed short-term interest rates to a record low at nearly zero and has plunged into far-reaching corners of the bond market to keep lending running smoothly.
“It’s a crazy message to deliver to clients that the economy will struggle for at least the next couple of quarters while also being relatively bullish on corporate bonds as well as the stock market,” said Bryce Doty, senior portfolio manager at Sit Fixed Income Advisors.
Big Tech stocks were once again leading the way, with all five of the market's biggest titans making modest gains. Apple, Microsoft, Amazon, Facebook and Google's parent company together make up more than 22% of the S&P 500, giving their movements extra heft in the index, and each rose at least 0.7%.
Cisco slumped 11% for the biggest loss in the S&P 500, even though it reported better results for its latest quarter than Wall Street expected. It gave a forecast for the current quarter that fell short of analysts’ forecasts.
In Asian stock markets, Japan's benchmark Nikkei 225 jumped 1.8%, South Korea's Kospi gained 0.2% and Hong Kong's Hang Seng slipped 0.1%. Stocks in Shanghai were virtually flat.
In European markets, Germany's DAX lost 0.3%, and France's CAC 40 fell 0.4%. The FTSE 100 in London dropped 1.3%.
Benchmark U.S. crude fell 0.8% to $42.33 per barrel. Brent crude, the international standard, was down 0.6% at $45.15 per barrel.
Gold, which has been setting records recently, added 0.5% to $1,958.80 per ounce.
US Budget Deficit Climbs To Record $2.81 Trillion
SILVER SPRING, Md. (AP) — The U.S. budget deficit climbed to $2.81 trillion in the first 10 months of the budget year, exceeding any on record, the Treasury Department said Wednesday.
The nation's budgetary shortfall is expected to eventually reach levels for the fiscal year more than double the largest annual deficit on record.
The federal government rang up a $63 billion deficit in July, the department reported. That's a relatively modest amount compared to red ink that spilled in the spring months when the government tried to revive an economy that all but ground to a halt due to the coronavirus outbreak.
Last month's deficit was sharply lower than June's $864 billion, in part because the government collected a record amount tax revenue in July — $563 billion — after extending the filing deadline to July 15. That extension allowed Americans more time to sort through the economic havoc wrought by the pandemic.
So far this budget year, government receipts total $2.82 trillion, off just 1% from the same period last year, Treasury officials said, crediting the “income replacement” provided by various government aid packages. In other words, unemployment benefits and other aid are still taxable.
Outlays so far this budget year total $5.63 trillion, a 50% increase over the $3.73 trillion at this point in 2019, with the vast majority of the extra spending related to fortifying the country's economy in the wake of the coronavirus pandemic.
Bumpy Road Ahead: UK Bracing For Big Spike In Unemployment
LONDON (AP) — The U.K. has kept a lid on its unemployment rate so far during the coronavirus pandemic but, scratch beneath the surface, there are worrying trends that will likely see the jobless total soaring by the end of the year.
As department store Debenhams announced another 2,500 job losses on Tuesday, official figures showed that the number of people in paid employment in the April-June quarter fell by the most since the global financial crisis more than a decade go.
That didn’t lead to an automatic increase in the unemployment rate, which held steady at a historically low 3.9% as workers need to be actively looking for a job to be counted as jobless. But as a key government salary support package is being phased out, there are concerns that the number of people officially labeled as unemployed could at least double toward the 3 million mark last struck in the 1980s.
“Some parts of the economy are undoubtedly showing great resilience but clearly there are going to be bumpy months ahead and a long, long way to go,” Prime Minister Boris Johnson said.
The stable jobless rate is largely due to a government salary support scheme that will end in October, a cliff-edge moment that many economists think will lead to an almost immediate doubling in unemployment.
Under the Coronavirus Job Retention Scheme, the government has been paying a large chunk of the salaries of workers retained rather than fired. Some 1.2 million employers have taken advantage of the program during the lockdown to furlough 9.6 million people at a cost to the government of 33.8 billion pounds ($44 billion).
The government has started phasing out the furlough program, with firms now having to cover some of the costs of the plan. The government has said it will end the program in October on the grounds it gives “false hope” to furloughed workers while at the same time limiting their prospects of getting new jobs as their skills fade.
While admitting that not every job can be saved, Treasury chief Rishi Sunak said Tuesday's figures said the support measures, have helped to “safeguard millions of jobs and livelihoods that could otherwise have been lost.”
The big question is how many of those furloughed workers are being kept on as lockdown restrictions across sectors, including retail and hospitality, have been eased, and how many will be kept on the payroll after the October cut-off date. It’s a tough call for firms facing a historic cash crunch following one of the deepest economic slumps ever recorded in the U.K.
“A wide range of indicators suggest that job losses will crystallize from August, when employers must start to cover some of the costs of furloughed staff,” said Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics.
In a sign of the weakness of the U.K.'s labor market, employment fell in the April to June quarter by 220,000, its biggest three-month decline since the 2009 recession. Figures due for release on Wednesday are set to show the economy contracted by nearly 25% in the second quarter of the year from the previous three-month period.
The statistics agency also reported that the number of people on payroll in the U.K. fell 81,000 in July to 28.27 million. The number of people coming off the payroll since March is now 730,000, with the falls in employment greatest among younger and older workers.
The number of firms cutting jobs has accelerated in the past month or two with big companies like British Airways and Rolls Royce announcing big layoffs, in addition to Tuesday's news from Debenhams.
Unions are urging the government to at least extend the furlough scheme to sectors still suffering from lockdown restrictions.
“The alarm bells couldn’t be ringing any louder,” said Frances O’Grady, general secretary of the Trades Union Congress.
Pandemic Wrecks Global Class Of 2020'S Hopes For First Job
LONDON (AP) — British fashion school graduate Phoebe St. Leger’s dream of landing a job at a design label is on hold. Like many others in the global Class of 2020, the pandemic is clouding her career ambitions.
The coronavirus forced the cancellation of her university graduating class's final-year fashion show, removing the chance to show her knitwear collection to people in the industry, some of whom might have liked her work enough to offer her a job.
Instead, St. Leger, 23, returned to her family home in Winchester, southern England, and submitted her classwork online. She has applied for about 40 jobs and received only rejections.
“All the jobs have all dried up - everywhere,” she said. She knows graduates from previous years who have been fired or furloughed and is prepared to get a job at a bar. “It’s still hard to be hopeful when you’re not seeing anyone doing well at the moment."
Around the world, young people armed with new degrees, diplomas and professional qualifications are struggling to enter the workforce as the pandemic pushes the global economy into recession. COVID-19 has thwarted hopes of landing first jobs - important for jumpstarting careers - as employers cut back graduate recruiting plans or even revoke job offers.
The latest U.S. job numbers Friday underscored the murky outlook: 1.8 million jobs were added in July, a sharp slowdown in employment growth from the month before. It means the world’s biggest economy has regained just 42% of jobs lost to the coronavirus.
U.S. careers website Glassdoor says the number of jobs advertised as “entry level” or “new grad” was down 68% in May from a year ago. In Britain, companies plan to cut student recruitment by 23% this year, according to a survey of 179 businesses by the Institute of Student Employers.
The wave of delayed employment will ripple out through the economy, says Brian Kropp, chief of HR research at consultancy Gartner.
Many grads will have student loan debts they won’t be able to start paying off until they find a job, he said.
"If you can’t get an entry level job today, that means that you don’t move out of your parent’s house, you don’t develop real work experience, you don’t buy your first home until later, and you don’t get married until later."
Michael Welch, 22, has been scouring LinkedIn, Monster and Indeed for postings and connections after earning a University of Connecticut engineering degree. He hadn't planned to start his job search until after graduation.
“That plan was disrupted because I was planning to go into a good job market,” he said. “Suddenly I was in one of the worst job markets in recent history.”
Welch, who moved back home with his parents, worries about online interviews and starting a job remotely.
“Remote jobs are great for someone who doesn’t have to commute and already has a job,” he said. But “for someone entering the job market it is a scary prospect. It's difficult to learn technical skills when you’re in a remote setting.”
Noah Isaak, a 2019 grad and newly certified teacher, has been applying for jobs in the Chicago public school system and has done a few interviews but they didn't lead anywhere. Most of the people he knows from his program are having trouble, too.
Now he's considering applying for minimum wage jobs at Target, Costco, coffee shops and Amazon.
“I’m stressed," said Isaak, 23. “Nothing is really going how we expected it to go. It’s comforting that it’s not a personal flaw and other people are going through the same struggle. But it is difficult not knowing."
One important long-term effect for young graduates who take longer to find good first jobs is lower pay over the course of their careers, experts said.
Someone who takes a year or more to find their first job lags behind their peers when it comes to promotions and also competes with younger people who come on to the job market later.
The problem, like the pandemic, is global.
Graduate job vacancies for July are down from the previous year in 10 countries, according to Adzuna, a job postings search engine. Britain, India and the Netherlands have seen the biggest declines, with postings down by more than half from a year ago, but other countries including Austria, Australia, Brazil, and France are also seeing double digit percentage drops.
Graduate jobs are expected to shrink in 21 countries, with most unlikely to recover next year, according to a separate report by Britain's ISE.
Maria Jose Casco, a newly qualified doctor, hasn’t found work after graduating in Ecuador in April. Casco, 24, said she’s been searching for health-related jobs as well as work in other industries.
Even though the pandemic means more need for health services, she found employers aren’t hiring for full time jobs.
“They're looking for temporary staff they can easily fire,” Casco said. She and her husband are living off savings and his $480 monthly salary and, like others, are considering emigrating. "Because there is no future, many of my colleagues are looking at the possibility of leaving Ecuador.”
The pandemic is compounding problems for young people in countries plagued by chronic economic instability.
Two years after graduating with from Zimbabwe’s Midlands State University, 24-year old Emmanuel Reyai is no closer to his goal of getting a job related to his degree in local governance. His search is stymied by both the African country’s economic collapse and the coronavirus outbreak.
“I have applied more than 40 times - nothing,” he said, clutching a plastic folder containing his academic certificates.
More than two thirds of Zimbabwe's population, including university grads, get by on informal trade such as street hawking. Reyai initially resold cooking gas from a shack in his poor Harare neighborhood but the local council razed it after the outbreak. Now he makes and sells peanut butter around the city.
“There are no hopes of getting a job," said Reyai. “I have tried all I can to apply for jobs but the situation is not getting any better. It is actually getting worse."
In Indonesia, Clara Karina, 25, graduated in January with an accounting degree from a well-known business and finance school in Jakarta.
She wanted to work as a civil servant but applied for jobs at private firms as the government froze recruitment. Only three of 20 companies replied to her applications. Two turned her down and the third is in progress.
“Companies aren't recruiting new employees, they're reducing employees now," Karina said. “I need to be more patient.”
For some, there are happy endings.
In China, 23-year-old Li Xin graduated this summer with a statistics degree but had started looking for a job in January - just as the pandemic forced many companies to suspend operations. She encountered apparent scams from companies hiring for finance and IT jobs that wanted hefty “training fees."
Some classmates found banking jobs thanks to their connections. Others without ties ended up in industries unrelated to their degrees. Several are doing tutoring jobs, and Li found one herself but lasted just a week.
She felt hopeless but also realized everyone has it hard.
“I’d sit in the subway, seeing the people come and go around me, and I’d suddenly feel that it wasn’t easy for anyone,” Li said.
Eventually, Li landed a data analysis job in her hometown near Beijing that started this month. More than half her class, though, have yet to find jobs.
Argentina Reports Debt Restructuring Deal With Creditors
BUENOS AIRES, Argentina (AP) — Argentina's government said Tuesday it has reached agreement with its principle creditors to restructure more than $65 billion in foreign debt following seven months of negotiations and shifting deadlines.
The government of President Alberto Fernández said the deal means “significant debt relief," adjusting the dates of payments without raising the total amount of capital and interest to be paid.
It said it also improved on the government's previous offer to creditors.
The government said it reached the debt exchange agreement with the Ad Hoc Argentine Bondholder Group, The Argentina Creditor Committee and the Exchange Bondholder Group, among others.
Argentina formally defaulted on its debt obligations earlier this year for the second time in two decades. The country's economy was struggling even before the COVID-19 pandemic struck.
Oil Giants Lost Billions As Pandemic Crushed Demand For Fuel
NEW YORK (AP) — Two American oil giants lost more than $9 billion in the second quarter as the pandemic kept households on lockdown, cutting a gaping hole into a once-thriving business as the need for oil diminished around the world.
Exxon lost $1.1 billion in the second quarter, and the Irving, Texas-based oil producer brought in $32.6 billion in revenue, less than half of what it brought in at the same time last year. Chevron Corp. lost $8.27 billion during the quarter, a sharp contrast to the $4.3 billion it earned at the same time last year.
The quarter was one of the worst on record for the oil industry. The price of a barrel of benchmark U.S. crude fell below $0 in April, a stunning downfall that had not before been seen in the industry. Producers had been pumping far more oil than the world was using as global travel all but shut down, and storage tanks were filling up.
Oil prices have recovered somewhat since, but have been stuck at around $40 a barrel for weeks, fetching 30% less than a barrel did a year ago and well below what most producers need to make ends meet.
As a result, the U.S. oil industry lost more than 100,000 jobs since February, with 45,000 of those jobs shed by upstream oil and gas companies in Texas alone, according to Rystad Energy, a consulting firm.
“Simply put, the demand destruction in the second quarter was unprecedented in the history of modern oil markets,” said Neil Chapman, senior vice president at Exxon, on a conference call with investors Friday. “To put it in context, absolute demand fell to levels we hadn’t seen in nearly 20 years. We’ve never seen a decline of this magnitude and pace before, even relative to the historic periods of demand volatility following the global financial crisis and as far back as the 1970s oil and energy crisis.”
Exxon expects gasoline and diesel fuel consumption to rebound to levels similar to last year in the fourth quarter, but jet fuel will take longer to recover, Chapman said.
Exxon Mobil Corp. announced in April that it would cut its capital spending budget by 30%, to $23 billion, and its cash operating expenses by 15%, in 2020. The company is on track to exceed that goal and is exploring other ways to cut expenses, including evaluating its workforce around the world, Chapman said.
The pandemic is also making some of Exxon's work more expensive as it tries to keep employees safe. “We’ve had to charge planes to move our rotating operating staff all over the globe without the availability of commercial planes,” Chapman said. “We’ve had to lease hotels in multiple cities to quarantine our folks before they start their 30-day rotations.”
Exxon produced 3.6 million barrels of oil-equivalent, down 7% from last year. That included a 12% drop in natural gas production. But it boosted production in the Permian Basin by 9% compared to last year.
San Ramon, California-based Chevron brought in $13.49 billion in revenue, about a third of what it brought in last year.
“The past few months have presented unique challenges,” said Michael Wirth, Chevron’s chairman of the board and CEO, in a statement. “The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices.”
Phillips 66, the Houston-based oil refining and logistics company, lost $141 million during the quarter, reversing a year-earlier profit.
Dollar Slumps To A New 2-Year Low As U.S. Unemployment Bonus Expires
The dollar index (DXY00) today is down by -0.075 (-0.08%). Sep euro-fx futures (E6U0) are up +0.00007 (+0.06%), and EUR/USD (^EURUSD) is down -0.00042 (-0.04%). Sep yen futures (J6U0) are down -0.0027 (-0.28%), and USD/JPY (^USDJPY) is up +0.0410 (+0.39%).
The dollar index today has fallen to another new 2-year low and is trading slightly lower. Bearish factors include reduced liquidity-demand for the dollar with stocks trading mildly higher. The dollar is also seeing weakness from the lack of progress in the negotiations in Washington on a new pandemic bill. The federal unemployment bonus of $600 per week expires today, which will put a new hole in U.S. consumer income and spending.
There was no progress in negotiations last night on a new pandemic bill. Treasury Secretary Mnuchin on Thursday night after leaving a 2-hour negotiating meeting in Speaker Pelosi's office said, "On certain issues we made progress, on certain issues we're still very far apart." He said negotiations would continue on Friday and Saturday "as long as it takes to get this done." Democrats want an overall package and are refusing the Republican attempt to get a short-term extension of enhanced unemployment benefits, which expire today. The House is now on recess but can be called back to Washington to vote on a bill. The Senate is scheduled to leave for its August recess next Friday.
EUR/USD today reached a new 2-year high but then fell back and is currently little changed. The euro was undercut by today's negative Eurozone GDP data, which illustrated that the Eurozone has a long recovery road ahead. Eurozone Q2 GDP plunged by -12.1% q/q, which was in line with market expectations. Italy's Q2 GDP was in mildly worse shape than the Eurozone as a whole with a Q2 plunge of -12.4% q/q, although that was significantly better than expectations of -15.5%.
Meanwhile, today's slightly stronger-than-expected Eurozone inflation data was a supportive factor for the euro. The Eurozone July preliminary (EU-harmonized) CPI report of +0.4% y/y was slightly stronger than expectations of +0.2% and June's +0.3%. The Eurozone July core CPI rose by +1.2% y/y, which was stronger than the consensus and June's report of +0.8%.
The second Covid wave continues to negatively impact global economic growth, and is dovish for Fed policy and negative for the dollar. Confirmed cases of Covid have risen above 17.213 million globally, with deaths exceeding 671,000.
Today's U.S. economic data was mixed and neutral for the dollar. June personal income fell by -1.1% m/m, which was weaker than market expectations of -0.6%. However, June personal spending rose by +5.6% m/m, which was stronger than market expectations of +5.2%. Personal income declined as government stimulus payments declined and as unemployment remains extremely high, while spending remained high in June on pent-up demand after the spring economic lockdowns.
Meanwhile, U.S. inflation data was mostly in line with market expectations. The June deflator rose to +0.8% y/y from May's +0.5% but was slightly below market expectations of +0.9%. The June core deflator eased to +0.9% y/y from May's +1.0% and was slightly weaker than market expectations of +1.0%. The core June PCE deflator of +0.9% matched the record low for the series that was posted on several occasions in 2009/2010.
China's PMI reports on Thursday night were mixed. China's July national manufacturing PMI rose by +0.2 points to 51.1, which was better than the consensus for a -0.1 point drop to 50.8. However, the July non-manufacturing PMI fell by -0.2 points to 54.2, which was weaker than the consensus for a +0.1 point increase to 54.5.
Is it time to dump stocks and go long gold and silver bullion, me thinks so. The rally back in stock markets does not look so good? The NASDAQ for example looks great, right? The QQQ has had a great rally back from $164 on March 23, 2020 to $269, wow, right, while at the same time the U.S. Dollar index is plunging to a two year low, with no bottom insight. The QQQ is priced in U.S. Dollars, so it's great rally back needs to be discounted by the loss of value of the U.S. Dollar?
Go big or go home? The world's central banks are all lowering interest rates to 0 or -0, while at the same time increasing money supply. Hyperinflation and inflation combined with stagflation are on tap. October is only 2 months away.
We are still in stock market crash mode. Take a look at: QQQ Short Proshares (PSQ) 17.93 -0.07 (-0.39%), 100% strong downward bearish trend. Or take a look at: Direxion Monthly Nasdaq-100 Bear 1.25X Fund (DXNSX) 5.26 -0.09 (-1.68%). Both PSQ and DXNSX look way oversold going into the "Next October 1929"? Not investment advise.
Dollar Posts Modest Losses But Remains Above Wednesday's 2-Year Low
The dollar index (DXY00) this morning is down -0.123 (-0.13%). Sep euro-fx futures (E6U0) are up +0.0013 (+0.11%), and EUR/USD (^EURUSD) is down -0.0006 (-0.05%). Sep yen futures (J6U0) are down -0.06 (-0.06%), and USD/JPY (^USDJPY) is up +0.14 (+0.13%).
The dollar index this morning is lower but remains above Wednesday's 2-year low. Weakness in stocks has spurred liquidity demand for the dollar. EUR/USD is weaker after German Q2 GDP shrank more than expected. USD/JPY is moving higher after a Japanese Ministry of Finance official warned of intervention in forex markets if the yen strengthens further against the dollar.
World stock markets are weaker this morning, which is boosting liquidity demand for dollars. Global economic concerns are weighing on stock markets today. German Q2 GDP contracted at a weaker-than-expected -10.1% q/q pace, the steepest pace of contraction since the data began for a reunified Germany in 1991. Also, U.S. Q2 GDP shrank at a record -32.9% (y/y annualized) pace, which is equivalent to a -9.5% decline on a quarter-on-quarter basis. Covid concerns are also weighing on global equity markets after Germany reported 838 new virus infections today, a 6-week high, and Tokyo reported a record 367 Covid infections today. Confirmed cases of Covid have risen above 17.213 million globally, with deaths exceeding 671,000.
A slump in T-note yields is bearish for the dollar as the 10-year T-note yield today dropped to a 4-1/2 month low of 0.536%.
Another negative for the dollar is the lack of movement towards a compromise between Republicans and Democrats on a new pandemic rescue bill. Treasury Secretary Mnuchin said late Wednesday night that after three days of negotiations, "we are still very far apart on a lot of issues."
Today's U.S. economic data was better than expected and slightly supportive for the dollar. U.S. Q2 GDP shrank a record -32.9% (q/q annualized), slightly better than expectations of -34.5% (q/q annualized). Also, weekly initial unemployment claims rose +12,000 to 1.434 million, showing a slightly stronger labor market than expectations for a rise to 1.445 million.
EUR/USD this morning is lower on weak Eurozone economic data. The Eurozone June unemployment rate rose +0.1 to a 16-month high of 7.8%, showing a slightly weaker labor market than expectations of 7.7%. Also, German Q2 GDP fell -10.1% q/q, weaker than expectations of -9.0% q/q, and the steepest pace of contraction since the data began for a reunified Germany in 1991.
Slack price pressures are dovish for ECB policy. The German July CPI was unchanged y/y, below expectations of +0.3% y/y and the slowest pace of increase in 4 years.
A decline in German bund yields is also weighing on EUR/USD as the 10-year German bund yield today fell to a 2-1/4 month low of -0.553%.
USD/JPY this morning is moving higher as jawboning from a Japan Ministry of Finance (MOF) official undercut the yen. A MOF official today said that "should the yen strengthen further against the dollar, there will be various complicated factors involved, and various policy tools will be considered as a response measure." The yen saw support after Japan June retail sales rose +13.1% m/m, stronger than expectations of +8.0% m/m, and the biggest increase since the data series began in 2002.
1.4 Million Seek Jobless Aid As Virus Surges In South, West
WASHINGTON (AP) — More than 1.4 million laid-off Americans applied for unemployment benefits last week, further evidence of the devastation the coronavirus outbreak has unleashed on the U.S. economy.
The continuing wave of job cuts is occurring against the backdrop of a spike in virus cases that has led many states to halt plans to reopen businesses and has caused millions of consumers to delay any return to traveling, shopping and other normal economic activity. Those trends have forced many businesses to cut jobs or at least delay hiring.
The Labor Department's report Thursday marked the 19th straight week that more than 1 million people have applied for unemployment benefits. Before the coronavirus hit hard in March, the number of Americans seeking unemployment checks had never exceeded 700,000 in any one week, even during the Great Recession.
The number of new applicants was up by 12,000 from the week before, the second straight increase. New claims had dropped for 15 straight weeks, from mid-April through early July, as states began to reopen their economies, a move that is now stalling.
All told, 17 million people are collecting traditional jobless benefits, a sign that unemployment checks are keeping many American families afloat financially at a time of big job losses and agonizing economic uncertainty.
The pain could soon intensify: An supplemental $600 in weekly federal unemployment benefits is expiring, and Congress is squabbling about extending the aid, which would probably be done at a reduced level.
A resurgence of cases in the South and the West has forced many many bars, restaurants, beauty salons and other businesses to close again or reduce occupancy. Between June 21 and July 19, for example, the percentage of Texas bars that were closed shot up from 25% to 73%; likewise, 75% of California beauty shops were shuttered July 19, up from 40% just a week earlier; according to the data firm Womply.
And many states have imposed restrictions on visitors from states that have reported high level of virus cases, thereby hurting hotels, airlines and other industries that depend on travel.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said the jobs numbers were disheartening.
“A resurgence in virus cases has resulted in a pause or rollback of reopenings across states and the pace of layoffs is likely to pick up just as expanded unemployment benefits are expiring,” Farooqi said. “The risk of temporary job losses becoming permanent is high from repeated closures of businesses. That could result in an even slower pace of recovery.''
The virus and the lockdowns meant to contain it have hammered the American economy: Employers slashed a record 20.8 million jobs in April, restoring about 7.5 million of them in May and June as many states began to reopen their economies.
Last week, an additional 830,000 million people applied for jobless aid under a new program that extends eligibility for the first time to self-employed and gig workers. That figure isn’t adjusted for seasonal trends, so it’s reported separately.
Altogether, the Labor Department said that 30.2 million people are receiving some form of unemployment benefits, though the figure may be inflated by double-counting by states.
Since she was laid off by a tech industry nonprofit May 15, Miranda Meyerson, 38, has been trying to find another job and to sign up for unemployment benefits. ”It’s just incredibly frustrating and demoralizing,’’ she said. Potential employers seem to be delaying hiring decisions. “Nobody gets back to you,’’ she said. “You feel like there’s only so long you can submit (applications) into a void.’’
Meyerson and her partner moved from New York to Oakland, California, in March, just as the virus began to spread rapidly across the United States. The move to a new state has complicated her so far futile efforts to collect benefits from a swamped California unemployment benefits system. ”They’re obviously totally overwhelmed,” she said. “You can’t even get on the phone to talk to anybody.’’
Allegra Troiano, 64, was stunned when the Milwaukee English language learning center she ran was closed in May. “They got through SARS. They got through the Ebola scare,’’ she said. “Nobody ever thought it would get to the point where we were shutting down.’’
The extra $600 in unemployment pay has been a lifeline as she contends with a $2,200 mortgage and $600 in monthly health insurance expenses. “It means surviving,” she said.
Laid off from his job as a bank security guard in March, James Adams, 53, of New Kensington, Pennsylvania, said that “losing that $600 a week would be devastating. I have been having a hard time sleeping.’’
A Trump voter, Adams has a message for Republican senators reluctant to spend more money on unemployment aid: “I know they want to be fiscal hawks, but swallow the bitter pill and help out the people who need this help.”
Stocks Sink Worldwide; Dow Drops 500 Points In Early Trading
NEW YORK (AP) — Stocks are falling in early Thursday trading on Wall Street as the market’s see-saw week snaps sharply back downward.
The S&P 500 was 1.5% lower after the first 30 minutes of trading, following steeper losses in Europe and milder ones across much of Asia. Treasury yields also fell in a sign of increased caution, while gold ticked down from its record level.
The Dow Jones Industrial Average was down 503 points, or 1.9%, at 26,036, as of 10 a.m. Eastern time, and the Nasdaq composite was down 1%.
The losses come after a report showed that layoffs are continuing at their stubborn pace across the country, denting hopes that the economy can recover nearly as quickly as it plummeted into recession. A separate report on Thursday showed that the U.S. economy contracted at a nearly 33% annual rate in the spring, the worst quarter on record.
Markets worldwide had already turned lower before those reports were released. An earlier report showed that Germany’s economy, Europe’s largest, suffered through its worst quarter on record during the spring, a contraction more than twice as sharp as during the Great Recession
The losses for markets accelerated following the U.S. data reports, as well as a tweet from President Donald Trump suggesting the United States delay its presidential election in November, though that would require an act of Congress to do.
Thursday’s loss for the S&P 500 also nearly mirrors its jump from the day before, when the Federal Reserve pledged to keep interest rates at their record low but highlighted how uncertain the path is for the economy, and how it’s mostly dependent on what happens with the coronavirus pandemic. If the market stays at its current level, it would be the second time that the index has flip-flopped this week.
Energy stocks had some of the market's sharpest losses, dropping in concert with oil prices amid worries about weaker demand amid a struggling global economy. Exxon Mobil dropped 4.5%, and ConocoPhillips lost 9.5%.
Financial stocks were also weak, hurt by a drop in interest rates that reins in the profits to be made from lending. JPMorgan Chase fell 3.4%, and Citigroup lost 4.9%
Technology stocks held up better than the rest of the market, as they have through the pandemic. The sector fell 1.2% in Thursday morning trading, less than half the decline of financial stocks.
Four of the biggest tech-oriented companies are scheduled to report their latest quarter results after trading ends. Amazon, Apple, Facebook and Google’s parent company are all up more than 12% this year, when the S&P 500 is down 0.2%. Amazon is up more than 60%.
Investors have continued to flock to such stocks on expectations that sales for the companies will continue to explode as the pandemic accelerates life’s shift toward online. But with great expectations also comes the possibility of great disappointment, and discouraging reports from the four would have big effects on the market. They alone account for nearly 16% of the S&P 500 by market value.
Investors are also continuing to wait for signs of progress from Capitol Hill, where Congress is debating how and whether to offer more aid for the economy ravaged by the pandemic. An extra $600 in weekly unemployment benefits from the federal government is about to expire, and that cash is growing in importance as the number of laid-off workers ticks higher.
A little more than 1.4 million U.S. workers applied for unemployment benefits last week, according to a Thursday report from the Labor Department. That's up by 12,000 from a week earlier.
The yield on the 10-year Treasury fell to 0.54% from 0.58% late Wednesday. It tends to move with investors’ expectations for the economy and inflation.
Gold pulled back a bit from its record heights, offering at least a pause to its huge rally amid a weakening dollar, rock-bottom interest rates and worries about the economy. It fell 0.3% to $1,947.20 per ounce.
Benchmark U.S. crude dropped 2.2% to $40.37 per barrel. Brent crude, the international standard, lost 1.9% to $43.27 per barrel.
In European stock markets, Germany's DAX lost 3.5%, and France's CAC 40 dropped 2.1%. The FTSE 100 in London was down 2.5%.
In Asia, Japan's Nikkei 225 slipped 0.3%, South Korea's Kospi added 0.2% and Hong Kong's Hang Seng dropped 0.7%. Stocks in Shanghai slipped 0.2%.
Bleak Economic Data Point To Struggles Ahead For US Economy
WASHINGTON (AP) — A grim picture emerged Thursday of a U.S. economy that has endured a record-shattering plunge last quarter and is now struggling to rebound as the coronavirus keeps forcing more layoffs.
The economy shrank at a dizzying 32.9% annual rate in the April-June quarter, when the viral outbreak shut down businesses, throwing tens of millions out of work and sending unemployment surging to nearly 15%. The government’s estimate of the second-quarter fall in the gross domestic product was the sharpest such drop on records dating to 1947. The previous worst quarterly contraction, a 10% drop, occurred in 1958 during the Eisenhower administration.
So dizzying was the fall that most analysts expect the economy to produce a sharp bounce-back in the current July-September quarter. Yet with the rate of confirmed coronavirus cases having surged in a majority of states, more businesses being forced to pull back on re-openings and the Republican Senate proposing to scale back government aid to the unemployed, the economy could worsen in the months ahead.
In a sign of how weakened the job market remains, more than 1.4 million laid-off Americans applied for unemployment benefits last week. It was the 19th straight week that more than 1 million people have applied for jobless aid. Before the coronavirus erupted in March, the number of Americans seeking unemployment checks had never exceeded 700,000 in any one week, even during the Great Recession.
An additional 830,000 million people applied for unemployment benefits under a new program that extends eligibility for the first time to self-employed and gig workers. All told, the government says roughly 30 million people are receiving some form of jobless aid, though that figure might be inflated by double-counting by some states.
The pain could soon intensify: A supplemental $600 in weekly federal unemployment benefits is expiring, and Congress is squabbling about extending the aid, which will probably be done at some reduced level of payment.
Soon after the government issued the bleak economic data, President Donald Trump diverted attention by suggesting a “delay” in the Nov. 3 presidential election, based on his unsubstantiated allegations that widespread mail-in voting will result in fraud. The dates of presidential elections are enshrined in federal law and would require an act of Congress to change.
Last quarter’s economic drop followed a 5% fall in the January-March quarter, during which the economy officially entered a recession triggered by the virus, ending an 11-year economic expansion, the longest on record in the United States.
The contraction in the spring was driven by a deep pullback in consumer spending, which accounts for about 70% of economic activity. Spending by consumers collapsed at a 34.6% annual rate as travel all but froze and shutdown orders forced many restaurants, bars, entertainment venues and other retail establishments to close.
The plunge in GDP “underscores the unprecedented hit to the economy from the pandemic,” said Andrew Hunter, senior U.S. economist at Capital Economics. “We expect it will take years for that damage to be fully recovered.”
A resurgence of viral cases in the South and the West has forced many bars, restaurants, beauty salons and other businesses to close again or reduce occupancy. Between June 21 and July 19, for example, the proportion of Texas bars that were closed shot up from 25% to 73%. Likewise, 75% of California beauty shops were shuttered July 19, up from 40% just a week earlier, according to the data firm Womply.
And many states have imposed restrictions on visitors from states that have reported high level of virus cases, thereby hurting hotels, airlines and other industries that depend on travel.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said the job numbers were disheartening.
“A resurgence in virus cases has resulted in a pause or rollback of re-openings across states, and the pace of layoffs is likely to pick up just as expanded unemployment benefits are expiring,” Farooqi said. “The risk of temporary job losses becoming permanent is high from repeated closures of businesses. That could result in an even slower pace of recovery.”
The picture looks dim for many of the jobless. Since she was laid off by a tech industry nonprofit in mid-May, Miranda Meyerson has been trying to find another job and to sign up for unemployment benefits.
“It’s just incredibly frustrating and demoralizing,’’ she said. Potential employers seem to be delaying hiring decisions.
“Nobody gets back to you,’’ said Meyerson, 38. “You feel like there’s only so long you can submit (applications) into a void.’’
Meyerson and her partner had moved from New York to Oakland, California, in March, just as the virus began to spread rapidly across the United States. The move complicated her efforts, so far futile, to collect benefits from a swamped California unemployment benefits system.
“They’re obviously totally overwhelmed,” she said. “You can’t even get on the phone to talk to anybody.’’
Trump has pressured states to reopen businesses despite concerns that the virus remains a threat to workers and customers at many service industry jobs that require frequent face-to-face contact.
Many economists note that the economy can’t fully recover until the pandemic is defeated — a point stressed Wednesday at a news conference by Federal Reserve Chair Jerome Powell. The Fed chairman warned that the viral epidemic has been endangering a modest economic recovery and that as a result, the Fed plans to keep interest rates pinned near zero well into the future.
“A poorly managed health situation and depressed incomes means the economy risks a double-dip recession without urgent fiscal aid,” said Gregory Daco, chief U.S. economist at Oxford Economics.
“Fiscal aid is a must pass,” Daco said. “Without further fiscal assistance, many households across the country are going to be left without much of an income stream and will react by severely cutting back on spending.”
Daco said the expiration of the $600 in federal unemployment aid means that many households could suffer a loss of income in the range of 50% to 75%.
“The economy," Daco said, “is going to be running on very little fuel at a point when the recovery has really stalled.”
Fed Sees Dim Economic Outlook As Virus Squeezes Economy
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell warned Wednesday that the viral epidemic is endangering the modest economic recovery that followed a collapse in hiring and spending this spring. As a result, he said, the Fed plans to keep interest rates pinned near zero well into the future.
That faltering economy, pressured by a resurgence of the virus, has heightened the need for Congress to continue providing significant financial aid, Powell said. Members of the House and Senate are negotiating a new package but are nowhere near agreement. Senate Republicans and the White House are proposing a plan that would provide less help for unemployed Americans than they are now receiving.
Speaking at a virtual news conference after a two-day Fed meeting ended, Powell said the economy had rebounded after nearly all states lifted their broad business shutdown measures in May. But since then, he noted, as new confirmed cases have soared, measures of spending and hiring have slipped or plateaued at low levels.
“Now that the cases have spiked again, the early data ... suggest that there is a slower pace of growth at least for now," he said. "We don’t know how deep or for how long it will be.”
The economic stumble, amid the worsened viral outbreak, underscores the connection between the virus and the economy's ability to sustain any recovery, the chairman said. This point was also highlighted in the Fed's statement , which added a new sentence: “The path of the economy will depend significantly on the course of the virus."
That observation was an acknowledgement that uncertainty about when the health crisis might be solved has complicated the Fed’s ability to set interest rate policy.
It’s also a point that Powell has made, in one way or another, for months as most states have succeeded only fitfully in controlling the virus and the ability of businesses to stay open. And it suggested that Powell and the Fed envision a prolonged recovery that will depend in large part on how well the U.S. can contain the pandemic.
“A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities," Powell said.
In the meantime, he said, “We are committed to using our full range of tools to support the economy. We will continue to use these powers until we are confident we are solidly on the road to recovery.”
Yet despite its concerns, the Fed announced no new policies. It said it will also continue to buy billions of dollars in Treasury and mortgage bonds each month, which are intended to inject cash into financial markets and spur borrowing and spending.
William English, a finance professor at Yale School of Management and former top Fed official, said that Powell stressed that he wanted to see more comprehensive data, such as next week's July jobs report, before taking further steps.
“He acknowledged the softer high frequency data but didn’t put a huge weight on it," he said. “He took the weight off that by emphasizing the uncertainty.”
Powell also said that Congress had helped spur the modest economic recovery that occurred in May and June, when spending at retail stores and restaurants surged and employers added 7.5 million jobs. Still, that amounted to just one-third of the jobs lost in March and April.
“In a broad sense, it’s been well spent," Powell said of the $2 trillion package Congress approved in March. That legislation provided $600 in jobless benefits a week and set up a small business lending program.
“It’s kept people in their homes, it’s kept businesses in business.”
Yet “there will be a need for more support from us, and from fiscal policy,” Powell said, referring to Congressional tax and spending powers.
Congress is in the early stages of negotiating an economic relief package that might extend several key support programs, such as the expiring $600-a-week unemployment benefit. That benefit will likely be reduced in any final legislation.
With the two parties far apart, the federal jobless benefit will likely lapse for at least several weeks for about 30 million people who are unemployed. That would likely slow consumer spending and weaken the economy.
Economists say the Fed has time to consider its next policy moves because short- and long-term rates remain historically ultra-low and aren’t restraining economic growth. Home sales have picked up after falling sharply in the spring. The housing rebound has been fueled by the lowest loan rates on record, with the average 30-year mortgage dipping below 3% this month for the first time in 50 years.
Still, with the economy struggling just to grow, small businesses across the country in serious danger and unemployment very high at 11.1%, the pressure is likely to increase on the Fed to take further steps. Few investors expect the Fed to hike interest rates for years to come. After its previous meeting last month, the Fed signaled that it expected to keep its key short-term rate near zero at least through 2022.
The Fed's overall message that it would keep rates low indefinitely with the economy in a severe downturn was widely expected by investors, and reaction in financial markets was muted. Stocks maintained their gains, and Treasury yields held steady.
Most analysts say they think the Fed’s next move will be to provide more specific guidance about the conditions it would need to see before raising its benchmark short-term interest rate from zero.
Economists call such an approach “forward guidance,” and the Fed used it extensively after the 2008-2009 recession. Some Fed watchers expect no rate increase until 2024 at the earliest given the bleak outlook for the economy and expectations of continued ultra-low inflation. But by providing more certainty for investors about when a rate hike may occur, forward guidance can help keep longer-term rates lower than they might otherwise be.
Wall Street Rallies As Fed Keeps Rates Pinned At Record Low
NEW YORK (AP) — Wall Street rallied on Wednesday, and the S&P 500 climbed 1.2% for its best day in two weeks after the Federal Reserve kept the accelerator floored on its support for the economy.
U.S. stocks began rising as soon as trading opened, and momentum picked up after the Fed said in the afternoon that it will keep interest rates at their record low as the economy struggles through the recession created by the coronavirus pandemic.
The S&P 500 gained 40.00 points to 3,258.44 for its second gain in the last three days. The Dow Jones Industrial Average rose 160.29, or 0.6%, to 26,539.57, and the Nasdaq composite added 140.85, or 1.4%, to 10,542.94.
Besides keeping short-term rates pinned at nearly zero, the Federal Reserve also said it will continue to buy about $120 billion in Treasury and mortgage bonds each month to support the economy.
“The Fed has done a lot,” said Kirk Hartman, president and global chief investment officer at Wells Fargo Asset Management. “It was very clear today that they’ll stand by and continue to be accommodative.”
Such aid from the Fed, along with stimulus from Congress, helped launch the stock market’s turnaround in March. Congress is also locked in negotiations for more support for the economy, with $600 in weekly unemployment benefits about to expire. Democrats and Republicans seem to remain far apart in their proposals, but investors are still hopeful about a deal’s chances.
If those two remain in hand, the big wild card for markets will continue to be the coronavirus pandemic and whether a vaccine can be developed for it within the next year.
“The markets are very strong, but the real economy is not so strong,” Hartman said. “The markets are betting on a recovery, on a vaccine rolling out at the end of the year. That’s the only way you can justify the market” at the levels it's reached, along with the continued rescue efforts by the Federal Reserve.
The S&P 500 is back within 3.8% of its record set in February after earlier being down nearly 34%.
Besides the action in Washington, this is also a frenetic week for profit reports from the biggest U.S. companies. Several reported results for the spring that topped Wall Street’s expectations, even though they were far below last year’s levels from before the pandemic. That’s been the general trend so far this earnings season, with 40% of companies in the S&P 500 having reported.
Advanced Micro Devices rose 12.5% after it reported a stronger jump in profit for its latest quarter than Wall Street expected. The chip maker also raised its forecast for revenue through 2020. It’s notable because many companies have been pulling their forecasts or declining to offer any given all the uncertainty in the economy created by the pandemic.
Starbucks gained 3.7% after it reported a loss for the spring that wasn't as bad as analysts were expecting.
L Brands, the parent company of Victoria's Secret, soared 35.4% for the biggest gain in the S&P 500 after it laid out plans to slash its annual costs by $400 million, including through laying off workers. The stock had been struggling for years before turning higher in the spring, and analysts say the cost cuts should help bolster the company's profitability.
Eastman Kodak's stock more than tripled for the second straight day after the company won a $765 million government loan to launch a new business unit making pharmaceutical components. It surged 318.1% to $33.20, up from $2.62 on Monday.
Big technology CEOs, meanwhile, testified at a House of Representatives subcommittee hearing on whether their companies have grown too big and harm competition.
Amazon, Apple, Facebook and Google’s parent company have been some of the market’s strongest stocks through the pandemic, much as they’ve been for the last several years, on investors’ expectations that they can continue to grow almost regardless of what the economy does.
Their stocks have grown so valuable that they can sway the S&P 500 and other indexes almost by themselves. Those four, plus Microsoft, account for nearly 22% of the S&P 500’s total value.
The big tech-oriented stocks have had a few stumbles in recent weeks, but they remain far ahead of the rest of the market. Amazon added 1.1% Wednesday, Apple rose 1.9%, Facebook gained 1.4% and the Class A shares of Alphabet were up 1.3%.
The yield on the 10-year Treasury dipped to 0.57% from 0.58% late Tuesday.
Gold extended its record run and rose 0.4% to settle at $1,953.40 per ounce after touching $1,960.00 in the morning.
Benchmark U.S. crude oil for September delivery rose 23 cents to settle at $41.27 a barrel Wednesday. Brent crude oil for September delivery rose 53 cents to $43.75 a barrel.
Overseas stock markets were mixed. The Nikkei 225 in Tokyo lost 1.1%, but stocks in Shanghai rose 2.1%. South Korea’s Kospi added 0.3%, and Hong Kong’s Hang Seng rose 0.4%.
Germany’s DAX lost 0.1%, and France’s CAC 40 rose 0.6%. The FTSE 100 in London was close to flat.
US Energy Use Hit 30-Year Low During Pandemic Shutdowns
BILLINGS, Mont. (AP) — U.S. energy consumption plummeted to its lowest level in more than 30 years this spring as the nation’s economy largely shut down because of the coronavirus, federal officials reported Wednesday.
The drop was driven by less demand for coal that is burned for electricity and oil that’s refined into gasoline and jet fuel, the U.S. Energy Information Administration said.
The declines were in line with lower energy usage around the globe as the pandemic seized up economies.
Those trends are turning around as commercial activity resumes but the impact has already been profound — including energy companies filing for bankruptcy protection and a forecasted dip in annual U.S. and global greenhouse gas emissions.
Overall U.S. energy consumption dropped 14 % during April compared to a year earlier, the energy administration said. That’s the lowest monthly level since 1989 and the largest decrease ever recorded in data that’s been collected since 1973.
The largest drop previously seen was in December 2001, after the Sept. 11 attacks shocked the economy and a mild winter depressed electricity demand.
Natural gas bucked the trend with a 15 percent increase in use during the April lockdown. More people at home meant more demand for natural gas as a heating fuel, while relatively few homes are heated with coal or oil, said Brett Marohl, who helped produce the energy administration findings.
Petroleum consumption fell to 14.7 million barrels a day in April, down almost a third compared to the same period in 2019. Demand already has rebounded some after stay-at-home orders expired and large sectors of the economy started moving again.
Led by people resuming some of their old driving habits, particularly in cities, petroleum consumption in June was back up to 17.6 million barrels a day, according to the American Petroleum Institute. But new drilling activity continued to be weak, declining in June for the seventh month in a row to 11 million barrels daily as stockpiles of oil and petroleum products remained near record levels.
The spring drop in oil demand coincided with a market collapse triggered by a price dispute between Russia and Saudi Arabia.
“While we are not out of the woods yet, we do appear to be headed in the right direction,” said Dean Foreman, the industry group’s chief economist.
Coal companies are expected to have an even tougher time recovering from the pandemic, which hit as the coal sector remained on a fairly steady downward spiral since 2007 despite President Donald Trump’s attempts to prop it up.
Coal consumption fell 27 percent in April compared to the same period in 2019, to 27 million tons. Most coal produced in the U.S. is used to generate electricity but many utilities have switched to cheaper natural gas and renewable sources like wind and solar.
The energy administration projects overall consumption will increase for the rest of 2020 but remain below 2019 levels.
World Shares Mixed After Wall Street Rally; Gold Retreats - October is right around the corner, 1929 all over again?
MITO, Japan (AP) — World shares were mixed on Tuesday after U.S. stocks advanced overnight. The price of gold retreated after surging to nearly $1,975 per ounce.
Investors are awaiting the outcome of a two-day policy meeting of the Federal Reserve that begins Tuesday. They're also keeping an eye on corporate earnings and waiting for Congress to decide on more help for the American economy.
Germany's DAX gained 0.5% to 12,904.76 and the CAC 40 in Paris edged 0.1% lower to 4,934.39. Britain's FTSE 100 added 0.3% to 6,122.50. Wall Street looked set for a languid start, with the future for the Dow industrials virtually unchanged and the future for the S&P 500 up 1 point.
Investors are waiting to hear what the U.S. central bank says this week about the economy’s prospects and what it plans to do on interest rates, analysts said.
The closure of the U.S. Consulate in western China's Chengdu, following the shutdown of China's consulate in Houston, Texas, has highlighted antagonisms between Washington and Beijing that are adding to jitters at a time when the coronavirus pandemic appears to be regaining its grip in parts of Asia, including Hong Kong, Japan and Vietnam.
Such “acute geo-political uncertainties and socio-political strains all align with preference for a currency-like, safe-haven hard asset such as gold at the expense of the U.S. dollar," Hayaki Narita of Mizuho Bank said in a commentary.
The price of gold jumped a fresh intraday high of $1,974.70 an ounce on Tuesday before retreating slightly. As of 0700 GMT it was trading at $1,909.00 down $22.00.
Gold usually tends to rise when worries about the economy are high.
Share prices ended mixed in Asia, with Tokyo's Nikkei 225 index down 0.3% at 22,657.38. The Hang Seng in Hong Kong added 0.6% to 24,760.90. The Shanghai Composite index surged 0.7% to 3,227.96 and the S&P ASX/200 in Sydney lost 0.4% to 6,020.50.
South Korea's Kospi picked up 1.8% to 2,256.99.
On Wall Street, the S&P 500 climbed 23.78 points overnight to 3,239.41. The Dow Jones Industrial Average rose 0.4% to 26,584.77. Heavy buying of technology shares helped push the Nasdaq composite 1.7% higher, to 10,536.27.
“Amid the lack of fresh leads for the market, investors appeared to have once again turned to the safe choice of tech stocks, ones regarded to better weather the COVID-19 pandemic," Jingyi Pan of IG said in a commentary.
So far, profit reports have been better than Wall Street forecasts, though still far weaker than a year earlier because of the recession.
More than a third of the companies in the S&P 500 are scheduled to report how they fared from April through June, including some of the most influential companies such as Amazon, Apple, Facebook and Google’s parent company, Alphabet. Those four account for 16% of the S&P 500’s total value, which gives their movements significant influence on the index.
As extra pandemic unemployment benefits expire and U.S. businesses close down again to battle growing coronavirus counts, Democrats and Republicans still have much to negotiate over how best to support the economy.
The yield on the 10-year Treasury note ticked up to 0.61% from 0.60% late Monday.
Benchmark U.S. crude gave up 12 cents to $41.48 per barrel in electronic trading on the New York Mercantile Exchange. It gained 31 cents to settle at $41.60 per barrel on Monday.
Brent crude, the international standard, added 15 cents to $44.05 per barrel.
In currency dealings, the U.S. dollar strengthened to 105.65 Japanese yen from 105.40 yen late Monday. The euro slipped to $1.1709 from $1.1752.
Wall Street Dips After Worldwide Slide; Gold Nears Record
NEW YORK (AP) — Wall Street is slipping on Friday after tensions ramped higher between the world’s two largest economies, though the market pared its losses as the morning progressed.
The S&P 500 was 0.4% lower in midday trading, which would wipe out the last of its gains for the week. The Dow Jones Industrial Average was down 118 points, or 0.4%, at 26,534, as of 11:30 a.m. Eastern time, and the Nasdaq composite was down 0.5%. Each of the indexes had been down more sharply in the morning, with the Nasdaq off by as much as 2.3%.
Stocks also sank across Asian and European markets, and all the uncertainty helped gold top $1,900 per ounce, close to its record high. Treasury yields were holding relatively steady, but they remain close to their lowest levels since April.
The coronavirus pandemic remains the most dominant force in markets, with its potential to destroy lives and economies. But other risks are also bubbling up, headlined by Friday's worsening relations between the United States and China.
Investors are also concerned about a recent uptick in layoffs as spiking coronavirus counts across the Sun Belt lead more businesses to shut down. Extra benefits for those out-of-work Americans from the federal government are set to expire soon, and worries are rising about whether Congress can reach a deal on more aid for the economy. Nearly half of Americans whose families experienced a layoff during the pandemic believe those jobs are lost forever, according to a poll from The Associated Press-NORC Center for Public Affairs Research.
Despite all those challenges, the S&P 500 remains only about 5% below its record set in February, after roaring back from an earlier, nearly 34% plummet. This week's stall for the S&P 500 follows three straight weekly gains driven by hopes that the economy was regaining its footing. Underlying it all is massive aid for the economy promised by the Federal Reserve, including record-low interest rates.
“The Fed is the big story behind this market, that and the liquidity it’s provided,” said Teresa Jacobsen, managing director at UBS Private Wealth Management. “It gives a great deal of support for upside in the market. But, there are momentary blips when we pause and give a little back.”
On Friday, the blip came after China’s Foreign Ministry ordered the closure of the U.S. consulate in the western city of Chengdu. It echoes a similar move earlier this week by the United States to close the Chinese consulate in Houston.
Such moves have investors on edge because of how viciously markets swung in prior years when President Donald Trump was pressing his trade war with China, before they agreed to a temporary truce early this year.
“Alongside the eviction of the Houston Chinese Consulate, the risk of the U.S.-China conflict escalating into a ‘Cold War’ is worrying,” said Hayaki Narita of Mizuho Bank.
A speech Thursday by U.S. Secretary of State Mike Pompeo saying that “securing our freedom from the Chinese Communist Party is the mission of our time” adds to the rhetoric certain to incense Beijing, making it still more difficult for either side to back down, he said.
Technology stocks have also been in the spotlight, after a sharp slide for them on Thursday helped drag the S&P 500 to its worst loss in nearly four weeks.
Microsoft, Apple, Amazon and other giants have cruised through much of the pandemic on expectations that they can keep growing despite all the challenges for the economy. But critics say enthusiasm for them was overdone, with prices too high even after accounting for the huge profits that they can produce
Apple slipped 0.6%, Microsoft dropped 0.2%, and tech stocks as a group accounted for roughly half of the S&P 500’s loss. Earlier in the morning, Apple had been down 4%, and tech stocks were responsible for two thirds of the S&P 500's drop.
Intel sank 15.3% after it delayed the release of its new 7 nanometer chip, and it was the biggest weight on the market Friday morning.
Earlier in the day, stocks in Shanghai sank 3.9%, while the Hang Seng in Hong Kong lost 2.2%. Elsewhere in Asia, South Korea’s Kospi fell 0.7%.
In Europe, France’s CAC 40 fell 1.5%, and Germany’s DAX lost 1.9%. The FTSE 100 in London dropped 1.3%.
The yield on the 10-year Treasury held steady at 0.58%. It tends to move with investors’ expectations for the economy and inflation.
Gold rose 0.5% to $1,900.30 per ounce, crossing above that threshold for the first time in nearly nine years. Benchmark U.S. crude slipped 14 cents to $40.93 per barrel. Brent crude, the international standard, lost 10 cents to $43.21 per barrel.
Virus Sends Jobless Claims Up For First Time Since March - October is right around the Corner, Silver Bullion to $500.00 USD per ounce?
WASHINGTON (AP) — The viral pandemic's resurgence caused the number of Americans seeking unemployment benefits to rise last week for the first time in nearly four months, evidence of the deepening economic pain the outbreak is causing.
The increase in weekly jobless claims to 1.4 million served to underscore the outsize role the unemployment insurance system is playing among the nation’s safety net programs — just when a $600 weekly federal aid payment for the jobless is set to expire at the end of this week.
Last week’s pace of unemployment applications — the 18th straight time it’s topped 1 million — was up from 1.3 million the previous week. Before the pandemic, applications had never exceeded 700,000. An additional 975,000 applied last week for jobless aid under a separate program that has made self-employed and gig workers eligible for the first time.
The weakening of the labor market has raised fears that the economy will shed jobs again in July, after two sharp hiring gains in May and June, and derail prospects for a recovery from the recession.
“The labor market remains in a precarious place as COVID-19 cases surge in some parts of the country and fresh lockdown measures are adopted in response,” said Nancy Vanden Houten, lead economist at Oxford Economics, a consulting firm.
In contrast to the U.S., the outlook has brightened for some other major economies. Europe is forecast to rebound next year after having managed to shrink its coronavirus caseload. Unemployment in the 19 countries that use the euro has remained contained, reflecting aggressive government efforts to keep workers on payrolls.
And China has become the first major economy to grow since the start of the pandemic. Economists say China will likely recover relatively fast because of the Communist Party’s move to impose early and intensive anti-disease measures.
The U.S. government also said Thursday that the total number of people receiving jobless benefits fell 1.1 million to 16.2 million. That was a hopeful sign that even as layoffs remain persistently high, some companies are recalling workers. Yet that figure is still roughly 10 times what it was before the pandemic.
The painfully high number of layoffs reflects a pandemic that's causing both confirmed infections and deaths to rise nationally. Laboratories are buckling under a surge of coronavirus tests, creating processing delays that are undercutting the pandemic response. With the U.S. tally of confirmed infections nearing 4 million and deaths above 143,000, some workers are being kept off the job while awaiting test results. Analysts say the economy can’t improve until authorities can control the spread of the virus, a need that is complicating the reopening of businesses and schools.
Last week, applications for unemployment benefits declined in many states that have been hard hit by the virus, including Texas, Florida, Georgia and Arizona. Jobless claims rose in other states that are also seeing increases, however, including Louisiana, California, and Tennessee. The resurgence of confirmed virus cases has forced some businesses to close a second time or to impose tighter restrictions on customers in response to state mandates. The resulting pullback in business activity has hindered job growth and likely forced additional layoffs.
The federal government’s $600 weekly benefit for laid-off workers — which is in addition to whatever jobless aid a state provides — is the last major source of economic help from the $2 trillion relief package that Congress approved in March. A small business lending program and one-time $1,200 payment have largely run their course.
Members of Congress are negotiating another aid package that might extend the $600 benefit, though likely at a lower level. Because of the $600 weekly federal benefit, roughly two-thirds of the unemployed are receiving more in aid than they earned at their former jobs, research has shown — a finding that's led Republicans to argue that it is discouraging people from returning to work.
Yet the additional money has also been a key source of support for people who lost jobs that no longer exist or who fear being infected by the virus if they return to work.
The enhanced aid “is important to a lot of households, especially to my household, that cannot go back to work,” said Cindy Moffett, who used to work in the trade show industry, which has seen business dry up entirely since the pandemic began. Without tourists, she has no job to return to.
Analysts say it’s unlikely an agreement will be reached before the end of this month, and could take until mid-August. It would then take additional time for state unemployment agencies to distribute any extra benefit that is approved.
Such a disruption would likely “result in a slower rebound in overall economic activity,” said Joe Brusuealas, chief economist at RSM, a tax advisory firm.
Unemployment aid accounted for 6% of all U.S. income in May, a greater share than even Social Security. Economists say it’s one reason why retail spending rebounded as quickly as it did in May and June, helping fuel a modest economic rebound. If the full $600 were extended, it would boost consumer spending enough to generate roughly 1 million jobs by the end of this year, Oxford Economics estimates.
The end of the added benefit coincides with the expiration of a federal moratorium on evictions on Saturday. That moratorium bars evictions of renters who live in federally subsidized housing, and without it, about 22 million people are at risk of losing their homes.
Desperate to stop the spread of the virus and its resulting economic impact, a growing number of states have announced new or broadened mask requirements. A new survey from The Associated Press-NORC Center for Public Affairs Research finds three out of four Americans, including a majority of Republicans, favor requiring people to wear face coverings while outside their homes.
Real-time measures of the economy suggest that companies are pulling back on hiring and that more small businesses are closing permanently. Credit card spending has been stuck at about 10% below year-ago levels for nearly a month, according to JPMorgan Chase, after having risen steadily from mid-April to mid-June.
Data from the consumer-review website Yelp, which tracks millions of small businesses, shows that more such companies are permanently shutting down. Nearly 73,000 small businesses have closed for good since the pandemic intensified in March, up 28% from mid-June.
“Every time a business closes, that makes the recovery longer and harder, so that worries me,” said Ernie Tedeschi, an economist at the investment bank Evercore ISI.
Many of the unemployed say they fear that a slow and prolonged recovery would be hard to survive without the $600 weekly aid from the federal government. If that payment were eliminated, total unemployment benefits would shrink by one-half to two-thirds, depending on a recipient’s state.
Melissa Bennett has been using the federal jobless benefit to help pay her $1,900 monthly health insurance bill, which she’s paid on her own since losing her employer-sponsored plan in June when she was laid off from her job at a vacation time-share rental in Myrtle Beach, South Carolina, which has become a COVID-19 hot spot.
Without the $600, her unemployment benefit will fall to just $200 a week, and she’ll have to decide whether to pay her mortgage or her utilities first.
Dollar Sinks To A 4-1/4 Month Low On Strength In EUR/USD Which Climbs To A 1-3/4 Year High
The dollar index (DXY00) this morning is down -0.235 (-0.24%). Sep euro-fx futures (E6U0) are up +0.0059 (+0.51%), and EUR/USD (^EURUSD) is up +0.0057 (+0.49%). Sep yen futures (J6U0) are down -0.28 (-0.30%), and USD/JPY (^USDJPY) is up +0.31 (+0.29%).
The dollar index this morning tumbled to a new 4-1/4 month low on strength in EUR/USD, which climbed to a 1-3/4 year high on positive carry-over from Tuesday when EU leaders agreed on a 750 billion-euro pandemic stimulus package. A decline in T-note yields today is also weighing on the dollar.
The dollar garnered underlying support this morning as stocks fell on an escalation of U.S./China tensions after the U.S. ordered China's Houston consulate to close within three days, with the State Department saying it needed to protect intellectual property and "private information" of Americans.
The escalation of U.S./China tensions has also fueled safe-haven buying of government debt and sent the 10-year T-note yield down to a 1-1/2 week low of 0.582%, which was dollar negative since it undercut the dollar's interest rate differentials.
Today's U.S. economic data was bearish for the dollar after May FHFA house prices unexpectedly fell -0.3% m/m, weaker than expectations of +0.3% m/m, and the biggest decline in 8-1/2 years.
EUR/USD this morning soared to a 1-3/4 year high on positive carry-over from Tuesday when EU leaders agreed on a 750 billion euro ($860 billion) stimulus package. The emergency fund will provide 390 billion euros of grants and 360 billion euros of low-interest loans. A slight negative for EUR/USD is lower German bund yields as the 10-year German bund yield today fell to a 1-1/2 week low of -0.489%, which weakened the euro's interest rate differentials.
USD/JPY this morning is stronger on long liquidation in the yen ahead of the Japanese holidays on Thursday and Friday. The yen saw support from today's news that Japan's July Jibun Bank manufacturing PMI rose +2.5 to a 4-month high of 42.6, although it remained below 50.0 for the 15th consecutive month. The yen was undercut after the Japan 10-year JGB bond yield today matched Tuesday's 3-week low of 0.010%, which hurt the yen's interest rate differentials.
The ACG has a massive .999 silver bullion position up from the March lows of 2020 from $11.60 and silver bullion looks to go much higher still! What is going to happen to silver when gold bullion reaches a new high price of over $2,000+ per ounce? .999 silver bullion to record closing price above $50.00 per ounce? $25.00 ounce for silver is the next price target for silver bullion, the onto $50.00+? Time will tell. Hyperinflation along with FOMC comments seem to go hand in hand these days.
Goldman 2Q Profit Tops Forecast On Strong Trading Revenue
NEW YORK (AP) — Goldman Sachs Group Inc.'s second-quarter profit blew past Wall Street's expectations thanks to strong results from its investment banking and trading businesses.
Goldman reported second-quarter earnings of $2.25 billion, or $6.26 per share. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $3.97 per share.
The investment bank posted revenue of $15.39 billion in the period. Its revenue net of interest expense was $13.3 billion, which also topped Street forecasts. Three analysts surveyed by Zacks expected $10.07 billion.
The investment banking division posted record revenue of $2.66 billion, helped by revenue from underwriting stocks and debt securities. In addition, revenue from trading stocks, bonds, commodities and currencies was the strongest in about a decade, Goldman said.
Goldman shares rose 5% in premarket trading. The shares have fallen almost 7% since the beginning of the year, while the Standard & Poor’s 500 index has declined 1%. The shares have risen 1% in the last 12 months.
Stocks Climb Worldwide As CEOs Prepare Latest Report Cards
NEW YORK (AP) — Wall Street is rising in Monday morning trading as CEOs across the country prepare to tell their investors how much money they made, or lost, in the spring as the coronavirus pandemic pounded the economy.
The S&P 500 was 1.1% higher after the first hour of trading, following up on similar gains across Europe and Asia. Treasury yields also climbed, though some hesitance still hung over markets as the price of gold ticked higher.
The Dow Jones Industrial Average was up 337 points, or 1.3%, at 26,413, as of 10:30 a.m. Eastern time, and the Nasdaq composite was up 1.5%.
PepsiCo added 1.9% after it reported a bigger profit for the latest quarter than analysts expected. But the company behind Frito-Lay and SodaStream also said the future looks so uncertain given the coronavirus pandemic that it won’t offer any predictions about its sales and profits for the rest of the year.
Earnings reporting season will really get going Tuesday, when several of the country’s biggest banks report their results, headlined by JPMorgan Chase. Across the S&P 500, expectations are almost universally dismal.
Analysts say the biggest U.S. companies likely saw their earnings per share plummet nearly 45% from April through June, compared with year-ago levels. That would be the sharpest loss since the depths of the Great Recession in 2008, according to FactSet.
Investors, though, largely seem willing to give a mulligan for terrible results in the latest quarter and perhaps even a couple more.
“We — and many investors — expect the coronavirus-induced collapse in profits will be concentrated in 2020,” Goldman Sachs strategists wrote in a report.
Instead, investors are focusing on a hopeful return to profit growth in 2021 and beyond. The hope is that the economy and corporate profits bottomed out in the spring, when lockdowns were at their height, and will continue to improve as governments have relaxed restrictions. The job market, retail sales and other measures of the economy have already been showing some budding improvement.
Of course, all the optimism is colliding with fears that the recovery could be short-lived. Coronavirus counts are jumping across global hot spots. Florida and other hard-hit states in the U.S. Sun Belt have been in the spotlight in particular, with the stock market often jerking suddenly lower following announcements of rising numbers of known infections and deaths.
If states continue to bring back restrictions on their economies to slow the resurgence, it could choke off the fragile economic improvements just as they got underway.
Such concerns have helped the price of gold recently vault to its highest level since September 2011. Gold added $8.60 to $1,810.50 per ounce in Monday morning trading.
Another measure of nervousness in the market also ticked higher. The VIX, which shows how much volatility traders expect from the S&P 500 in upcoming weeks, rose by 1.7%.
Stocks nevertheless mostly climbed on Monday, with Maxim Integrated Products surging 10.8% for the biggest gain in the S&P 500. Semiconductor maker Analog Devices said it will buy the company in an all-stock deal that values the combined company at more than $68 billion.
The gains add to the S&P 500's 1.8% climb last week. It has pulled back within 5% of its record, which was set in February, after being down nearly 34% in late March. The market has been stuck in a mostly up-and-down churn since early June, though, when it got within 4.5% of its record.
Even though reports on the economy since early June have painted more improvements, worries are still high that the stock market has roared back to nearly record levels so much faster than corporate profits or the economy are expected to. Many economists and analysts say it could take years for that to happen, and the recent resurgence in coronavirus counts puts even that timetable in jepoardy.
Stocks elsewhere around the world also climbed Monday.
In Europe, France’s CAC 40 rose 1.3%, and Germany’s DAX returned 1%. The FTSE 100 in London climbed 1.2%.
Japan’s benchmark Nikkei 225 climbed 2.2%, South Korea’s Kospi gained 1.7% and Hong Kong’s Hang Seng rose 0.2%. The Shanghai Composite rose 1.8%.
The yield on the 10-year Treasury rose to 0.65% from 0.63% late Friday. It tends to move with investors' expectations for the economy and inflation.
Benchmark U.S. crude slipped 0.8% to $40.24 per barrel. Brent crude, the international standard, lost 0.8% to $42.90 per barrel.
Stocks Fall Amid Worries On Virus, Economy
NEW YORK (AP) — Stocks slumped on Wall Street Thursday amid worries that recent improvements in the economy may be set to stall as coronavirus cases continue to climb. The S&P 500 lost nearly all of Wednesday’s gains, with the sharpest drops hitting oil producers and other stocks whose fortunes are most closely tied to a reopening and strengthening economy. Treasury yields fell in a sign of continued caution in the market. Smaller stocks sank more than the rest of the market, which often happens when investors are downgrading their expectations for the economy.
THIS IS A BREAKING NEWS UPDATE. AP's earlier story appears below.
Most stocks are slumping on Wall Street Thursday amid worries that recent improvements in the economy may be set to stall as coronavirus cases continue to climb.
The S&P 500 was 0.4% lower in late trading, after paring earlier losses, with the sharpest drops hitting oil producers, banks, airlines and other stocks whose fortunes are most closely tied to a reopening and strengthening economy. Treasury yields also fell in a sign of continued caution in the market.
The Dow Jones Industrial Average was down 298 points, or 1.1%, at 25,769, as of 3:08 p.m. Eastern time. Smaller stocks sank more than the rest of the market, which often happens when investors are downgrading their expectations for the economy. The Russell 2000 index of small-cap stocks lost 1.7%.
Tech stocks were holding up better than the rest of the market, though, as investors continue to bet they can keep growing almost regardless of the economy's strength. They helped the Nasdaq composite to a gain of 0.6%. They also helped the S&P 500 pare its loss through the afternoon, after being down as much as 1.7%.
“The broad equity market is navigating through a zone of uncertainty,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
“There are ample reasons for caution,” he said. “Clearly there's uncertainty surrounding the impact and duration of this virus.”
Thursday's headline economic report showed that a little more than 1.3 million workers filed for unemployment claims last week. It's an astoundingly high number, but it's also down down from 1.4 million the prior week and from a peak of nearly 6.9 million in late March.
The improvements back up investor optimism that the economy can recover as states and other governments relax restrictions put in place earlier this year to slow the coronavirus pandemic. Such optimism has helped the S&P 500 recently climb back to within roughly 7% of its record set in February, after earlier being down nearly 34%.
But economists point to a troubling slowdown in the pace of improvements, including moderating declines in the four-week average of jobless claims .
“At best, these numbers are deemed ‘less bad,’ but still seem to be indicating that we are traveling on a ‘slow boat’ to a recovery that looks nothing like the ‘V’ that so many had hoped it would be,” Kevin Giddis, chief fixed income strategist at Raymond James, wrote in a report.
Investors are worried that worsening infection levels across swaths of the U.S. South and West, among other global hotspots, could derail the budding recovery. Some states are rolling back their reopenings, while others are ordering people arriving from hotspots to quarantine.
Markets have been quick to react to infection and hospitalization rates in Florida and other big Sun Belt states in particular. Thursday's losses for stocks accelerated after Florida reported the largest daily increase in deaths yet from the pandemic, with its cumulative death toll topping 4,000.
Such concerns helped push Treasury yields lower. The yield on the 10-year note, which tends to move with investors' expectations for the economy and inflation, sank to 0.60% from 0.65% late Wednesday.
The price of gold also held above $1,800 per ounce. Gold tends to rise when investors are worried about the economy, and on Wednesday it touched its highest price since September 2011. After flipping between small gains and losses, gold for delivery in August dipped $16.80 to settle at $1,803.80.
In the stock market, the sharpest losses hit companies whose profits tend to rise and fall most closely with the strength of the economy. Energy stocks dropped 4% for the biggest loss among the 11 sectors that make up the index. Exxon Mobil sank 3.4%, and ConocoPhillips fell 5.7%.
Financial stocks were also particularly weak, as a struggling economy raises the threat of borrowers failing to repay their loans. Bank of America dropped 1.7%, Citigroup lost 2.8% and JPMorgan Chase fell 1.9%.
Other companies that desperately need the pandemic to ease so customers can return also struggled. United Airlines lost 7.2%, and mall-owner Simon Property Group fell 5.1%.
Walgreens Boots Alliance slumped 8.1% for one of the biggest losses in the S&P 500 after it said it lost $1.7 billion in the latest quarter as the pandemic kept its customers around the world at home.
Companies across the country are preparing to report their second-quarter results in upcoming weeks, and forecasts are uniformly dismal.
If the S&P 500 ends up lower for the day, it would be just its second loss in the last eight days. Its loss so far on Thursday trimmed its gain for the week to 0.9%.
Trading has been erratic lately, though, with many gains coming only after the index bounced up and down repeatedly through the day. It mirrors the market’s movement’s over much of the last month, as investors struggle through massive amounts of uncertainty.
In European stock markets, Germany's DAX was virtually flat, while France's CAC 40 fell 1.2%. The FTSE 100 in London lost 1.7% after the Treasury chief warned about the depth of the recession there and more big retailers said they had to cut jobs.
In Asia, Chinese stocks continued their huge run. Stocks in Shanghai added another 1.4%, bringing its gain for July to 15.6% and further stoking worries that speculators are in charge of the market.
The Nikkei 225 in Tokyo added 0.4%, as did South Korea's Kospi. The Hang Seng in Hong Kong gained 0.3%.
Benchmark U.S. crude dropped $1.28 to settle at $39.62 per barrel.
Germany Is First Major Economy To Phase Out Coal And Nuclear
BERLIN (AP) — German lawmakers have finalized the country's long-awaited phase-out of coal as an energy source , backing a plan that environmental groups say isn't ambitious enough and free marketeers criticize as a waste of taxpayers' money.
Bills approved by both houses of parliament Friday envision shutting down the last coal-fired power plant by 2038 and spending some 40 billion euros ($45 billion) to help affected regions cope with the transition.
The plan is part of Germany's ‘energy transition’ - an effort to wean Europe's biggest economy off planet-warming fossil fuels and generate all of the country's considerable energy needs from renewable sources. Achieving that goal is made harder than in comparable countries such as France and Britain because of Germany's existing commitment to also phase out nuclear power by the end of 2022.
“The days of coal are numbered in Germany,” Environment Minister Svenja Schulze said. “Germany is the first industrialized country that leaves behind both nuclear energy and coal.”
Greenpeace and other environmental groups have staged vocal protests against the plan, including by dropping a banner down the front of the Reichstag building Friday. They argue that the government's road map won't reduce Germany's greenhouse gas emissions fast enough to meet the targets set out in the Paris climate accord.
“Germany, the country that burns the greatest amount of lignite coal worldwide, will burden the next generation with 18 more years of carbon dioxide,” Greenpeace Germany’s executive director Martin Kaiser told The Associated Press.
Kaiser, who was part of a government-appointed expert commission, accused Chancellor Angela Merkel of making a “historic mistake,” saying an end date for coal of 2030 would have sent a strong signal for European and global climate policy. Merkel has said she wants Europe to be the first continent to end its greenhouse gas emissions, by 2050.
Germany closed its last black coal mine in 2018, but it continues to import the fuel and extract its own reserves of lignite, a brownish coal that is abundant in the west and east of the country. Officials warn that the loss of mining jobs could hurt those economically fragile regions, though efforts are already under way to turn the vast lignite mines into nature reserves and lakeside resorts .
Schulze, the environment minister, said there would be regular government reviews to examine whether the end date for coal can be brought forward. She noted that by the end of 2022, eight of the country’s most polluting coal-fired plants will have already been closed.
Environmentalists have also criticized the large sums being offered to coal companies to shut down their plants, a complaint shared by libertarians such as Germany’s opposition Free Democratic Party.
Katja Suding, a leading FDP lawmaker, said the government should have opted to expand existing emissions trading systems that put a price on carbon, thereby encouraging operators to shut down unprofitable coal plants.
“You just have to make it so expensive that it’s not profitable anymore to turn coal into electricity,” she said.
This week, utility companies in Spain shut down seven of the country’s 15 coal-fired power plants, saying they couldn’t be operated at profit without government subsidies.
But the head of Germany’s main miners’ union, Michael Vassiliadis, welcomed the decision, calling it a “historic milestone.” He urged the government to focus next on expanding renewable energy generation and the use of hydrogen , which is being touted as a long-term replacement for natural gas.
According to Germany’s state-funded Fraunhofer Institute, some 55.7% of net electricity generated so far this year for the public power supply came from renewable sources including wind, solar, biomass and hydro. Coal accounted for almost 20%, followed by nuclear and natural gas with about 12% each.
Stocks Sink As Virus Cases Jump, Forcing States To Backtrack, Has the Rally back failed? 1930 - 1931 89% stock market crash pending?
Stocks on Wall Street fell sharply Friday as confirmed new coronavirus infections in the U.S. hit an all-time high, prompting Texas and Florida to reverse course on the reopening of businesses.
The combination injected new jitters into a market that's been mostly riding high since April on hopes that the economy will recover from a deep recession as businesses open doors and Americans begin to feel more confident that they can leave their homes again.
The S&P 500 dropped 2.4%, giving up all of its gains after a rally the day before. The sell-off capped a choppy week of trading that erased the benchmark index's gains for the month. Even so, the S&P 500 is still on pace for its best quarter since 1998.
The surge in the number of confirmed new coronavirus cases prompted Texas and Florida to reverse course and clamp down on bars again. The two states join a small but growing list of those that are either backtracking or putting any further reopenings of their economies on hold because of a resurgence of the virus.
“That certainly calls into question how vigorous this recovery will be,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “We have to acknowledge there’s a high degree of uncertainty about how this is going to progress for the balance of the year.”
The S&P 500 fell 74.71 points to 3,009.05. The Dow Jones Industrial Average had its worst day in two weeks, losing 730.05 points, or 2.8%, to 25,015.55. The Nasdaq, which hit an all-time high earlier this week, dropped 259.78 points, or 2.6%, to 9,757.22.
Markets have been mostly rallying since April on hopes that U.S. states and regions around the world could continue to lift the spring lockdowns put in place to slow the spread of the coronavirus. The increase in cases casts doubt on expectations that the economy will continue to reopen and things can get back to normal sooner, rather than later.
The number of confirmed new coronavirus cases per day in the U.S. has hit an all-time high of 40,000, eclipsing the mark set during the deadliest stretch in late April. Deaths and hospitalizations have been rising in parts of the country, especially in the South and West.
The resurgence in the virus and the action by some governors to backtrack or at least pause the reopenings of their states undercut Wall Street’s optimism for a relatively swift economic turnaround.
“That has real implications for the pace where we can return to economic normalcy,” Northey said, adding that while some states are rolling back their reopening, it’s unlikely there will be a broad, nationwide lockdown.
The stock market is likely to remain volatile as traders weigh the ups and downs in the trajectory of the pandemic.
“In large part, we’re going to see some of these fits and starts,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. “It’s going to weigh on sentiment to some extent, but overall we think the economy is on the mend and the recovery is on its the way."
Facebook slumped 8.3% as an advertising boycott aimed at pressuring the social networking giant into doing more to prevent racist and violent information from being shared on its service intensifies. Verizon announced it had joined the boycott Thursday, and on Friday European consumer-products maker Unilever, which makes Ben & Jerry's ice cream and Dove soap also said it would stop advertising on Facebook.
Financial companies were among the biggest decliners after the Federal Reserve ordered many of the nation’s biggest banks to suspend buybacks of their stock and cap dividend payments for several months.
Capital One Financial fell 8.8%, Goldman Sachs dropped 8.6% and JPMorgan lost 5.5%. The announcement came as part of the Fed’s annual “stress tests,” which showed that in a worst-case scenario involving the U.S. economy being ravaged by the pandemic, the banks would collectively lose roughly $700 billion.
Traders also dumped shares in Nike after the athletic apparel maker reported a big loss as most of its stores were forced to close. The stock slid 7.6%.
Bond yields were mixed. The yield on the 10-year Treasury note dropped to 0.65% from 0.67%, another sign of caution in the market. The yield tends to move with investors’ expectations for the economy and inflation.
Concern that a pullback in the reopening of businesses could hamper demand for energy helped pull down oil prices Friday. Benchmark U.S. crude oil for August delivery fell 23 cents to settle at $38.49 a barrel. Brent crude oil for August delivery fell 3 cents to $41.02 a barrel.
Major indexes in Europe closed mostly lower, and Asian markets finished mostly higher.
Natural Gas Prices Settle At A 25-Year Low As Weekly Nat-Gas Inventories Surge, nobody wants natural gas, fracking sucks for Natural Gas. Fracking ruined the #Natgas #LNG industry! Time to buy the #LNG dip?
Nat-gas prices on Thursday plunged to a 25-year nearest-futures low on robust supplies and weak demand. The IEA reported Thursday that weekly nat-gas inventories surged 120 bcf, higher than consensus of 108 bcf and well above the 5-year average for this time of year of +73 bcf.
A resurgence of coronavirus infections is also raising concern that lockdowns may remain in place for longer, which would curtail economic growth and energy demand. The U.S. reported 36,880 new infections on Wednesday, the biggest one-day increase since the pandemic began. The coronavirus pandemic continues to dampen the U.S. and global economies. Confirmed cases of the virus have risen above 9.555 million globally, with deaths exceeding 485,000.
The Dallas Fed Energy Survey released on Wednesday was bearish for nat-gas prices since it reported that more than a third of U.S. shale-oil producers intend to restart most of their idled output by the end of this month, which could boost U.S. nat-gas production as a by-product.
Forecasts for hot U.S. temperatures are positive for nat-gas prices due to increased demand for AC and electricity. Maxar said Wednesday that the Midwest and East coast would see above-normal temperatures over the next 15 days as the heat shifts across the rest of the lower 48 states during July 2-6.
Nat-gas export demand remains weak as BNEF reported that scheduled natural gas flows to LNG export plants on Wednesday were 4.5 bcf/d, down -27% since May 31 and moderately above the June 9 low of 3.5 bcf/d, the lowest in 14 months.
July nat-gas was undercut by last Wednesday's IEA 2020 Gas report, which said that global nat-gas consumption would slump by a record -4% this year, or twice the amount lost after the 2008 financial crisis. The IEA said European nat-gas demand so far this year (Jan-May) has fallen -7% y/y due to the coronavirus pandemic.
U.S. nat-gas production continues to be weak, which is supportive of nat-gas prices. U.S. lower-48 state dry gas production on Thursday fell by -8.2% y/y at 82.762 bcf/d, the 39th consecutive day that nat-gas production has fallen on a year-on-year basis, according to figures calculated by Bloomberg.
Baker Hughes last Friday reported that the number of active U.S. nat-gas drilling rigs fell by -3 rigs in the week of June 19 to 75 rigs, the fewest active rigs since the data began in 1987.A
Thursday's weekly EIA report of +120 bcf was well above market expectations of +108 bcf and left total U.S. nat-gas supplies at 3,012 bcf in the week of June 19, down from the 2-1/4 year high of 3,732 bcf posted in the week of Nov 8. Inventories are up +30.9% y/y and are +18.3% above the 5-year average.
Bank stocks Up For Stocks On Wall Street In Jumpy Trading and Scared Trading
A man walks by an electronic stock board of a securities firm in Tokyo, Thursday, June 25, 2020. Shares declined in Asia on Thursday after a sharp retreat overnight on Wall Street as new coronavirus cases in the U.S. climbed to their highest level in two months, dimming investors' hopes for a relatively quick economic turnaround. (AP Photo/Koji Sasahara)
Financial companies led stocks broadly higher on Wall Street Thursday as traders welcomed news that the Federal Reserve and other regulators are removing some limits on the ability of banks to make investments.
The S&P 500 climbed 1.1% following a jumpy day of trading. At one point, the index was down 0.9% before the rally strengthened toward the end of the day. The gains reversed some of the S&P 500's losses from a day earlier, when the market had its biggest drop in nearly two weeks.
Banks surged after the Fed and four regulatory agencies announced they’re going to change a rule that has limited banks’ ability to make investments in such areas as hedge funds. The rule change could free up billions of dollars in capital in the banking industry.
“It is potentially quite meaningful for the banks,” said Tony Roth, chief investment officer at Wilmington Trust.
Technology and health care stocks also helped lift the market, outweighing losses in utilities. Bond yields fell, a sign of caution in the market.
The Dow Jones Industrial Average rose 299.66 points, or 1.2%, to 25,745.60. The Nasdaq, which hit an all-time high earlier this week, gained 107.84 points, or 1.1%, to 10,017. The Russell 2000 index of small company stocks notched the biggest gain, climbing 23.57 points, or 1.7%, to 1,413.31.
The S&P 500 added 33.43 points to 3,083.76. The benchmark index is on pace for its best quarter since the fourth quarter of 1998.
Until this week, markets had been mostly rallying on hopes that U.S. states and regions around the world could continue to lift the spring lockdowns put in place to slow the spread of the coronavirus.
Recent economic data have been positive, helping fuel the cautious optimism. But a rise in new infections is stoking worries that the reopening of businesses may have to be curtailed again, delaying the economy’s recovery.
The Commerce Department said Thursday that the U.S. economy shrank at a 5% rate in the first three months of the year. A far worse decline is expected for the current quarter due to the pandemic. The Labor Department said another 1.5 million laid-off workers applied for unemployment benefits last week. That marks the 12th straight drop, a sign that layoffs are slowing, but remain at a painfully high level.
Macy’s slid 4.1% after the department store operator announced it is laying off 3,900 corporate staffers, or roughly 3% of its overall workforce, as the pandemic takes a financial toll on the retailer’s sales and profits. Like many of its non-essential peers, the retailer was forced to close its physical stores to curb the spread of the coronavirus, evaporating sales.
On a more encouraging note, the government said orders to American factories for big-ticket goods rebounded last month from a steep pullback in April and March as the economy began to slowly reopen.
The mixed data come amid growing alarm over a surge in cases of COVID-19. Hospitalizations and caseloads have hit new highs in over a half-dozen U.S. states, including California, Florida and Texas, where the governor on Thursday said the state would pause its aggressive reopening as it deals with a surge in cases and people in need of being hospitalized. The daily number of confirmed cases in the country closed in on the peak reached in late April.
“What we’re seeing is a lot of uncertainty over the significance of the spike in COVID-19 cases,” Roth said. “The market is trying to figure out what the impact this is going to have on consumer activity in coming months, and it’s not clear now because we don’t know how bad this spike is going to get.”
JPMorgan, Bank of America and Citigroup all rose more than 3% as investors cheered word that the Fed and other bank regulators have finalized a rule that will ease restrictions imposed by the Volcker Rule, which was part of the overhaul of banking regulation approved in the Dodd-Frank Act passed by Congress in 2010 in an effort to curtail excesses that had led to the 2008 financial crisis.
President Donald Trump had campaigned in 2016 on rolling back what he saw as excessive over-regulation of the banks that had weighed on the economy by preventing the banks from making loans to qualified borrowers.
After the close of regular trading, the Fed said it was ordering the nation's 34 biggest banks to suspend buybacks of their own stock and cap dividend payments until Sept. 30 so they can shore up their defenses in the event of a potentially damaging recession. The announcement came as part of the Fed's annual “stress tests,” which showed that in a worst-case scenario involving the U.S. economy being ravaged by the pandemic, the banks would collectively lose roughly $700 billion.
Bond yields fell. The yield on the 10-year Treasury note held at 68%. The yield tends to move with investors’ expectations for the economy and inflation.
In energy trading, benchmark U.S. crude oil rose 1.9% to settle at $38.72 a barrel. Brent crude, the international standard, gained 1.8% to $41.05 a barrel.
After broad losses in Asia overnight, markets closed higher in Europe. Germany’s DAX rose 0.7%, while the CAC 40 in Paris picked up 1%. London’s FTSE gained 0.4%.
World Stocks Mostly Tank \ Crash On New Coronavirus Cases
BANGKOK (AP) — World shares and U.S. futures mostly slipped Thursday as investors focused on surging new coronavirus cases in the U.S. that are dimming hopes for a relatively quick economic turnaround from the pandemic downturn.
Dow futures were down 0.4% and those for the S&P 500 were off 0.3%, pointing to losses on the open on Wall Street. After broad losses in Asia, markets were somewhat more stable in Europe. London’s FTSE gave up 0.1% to 6,120, while Germany's DAX rose 0.4% to 12,142. The CAC 40 in Paris picked up 05% to 4,894.
A rise in new infections is stoking worries that reopenings of businesses closed earlier to fight the pandemic may have to be curtailed, despite indications that economies are recovering from lockdowns that are being eased in the U.S. and other countries.
“Financial markets had the chance to reassess some of the great expectations that have underlined the asset price rally since Mid-March," Jeffrey Halley of Oanda said in a report.
Talk of reimposing shutdowns in the U.S. has gotten investors' attention, he said. “More concerning for the U.S., is that this is not even the dreaded ‘second wave' of infections, merely an ongoing evolution of the first one."
Tokyo's Nikkei 225 slipped 1.2% to 22,259.79 and the Kospi in Seoul lost 2.3% to 2,112.37. India’s Sensex lost 0.8% to 34,591.33.
Markets in Hong Kong, Taiwan and Shanghai were closed for holidays. Australia's S&P/ASX 200 sank 2.5% to 5,817.70 after its biggest airline, Qantas, announced it plans to cut at least 6,000 jobs and keep 15,000 more workers on extended furloughs to survive the coronavirus pandemic.
On top of lingering concerns over trade tensions between the U.S. and China, reports said the White House is considering fresh tariffs on $3.1 billion worth of exports from France, Germany, Spain and Britain. That helped send markets tumbling on worries that such a move might spiral into another trade war, said Jingyi Pan of IG.
Despite shedding its gains for June, the S&P 500 still is on pace for its best quarter since the fourth quarter of 1998.
The market had been mostly in rally mode since April as investors focused on the prospects for an economic turnaround as broad areas of the economy reopened. But the recent surge in new infections has undercut that optimism.
While early hot spots like New York and New Jersey have seen cases steadily decrease, the virus is slamming the south and west, with several states setting single-day records, including Arizona, California, Mississippi, Nevada and Texas.
The yield on the 10-year Treasury note fell to 0.67% from 0.69% late Wednesday. It tends to move with investors’ expectations for the economy and inflation.
In energy trading, benchmark U.S. crude oil fell 47 cents to $37.54 per barrel in electronic trading on the New York Mercantile Exchange. It slid 5.8% to settle at $38.01 a barrel on Wednesday.
Brent crude, the international standard, gave up 31 cents to $40.22 per barrel. It fell 5.4% to close at $40.31.
In currency dealings, the dollar bought 107.27 Japanese yen, rising from 107.05 yen. The euro slipped to $1.1207 from $1.1252.
Is this COVID-19 the same process over and over again, just like the Black Death? God's wrath on humanity? Seems like you have Pestilence combined with Famine in the past? Mark Twain was right about history rhyming? What about the world's population in the years 1346, then spanish flu of 1917, verses today in 2020? Spanish flu killed 3% of the world's population in 1918. 3% of 7.5 billion current population is how many people? The world's food supply have been having shortages recently. Is starvation coming to the U.S.A.?
Spread of the Black Death in Europe and the Near East (1346–1353)
|75,000,000 – 200,000,000 (estimate)|
What is now called the Black Death, also known as the Pestilence and the Great Mortality, was the most fatal pandemic recorded in human history. The Black Death resulted in the deaths of up to 75–200 million people in Eurasia and North Africa, peaking in Europe from 1347 to 1351. Plague, the disease caused by the bacterium Yersinia pestis, was the cause; Y. pestis infection most commonly results in bubonic plague, but can cause septicaemic or pneumonic plagues.
The Black Death was the beginning of the second plague pandemic. The plague created religious, social, and economic upheavals, with profound effects on the course of European history.
The Black Death most likely originated in Central Asia or East Asia, from where it travelled along the Silk Road, reaching Crimea by 1347. From there, it was most likely carried by fleas living on the black rats that travelled on Genoese merchant ships, spreading throughout the Mediterranean Basin and reaching Africa, Western Asia, and the rest of Europe via Constantinople, Sicily, and the Italian Peninsula. Current evidence indicates that once it came onshore, the Black Death was in large part spread by human fleas – which cause pneumonic plague – and the person-to-person contact via aerosols which pneumonic plague enables, thus explaining the very fast inland spread of the epidemic, which was faster than would be expected if the primary vector was rat fleas causing bubonic plague.
The Black Death was the second disaster affecting Europe during the Late Middle Ages (the first one being the Great Famine) and is estimated to have killed 30% to 60% of Europe's population. In total, the plague may have reduced the world population from an estimated 475 million to 350–375 million in the 14th century. There were further outbreaks throughout the Late Middle Ages, and with other contributing factors it took until 1500 for the European population to regain the levels of 1300 (Crisis of the Late Middle Ages). Outbreaks of the plague recurred at various locations around the world until the early 19th century.
IMF Downgrades Outlook For Global Economy In Face Of Virus
WASHINGTON (AP) — The International Monetary Fund has sharply lowered its forecast for global growth this year because it envisions far more severe economic damage from the coronavirus than it did just two months ago.
The IMF predicts that the global economy will shrink 4.9% this year, significantly worse than the 3% drop it had estimated in its previous report in April. It would be the worst annual contraction since immediately after World War II.
The global organization predicts that the global economy will shrink 4.9% this year, significantly worse than the 3% drop it had estimated in its previous report in April. The IMF has forecast that the global economic damage from the recession will be worse than from any other downturn since the Great Depression of the 1930s.
For the United States, the it predicts that the nation’s gross domestic product — the value of all goods and services produced in the United States — will plummet 8% this year, even more than its April estimate of a 5.9% drop. That would be the worst such annual decline since the U.S. economy demobilized in the aftermath of World War II.
The IMF issued its bleaker forecasts Wednesday in an update to the World Economic Outlook it released in April. The update is generally in line with other recent major forecasts. Earlier this month, for example, the World Bank projected that the global economy would shrink 5.2% this year.
“This is the worst recession since the Great Depression,” Gita Gopinath, the IMF's chief economist, told reporters at a briefing. “No country has been spared.”
The IMF noted that the pandemic was disproportionately hurting low-income households, “imperiling the significant progress made in reducing extreme poverty in the world since 1990.”
In recent years, the proportion of the world’s population living in extreme poverty — equivalent to less than $1.90 a day — had fallen below 10% from more than 35% in 1990. But the IMF said the COVID-19 crisis threatens to reverse this progress. It forecast that more than 90% of developing and emerging market economies will suffer declines in per-capita income growth this year.
For 2021, the IMF envisions a rebound in growth, so long as the viral pandemic doesn’t erupt in a second major wave. It expects the global economy to expand 5.4% next year, 0.4 percentage point less than it did in April.
For the United States, the IMF predicts growth of 4.5% next year, 0.2 percentage point weaker than in its April forecast. But that gain wouldn’t be enough to restore the U.S. economy to its level before the pandemic struck. The association of economists who officially date recessions in the United States determined that the economy entered a recession in February, with tens of millions of people thrown out of work from the shutdowns that were imposed to contain the virus.
The U.S. government has estimated that the nation’s GDP shrank at a 5% annual rate in the January-March quarter, and it is widely expected to plunge at a 30% rate or worse in the current April-June period.
In its updated forecast, the IMF downgraded growth for all major countries. For the 19 European nations that use the euro currency, it envisions a decline in growth this year of 10.7% — more than the 8% drop it predicted in April — followed by a rebound to growth of 6% in 2021.
In China, the world’s second-largest economy, growth this year is projected at 1%. India’s economy is expected to shrink 4.5% after a longer period of lockdown and a slower recovery than was envisioned in April.
In Latin America, where most countries are still struggling to contain infections, the two largest economies, Brazil and Mexico, are projected to shrink 9.1% and 10.5%, respectively.
A steep fall in oil prices has triggered deep recessions in oil-producing countries, with the Russian economy expected to contract 6.6% this year and Saudi Arabia’s 6.8%.
The IMF cautioned that downside risks to the forecast remain significant. It said the virus could surge back, forcing renewed shutdowns and possibly renewed turmoil in financial markets similar to what occurred in January through March. The IMF warned that such financial turbulence could tip vulnerable countries into debt crises that would further hamper efforts to recover.
Its updated forecast included a downside scenario that envisions a second major outbreak occurring in early 2021. Under this scenario, the global economy would contract again next year by 4.9%, it estimates.
Stocks Tanking On Rising Coronavirus Infection Rates And U.S./EU Trade Tensions
The S&P 500 Index ($SPX) this morning is down -1.43%, the Dow Jones Industrials Index ($DOWI) is down -1.53%, and the Nasdaq 100 Index ($IUXX) is down -0.98%.
U.S. stock indexes this morning are moving sharply lower on concern about the resurgence of the coronavirus and on heightened trade tensions as the U.S. is considering imposing fresh tariffs on the EU. Stocks extended their losses after the IMF lowered its 2020 GDP forecast.
Stock indexes tumbled on recent news that the pace of global coronavirus infections is accelerating. Germany reported 712 new cases of infections today, a 49% increase from the prior day. Japan reported 55 new infections, the most in 7 weeks. Also, new cases of infections surged in Arizona, Florida, Texas, and in California, which on Tuesday broke its record for new cases for the 4th day in the past week. The coronavirus pandemic continues to dampen the U.S. and global economies. Confirmed cases of the virus have risen above 9.381 million globally, with deaths exceeding 480,000.
Ramped-up trade tensions between the U.S and EU are also weighing on stocks today. The U.S. is considering new tariffs on $3.1 billion of imports from France, Germany, Spain, and the UK. The new tariffs are related to the October decision by the World Trade Organization (WTO) to authorize U.S. tariffs on $7.5 billion of EU imports in response to Europe's illegal subsidies to Airbus SE. Next month, the WTO is expected to authorize a retaliation award to the EU in its separate but related case against U.S. for its subsidies to Boeing.
Another bearish factor for stocks is the IMF's downward revision of its global 2020 GDP estimate to -4.9% from April's forecast of -3.0%. The IMF also warned that the recent rebound in global financial market sentiment "appears disconnected from shifts in underlying economic prospects."
Today's U.S. economic data was slightly negative for stocks after the Apr FHFA house price index rose +0.2% m/m, weaker than expectations of +0.3% m/m.
European economic data today was positive for stock prices. The German Jun IFO business climate index rose 6.5 to 86.2, stronger than expectations of +5.5 to 85.0. Also, French Jun business confidence rose +18 to 78, stronger than expectations of 72.
Comments today from ECB Chief Economist Lane were bearish for stocks when he said the initial economic rebound from the pandemic induced recession might not be a good recovery guide and it "is plausible that it will take a sustained period of improving economic and public health conditions before the confidence that is so important in determining the expenditure plans of households and firms is fully operative."
European economic data on Tuesday was positive for global growth prospects and stock prices. The Eurozone Jun Markit manufacturing PMI rose +7.5 to 46.9, stronger than expectations of+5.6 to 45.0. Also, the German Jun Markit/BME manufacturing PMI rose +8.0 to 44.6, stronger than expectations of +5.9 to 42.5. In addition, the Eurozone Jun Markit composite PMI rose +15.6 to 47.5, stronger than expectations of +11.1 to 43.0.
The VIX S&P 500 Volatility Index ($VIX) this morning is up +2.49 to 33.86 as it rebounds from Tuesday's 2- week low of 29.26. The VIX last Monday jumped to a 2-month high of 44.44, where it was sharply above the early-June 3-3/4 month low of 23.54.
Businesses In Survival Mode Raise Cash; Commodities Take Off + Netflix and Zoom hit all time high stock price = Stay at home and stay safe!
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments Monday related to the national and global response, the work place and the spread of the virus.
CASH BURN: Live to see another day has become a mantra for companies across all sectors, from restaurants to airlines. The Fed is using its tools to help , but most of the cash is being raised in the private sector.
— American Airlines will try to raise $3.5 billion to offset the cash it’s burning through with airports still largely empty. The Texas carrier will offer $1.5 billion in senior secured notes and it’s taking out a new loan of $500 million, due in 2024. American is raising another $1.5 billion through the sale of shares and convertible senior notes, the latter due the following year.
— TripAdvisor said Monday that it had $693 million of cash and cash equivalents at the end of last month, down $105 million from the end of March. It is looking at how to best raise new funds.
The travel service recorded only 33% and 45% of the unique visitors that it had last year in April and May. That trend began to bend the other way in May, when the number of unique users rose about 38% from the previous month.
— Bed Bath & Beyond announced an $850 million revolving credit facility with a group of banks. The retailer said Monday that the pandemic significantly impacted its operations during the fiscal first quarter. The chain had to temporarily close its stores in the period. Bed Bath & Beyond expects approximately 95% of its total store fleet to reopen by the end of this week and nearly all stores to reopen by July.
ELECTRIC AVENUE: Tesla postponed its July shareholders meeting until at least mid-September. The event likely will be combined with what Elon Musk has termed “battery day,” when the company is supposed to unveil power technology that will work for 1 million miles and have longer range than current models.
TRAVEL: Hard-struck locations like New York City and other tourist destinations have begun to relax restrictions. There are signs that people are becoming mobile, but nothing like before the pandemic.
— The Transportation Security Administration screened more than a half-million people four days in a row (thru Sunday) for the first time since March 18-21, but numbers are still down 78% from a year ago. Alaska Airlines said Monday that June revenue will be down about 80% from a year ago, but that’s better than April’s 87% decline and May’s 83% drop.
— Morocco will reopen cafés, restaurants, sports clubs, and beaches starting Wednesday and allow the resumption of domestic air travel and travel between cities. Tangier, Marrakech, Kenitra and the town of Larache will remain in lockdown, because of local clusters of COVID-19.
— Travel restrictions wiped out nearly all travel revenue for Greece in April, with Bank of Greece figures showing a nearly 99% decline for the month compared with last year. Greece depends heavily on tourism, which accounts for around 20% of gross domestic product.
— Disneyland Paris will begin to reopen on July 15. The park said Monday that the reopening will be phased and “deliberate,” with stepped up safety measures for its workers and guests. Face masks will be required for all visitors 11 and older. Park capacity will be limited.
Disney plans to reopen its parks in Florida and California next month.
COMMODITIES: The global pandemic shut down trade and the sale of commodities . It has skewed global trade and economists expect a slow recovery.
— A sharp increase in commodity prices could signal a revival in global economic activity. Prices are sharply lower when compared with last year at this time, but in the past month purchases in China, which can make or break commodity markets, have risen as its industrial activity recovers.
Crude prices have jumped almost 20% in the past 30 days, the same with gasoline. Two commodities monitored closely because they can indicate activity in construction — copper and lumber — are up 10% and 15% over the past month, respectively.
MARKETS: Stock indexes are higher in choppy trading Monday as investors weigh the risks that rising coronavirus cases could pose to hopes for an economic recovery.
DIFFERENT SHADE OF GRAY: Quarantines across the U.S. had a lot of people thinking about a change of color. Paint maker Sherwin-Williams said second-quarter sales declines will not be nearly as bad as it had expected. The company had projected a sales decline in the mid-teens. It now believes sales will only be down in the mid-single digits with projects at home offsetting declines elsewhere.
Administration Drops Secrecy Posture On Small Business Aid
WASHINGTON (AP) — The Trump administration has abruptly dropped its insistence on secrecy for a $600 billion-plus coronavirus aid program for small businesses.
The administration announced Friday it will publicly disclose the names of recipients of the taxpayer-funded loans, the amounts they received in ranges, as well as demographic data on the businesses.
The unexpected move came after Democratic lawmakers , government watchdogs, ethics advocates and news organizations called for the administration to make the information public.
Treasury Secretary Steven Mnuchin refused to do so at a Senate hearing last week, saying the data on the Paycheck Protection Program was “proprietary information.” The Small Business Administration, which manages the loan program, has only provided general information, such as the total amounts of loans awarded in a given time period.
Mnuchin said in a statement Friday that the new position resulted from a bipartisan agreement with leaders of the Senate Small Business Committee.
The new approach “will strike the appropriate balance of providing public transparency, while protecting the payroll and personal income information of small businesses, sole proprietors and independent contractors,” Mnuchin said.
To that end, information on loans of less than $150,000 will only be disclosed in totals by industry, business type and demographic category. Nearly 75% of the total loan amounts approved are over $150,000 and will be subject to full disclosure, according to the Treasury Department and the SBA.
In addition, business owners' personally identifiable information, such as a home address associated with the loan, will be withheld.
Critics had denounced the refusal to open the information to the public as an attempt to dodge accountability for how the federal aid money is spent. They said it raised questions about how the money was being distributed and who was benefiting.
President Donald Trump has moved to curb oversight of federal relief programs since Congress enacted the multitrillion-dollar coronavirus rescue law in late March.
Government watchdogs overseeing the law raised the alarm this week over a Treasury Department legal opinion concluding that the law's disclosure requirements don't extend to several programs including the small-business relief.
“The Treasury Department finally gave in to public pressure ... because their position of hiding which businesses have received PPP loans was untenable," Senate Democratic Leader Chuck Schumer said in a statement Friday. “This reversal is a good start and will help us determine if taxpayer money went where Congress intended — to the truly small" businesses.
Businesses struggled to obtain loans in the early weeks of the program in April, and several hundred publicly traded companies received loans despite their likely ability to get funding from private financial sources. Publicly shamed, a number of big corporations said they would return their loans.
The SBA — an agency with about 3,200 employees and an annual budget shy of $1 billion — is shouldering the massive relief effort for U.S. small businesses and their employees left reeling by the economic punch of the pandemic. A signature piece of the sweeping rescue law, and touted by Trump, the unprecedented lending program is intended to help small employers stay afloat and preserve jobs in a cratering economy losing tens of millions of them.
As of Friday, the SBA says it has processed 4.6 million loans worth about $512 billion. The loans can be forgiven if businesses use the money to keep employees on payroll or rehire workers who have been laid off.
For the larger loans, the SBA will disclose the business names, addresses, zip codes, business types, demographic data, number of jobs supported, and loan amount ranges: from $150,000 to $350,000, $350,000 to $1 million, $1 million to $2 million, $2 million to $5 million and $5 million to $10 million.
The demographic data is important because the watchdog for SBA found recently that the agency failed to provide guidance to lenders about prioritizing rural, minority and women business borrowers, so they may not have received loans as intended by the legislation.
Sen. Marco Rubio, the Florida Republican who heads the Senate Small Business Committee, said Friday that Americans “deserve to know how effective the PPP was in protecting our nation's small businesses and the tens of millions of Americans they employ." He said the new agreement with the Treasury Department strikes a balance between the need for transparency and the legitimate concerns of many small-business owners regarding disclosure of information.
Crude Oil Rallies To A 1-1/2 Week High On Pick-Up In Global Energy Demand
Jul WTI crude oil (CLN20) this morning is up +1.22 (+3.14%) at $40.06, Aug Brent crude oil (CBQ20) is up +0.97 (+2.34%) at $42.48, and Jul RBOB gasoline (RBN20) is up +0.00142 (+1.13%).
The energy complex this morning is higher with WTI crude and Brent crude at 1-1/2 week highs and RBOB gasoline at a 3-1/2 month high. Signs of stronger energy demand are pushing energy prices higher. Also, RBOB gasoline futures on Thursday moved into backwardation for the first time in 3 months. Backwardation is a bullish sign where the spot price is higher than forward prices, indicating that gasoline supplies are tightening as the summer driving season begins.
On Thursday, Vitol, the world's largest independent oil trader, estimated that global oil use in June is rising by +1.4 million bpd per week, which would bring June's demand growth to more than +5.5 million bpd. Also, data on Thursday from Trafigura, the world's second-largest independent oil trader, shows an improvement in global oil demand to about 10 million bpd below pre-coronavirus levels, a significant improvement from the 30 million bpd level estimated in late March and early April.
Crude prices added to their gains this morning as global stock markets rallied, which bolsters confidence in the economic outlook and energy demand. An easing of U.S./China tensions is positive for global growth prospects after Bloomberg reported today that China plans to accelerate purchases of U.S. farm goods to comply with the Phase One trade deal after purchases fell behind due to coronavirus disruptions.
Today's global economic data is positive for energy demand and crude prices after UK May retail sales ex-auto fuel rose +10.2% m/m, stronger than expectations of +4.1% m/m and the largest increase since the data began in 1988. Also, Japan's Cabinet Office today upgraded its assessment of the economy in its monthly report saying the economy has "almost stopped deteriorating," and private consumption is now "showing movements of picking up."
Brent crude prices received a boost today after UBS raised its year-end Brent price forecast to $45 a barrel from a prior estimate of $43, citing an under-supplied oil market.
Wednesday’s weekly EIA data showed that (1) U.S. crude oil inventories as of June 12 were +14.5% above the seasonal 5-year average at an all-time high of 539.28 million bbl, (2) gasoline inventories were +9.8% above the 5-year average, and (3) distillate inventories were +27.6% above the 5-year average. U.S. crude production in the week ended June 12 fell -5.4% w/w to a 2-year low of 10.5 million bpd, down by -2.6 million bpd (-19.8%) from Feb's record-high of 13.1 million bpd. The number of active U.S. oil rigs in the week ended June 12 fell by -7 rigs to an 11-year low of 199 rigs, according to Baker Hughes.
1.5 Million More Laid-Off Workers Seek Unemployment Benefits
WASHINGTON (AP) — About 1.5 million laid-off workers applied for U.S. unemployment benefits last week, a historically high number, even as the economy increasingly reopens and employers bring some people back to work.
The latest figure released Thursday marked the 11th straight weekly decline in applications since they peaked at nearly 7 million in March as the coronavirus shut down much of the economy and caused tens of millions of layoffs. The decline was much smaller, though, than in recent weeks, falling just 58,000.
The total number of people receiving unemployment aid also fell slightly, reflecting the return of many to their old jobs.
Still, analysts had expected a sharper decline in weekly applications, and some expressed disappointment that so many people are still seeking unemployment benefits even as restaurants, gyms and many categories of retail shops are reopening across the country.
“It does seem like there are many new people filing for unemployment, and this is worrisome when we are three months into the crisis and you are starting to see re-openings across the nation," said Gregory Daco, chief U.S. economist at Oxford Economics.
The jobless claims report generally tracks the pace of layoffs. But it provides little information about how much hiring is occurring that would offset those job losses. In May, employers added 2.5 million jobs — a surprise increase that caught analysts off-guard because the number of applications for unemployment aid was still so high.
Daco said he expects the June jobs report, to be released in early July, to show another increase in hiring. But he said the June figures will be particularly hard to forecast.
Millions of people, Daco noted, have likely been rehired thanks to the government’s small business lending program, which has made about 5 million loans to employers. But the actual number of recovered jobs depends on how many people those businesses actually rehired. And some companies may resort to layoffs again once they spend all their loan money.
Such a huge flow of people in and out of work, and the uncertainty surrounding it, make it hard to track where the job market is headed, Daco said.
The jobs report for May had suggested that the damage might have bottomed out. The unemployment rate declined from 14.7% to a still-high 13.3%. Employers added 2.5 million jobs.
Even so, nearly 21 million people are officially classified as unemployed. And including people the government said had been erroneously categorized as employed in May and those who lost jobs but didn’t look for new ones, 32.5 million people are out of work, economists estimate.
Thursday’s report also showed that an additional 760,000 people applied for jobless benefits last week under a new program for self-employed and gig workers that made them eligible for aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the official count.
Other recent reports have been more encouraging and suggest that the lifting of shutdown orders has sparked some pent-up demand from consumers, whose spending largely drives the economy. Most economic gauges remain far below their pre-pandemic levels, though, and some analysts question whether the recent gains can be sustained, especially if the virus were to surge back.
Last month, retail and restaurant sales jumped nearly 18%, the government said Tuesday , retracing some of the record plunges of the previous two months. Even so, retail purchases remain a sizable 6% below their year-ago levels.
Furniture store sales nearly doubled, and clothing sales nearly tripled, though both remain far below their levels before the coronavirus struck. Clothing store sales are still down 60% compared with a year earlier.
With nearly record-low mortgage rates, applications for home loans reached an 11-year high last week. But even though the number of homes under construction rose in May, they remain substantially below last year’s pace.
The economy and the job market face a raft of uncertainties that could slow or even derail a recovery. Business re-openings have caused spikes of viral infections in nearly half of states, a trend that could lead consumers to pull back again on shopping and dining out and reverse any economic gains.
Restaurants, bars, gyms and movie theaters will likely rehire only a portion of their workforces. Many consumers won’t fully resume their previous habits of shopping, traveling and going out until a vaccine is available.
One key reason why consumer spending has rebounded is that government aid programs, from one-time $1,200 stimulus checks to $600-a-week in supplemental federal unemployment aid, have helped offset the loss of income for laid-off Americans. Yet nearly all the stimulus checks have been issued. And the supplemental federal jobless aid is set to expire July 31.
“Recently, some indicators have pointed to a stabilization, and in some areas a modest rebound, in economic activity,” Federal Reserve Chairman Jerome Powell said Tuesday in testimony to a Senate committee . Yet “until the public is confident that the disease is contained, a full recovery is unlikely.”
Corinne Cook, who lives in Kissimmee, near Orlando, felt a huge relief to finally receive her unemployment benefits last week after a month and a half of battling Florida’s bureaucracy.
Cook, 28, had moved to the area in September for an 18-month contract position as a 3-D modeler for Walt Disney, a job involving sculpting character prototypes that were printed on 3-D printers. But she was laid off in mid-April after the parks closed down.
She is receiving the minimum state unemployment benefit from Florida, $125 a week, because the state has no record of her prior earnings in New Jersey, even though she said she has uploaded, mailed and faxed her documents from her job there. If her previous earnings were properly credited, her state benefits would more than double. She is grateful, though, for the extra $600 in federal unemployment benefits, which have allowed her to pay off some bills.
“It was very stressful,” she said.
Global Shares Skid On Fears Virus Outbreaks Are Rebounding 1929-1931 over and over again? Deflation and hyperinflation working markets down?
TOKYO (AP) — Global shares and U.S. futures sank Monday as a resurgence of coronavirus cases in China and other countries deepened pessimism over prospects for a global economic recovery.
Benchmarks fell in Paris, London, Tokyo and Shanghai after China reported new local infections in Beijing and reimposed precautions to prevent it from spreading.
Stocks are turning wobbly as investors re-evaluate their expectations for economic growth, which many skeptics have been saying were overly optimistic, even as more economies were reopening for business.
Case numbers are still growing in various nations, including emerging economies, and without a vaccine, relaxing lockdowns and reopening travel could bring on further waves of COVID-19 cases.
France's CAC 40 fell 1.3% to 4,775, while Germany's DAX dropped 1.3% to 11,783. Britain's FTSE 100 slid 1.2% to 6,029, led by a 3.5% drop in energy producer BP, which wrote off as much as $17.5 billion, lowered its forecasts for oil and gas prices and said it would drill fewer wells.
U.S. shares were set for declines, with Dow futures dropping 2.3% and S&P 500 futures shedding 2%.
Earlier in Asia, Japan's benchmark Nikkei 225 dropped 3.5% to finish at 21,530.95. South Korea's Kospi slipped 4.8% to 2,030.82. Australia's S&P/ASX 200 shed 2.2% to 5,719.80. Hong Kong's Hang Seng slid 2.2% to 23,776.95, while the Shanghai Composite edged down 1.0% to 2,890.03.
“Once again, the pandemic has triggered cause for fear and doubt about the road ahead,” Hayaki Narita at Mizuho Bank said in a commentary.
Rising COVID-19 cases in Latin America and parts of Asia, re-emerging “second wave” risks in parts of the U.S., South Korea and China and so-called “cluster” cases in Japan were adding to worries, he said.
Tokyo reported 48 newly confirmed cases on Monday, the highest since the government “emergency” for the virus outbreak was called off last month, according to Kyodo News, citing unidentified sources familiar with the records.
China reported 49 new confirmed coronavirus cases on Monday, 36 of them in Beijing, as the capital re-instituted measures to contain a new outbreak. Authorities were testing tens of thousands of people after dozens of cases were traced to a wholesale market that supplies much of the city’s meat and vegetables.
India's public health authorities reported more than 11,000 new cases.
Rolling waves of outbreaks, if left unchecked, could result in more shutdowns to fight the pandemic, or at the very least will undermine consumer and business spending, hindering a global recovery. The concerns overshadowed that fact that more shops ad restaurants were resuming business in countries like Britain and France and tourism reopened Greece.
“If globally, we are still in wave 1, then it is possible that without a vaccine, the big wave is still lying out there somewhere waiting to hit,” said Robert Carnell, regional head of research Asia-Pacific at ING.
China’s industrial production accelerated in May, suggesting the world’s second-largest economy is gradually recovering from earlier shutdowns to fight the coronavirus. Factory output rose 4.4% over a year earlier, up 0.5 percentage points from April’s rate.
But analysts at RaboResearch said in a commentary the data had "mostly disappointed.”
“In short, even with a ‘build it and they will come’ attitude, and even with the virus ‘having been beaten,’ it still looks like China’s Q2 GDP will be negative,” it said.
Benchmark U.S. crude oil lost 82 cents to $35.44 a barrel in electronic trading on the New York Mercantile Exchange. It fell 8 cents to settle at $36.26 a barrel Friday. Brent crude oil, the international standard, fell 50 cents to $38.23 a barrel.
The dollar inched up to 107.33 Japanese yen from 107.37 yen. The euro was flat at $1.1254.
Watch the 200 week and the 50 week moving average on the ($DOWI) Dow Jones Industrial Average. Both the 200 and the 50 week moving averages are beginning to point down negative? The week saw just the start of the eventual 1929- 1931 89% eventual stock market crash for the $DOWI? It could take several more months (October 2020), until the big famous Death Cross for the $DOWI? Thursday yesterday $DOWI off 1,800 points, just the beginning of the huge jumbo crash- ola'! Dow Jones eventually wants $3,000?; just like 1931?
#deadcatbounce happening right now? The rally back is so strong and everything great? A chicken in every pot and everything is in technicolor? Are we now off to see wizard? Just "follow" the yellow brick road, right? .999 gold bullion looking good during the pending reset? Who ever has all of the gold, makes all of the rules?
Q2 earnings not looking so good, plus economic contraction for all developed nations? Mexico and UK economy not so good? India economy not so good either?
Wait until all of the unemployment checks run out mid July + the second wave of COVID-19 shutdowns = not good. This October, the Stock Markets Dow and NASDAQ are going to be just Nasty crashing? #NASDAQ wants $1,200, down from $10,000? Food lines, hyperinflation, massive unemployment, bailouts and bank runs with bank bailins?
This pending crash will make 1929 - 1931 look like a holiday, or rather a massive (bank Holiday) and then total economic reset? #Petrodollar and #USdollar toast after pending reset?
UK Economy Shrinks 20% In A Month To Fall Back To 2002 Level #BREXIT has been difficult for Jolly Old England!
LONDON (AP) — The British economy has seen nearly two decades worth of growth wiped out as a result of the lockdown measures put in place during the coronavirus pandemic.
The Office for National Statistics said Friday that the economy shrank by a colossal 20.4% in April, the first full month that the country was under lockdown to contain the spread of the virus. All areas of the economy were hit during the month, in particular pubs, education, health and car sales.
The month-on-month decline was unprecedented and, adding the still substantial 5.8% decline in March, means the U.K. economy is around 25% smaller than it was in February.
“This startling fall in activity takes output in April back to around its level in July 2002,” said James Smith, research director at the Resolution Foundation.
With much of the economy still mothballed in May and June, the U.K. is heading for one of its deepest recessions ever — the Organization for Economic Cooperation and Development has warned that the country is set to be the hardest-hit developed economy this year.
Lockdown restrictions are slowly being eased, which should see the economy start to pick up. On Monday, for example, nonessential shops, such as department stores and electronic retailers, can reopen if they can abide by social distancing requirements.
Prime Minister Boris Johnson predicted that the U.K. economy would “bounce back” as the lockdown is gradually lifted, including allowing large segments of the hospitality industry to reopen from early July.
“The U.K. is heavily dependent on services. We’re a dynamic, creative economy. We depend so much on human contact,” he told British broadcasters. “We have been very badly hit by this.”
But hopes that the bounceback in the economy will be as strong as the slide have faded given that many restrictions, such as on social contact, are set to remain in place so long as the pandemic is a threat to public health.
The government is under pressure to relax the social distancing guidelines to help the economy. People currently have to remain 2 meters (6-1/2 feet) apart, which is more than required in most countries and above the World Health Organization's minimum recommendation of staying one meter apart.
Johnson said the government is following scientific advice about containing the spread of the virus and that the required distance is under constant review and could in time be changed.
The recovery is also set to be held back by the fact that many businesses just aren't going to make it out of the slump and millions of workers face unemployment. People are also set to remain wary about going to shops or to commute so long as the virus remains a threat. Uncertainty over the U.K.'s trading relationship with the European Union at the start of 2021 is another factor that could keep a lid on business sentiment and the recovery.
Frances O’Grady, general secretary of the umbrella Trades Union Congress, said targeted support for hard-hit sectors of the economy is needed, as well as help for those who lose work.
“The more people in work, the faster we will work our way out of recession,” she said.
Companies have largely held off from cutting jobs during the lockdown as a result of the Job Retention Scheme, under which the government pays up to 80% of the salaries of workers retained, up to 2,500 pounds ($3,125) a month.
Treasury chief Rishi Sunak has said that from August, firms will have to start making contributions to the salaries of workers that are retained but not working, and that the scheme will close two months later.
That’s raised concerns that Britain will see a spike in unemployment then. In total, 8.9 million jobs have been furloughed under the scheme by 1.1 million employers at a cost to the government of 19.6 billion pounds ($25 billion). Even if 10% of those lose their jobs, it would increase unemployment substantially. In March, there were around 1.35 million people unemployed.
“It will take a very long time and significant monetary and fiscal stimulus for the economy to climb out of a hole this large,” said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.
Mexico Industrial Activity Plunges In April Amid Pandemic - Mexico "was" considered one of the World's new economic Superpowers, along with India, now this news out of Mexico = not good for the global economy!
The world economy does not look good folks, central banks are doing everything they can to stop the titanic from sinking?
I went out to a local restaurant this last week, it was almost empty, sure feels like 1929 - 1930 all over again? This crash action suggests massive deflation along with eventual 89% loss for the $DOWI to $3,000? Time will tell?
U.S. Dollar is very week, 30 year bonds in rally mode again, lookout below folks?
MEXICO CITY (AP) — Mexico’s industrial activity plunged by nearly 30% in April compared to a year earlier as the economy ground to a halt under measures aimed at slowing the spread of the novel coronavirus.
There had been a comparatively small drop in March as the government began recommending people stay home, but April was the first full month the country was essentially locked down.
Compared to March 2020, industrial activity fell a 25% in April, the worst monthly decline since the National Institute of Statistics and Geography began tracking the monthly data in 1993.
Construction and manufacturing took the biggest hits, falling 38% and 35%, respectively, compared to a year earlier, according to INEGI’s report Thursday.
Mexico’s economy was in recession even before the pandemic. Its central bank has forecast the economy will contract by 8.8% this year. Other analysts have said it could be even more.
That panorama has been a driving force behind President Andrés Manuel López Obrador’s push to reactivate the economy sooner than some think wise. The country’s COVID-19 infections are still peaking, but sectors including construction, mining and automotive manufacturing have been allowed to resume operations.
On Wednesday, Mexico's official death toll rose by 708 to 15,357 — one of the highest daily totals yet. The number of total confirmed cases rose by 4,883 to 129,184.
Stocks Fall Sharply On Wall Street As Investors Turn Jittery #NASDAQ going to $5,000 on a price retracement?
We are still in stock market crash conditions. The U.S. Dollar is toast as the World's reserve currency + Petro Dollar is toast. The rally back in stock prices vs. U.S. Dollar is not so good.
Economic reset. Feels like 1929 50% rally back?, then 89% crashola' into 1931 - 1932? Bear Market rally always appears to be the strongest counter trend, then it fades lower. Be careful with the rally back!
Stocks and bond yields are down sharply on Wall Street as optimism that the reopening of businesses would drive a relatively quick economic recovery fades amid rising coronavirus cases in many U.S. states and countries.
The S&P 500 was down 3.3% in morning trading Thursday, extending its losses into a third straight day. The benchmark index is now on track for its first weekly drop in four weeks. Technology, financial, industrial and health care stocks accounted for much of the market's broad slide. Energy stocks were the biggest losers as crude oil prices fell sharply. Bond yields fell and the price of gold surged as worried investors shifted money into the traditional safe-haven assets.
European and Asian markets also fell. The global markets sell-off came a day after the Federal Reserve warned that the road to recovery from the worst downturn in decades would be long.
Stocks have been rallying over the past two months, at first following emergency rescues by the Fed and Congress, but more recently on investor optimism that the economy will bounce back by the end of the year, if not sooner, as businesses reopen and people go back to work. But much uncertainty remains over how quickly economies can recover from the pandemic, given that the numbers of infections and fatalities are still rising in many countries.
In the U.S., Texas and Florida were among the states reporting jumps in the number of coronavirus cases after precautions were relaxed last month. The total number of U.S. cases has now surpassed 2 million.
The Dow Jones Industrial Average was down 1,049 points, or 3.9%, to 25,941. The Nasdaq composite, which was coming off an all-time high, slid 2.4%. Small company stocks continued to bear the brunt of the selling. The Russell 2000 index was down 4.7%.
Bond yields fell. The yield on the 10-year Treasury yield slid to 0.67% from 0.74% late Wednesday, a big move. Last Friday it briefly moved above 0.90%.
Oil prices fell sharply. Benchmark U.S. crude oil for July delivery was down 8.3% at $36.33 a barrel. Brent crude oil for August delivery was off 6.9% at $38.87 a barrel.
All but a handful of the companies in the S&P 500 were down. MGM Resorts International, Delta Air Lines and PVH, owner of the Calvin Klein and Tommy Hilfiger brands, were among the biggest decliners. Each was down more than 10%.
Markets in Europe were broadly lower. France’s CAC 40 was down 3.1% and Germany’s DAX dropped 2.8%. Britain’s FTSE 100 fell 2.7%. Stock markets in Asia closed lower.
The Labor Department said Thursday that about 1.5 million people applied for U.S. unemployment benefits last week, another sign that many Americans are still losing their jobs even as the economy begins to gradually reopen. The latest figure marked the 10th straight weekly decline in applications for jobless aid since they peaked in mid-March when the coronavirus hit hard. Still, the pace of layoffs remains historically high.
Other jobs data have been more encouraging. A report on Friday showed that the U.S. job market surprisingly strengthened last month as employers added 2.5 million workers to their payrolls. Economists had been expecting them instead to slash another 8 million jobs.
That report helped stoke optimism among investors that the economy can climb out of its current hole faster than forecast. But the Fed estimated Wednesday that the economy will shrink 6.5% this year, in line with other forecasts, before expanding 5% in 2021. It also expects the unemployment rate at 9.3%, near the peak of the last recession, by the end of this year. The rate is now 13.3%.
The central bank said it would keep providing support to the economy by buying bonds to maintain low borrowing rates and forecast no rate hike through 2022, which could make it easier for consumers and businesses to borrow and spend enough to sustain an economy depressed by business shutdowns and high unemployment.
Gold And Diamonds Lose Luster, But Garden Supply Sales Shine - Time to plant a food garden to fight hyperinflation? Let them eat cake?
"Let them eat cake" is the traditional translation of the French phrase "Qu'ils mangent de la brioche", spoken in the 17th or 18th century by "a great princess" upon learning that the peasants had no bread. This phrase is more accurately translated as "Let them eat brioche", as the original French phrase contains no mention of cake (gâteau). Brioche, a bread enriched with butter and eggs, was considered at the time to be a luxury food. The quotation in context would thus reflect either the princess's disregard for the peasants or her poor understanding of their situation if not both.
While the phrase is commonly attributed to Queen Marie Antoinette, there is no reliable record of her having said it.
The phrase was first attributed to Marie Antoinette in 1789, supposedly having been uttered during one of the famines that occurred in France during the reign of her husband, Louis XVI.
Although anti-monarchists never cited the anecdote during the French Revolution, it acquired great symbolic importance in subsequent historical accounts when pro-revolutionary commentators employed the phrase to disdain the upper classes of the Ancien Régime as oblivious and selfish. As one biographer of the Queen notes, it was a particularly useful phrase to cite because "the staple food of the French peasantry and the working class was bread, absorbing 50 percent of their income, as opposed to 5 percent on fuel; the whole topic of bread was therefore the result of obsessional national interest."
The phrase appears in book six of Jean-Jacques Rousseau's Confessions, his autobiography (whose first six books were written in 1765, when Marie Antoinette was nine years of age, and published in 1782). In the book Rousseau recounts an episode in which he was seeking bread to accompany some wine he had stolen. Feeling too elegantly dressed to go into an ordinary bakery, he recalled the words of a "great princess":
At length I remembered the last resort of a great princess who, when told that the peasants had no bread, replied: "Then let them eat brioches."— Jean-Jacques Rousseau, Confessions
Rousseau does not name the "great princess" and he may have invented the anecdote, as Confessions is not considered to be entirely factual.
The phrase was attributed to Marie Antoinette by Alphonse Karr in Les Guêpes of March 1843. Objections to the legend of Marie Antoinette and the comment centre on arguments concerning the Queen's personality, internal evidence from members of the French royal family and the date of the saying's origin. To wit, the Queen's English-language biographer wrote in 2002:
[Let them eat brioche] was said 100 years before her by Marie-Thérèse, the wife of Louis XIV. It was a callous and ignorant statement and she, Marie Antoinette, was neither.— Antonia Fraser, 2002 Edinburgh Book Fair
In attempting to justify an alternative attribution of the phrase to the wife of Louis XIV, Fraser cites the memoirs of Louis XVIII, who was only fourteen when Rousseau's Confessions were written and whose own memoirs were published much later. He does not mention Marie Antoinette in his account, but states that the story was an old legend and that the family always believed a Spanish princess who married Louis XIV in the 1660s had originated the phrase. Thus, Louis XVIII is as likely as others to have had his recollection affected by the quick spreading and distorting of Rousseau's original remark.
Fraser also points out in her biography that Marie Antoinette was a generous patron of charity and moved by the plight of the poor when it was brought to her attention, thus making the statement out-of-character for her. This makes it even more unlikely that Marie Antoinette ever said the phrase.
A second consideration is that there were no actual famines during the reign of King Louis XVI and only two incidents of serious bread shortages, the first of which occurred in April–May 1775, a few weeks before the king's coronation on 11 June 1775, and the second in 1788, the year before the French Revolution. The 1775 shortages led to a series of riots that took place in the northern, eastern and western parts of France, known as the Flour War, la guerre des farines, a name given at the time of the conflict. Letters from Marie Antoinette to her family in Austria at this time reveal an attitude largely contrary to the spirit of Let them eat brioche:
It is quite certain that in seeing the people who treat us so well despite their own misfortune, we are more obliged than ever to work hard for their happiness. The King seems to understand this truth.— Marie Antoinette
Another problem with the dates surrounding the attribution is that when the phrase first appeared, Marie Antoinette was not only too young but living outside France as well. Although published in 1782, Rousseau's Confessions were finished thirteen years prior in 1769. Marie Antoinette, only fourteen years old at the time, would not arrive at Versailles from Austria until 1770. Since she was completely unknown to him at the time of writing, she could not have possibly been the "great princess" he mentioned.
The increasing unpopularity of the Queen in the final years before the outbreak of the French Revolution has also likely influenced many to attribute the phrase to her. During her marriage to Louis XVI, her critics often cited her perceived frivolousness and very real extravagance as factors that significantly worsened France's dire financial straits. Her Austrian birth and her gender also diminished her credibility further in a country where xenophobia and chauvinism were beginning to exert major influence in national politics. While the causes of France’s economic woes extended far beyond the royal family’s spending alone, many anti-monarchists were nevertheless so convinced that it was Marie Antoinette who had single-handedly ruined France's finances that they nicknamed her Madame Déficit. In addition, anti-royalist libellistes printed stories and articles that attacked her family and their courtiers with exaggerations, fictitious events, and outright lies. Therefore, in a political climate marked by such strong sentiments of dissatisfaction and anger towards the King and Queen, it is quite possible that a discontented individual fabricated the scenario and put the words into the mouth of Marie Antoinette to slander her.
Another hypothesis is that after the revolution, the phrase, which was initially attributed to a great variety of princesses of the French royal family eventually stuck on Marie Antoinette because she was in effect the last "great princess" of Versailles. The myth had also been previously attributed to two of Louis XV’s daughters: Madame Sophie and Madame Victoire.
In his 1853 novel Ange Pitou, Alexandre Dumas attributes the quote to one of Marie Antoinette's favourites, the Duchess of Polignac.
The French Revolution (French: Révolution française [ʁevɔlysjɔ̃ fʁɑ̃sɛːz]) was a period of far-reaching social and political upheaval in France and its colonies beginning in 1789 and ending in 1799. The Revolution overthrew the monarchy, established a republic, catalyzed violent periods of political turmoil, and finally culminated in a dictatorship under Napoleon who brought many of its principles to areas he conquered in Western Europe and beyond. Inspired by liberal and radical ideas, as equality before the law the Revolution made a profound impression on the course of modern history, influencing the decline of absolute monarchies while replacing them with republics and liberal democracies. Historians widely regard the Revolution as one of the most important events in human history.
The causes of the French Revolution are complex and are still debated among historians. The American Revolution helped set the stage for the events of the French Revolution, having shown France that a rebellion based on Enlightenment principles, including natural rights and equality for all citizens, against an authoritarian regime could succeed. The National Assembly of France even used the American Declaration of Independence as a model when drafting the Declaration of the Rights of Man and of the Citizen in 1789. The Americans' victory over the British may have been the "single greatest impact" on the start of the French Revolution.
Following the Seven Years' War and the American Revolutionary War, the French government was deeply in debt. It attempted to restore its financial status through unpopular taxation schemes, which were heavily regressive. Leading up to the Revolution, years of bad harvests worsened by deregulation of the grain industry and fifty consecutive days of temperatures below freezing in the winter of 1788/1789 inflamed popular resentment of the privileges enjoyed by the aristocracy and the Catholic clergy of the established church. Demands for change were formulated in terms of Enlightenment ideals on democracy and contributed to the convocation of the Estates General in May 1789. During the first year of the Revolution, members of the Third Estate (commoners) took control, the Bastille was attacked in July, the Declaration of the Rights of Man and of the Citizen was passed in August, and the Women's March on Versailles forced the royal court back to Paris in October. A central event of the first stage, in August 1789, was the abolition of feudalism and the old rules and privileges left over from the Ancien Régime.
The next few years featured political struggles between various liberal assemblies and right-wing supporters of the monarchy intent on thwarting major reforms, promoted by the Jacobins, led to the Insurrection of 10 August 1792 and the arrest of Louis XVI and the royal family. The Republic was proclaimed in 22 September after the first French elections and the victory at Valmy. Its goal was to unify France and to introduce the same taxes and democratic elections for more citizens. It opposed prerogatives. In a momentous event that led to international condemnation and an internal struggle in the Convention between the Girondins and Montagnards, Louis XVI was executed in January 1793.
External threats closely shaped the course of the Revolution. The French Revolutionary Wars unleashed a wave of global conflicts that extended from the Caribbean to the Middle East. Internally, popular agitation by the Sans-culottes radicalised the Revolution significantly, followed by the Insurrection at the end of May and the rise of Maximilien Robespierre. A Levee en Masse, an army of volunteers to beat the external and internal enemy, culminated in a federalist revolt in the South and the West. The dictatorship imposed by the Committee of Public Safety established price controls on food and soap, introduced a secular Republican calendar, de-established the Catholic church (dechristianised society). During what was called the Reign of Terror, religious and political leaders were expelled, arrested or executed; the borders of the new republic were secured from its enemies.
After the Fall of Robespierre and Thermidorian Reaction, an executive council known as the Directory assumed control of the French state in 1795. They suspended elections, repudiated debts (creating financial instability in the process), persecuted the Catholic clergy, and made significant military conquests on the Italian Peninsula. Dogged by charges of corruption, the Directory collapsed in a coup led by Napoleon Bonaparte in 1799. Napoleon, who ended and became the hero of the Revolution, established the Consulate and later the First French Empire.
The modern era has unfolded in the shadow of the French Revolution. Almost all future revolutionary movements looked back to the Revolution as their predecessor. Its central phrases and cultural symbols, such as La Marseillaise and Liberté, fraternité, égalité, ou la mort, became the clarion call for other major upheavals in modern history, including the Russian Revolution over a century later.
The values and institutions of the Revolution dominate French politics to this day. The Revolution resulted in the suppression of the feudal system, emancipation of the individual, a greater division of landed property, abolition of the privileges of noble birth, and nominal establishment of equality among men. The French Revolution differed from other revolutions in being not only national, for it intended to benefit all humanity.
Globally, the Revolution accelerated the rise of republics and democracies. It became the focal point for the development of most modern political ideologies, leading to the spread of liberalism, radicalism, nationalism, and secularism, among many others. The Revolution also witnessed the birth of total war by organising the resources of France and the lives of its citizens towards the objective of national defense. Some of its central documents, such as the Declaration of the Rights of Man and of the Citizen, continued to inspire movements for abolitionism and universal suffrage in the next two centuries.
German Factory Orders Plunge, Portending Lean Times Ahead = Economic Depression.
Stock markets $DOWI and the #NASDAQ keep going up after the crash, while economic data is worse and worse? Same thing transpired in 1930 right after the 1929 crash! Careful with the rally back in stock prices? Next leg down, market crash next?
BERLIN (AP) — Factory orders in Germany plunged even more than anticipated in April, underlining the effect the coronavirus pandemic has had on Europe's largest economy.
The Economy Ministry said Friday that industrial orders dropped 25.8% in April over the previous month, in figures adjusted for seasonal and calendar effects.
Economists had been predicting a 19.9% drop for April, which is thought to have been the worst month of the economic deterioration ascribed to the pandemic and lockdown measures meant to slow its spread.
The decline followed a 15% drop already in March, and suggests lean times ahead for German industry.
Germany is already in a recession and the government's economic advisers are predicting a contraction of between 6% and 7% in 2020.
Germany this week agreed on 130 billion euros ($148 billion) in stimulus measures, including tax breaks and subsidies for buying electric vehicles, which comes on top of 540 billion euros in financial aid from eurozone governments that includes credit lines from the euro bailout fund, as well as a longer-term EU recovery fund of 750 billion euros that is still being worked out.
The European Central Bank additionally on Thursday boosted its pandemic emergency support program to 1.35 trillion euros as it sought to keep affordable credit flowing.
Global Stocks Turn Lower Ahead Of ECB Decision, US Data -Weekly Unemployment Data = 50+ Million out of work in U.S.A.? Not good.
Stock markets edged lower on Thursday as investors looked ahead to the European Central Bank's decision on more monetary stimulus and the latest weekly jobless claims figures in the United States.
Indexes in London, Frankfurt and U.S. futures were lower. Tokyo, Hong Kong and Sydney advanced while Shanghai declined.
Stock markets have risen this week on optimism about a possible global recovery from the coronavirus pandemic as more economies reopen. But rising case numbers in countries like the United States and Brazil remain a concern.
In midday trading, the FTSE 100 in London was down 0.3% at 6,365 and Frankfurt's DAX lost 0.7% to 12,398. The CAC 40 in France shed 0.5% to 4,995.
On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were down 0.5%.
The European Central Bank wraps up its latest policy meeting Thursday and analysts say it could expand its anti-pandemic stimulus program to more than a trillion euros, giving it more firepower to keep the virus crisis from sliding into a new financial crisis for the 19 countries that use the euro. Traders will also keep an eye on its outlook for the economy, with President Christine Lagarde holding a news conference.
In the U.S., the focus is on jobs figures.
A survey from payroll processor ADP said Wednesday that private employers cut nearly 2.8 million jobs last month — less than the 9.3 million that economists told investors to expect. That raises optimism that Friday’s more comprehensive jobs report from the U.S. government may also not be as bad as feared. Economists say it may show a loss of 8 million jobs, which would be a deceleration from April’s loss of 20.5 million. On Thursday, a weekly report is expected to show almost another 2 million jobless claims in the past week.
Other reports showed the U.S. economy is in bad shape but not as dismal as forecast.
One report said services industries contracted by less than economists expected, and at a more modest rate than in April. Another report said factory orders dropped 13% in April, but not by as much as the 14.8% that economists had forecast.
Stocks have been climbing since late March, at first on relief after the Federal Reserve and Congress promised massive amounts of aid for the economy. More recently, the driving force has been optimism that growth can resume as states across the country and nations around the world lift restrictions on businesses intended to slow the spread of the outbreak.
Widespread protests around the country following the killing of George Floyd haven’t dented the rally. One worry is that by bringing so many people together, the protests could also lead to more coronavirus infections.
Many professional investors have been warning that the stock market’s rally may have been too much, too soon. The recovery for the economy is likely to be much slower than the sharp rebound the stock market has just undertaken, which could be setting investors up for disappointment.
In energy markets, benchmark U.S. crude lost 60 cents to $36.69 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the benchmark for international oils, shed 29 cents to $39.50 per barrel in London.
The dollar edged up to 108.92 yen from Wednesday's 108.90 yen. The euro declined to $1.1206 from $1.1215.
US Service Sector Contracts For Second Month In May - U.S. Economy is 70% service- This is not good economic news, 40 million+ out of work in U.S. + consumers are saving + riots + looting = Not good for economy!
Stock markets $DOWI continue to rally back, from Mid March crash levels.
What is going to happen when unemployment benefits run out in July SNAP and EBT welfare checks don't happen, all pensions fail and Social Security goes bust?
WASHINGTON (AP) — The U.S. services sector shrank for a second month in May as the coronavirus pandemic triggered shutdowns and layoffs around the country.
Activity did rise from levels last month that had not been seen since the recession.
The Institute for Supply Management said Wednesday that its service sector index stood at 45.4 last month, up slightly from an April reading of 41.8.
Any reading below 50 signals that the service sector, where the majority of Americans work, is in contraction. The April decline broke a string of more than 10 years of expansion in the services sector.
The continued contraction in service industries followed a similar pattern in the industrial sector. The ISM reported earlier this week that manufacturing activity remained in contraction territory in May, with a reading of 43.1, up slightly after registering 41.5 in April.
While manufacturing and service industries improved slightly, economists believe a recovery from the massive shock of the pandemic could be long and painful.
“While some sectors appear to be recovering fairly rapidly as lockdowns have been eased — with mortgage applications surging in recent weeks and early reports suggesting auto sales have bounced back — the ISM non-manufacturing index echoes the message from other survey that it will take longer for the wider economy to recovery,” said Michael Pearce, senior U.S. economist at Capital Economics.
Chris Rupkey, chief financial analyst at MUFG Bank in New York, said that it was concerning that the weakest services survey component was employment, which rose only 1.8 percentage-points to a reading of 31.8 in May.
“We aren’t sure all the old employees are going to find a seat in the new economy,” Rupkey said.
Anthony Nieves, chair of ISM’s non-manufacturing business survey committee, said that social unrest across the country has set back efforts to re-open the economy, with many companies going back into lock-down mode.
“We will have to see how fast the country recovers from the unrest we are seeing now,” he said.
Four non-manufacutring industries reported growth in May, including agriculture, while 14 industries, including mining, arts and entertainment and recreation, were in retreat.
Metals Close Higher With Silver At A 1-Week High On A Weak Dollar And U.S./China Tensions - .999 Silver Bullion is catching a nice bid! Strong uptrend!
Jun Comex gold (GCM20) on Thursday closed up +2.6 (+0.15%), and July silver (SIN20) closed up +0.210 (+1.18%).
Precious metals prices on Thursday moved higher with silver at a 1-week high. A weaker dollar on Thursday lifted metals prices, along with safe-haven demand from the escalation of U.S./China tensions. Weak U.S. economic data on Thursday was positive for gold but negative for industrial metals.
U.S./China tensions escalated Thursday after Chinese lawmakers approved the new security law for Hong Kong. On Wednesday, Secretary of State Pompeo said the U.S could no longer certify Hong Kong's political autonomy from China, which could trigger U.S. sanctions against China.
Thursday's U.S. economic data was dovish for Fed policy and bullish for gold, but negative for industrial metals demand and silver prices. U.S. weekly initial unemployment claims fell -323,000 to 2.123 million, showing a weaker labor market than expectations of 2.100 million. Also, U.S. Q1 GDP was unexpectedly revised down -0.2 to -5.0% (q/q annualized), weaker than expectations of no revision from -4.8%, and the steepest pace of contraction in 11-years. In addition, Apr pending home sales plunged -21.8% m/m, weaker than expectations of -17.3% m/m and the biggest decline in nearly ten years. Conversely, Apr capital goods new orders nondefense ex-aircraft fell -5.8% m/m, a smaller drop than expectations of -10.0% m/m but still the biggest decline in 10 years.
Slack global price pressures are negative for gold demand as a hedge against inflation after the U.S. Q1 core PCE was revised lower on Thursday to 1.6% from 1.8%. Also, German May CPI (EU harmonized) eased to a 3-3/4 year low of +0.5% y/y, although that was slightly stronger than expectations of +0.4% y/y.
Precious metal prices continue to see underlying safe-haven demand from the global coronavirus pandemic. Confirmed cases of the virus have risen above 5.855 million globally, with deaths exceeding 360,000.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs on Wednesday rose to a new record high of 3,105.95 MT (data since 2002). Also, long silver positions in ETFs rose to a new record high of 727.573 million ounces on Friday.
Global Shares Up As Recovery Hopes Overshadow Virus Worries $DOWI trades above $24,800, or 50% rally back after COVID-19 Virus crash. 62% is the next rally back point, from what the market lost. Could the $DOWI rally back to $30,000+? Time will tell.
TOKYO (AP) — Global shares rose Tuesday as hopes for economic recovery overshadowed worries over the coronavirus pandemic.
Investors are shifting their focus to how various nations are adapting to getting back to business, while striving to keep new COVID-19 cases in check.
France's CAC 40 was up 1% to 4,585 as the government was due to unveil support measures for the auto industry. Germany's DAX gained 0.6% to 11,458 and the FTSE 100 in Britain, which was closed for trading Monday, rose 1.2% to 6,063.
U.S. shares were set for gains after a long weekend, with the future for the Dow industrials adding 1.9% and the future for the S&P 500 rising 1.8%.
Traders are awaiting U.S. consumer confidence data for May and home sales for April, indicators that might give further clues into the severity of the downturn brought on by the pandemic.
“As is the financial market’s wont these days ... even the slimmest of positive news on the COVID-19 front triggers a bullish immune response and another wave of the peak-virus trade,” said analyst Jeffrey Halley of trading platform Oanda.
Comments from China’s central bank governor on support for its slowing economy also lifted sentiment.
Yi Gang, in an interview on the bank’s website, promised to push down borrowing costs for entrepreneurs and “support development of the real economy.”
He said the People’s Bank of China will pursue a “more flexible” monetary policy in line with official goals announced Friday by Premier Li Keqiang of helping smaller and private companies survive the coronavirus pandemic.
The interview was published as China’s largely ceremonial National People’s Congress holds its annual session, where other senior officials have stressed the need to push growth higher and create jobs, while steering clear of excess government spending.
In Japan, government assessments of commuter train usage showed traffic was still much less than normal on Tuesday after the country lifted its pandemic state of emergency for Tokyo and several other areas. The relaxed precautions are meant to involve what Prime Minister Shinzo Abe has dubbed a “new lifestyle," with widespread wearing of masks and face shields.
Tokyo's benchmark Nikkei 225 jumped 2.6% to finish at 21,277.77, in a rebound to levels for the index not touched since early March. Australia's S&P/ASX 200 surged nearly 3.0% to 5,780.00. South Korea's Kospi gained 1.8% to 2,029.78. Hong Kong's Hang Seng added 1.9% to 23,384.66, while the Shanghai Composite advanced 1.0% to 2,846.55.
Benchmark U.S. crude gained 77 cents to $34.02 a barrel in electronic trading on the New York Mercantile Exchange. It closed at $33.25 on Friday, and markets were closed on Monday. Brent crude oil, the international standard, rose 48 cents to $36.60 a barrel.
The dollar fell to 107.52 Japanese yen from 107.69 yen late Monday. The euro rose to $1.0964 from $1.0898.
Wall Street Ends A Choppy Day Mostly Higher; Crude Oil Falls #WTI West Texas I looks weak again, is #WTI going negative again?
Stock indexes finished mostly higher Friday as Wall Street shook off an early slide, closing out a solid week of gains for the market.
The S&P 500 index inched up 0.2% after having been down 0.5%. It ended the week with a 3.2% gain, largely due to a big rally on Monday that offset all of the benchmark index’s losses from earlier in the month.
Strength in technology, communications and real estate stocks helped reverse much of the market’s early slide. Energy stocks fell the most as crude oil prices closed lower after six straight gains. Bond yields were mixed. Trading was choppy for much of the day ahead of the long holiday weekend. Markets in the U.S. will be closed Monday for Memorial Day.
Fresh hopes for a U.S. economic recovery in the second half of the year and optimism about a potential vaccine for COVID-19 helped spur stocks higher for much of the week. Investors are betting that the economy and corporate profits will begin to recover from the coronavirus pandemic as the U.S. and countries around the world slowly open up again.
Traders remain wary, however, that the reopening of businesses could lead to another surge in infections, potentially hobbling efforts to get the nation’s battered economy growing again.
“We’re in a bit of a hold right now looking for the next catalyst,” said Brian Levitt, global market strategist at Invesco. “There’s still an awful lot of uncertainty we have to work though.”
The S&P 500 rose 6.94 points to 2,955.45. The index is still down 12.7% from its all-time high in February. The Dow Jones Industrial Average slipped 8.96 points, or less than 0.1%, to 24,465.16. The Nasdaq composite added 39.71 points, or 0.4%, to 9,324.59.
Despite the uneven finish, the three major stock indexes each ended the week more than 3% higher. Those gains were blown away by the rally in small company stocks, which drove the Russell 2000 index 7.8% higher for the week, a bullish signal suggesting that investors expect that the economy is on the path to recovery. On Friday, the Russell 2000 gained 7.97 points, or 0.6%, to 1,355.53.
Fears of a crushing recession due to the coronavirus sent the S&P 500 into a skid of more than 30% from its high in February. Hopes for a relatively quick rebound and unprecedented moves by the Federal Reserve and Congress to stem the economic pain drove a historic rebound for stocks in April and have bolstered optimism that the market won't return to the depths its experienced in March.
Investors are now keenly focused on the process of reopening the U.S. economy, which is likely to continue accelerating as the summer progresses.
“The markets are expecting a reasonable resumption of economic activity, a manageable increase in coronavirus cases and a manageable situation when it comes to our health care system,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. "If we have a second freezing of the economy, then this market is grossly overvalued and the only people that are right now are the bears.”
Oil prices fell, snapping a six-day winning streak. Benchmark U.S. crude oil fell 2% to settle at $33.25 a barrel. Brent crude oil, the international standard, fell 2.6% to settle at $35.13 a barrel.
Crude oil started the year at about $60 a barrel, but plummeted earlier this year as demand sank due to widespread travel and business shutdowns related to the coronavirus. The price has risen this month as oil producing nations cut back on output and the gradual reopening of economies around the globe have driven up demand.
Bonds yields were mixed. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, fell to 0.66% from 0.67% late Thursday.
The choppy trading on Wall Street followed a downbeat day in Asia. Hong Kong’s main index dropped 5.6% after China made more moves to limit political opposition in the former British colony. Beijing also abandoned its longstanding practice of setting economic growth targets. European markets shook off some early weakness and ended mixed.
Beijing's move to take over long-stalled efforts to enact national security legislation in semi-autonomous Hong Kong spooked investors in Asian markets who have endured months of pro-democracy demonstrations last year that at times descended into violence between police and protesters.
The proposed bill is aimed at forbidding secessionist and subversive activity, as well as foreign interference and terrorism. The move has drawn strong rebukes from the U.S. government and rights groups.
Nearly 39 Million Have Sought US Jobless Aid Since Virus Hit = 1929 all over again? Jobless rate in the U.S. closer to 50%?
WASHINGTON (AP) — More than 2.4 million people applied for U.S. unemployment benefits last week in the latest wave of layoffs from the viral outbreak that triggered widespread business shutdowns two months ago and sent the economy into a deep recession.
Roughly 38.6 million people have now filed for jobless aid since the coronavirus forced millions of businesses to close their doors and shrink their workforces, the Labor Department said Thursday.
An additional 2.2 million people sought aid under a new federal program for self-employed, contractor and gig workers, who are now eligible for jobless aid for the first time. These figures aren’t adjusted for seasonal variations, so the government doesn’t include them in the overall number of applications
The continuing stream of heavy job cuts reflects an economy that is sinking into the worst recession since the Great Depression. The nonpartisan Congressional Budget Office estimated this week that the economy is shrinking at a 38% annual rate in the April-June quarter. That would be by far the worst quarterly contraction on record.
Nearly half of Americans say that either their incomes have declined or they live with another adult who has lost pay through a job loss or reduced hours, the Census Bureau said in survey data released Wednesday More than one-fifth of Americans said they had little or no confidence in their ability to pay the next month’s rent or mortgage on time, the survey found.
During April, U.S. employers shed 20 million jobs, eliminating a decade’s worth of job growth in a single month. The unemployment rate reached 14.7%, the highest since the Depression. Millions of other people who were out of work weren’t counted as unemployed because they didn’t look for a new job.
Since then, 10 million more laid-off workers have applied for jobless benefits. Federal Reserve Chair Jerome Powell said in an interview Sunday that the unemployment rate could peak in May or June at 20% to 25%.
Across industries, major employers continue to announce job cuts. Uber said this week that it will lay off 3,000 employees, on top of 3,700 it has already cut, because demand for its ride-hailing services has plummeted. Vice, a TV and digital news organization tailored for younger people, announced 155 layoffs globally last week.
Digital publishers Quartz and BuzzFeed, magazine giant Conde Nast and the company that owns the business-focused The Economist magazine also announced job cuts last week.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
The government will provide its latest snapshot Thursday of the layoffs that have left tens of millions of people unemployed but that have begun to slow as states allow some businesses to reopen and fewer companies slash jobs.
Millions more people likely filed for unemployment benefits last week, after 36 million sought aid in the previous eight weeks as the coronavirus forced employers to close and sent the economy into a deep recession.
The pace of layoffs has declined for six straight weeks, and some reopened businesses have rehired a portion of their laid-off employees. By historical standards, though, the number of weekly applications remains immense.
The continuing job cuts reflect an economy that is gripped by the worst downturn since the Great Depression. The Congressional Budget Office estimates that the economy is shrinking at a 38% annual rate in the April-June quarter. That would be, by far, the worst quarterly contraction on record.
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Metals Settle Mixed With "Silver" At A 2-1/2 Month High On Optimism About Industrial Metals Demand = Oil Market #WTI catches a Bid up since going negative, China Oil demand increase as global industrial engine starts back up post crisis.
Hi Ho Silver!
No one to talk to I got no telephone
And at night I wake up, I just lie and stare
Come on and save me from this nightmare
He's riding on down to rescue me
I leave old friends behind like old alibi
I take all they throw against me I make a stand
For truth and justice and for the common man
He's riding on down to rescue me
If you were just my hero, or my friend
Watching with my innocent eyes
Your silver stallion ride
across my room I'd listen as they cried
He's riding on down to rescue me
Hi Ho Silver
Jun Comex gold (GCM20) on Monday closed -21.9 (-1.25%), and July silver (SIN20) closed +0.398 (+2.33%).
Metals prices on Monday settled mixed with silver at a 2-1/2 month high. Gold prices on Monday fell back from a 7-1/2 year nearest-futures high and turned lower after stocks surged on optimism about a vaccine for the coronavirus. Silver prices rallied on a weak dollar along with plans by China to revive infrastructure projects.
Stocks rallied sharply on Monday and curbed safe-haven demand for gold after Moderna said its initial vaccine tests showed that it successfully creates an immune-system response that protects against the coronavirus and is safe.
Gold prices initially rallied in overnight trade and matched its 7-1/2 year nearest-futures high after comments on Sunday night from Fed Chair Powell signaled Fed policy will remain ultra-accommodative. Mr. Powell said the Fed can increase its emergency lending programs, and "there's a lot more we can do, we're not out of ammunition by a long shot."
Silver prices garnered support Monday from a weak dollar and hopes for increased Chinese industrial metals demand after China's State Council announced guidelines to revive large infrastructure projects.
Monday's global economic data was mostly bearish for gold but supportive for industrial metals demand and silver prices. The U.S. May NAHB housing market index rose +7 to 37, stronger than expectations of +5 to 35. Also, China Apr new home prices rose +0.42% m/m, the biggest increase in 6 months, and home prices rose in 50 cities in April compared with 38 cities in March. Conversely, Japan Q1 GDP fell -3.4% (q/q annualized), which is negative for industrial metals demand although slightly stronger than expectations of -4.5%.
Precious metal prices continue to see underlying safe-haven demand from the global coronavirus pandemic. Confirmed cases of the virus have risen above 4.859 million globally, with deaths exceeding 318,000.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs on Friday rose to a new record high of 3,067.99 MT (data since 2002). Also, long silver positions in ETFs rose to a new record high of 687.146 million ounces last Thursday.
Gold Rallies To 3-Week High On Rising China Tensions And Weak Global Data That May Prompt More QE =Hyperinflation!
.999 silver bullion ($17.265) is super cheap vs .999 gold bullion ($1,740) = a silver gold ratio of 100. This ratio wont last, .999 silver bullion is the Long play!
Jun Comex gold (GCM20) on Friday closed up +15.4 (+0.88%), and July silver (SIN20) closed up +0.914 (+5.66%).
Metals prices on Friday closed higher as they extended Thursday's gains, with gold climbing to a 3-week high and silver posting a 2-month high. Rising China tensions undercut stocks Friday and boosted the safe-haven demand for precious metals. Precious metals prices were also boosted by weak global economic data that bolstered the outlook for additional central bank stimulus measures.
Escalation of China tensions undercut stocks and sparked safe-having buying of precious metals after Reuters reported Friday morning that the U.S. is moving to block shipments of semiconductors to China's Huawei Technologies from global chipmakers. Reuters said the U.S. Commerce Department will amend an export rule to "strategically target Huawei's acquisition of semiconductors that are the direct product of certain U.S. software and technology."
Bleak U.S. economic data on Friday was bullish for gold but negative for industrial metals demand and silver prices. Apr retail sales plunged -16.4% m/m, weaker than expectations of -12.0% m/m and the biggest decline since the data series began in 1992. Also, Apr manufacturing production fell -13.7% m/m, the biggest decline since the data series began in 1919, although slightly better than expectations of -14.6% m/m. In addition, Mar JOLTS job openings fell -813,000 to a 2-3/4 year low of 6.191 million, although better than expectations of 5.800 million. Conversely, the early-May University of Michigan U.S. consumer sentiment index unexpectedly rose +1.9 to 73.7, stronger than expectations of -3.8 to 68.0.
Weak global economic data Friday was bullish for gold but negative for industrial metals demand and silver prices. German Q1 GDP fell -2.2% q/q, right on expectations but the steepest pace of contraction in 11 years. Also, Eurozone Q1 employment fell -0.2% q/q, the first decline in 7 years. In addition, China Apr retail sales fell -7.5% y/y, weaker than expectations of -6.0% y/y. Conversely, China Apr industrial production rose +3.9% y/y, stronger than expectations of +1.5% y/y.
Precious metal prices continue to see underlying safe-haven demand from the global coronavirus pandemic. Confirmed cases of the virus have risen above 4.593 million globally, with deaths exceeding 306,000.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs on Thursday rose to a new record high of 3,054.85 MT (data since 2002). Also, long silver positions in ETFs rose to a new record high of 687.146 million ounces Thursday.
Big Picture Gold-Silver Market Factors: Bullish factors include (1) highly simulative monetary policies by the world's key central banks to prevent systemic stress in the global financial system and combat the economic damage from the coronavirus pandemic, (2) low global bond yields, which boost demand for gold as a store of value, (3) low global inflation that is dovish for central bank policies, (4) fund buying of precious metals with long gold and long silver positions in ETFs at or near all-time highs, and (5) safe-haven demand due to the coronavirus pandemic, trade tensions, end-2020 Brexit risks, and global geopolitical risks involving Iran, North Korea, and Venezuela. Bearish factors include (1) fears of long-term deflation due to the massive economic damage from the pandemic, and (2) sharply reduced industrial metals demand, including for silver, as global economic activity plunges due to the coronavirus pandemic.
More Dire Economic News Keeps Wall Street Indexes In Check - .999 Silver Bullion Bidding up with the rise of Crude oil after #WTI crashed. Silver Bullion looks cheap at $17.00 = Buy Silver Bullion. Silver to Gold bullion ratio suggests that .999 Silver Bullion is way oversold and has much upside potential! Don't purchase ETF phony silver or gold bullion with ETFs like SLV or GLD. Buy the cash physical market only, just get a big safe and store bullion if you find .999 bullion these days!
#Bitcoin #BTCUSD looks Great after the recent halving, up from an April low of $3,900 #BTCUSD, then BTC rally back up to $10,000 #BTCUSD = Non inflation asset!
Stock indexes turned mixed in afternoon trading on Wall Street Friday as investors weighed another batch of data showing how the business shutdowns aimed at slowing the spread of the coronavirus pandemic are ravaging the economy.
The government reported that U.S. retail sales sank a record 16% in April, the second steep decline in a row as store closures kept shoppers away. The Federal Reserve also reported that industrial production plunged a record 11.2% last month. Overseas, Germany’s economy shrank in the first quarter, meaning that Europe’s largest economy is in a recession.
The selling, which eased around midday, erased some of the market’s gains from a day earlier. The S&P 500 was flat after falling 1.3% in the early going. It's on track for its third weekly loss in the past four weeks.
The Dow Jones Industrial Average was down 42 points, or 0.2%, to 23,582. The Nasdaq composite, which is heavily weighted with technology stocks, rose 0.4%. Small-company stocks were doing better than the rest of the market. The Russell 2000 index rose 1%.
Bonds yields rose. The yield on the 10-year Treasury note, a benchmark for interest rates on many consumer loans, rose to 0.64% from 0.61% late Thursday.
Technology stocks bore the brunt of the selling, with chipmakers among the biggest losers after the U.S. government moved to impose new restrictions on Chinese tech giant Huawei. The Commerce Department said Friday the restrictions, which impede Huawei's ability to use U.S. technology and software to design and manufacture its semiconductors abroad, aim to cut off the company's undermining of existing U.S. sanctions.
The U.S. government blacklisted the Chinese tech company a year ago, deeming it a national security risk. But there have been numerous loopholes that U.S. officials say the new restriction is meant to address. The news weighed on shares in several chipmakers. Lam Research and Qualcomm were down more than 5%.
Energy stocks rose as crude oil prices climbed. Benchmark U.S. crude picked up $1.73, or 6.3%, to $29.28 a barrel. Brent, the international standard, was up $1.05 to $32.18 a barrel.
Fears of a crushing recession due to the coronavirus sent the S&P 500 into a skid of more than 30% from its high in February. Hopes for a relatively quick rebound and unprecedented moves by the Federal Reserve and Congress to stem the economic pain fueled a historic rebound for stocks in April, with the S&P 500 recouping nearly all of its losses.
So far this month, however, stocks have been headed mostly lower. Investors are balancing cautious optimism of a recovery as economies around the world slowly ease the restrictions on people and businesses against worries that the moves could lead to another surge in coronavirus infections and more economic uncertainty.
Earlier this week, Federal Reserve Chair Jerome Powell warned the downturn could be lengthy, while the top infections diseases expert in the U.S. said that reopening the economy too quickly could backfire and lead to more deaths.
Wall Street is looking ahead to the fall and next year in hopes that the recession doesn't drag out, paving the way for corporate profits to bounce back. But much depends on how the reopening of businesses goes and the trajectory of the outbreak.
While many companies have ceased to provide earnings forecasts for the rest of this year, citing uncertainty over the when the pandemic will be under control and how soon the economy will recover, investors may get some insights next week when Walmart, Home Depot, Best Buy, Target and other retailers report quarterly results.
Major stock indexes in Asia ended mixed Friday. Markets in Europe closed mostly higher despite a report showing that Germany, the continent's largest economy, fell into recession in the first quarter with a 2.2% quarter-on-quarter decline. That pullback echoed economic declines in France and Italy.
Stocks Zigzag On Wall Street As Hope, Skepticism Collide.
Stocks Crash and then rally back, $24,800 is Major resistance for the $DOWI. My best guess is the next shoe is going to drop?
The second and third wave of COVID-19 is pending? The United Kingdom reported this economic depression is the worst in three hundred years?
Does the $DOWI eventually drop 89% with the Dow Jones Industrial Average eventually at $3,000 down from $30,000? A Big Bear Market in nothing more than an "inverted" Bull Market! Just turn your stock charts upside down, right?
Stocks are zigzagging in another erratic day of trading on Wall Street Thursday, as hopes for a relatively quick economic recovery continue to collide with skepticism that it can happen anytime soon.
The S&P 500 was up 0.5%, as of 1:30 p.m. Eastern time, in a day of roller-coaster trading. After falling 1.9% shortly after the start of trading, it clawed back nearly all its losses by the late morning, only to fall again and then peek back higher. Stocks in Asia and Europe dropped to sharper losses, while Treasury yields sank in a sign of increased pessimism.
The up-and-down trading fits with Wall Street’s wavering action in recent weeks as it digests a dizzying few months.
After a 30% rally immediately followed a nearly 34% plunge earlier this year, the S&P 500 has wobbled as investors rethink bets that the reopening of economies around the world will allow for a relatively quick resumption of growth. Another possible flare-up in tensions between the world’s largest economies is also hitting markets, with comments from President Donald Trump about China further weighing on them Thursday.
The Dow Jones Industrial Average was up 226 points, or 1%, at 23,474 after pulling back from an earlier loss of 458 points The Nasdaq composite was virtually flat.
The day’s turnaround was powered by a rally for stocks that have been getting pummeled this year on worries about the economy: banks and energy companies.
Wells Fargo jumped 8.4%, part of a 2.3% rise for financial stocks overall in the S&P 500. Energy stocks were close behind with a gain of 1.4%. Through much of this year, investors have pummeled those areas of the market on worries that the recession will mean less profit for making loans and a collapse in demand for oil.
Lagging behind the market were big technology stocks, which have been the market’s strongest stalwarts for much of this this year. Microsoft slipped 1.1%, and Apple was down 0.5%.
Before the recession hit, U.S. stocks quickly lost just over a third of their value as investors anticipated an avalanche of layoffs hitting the economy. Those fears have indeed turned true, and a report on Thursday showed that nearly 3 million U.S. workers filed for unemployment benefits. That brings the total to roughly 36 million in the two months since the pandemic caused widespread orders for people to stay at home and businesses to shut down.
But stocks began climbing in late March after massive amounts of aid promised by the Federal Reserve and Capitol Hill convinced markets that the worst-case scenario of a financial crisis wouldn’t be happening. Gains accelerated on hopes that the recession, while severe, could be relatively short and that the economy could resume its growth as shutdown orders lift.
Many professional investors have warned the rally was overdone, though, given how much uncertainty exists about how long the recession will last. On Wednesday, Federal Reserve Chair Jerome Powell warned this could become a prolonged downturn, while the top infections diseases expert in the U.S. said Tuesday that reopening the economy too quickly could backfire and lead to more deaths.
Recently, worries about renewed U.S.-China tensions have also weighed on markets. A bruising trade war between the two had dragged on the global economy before the pandemic hit, and some U.S. politicians are now blaming China for not doing more to stop COVID-19 from spreading.
“I have a very good relationship,” with China’s leader, Xi Jinping, Trump said in an interview with Fox Business Network, “but I just — right now, I don’t want to speak with him. I don’t want to speak with him.”
Trump also said the government is considering barring Chinese stocks trading on U.S. exchanges unless they follow U.S. accounting rules.
The yield on the 10-year Treasury fell to 0.60% from 0.64% late Wednesday. It tends to fall when investors are downgrading their expectations for the economy and inflation.
In Europe, France’s CAC 40 lost 1.7%, and Germany’s DAX lost 2%. The FTSE 100 in London fell 2.8%. In Asia, Japan’s Nikkei 225 lost 1.7%, the Hang Seng in Hong Kong dropped 1.4% and the Kospi in South Korea slipped 0.8%.
Analysts say they expect the market to remain in a wait-and-see approach for weeks as investors gauge how economic reopenings underway are going. Investors want to see if second waves of coronavirus infections occur if governments lift their restrictions on businesses too soon.
A barrel of U.S. crude oil for delivery in June rose 6.7% to $26.98 per barrel. Brent crude, the international standard, added 5.7% to $30.84 per barrel.
Wall Street Tanks Again As Worries About Economy Weigh - Careful with the rally back in the stock market! Comments from the Federal Reserve were not good today. Bear Market trend in play.
Watch the rally in the 30 year Long Bond (STRONG BUY): https://www.barchart.com/etfs-funds/quotes/TMF/overview
Wall Street is falling in another erratic day of trading Wednesday, weighed down by worries about a slow recovery for the economy.
The market has been wavering the last couple weeks after coming off its best month in a generation, as optimism about reopening the economy collides with worries about the dangers of lifting restrictions too soon.
The S&P 500 was down 2.3%, as of 12:18 p.m. Eastern time, with the sharpest losses coming for stocks that most need a healthy economy for their profits to grow. Trading was volatile, and the index went from an early loss of 1.1% to a gain of 0.1% and back to more losses, all in the span of 90 minutes.
The Dow Jones Industrial Average was down 576 points, or 2.4%, at 23,188, and the Nasdaq composite was down 2.6%.
Treasury yields were also lower in another sign of pessimism about the economy and inflation, after Federal Reserve Chairman Jerome Powell warned about the threat of a prolonged recession. He said the U.S. government may need to pump even more aid into the economy, which is bleeding millions of jobs every week.
But Powell also said that the Fed is not considering taking interest rates below zero, as some investors have been speculating recently.
The yield on the 10-year Treasury fell to 0.64% from 0.69% late Tuesday.
Oil companies and other energy producers had the sharpest losses in the S&P 500, down 4.7%. Financial stocks were also among the market’s weakest, down 3.5%. Those two areas of the market have been some of this year’s biggest losers this year on expectations that a coronavirus-ravaged economy will mean less demand for oil and more defaults on loans.
Earlier in the day, strength for technology stocks had helped to steady the market momentarily. Tech stocks have been among the market’s few clear winners this year, as investors pile into companies that can make money regardless of whether people are hunkering at home in hopes of containing the virus. .
The volatile day echoes Tuesday’s action, when the S&P 500 was close to flat for much of the day before a sudden slide in the last hour of trading left it down 2.1%.
Analysts say they expect the market to remain in a wait-and-see approach for weeks as investors gauge how economic reopenings underway in areas around the world are going. Many countries and U.S. states have begun lifting restrictions on businesses that were meant to slow the spread of the coronavirus outbreak but have also sent the economy into a severe recession.
Hope that the reopenings will allow growth to resume later this year have helped drive the S&P 500 up 26% since late March, but worries have been rising recently that premature liftings of lockdowns will cause resurgent waves of infections.
On Tuesday, the top U.S. infectious diseases expert, Dr. Anthony Fauci, warned that if the economy reopens too soon, it could cause a backtrack in the “road to try to get economic recovery.”
In China, where the virus first surfaced, authorities announced seven new cases on Wednesday. Six were in Jilin province, in the northeast, where alert levels were raised and rail connections suspended. South Korea reported 26 additional cases of the coronavirus over the past 24 hours amid a new spike in infections linked to nightclubs in Seoul.
Worries about a resumption in trade tensions between the United States and China have also weighed on markets around the world recently.
If Wednesday’s loss holds, it will be the first back-to-back loss of 2% for the S&P 500 since its rally began on March 24.
In Europe, Germany’s DAX lost 2.6%, and France’s CAC 40 dropped 2.9%. The FTSE 100 in London lost 1.5%.
In Asia, Japan’s Nikkei 225 slipped 0.5%, the Hang Seng in Hong Kong lost 0.3% and South Korea’s Kospi rose 0.9%.
A barrel of U.S. oil to be delivered in June fell 1.2% to $25.48 per barrel. Brent crude, the international standard, slipped 1.6% to $29.51 per barrel.
The economic data is worse and worse and the stock markets go up up and away? Everyone wants the economy to be better. Sometimes as they say, "things have to get worse, before they get better". in 1929 the stock market took it's first leg down and then a rally back, only to plunge into 1932- 1933. 32-33 was a Great time to purchase the $DOWI.
Is this rally back in stock prices the same pattern over again? Resistance for the Dow Jones Industrial Average is $28,800. The fifty percent rally back has been achieved, now what? I like the stock market $DOWI etc. at the 50% price pullback from the high of $30,000, thus anything for the $DOWI below 15,000 I buy the market.
I received my $1,200 stimulus funds and guess what I purchased: .999 Silver Bullion to manufacture American Eagle coins with, bought some .999 gold bullion and bought some Bitcoin (BTCUSD), up from $5,200 BTCUSD over the last few months.
Bigger is better! Inflation nation is here upon us in the Great U.S.A.! Welcome to the United States of Venezuela \ Zimbabwe? The price of beef has increased well over 50% in my local supermarket since the beginning of 2020 and is going much higher in price over time, at least the toilet paper has been restocked!
Stocks Rise On Hopes That Awful Jobs Report Marks The Bottom
Wall Street rallied again on Friday after a terrible, unprecedented report on the U.S. jobs market wasn’t quite as horrific as economists had forecast.
The S&P 500 climbed 1.1% in morning trading after the government said employers cut a record-setting 20.5 million jobs last month. While the number is a nightmare, it was slightly below the 21 million that economists told markets to brace for. Investors are also increasingly betting they won’t see another report that bad again because the number of workers filing for unemployment benefits has been slowly declining the last five weeks.
Stocks around the world were already heading higher before the U.S. jobs report came out, in part on hopes that U.S. and China won’t restart their trade war. After the release of the report, stocks climbed even more. Treasury yields also bumped higher following the report, a sign of receding pessimism, but they lost their gains as the morning progressed.
The Dow Jones Industrial Average was up 303 points, or 1.3%, at 24,179, as of 10:50 a.m. Eastern time. The Nasdaq was up 1.1%. The S&P 500 is heading toward its first winning week in the last three.
“The question that matters isn’t whether the economy is at a standstill — it is,” AllianceBernstein senior economist Eric Winograd wrote in a report. “What matters now is when and how the economy recovers, and today’s data are largely backward-looking and therefore don’t alter our fundamental view of the outlook.”
After losing a third of its value in a little more than a month on worries about a severe recession, the S&P 500 has since charged higher to recover more than half its loss. The rally started after the Federal Reserve and Capitol Hill pledged trillions of dollars in aid to prop up the market and economy through the downturn.
More recently, even as horrific data confirmed the recession fears were correct, investors have pushed stocks higher as they looked ahead to growth potentially resuming later this year. Countries around the world and many U.S. states have laid out plans to relax restrictions on business, which could set the stage for many of those vanished jobs to reappear.
“This is a policy-induced downturn, and the speed and structure of the recovery could track a different path from previous recessions,” Stephen Innes, chief global markets strategist at AxiCorp, said in a report. “The bounce-back will be much quicker.”
Many analysts are skeptical of the rally, though, saying the economy likely won’t recover nearly as vigorously and quickly as the stock market has. Friday’s jobs report showed that the unemployment rate climbed to its highest level since the Great Depression.
Stocks got off to a strong start earlier on Friday after a Chinese state media report said top U.S. and Chinese trade negotiators talked on the phone and are working to implement a trade deal. That helped calm building concerns that tensions between the world’s largest economies were close to flaring up again.
The last thing investors want is another round of punishing tit-for-tat tariffs that would drag even more on an economy already sliding into a severe recession.
Companies whose profits are usually most closely tied to the strength of the economy led the market higher. Energy producers in the S&P 500 jumped 2.4% for the biggest gain of the 11 sectors that make up the S&P 500. Industrial companies and financial stocks were also stronger than the rest of the market.
They’re the three sectors of the market that were hardest hit earlier in the year on worries about the coming recession, which would cause demand for their products to vanish and saddle banks with bad loans.
Smaller stocks also rose more than the rest of the market, an indication of the market’s belief in stronger growth ahead. Small-cap stocks have historically sunk more than their bigger rivals heading into downturns but rebound harder in anticipation of recoveries, and Friday’s 2.2% gain for the Russell 2000 was more than double big-stock indexes.
In Asia, Hong Kong’s Hang Seng added 1%, and stocks in Shanghai rose 0.8%. South Korea’s Kospi gained 0.9%. In Europe, France’s CAC 40 rose 0.8%, and Germany’s DAX returned 1.2%.
The yield on the 10-year Treasury note rose as high as 0.66% shortly after the job report’s release, up from 0.63% late Thursday. That yield tends to move with investors’ expectations for the economy and inflation. But it dipped back down to 0.63% as the morning progressed.
Benchmark U.S. crude rose 0.9% to $23.77 per barrel, continuing its strong week and recovering some more of its record-setting losses from earlier in the year. Brent crude, the international standard, added 1.6% to $29.92 per barrel.
This Great Economic Depression will be the opposite of the 1930's Depression. In the 1930's the famous saying was "Hey brother can you spare a dime"? This depression the famous saying is, "Hey brother can you spare a Billion in bailout dollars"? 1930 no one had any money and lots of supply of good and services available". The 2020 Great depression, everyone has a lot of money, with no supply of goods and services available.
Every Great Depression transpires every 90 years. The next Great Depression should be 2020 + 90 = the year 2,110! 1929 + 90 = 2019. Stop blaming elected officials economic cycles.
The Great Depression
The 1930s in the United States began with an historic low: more than 15 million Americans–fully one-quarter of all wage-earning workers–were unemployed. President Herbert Hoover did not do much to alleviate the crisis: Patience and self-reliance, he argued, were all Americans needed to get them through this “passing incident in our national lives.” But in 1932, Americans elected a new president, Franklin Delano Roosevelt, who pledged to use the power of the federal government to make Americans’ lives better. Over the next nine years, Roosevelt’s New Deal created a new role for government in American life. Though the New Deal alone did not end the Depression, it did provide an unprecedented safety net to millions of suffering Americans.
The disaster had been brewing for years. Different historians and economists offer different explanations for the crisis. Some blame the increasingly uneven distribution of wealth and purchasing power in the 1920s, while others blame the decade’s agricultural slump or the international instability caused by World War I.
In any case, the nation was woefully unprepared for the crash. For the most part, banks were unregulated and uninsured. The government offered no insurance or compensation for the unemployed, so when people stopped earning, they stopped spending. The consumer economy ground to a halt, and an ordinary recession became the Great Depression, the defining event of the 1930s.
President Herbert Hoover was slow to respond to these events. Though he believed that the “crazy and dangerous” behavior of Wall Street speculators had contributed in a significant way to the crisis, he also believed that solving such problems was not really the federal government’s job. As a result, most of the solutions he suggested were voluntary: He asked state governments to undertake public-works projects; he asked big companies to keep workers’ pay steady and he asked labor unions to stop demanding raises. The shantytowns that were popping up as more and more people lost their homes were nicknamed “Hoovervilles” as an insult to the president’s hands-off policies.
The crisis worsened, and life for the average American during the Great Depression was challenging. Between 1930 and 1933, more than 9,000 banks closed in the U.S., taking with them more than $2.5 billion in deposits. Meanwhile, unemployed people did whatever they could, like standing in charity breadlines and selling apples on street corners, to feed their families.
“A New Deal for the American People”
By 1932, many Americans were fed up with Hoover and what Franklin Roosevelt later called his “hear nothing, see nothing, do nothing government.” The Democratic presidential candidate, New York governor Franklin Delano Roosevelt, promised a change: “I pledge myself,” he said, “to a New Deal for the American people.” This New Deal would use the power of the federal government to try and stop the economy’s downward spiral. Roosevelt won that year’s election handily.
The First Hundred Days
The new president acted swiftly during his first hundred days in office to, he said, “wage a war against the emergency” just as though “we were in fact invaded by a foreign foe.” First, he shored up the nation’s banks. Then he began to propose more comprehensive reforms. By June, Roosevelt and Congress had passed 15 major laws–including the Agricultural Adjustment Act, the Glass-Steagall Banking Bill, the Home Owners’ Loan Act, the Tennessee Valley Authority Act and the National Industrial Recovery Act–that fundamentally reshaped many aspects of the American economy. This decisive action also did much to restore Americans’ confidence that, as Roosevelt had declared in his inaugural address, “the only thing we have to fear is fear itself.”
American Culture During the 1930s
During the Depression, most people did not have much money to spare. However, most people did have radios–and listening to the radio was free. The most popular broadcasts were those that distracted listeners from their everyday struggles: comedy programs like Amos ‘n’ Andy, soap operas and sporting events. Swing music encouraged people to cast aside their troubles and dance. Bandleaders like Benny Goodman and Fletcher Henderson drew crowds of young people to ballrooms and dance halls around the country. And even though money was tight, people kept on going to the movies. Musicals, “screwball” comedies and hard-boiled gangster pictures likewise offered audiences an escape from the grim realities of life in the 1930s.
The Second New Deal
President Roosevelt’s early efforts had begun to restore Americans’ confidence, but they had not ended the Depression. In the spring of 1935, he launched a second, more aggressive set of federal programs, sometimes called the Second New Deal. The Works Progress Administration provided jobs for unemployed people and built new public works like bridges, post offices, schools, highways and parks. The National Labor Relations Act (1935), also known as the Wagner Act, gave workers the right to form unions and bargain collectively for higher wages and fairer treatment. The Social Security Act (also 1935) guaranteed pensions to some older Americans, set up a system of unemployment insurance and stipulated that the federal government would help care for dependent children and the disabled.
In 1936, while campaigning for a second term, President Roosevelt told a roaring crowd at Madison Square Garden that “The forces of ‘organized money’ are unanimous in their hate for me–and I welcome their hatred.” He went on: “I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match, [and] I should like to have it said of my second Administration that in it these forces have met their master.” He won the election by a landslide. Still, the Depression dragged on. Workers grew more militant: In December 1936, for example, the United Auto Workers started a sit-down strike at a GM plant in Flint, Michigan that lasted for 44 days and spread to some 150,000 autoworkers in 35 cities. By 1937, to the dismay of most corporate leaders, some 8 million workers had joined unions and were loudly demanding their rights.
The End of the Depression
By the end of the 1930s, the New Deal had come to an end. Growing Congressional opposition made it difficult for President Roosevelt to introduce new programs. At the same time, as the threat of war loomed on the horizon, the president turned his attention away from domestic politics. In December 1941, the Japanese bombed Pearl Harbor and the U.S. entered World War II. The war effort stimulated American industry and the Great Depression was over.
Wall Street Pulls Back After Companies Detail Virus Fallout. The Bear Market rally always looks so convincing?
Stocks ready for next crash wave? Huge unemployment numbers.
WTI Did rally back, is Crude oil going to crash again?
Stocks are falling in morning trading on Wall Street Friday after Amazon and other big companies laid out how the coronavirus pandemic is hitting their bottom lines.
The S&P 500 was down 1.8%, following losses in London and Tokyo. Treasury yields ticked higher, while crude oil prices continued to yo-yo.
Amazon sank 6.1% after it reported profit for the latest quarter that fell short of Wall Street’s forecasts. It also said it will spend billions of dollars this quarter to pay workers overtime, buy masks for them and make other investments. Its movements have outsized sway on the S&P 500 because it’s the third-largest company in the index. Amazon alone accounted for one-seventh of the S&P 500’s loss for the day.
The Dow Jones Industrial Average was down 384 points, or 1.5%, at 23,965, as of 10:40 a.m. Eastern time, and the Nasdaq was down 1.8%.
Exxon Mobil fell 4% after it said it swung to a loss of $610 million last quarter. It had to write down the value of its inventories by $2.9 billion amid a collapse in energy prices as airplanes, automobiles and workplaces worldwide suddenly went idle in the spring.
Exxon Mobil helped drive energy stocks across the S&P 500 to a 4% loss, the largest among the 11 sectors that make up the index.
The S&P 500 is nevertheless close to ending the week with its third gain in the last four. It’s clinging to a 0.9% gain for the week.
Stocks have been rallying recently as economies around the world lay out plans to relax stay-at-home orders and as hopes rise that a possible drug treatment for COVID-19 may be on the horizon. They added to earlier gains sparked by massive aid promised by the Federal Reserve and Congress, and the U.S. stock market just closed out its best month in 33 years.
The U.S. stock market has more than halved its sharp losses from its February record into late March, triggered by worries about a sudden, devastating recession.
Many professional investors say the rally has been overdone given how much uncertainty still exists about how long the recession will last. If U.S. states and nations around the world reopen their economies prematurely, it may lead to additional waves of infections, which could mean more business closures, layoffs and economic devastation.
London’s FTSE 100 fell 2.1%, and Tokyo’s Nikkei 225 lost 2.8%.
In Japan, the government is keeping social distancing measures in place to prevent a resurgence of infections.
Australia’s market was one of the few others open Friday, and its S&P/ASX 200 plunged 5% with heavy losses in miners and banks. A measure of Australian manufacturing showed activity contracting at its worst pace since 2009.
The yield on the 10-year Treasury rose to 0.64% from 0.62% late Thursday. It’s still well below the roughly 1.90% level where it was at the start of the year. Longer-term Treasury yields tend to move with investors’ expectations for the economy and inflation, and a Friday report showed that U.S. manufacturing plunged in April, but not as severely as economists were expecting.
Benchmark U.S. crude oil rose 2.5% to $19.31 per barrel after swinging between $18.07 and $20.48 earlier in the morning. They’re the latest severe swings for U.S. crude, which has plunged from its perch of roughly $60 at the start of the year on worries about a collapse in demand and strained storage facilities.
Brent crude, the international standard, fell 1.6%, to $26.07 per barrel.
Drug Proves Effective Against Virus As Economic Damage Rises
The stock markets keep rising as the economic data is getting worse? The Bear market rally continues. Is 1929 right around the corner? Is the big 89% stock market wipe out setting up after the huge rally back?
The weekly chart along with the daily chart suggest jumbo crash is setting up. Time will tell.
When the weekly chart has a death cross (50 week moving average trades below the 200 week moving average), this is when we see some real stock market crashing action, just like the death cross back in 2008.
The $DOWI has a gap way up at 30,000 when it gaped down at the start this crash cycle, when this Dow gap is filled, then the huge crash cycle starts? Sit tight!
Scientists on Wednesday announced the first effective treatment against the coronavirus — an experimental drug that can speed the recovery of COVID-19 patients — in a major medical advance that came as the economic gloom caused by the scourge deepened in the U.S. and Europe.
The U.S. government said it is working to make the antiviral medication remdesivir available to patients as quickly as possible.
“What it has proven is that a drug can block this virus,” said Dr. Anthony Fauci, the government's top infectious-disease expert. “This will be the standard of care.”
Stocks surged around the world on the news, with the Dow Jones Industrial Average gaining more than 530 points on the day, or over 2%.
Still, word of the new drug came as the U.S. government reported that American economic output is shriveling in the biggest and fastest collapse since the Depression. The virus has killed over 220,000 people worldwide, including more than 60,000 confirmed deaths in the U.S., and led to lockdowns and other restrictions that have closed factories and other businesses around the globe.
The U.S. said its gross domestic product, or output of goods and services, shrank at an annual rate of 4.8% in the January-March period, the sharpest quarterly drop since the global financial meltdown of more than a decade ago.
And the worst is yet to come: The Congressional Budget Office has estimated that the GDP of the world’s biggest economy will plunge at a 40% annual rate during the three-month period that ends in June.
The latest figures on people applying for unemployment benefits in the U.S. come out Thursday, with economists estimating perhaps 1 in 6 American workers, or nearly 30 million people, have lost their jobs over the past six weeks.
The U.S. unemployment rate for April will be released at the end of next week, and economists have said it could range as high as 20% — a level last seen during the Depression.
Mario Franco, who worked at a McDonald’s at a rest stop along Interstate 95 in Darien, Connecticut, for 26 years, rising to night manager in charge of the kitchen staff, was laid off in late March. The 50-year-old said he has little savings and now relies on a food bank and union donations.
“They didn’t give us any notice,” he said through an interpreter. “They didn’t tell us about it. Just suddenly the night shift ended and that was it. There was no more work.”
Amid the economic carnage, President Donald Trump was pushing to reopen the country, allowing federal social distancing guidelines to expire Thursday and even saying he plans to travel to Arizona next week.
Trump laid out plans for returning to pre-virus normalcy despite doctors’ warnings that the country will need to embrace extended social distancing and mask-wearing.
Confirmed infections globally reached about 3.2 million, including 1 million in the U.S., according to a tally by Johns Hopkins University. The true numbers of deaths and infections are believed to be much higher because of limited testing, differences in counting the dead and concealment by some governments.
California-based biotech company Gilead Sciences and the U.S. government reported that in a major study, remdesivir shortened the time it takes for COVID-19 patients to recover by four days on average — from 15 days to 11. Also, a trend toward fewer deaths was seen among those on the drug, Fauci said.
The study was run by the U.S. National Institutes of Health and involved 1,063 hospitalized coronavirus patients around the world.
An effective treatment could have a profound effect on the outbreak, since a vaccine is probably a year or more away.
Economic damage, meanwhile, is piling up around the world.
The United Nations’ main labor body predicted the world will lose the equivalent of about 305 million full-time jobs in the second quarter.
It also projected that 1.6 billion workers in the “informal economy,” including those working beyond the reach of the government, “stand in immediate danger of having their livelihoods destroyed.” That is nearly half the global workforce of 3.3 billion people.
In Europe, almost every measure of the economy is in free fall. Figures due to be released Thursday are expected to show a drop of about 4% in the first three months of the year in the eurozone, and an even steeper hit is projected this quarter. Unemployment is expected to rise to about 8%.
The figure would be worse if not for massive amounts of government aid to keep millions of workers on payrolls. Government debt is exploding to cover the costs of such relief.
“The lockdowns to contain the COVID-19 pandemic are taking an unprecedented toll on the European economy,” said Florian Hense, an economist at Berenberg Bank.
In Paris, aircraft maker Airbus reported a first-quarter loss of 481 million euros ($515 million), laid off thousands of workers and sought billions in loans to pull through the crisis. U.S.-based rival Boeing said it is cutting 10% of its workforce and reducing the production rate of commercial jets.
Italy’s credit rating was lowered in the first downgrade of a major economy as a result of the crisis. Its rating stands just one level above junk bond status. Italy expects its economy to shrink 8% this year.
Germany’s economy minister said the government is projecting a contraction of about 11% in GDP by the end of the quarter. But he also predicted a sharp recovery in 2021.
Many economists are skeptical the U.S. economy will bounce back quickly later in the year, noting that the virus could flare up again or consumers and employees might be too worried to return to business as usual.
“The virus has done a lot of damage to the economy, and there is just so much uncertainty now,” said Mark Zandi, chief economist at Moody’s Analytics.
In other developments, Britain raised its death toll to more than 26,000 after adding more than 3,800 nursing home deaths that were previously not included.
With the crisis easing in places like Italy, France and Spain, European governments are making adjustments in their transportation networks to try to get their economies running again without setting off a second wave of infections.
In Italy, Milan is putting red stickers on the floor to tell bus passengers how far apart to stand. The Dutch are putting on longer, roomier trains. Berlin and many other cities are opening up more lanes to bicyclists. And in Britain, bus passengers are using the middle or rear doors to reduce the risk to the driver.
Wall Street’s Rally Carries Into 3rd Day As Economies Reopen
Stocks Rally back past 50% (24,000 on the Dow Jones), next level of rally resistance is 62% Rally Back point?
Stocks are pumping higher in early trading on Wall Street Tuesday, and the S&P 500 is cruising toward its first three-day winning streak in a month.
European stocks were also strong, as markets turned higher following a mixed Asian performance. The price of U.S. oil remained wild, though, and it swung through more extremes as storage tanks come closer to hitting their limits.
With massive aid in place for the economy from central banks and governments, stocks have been building higher in recent weeks on anticipation that stay-at-home orders will gradually lift. U.S. states and nations around the world are going at their own speeds, but the removal of restrictions would allow businesses to get back into some type of gear, even if it’s only first, after the global economy essentially slammed shut.
The S&P 500 was up 0.8%, as of 10:05 a.m. Eastern time. The Dow Jones Industrial Average gained 213 points, or 0.9%, to 24,347, and the Nasdaq was up 0.3.%
Companies that would benefit most from people being able to leave their houses again were among the market’s leaders. Harley-Davidson jumped 16% after laying out plans to slash costs and preserve cash, including a cut of its dividend and a halt to its stock buyback program. Kohl’s rose 12%, and Kimco Realty, which owns shopping centers, added 8.8%
Sectors of the stock market that are most closely tied to the strength of the economy were also leaders. Financial stocks rose 3% for the biggest gain among the 11 sectors that make up the S&P 500. Industrial stocks were close behind with a gain of 2.7%, and raw-material producers were up 2.1%.
Still, signs of caution are prevalent throughout the market. Merck reported a jump in revenue and profit for the first quarter, but the drugmaker also cut its financial forecast for the full year. It said prescription drug sales will likely fall because because the pandemic is keeping many patients with chronic conditions away from their doctors. It’s also looking for sales of veterinary medicines to dip. Its shares fell 4.2%.
Treasury yields, which had sent warning signals about the disastrous economic effects of the pandemic long before the stock market did, were down slightly.
The yield on the 10-year Treasury dipped to 0.63% from 0.65% late Monday. Yields tend to fall when investors are downgrading expectations for the economy and inflation.
Inflation recently has gotten weighed down by a plunge in oil prices. With airplanes, autos and factories around the world idled, demand has collapsed for energy, and producers have not cut back quickly enough. All the extra oil has flowed into storage tanks, which are close to hitting their limits. A barrel of U.S. oil for delivery in June was up 2% to $13.06, but it had dropped as low as $10.07 earlier in the morning.
Brent crude, the international standard, was up 1.3% at $23.37 per barrel.
In Europe, France’s CAC 40 gained 1.6% while Germany’s DAX rose 1.8%7. Britain’s FTSE 100 gained 2.1.
Japan’s benchmark Nikkei 225 edged 0.1% lower. A day before, it surged after Japan’s central bank lifted its ceiling on purchases of government bonds and other assets that it uses to pump more cash into the economy.
“Basically, the monetary spigots are wide open,” said Robert Carnell, regional head of research, Asia Pacific, at ING.
South Korea’s Kospi gained 0.6%, and Hong Kong’s Hang Seng rose 1.2%.
The U.S. Federal Reserve is holding its own monetary policy meeting Tuesday and Wednesday, though it is not expected to add to the huge amounts of stimulus it has already deployed.
The European Central Bank will hold its own meeting Thursday, and is likewise expected to mainly fill in details of its stimulus programs, or possibly tweak them.
Worries persist about new surges of coronavirus cases in places like China and South Korea, where they had declined as a result of social distancing, testing and arduous efforts by medical workers.
A slew of corporate earnings announcements is lined up for this week.
Nearly a third of the companies in the S&P 500 are scheduled to report their results for the first three months of 2020 and, more importantly, perhaps talk about how they see future conditions shaking out. That includes Amazon, Apple, Facebook, Microsoft and Google’s parent, Alphabet, which together make up about a fifth of the index.
Stocks Climb Worldwide As Oil Prices Crawl Off The Floor, will this Rally Last?
Even oil gained ground, pulling further away from zero after earlier getting turned upside down amid a collapse in demand. Stocks rose from Seoul to Spain, and winners outnumbered losers in New York by more than two to one. Treasury yields also pushed higher in a sign of a bit less pessimism among investors.
”This has been a tremendously good reminder that the stock market is a forward predictor,” said Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management.
Investors are still bracing for a severe, painfully deep recession after businesses shut down worldwide in hopes of slowing the spread of the coronavirus. But they had already sent U.S. stocks down by roughly a third a month ago on that expectation. Now, even as depressing economic and health reports pile up, some investors are looking ahead to the prospect of parts of the economy reopening as infections level off in some areas.
“Right now, it’s about the economy beginning to open, even at the margins,” said Quincy Krosby, chief market strategist at Prudential Financial. “We’re watching Germany, the largest economy in Europe, begin to open. What this suggests is if things go well in these economies, we’re going to see more states begin to open, and perhaps open more broadly.”
The S&P 500 rose 62.75 points, or 2.3%, to 2,799.31 and trimmed its loss for the week to 2.6%.
The Dow Jones Industrial Average climbed 456.94, or 2%, to 23,475.82, and the Nasdaq composite picked up 232.15, or 2.8%, to 8,495.38.
Energy stocks jumped to some of the market’s biggest gains, riding the ripple of strengthening oil prices. Halliburton, Apache and Diamondback Energy all added at least 9%. All three, though, are still down more than 60% for the year so far.
The price of a barrel of U.S. oil to be delivered in June jumped 19% to settle at $13.78. It had zig-zagged in the morning before turning higher after President Donald Trump threatened the destruction of any Iranian gunboats that harass U.S. Navy ships, raising the possibility of a disruption to oil supplies.
The big gain, though, means it’s recovered just a fraction of its steep losses. It was close to $30 at the start of last week and nearly $60 at the beginning of the year. A collapse in demand for energy combined with continued production in countries around the world means too much oil is sloshing around, depressing its price.
Brent crude, the international standard, climbed 5.4% to $20.37 per barrel.
Other companies that have been hurt by the coroanvirus pandemic also rose after offering some slight hints of hope.
Chipotle Mexican Grill, for example, said that a key sales figure plunged 16% in March on widespread stay-at-home orders. But it hit a bottom during the week of March 29, down 35%, and has since improved a bit. Declines the past week were “in the high teens.” Its shares rose 12.1%.
Stocks of companies that have been winners in the new stuck-at-home economy, meanwhile, are also telling investors just how much they’ve been benefiting.
With people hunkered inside and craving communication, Snap said that the number of active users on Snapchat each day jumped 20% in the first three months from a year ago. Its revenue topped Wall Street’s expectations, and Snap shares jumped 36.7%.
Netflix has also been a big winner as people look to fill their time, with shares recently hitting a record. It added nearly 16 million global subscribers in the first three months of the year, but shares slipped 2.9% after its profits didn’t quite live up to Wall Street’s lofty expectations.
Toilet paper has also been hugely in demand, and the maker of Cottonelle and Scott said its sales benefited in the first three months of the year as customers stocked up on them and Kleenex tissue, among other items. Shares of Kimberly-Clark rose 2.4%.
In an increasingly common move, Kimberly-Clark also retracted its financial forecasts for 2020 given how uncertain the global economy is due to the COVID-19 outbreak.
The Senate late Tuesday approved a $483 billion proposal to deliver more loans to small businesses and aid to hospitals. The House is expected to vote on it Thursday.
The new bill would come on top of more than $2 trillion in aid that Congress has already approved. That, plus massive support for markets from the Federal Reserve, has helped the S&P 500 rise 25% since a low in late March. The index has roughly halved its loss from its record set in February.
The yield on the 10-year Treasury rose to 0.61% from 0.57% late Tuesday. But it remains well below the 1.90% level where it started the year.
In Europe, Germany’s DAX returned 1.6%, France‘s CAC 40 gained 1.2% and the FTSE 100 in London added 2.3%. In Asia, South Korea’s Kospi rose 0.9%, the Hang Seng in Hong Kong gained 0.4% and Japan’s Nikkei 225 fell 0.7%.
Stock Indexes Settle Sharply Lower As Energy And Bank Stocks Slump On Continued Rout In Crude Prices
The S&P 500 Index ($SPX) on Tuesday closed down -3.07%, the Dow Jones Industrials Index ($DOWI) closed down -2.67%, and the Nasdaq 100 Index ($IUXX) closed down -3.71%.
U.S. stock indexes on Tuesday sold off sharply with the S&P 500 and Nasdaq 100 at 1-week lows and the Dow Jones Industrials at a 1-1/2 week low. A plunge in crude oil prices by more than -40% on Tuesday undercut energy and bank stocks. Also, concern about Q1 corporate earnings weighed on the equity markets.
Oil prices plunged for a second day Tuesday as Jun WTI crude closed down by more than -40%. Crude prices have collapsed as storage tanks, pipelines, and tankers around the world are quickly being filled to capacity by the vast oil glut caused by one-third slump in oil demand. Bank stocks also retreated on Tuesday due to their exposure to oil and gas loans if record-low crude prices spark loan and bond defaults in the industry.
The pandemic continues to keep large swaths of the economy closed, which is a major negative factor for many stock sectors. Confirmed cases of the virus have risen above 2.54 million globally, with deaths exceeding 176,000.
Concern about Q1 corporate earnings results is another major bearish factor for equity prices. IBM fell by more than -2% Tuesday after it withdrew its full-year earnings forecast and reported Q1 revenue of $17.57 billion, below the consensus of $17.69 billion.
Comments on Tuesday from White House economic adviser Hassett weighed on stocks when he said the decline in U.S. Q2 GDP could end up being "the biggest we've ever posted because so many things have just shut down."
Geopolitical concerns were another negative for stocks on conflicting reports about the health of North Korea's leader Kim Jong Un, who was said to be in critical condition after undergoing cardiovascular surgery last week. If Kim Jong Un were to be dead or incapacitated for a long period of time, it would be unclear who would be in control of North Korea's nuclear weapons.
A bullish factor for stocks was the bipartisan agreement in Washington for a fourth coronavirus rescue package. The new rescue package will replenish the Paycheck Protection Program (PPP) for small businesses and will also boost funding for hospitals and expanded coronavirus testing.
Tuesday's U.S. economic data was bearish for stocks after Mar existing home sales fell sharply by -8.5% to an 11-month low of 5.27 million, although that was slightly stronger than expectations of -9.0% to 5.25 million.
Tuesday's global economic data was mixed for growth prospects and neutral for stocks. The German Apr ZEW survey expectations of economic growth index rose +77.7 to a 3-3/4 year high of 28.2, stronger than expectations of +7.5 to -42.0. Conversely, the UK Feb ILO unemployment rate unexpectedly rose +0.1 to a 14-month high of 4.0%, showing a weaker labor market than expectations of unchanged at 3.9%.
The VIX S&P 500 Volatility Index ($VIX) on Tuesday jumped to a 2-week high of 47.77 and finished the day up +1.58 at 45.41. The VIX is consolidating moderately above last Tuesday's 3-week low of 37.31 and well below the 11-1/4 year high of 85.47 posted on March 18.
Futures, Oil Plunge As Crude Contagion Spreads To All Markets
The experts said ignore the May WTI meltdown - it is irrelevant and is only confined to the deliverable contract. The experts were wrong.
Not only was the Monday May WTI meltdown not contained, with the contract still trading negative after closing down nearly $40 on Monday in their first ever sub-zero dive as traders realized Cushing was on the out of storage space, but overnight it spread to the more-active June contract which crashed almost 50% plunging to the low teens, before stabilizing down 23.5%, to $15.64 a barrel. June trading volumes were roughly 80 times those of the expiring May contract.
.... with Brent also dragged in, dropping as low as $18/barrel and last trading down $5.25, or 21% at $20.32 per barrel...
... as the world's oil benchmark dropped below $20. And as the oil meltdown accelerated, it inflicted huge losses sweeping through markets as the world runs out of places to store unwanted crude and grapples with negative pricing.
The plunge in oil is taking place even as President Trump said late on Monday that he is looking at putting as much as 75mln bbls into SPR which would top it out and that the oil price drop is short-term in which a lot of people got caught out and was largely a financial squeeze. Furthermore, Trump suggested oil producers need to do more by the market in terms of output cuts and that the administration will either ask permission from Congress to buy oil or we will store it, while he also responded we will look at it when questioned about stopping shipments of oil from Saudi Arabia.
If the oil crash wasn't enough, overnight we also got unconfirmed reports that North Korea’s Kim Jong Un was in critical condition (and may have contracted the coronavirus) after a surgery, which slammed Korean assets, and sent the dollar sharply higher, while hitting global stocks and S&P futures, even as traders continued to follow the impact of the ongoing coronavirus epidemic and plunging corporate earnings.
Exxon Mobil dropped 3.7% in premarket trading and Chevron slipped 4.0% as the front month May WTI contracts continued to trade below $0 on Tuesday. Other oil-related companies including Apache, Halliburton, ConocoPhillips, Schlumberger and Occidental Petroleum all tumbled between 6.3% and 11%. Coca-Cola Co provided the latest evidence of the damage wrought by the pandemic, saying its current-quarter results would take a severe hit from low demand for sodas. IBM was also sharply lower after the company reported its lowest revenue in the 21st century and withdrew guidance.
As Bloomberg writes, mystery surrounded Kim Jong Un’s health after U.S. and South Korean officials gave differing accounts of the North Korean leader’s condition. The risk of instability in the region adds to a host of market headaches, including the gut-wrenching oil slump and concerns about the outlook for the global economy.
"The uncertainty about who succeeds him in North Korea is the great unknown,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific, conjecturing about a potential worst-case scenario for Kim. “That’s what is making markets nervous."
Meanwhile, President Donald Trump said he’ll sign an executive order temporarily suspending immigration into America as the country tries to contain the spread of the coronavirus. The news came even amid more signs that the outbreak is slowing in hard-hit areas.
In Europe, all markets and industry sectors were in the red as the Stoxx Europe 600 index declined as much as 2.1%, dropping for the first time in 4 days, with energy companies dragging on the gauge despite a sharp rebound in Germany's ZEW index, which soared from -49.5 to +28.2, smashing expectations. In retrospect, this jump may prove to be premature.
Asian stocks also fell, led by energy and IT; all Asian markets in the region were down, with India's S&P BSE Sensex Index dropping 3.6% and Taiwan's Taiex Index falling 2.8%. The Topix declined 1.2%, with IBJ and Asteria falling the most. The Shanghai Composite Index retreated 0.9%, with Shangying Global and Beijing Vantone Real Estate posting the biggest slides.
In FX, the Bloomberg Dollar Spot Index advanced a second day as the dollar climbed against most major currencies, with the won and ruble tumbling and the yen edging up. amid losses in Japanese stocks while EUR/USD traded within recent ranges. The slump in Brent dragged down the Norwegian krone, as the sterling reached a near two-week low, weighed down by renewed Brexit concerns and wider unease on global markets after the rout in the U.S. oil. The kiwi fell versus all its Group- of-10 peers and NZD/USD slid as much as 1% after Reserve Bank of New Zealand Governor Adrian Orr said the central bank was open- minded on direct monetization of government debt.
In rates, the Bund and Treasury curves steepened somewhat while yields plunged, the 10Y yield sliding to the lowest since April 3, while the 5Y TSY yield plunged to an all time low.
Investors will be looking to corporate earnings for more insight on the impact of the coronavirus pandemic, with almost one-fifth of S&P 500 companies reporting this week. Looking at the day ahead, we get March existing homes sales is expected. Coca-Cola, Lockheed Martin, Philip Morris, Chipotle, and Netflix are among companies reporting earnings
- S&P 500 futures down 0.6% to 2,790.75
- STOXX Europe 600 down 1.7% to 330.00
- MXAP down 1.8% to 141.46
- MXAPJ down 2.3% to 455.77
- Nikkei down 2% to 19,280.78
- Topix down 1.2% to 1,415.89
- Hang Seng Index down 2.2% to 23,793.55
- Shanghai Composite down 0.9% to 2,827.01
- Sensex down 3.7% to 30,468.34
- Australia S&P/ASX 200 down 2.5% to 5,221.30
- Kospi down 1% to 1,879.38
- Brent futures down 21% to $20.29/bbl
- Gold spot down 0.4% to $1,688.44
- U.S. Dollar Index up 0.2% to 100.20
- German 10Y yield fell 0.9 bps to -0.457%
- Euro down 0.3% to $1.0833
- Italian 10Y yield rose 14.4 bps to 1.763%
- Spanish 10Y yield fell 1.2 bps to 0.879%
Top Overnight News from Bloomberg
- The world’s biggest independent oil storage company said that space for traders to store crude and refined fuels has all but run out as a result of the fast-expanding glut that’s been caused by Covid-19
- President Donald Trump said he’ll sign an executive order temporarily suspending immigration as the country tries to contain the spread of the coronavirus; Italy will present a plan this week to ease its rigid lockdown, joining Germany, France and Austria in pursuing a gradual return to normality as coronavirus infection rates fall and pressure mounts to reopen businesses
- Central-bank balance sheets are expanding to record levels amid their latest buying spree, raising questions about how big they can get and whether those assets can ever be sold back to markets
- More signs emerged that the coronavirus outbreak is slowing in hard-hit areas, with the U.S., Italy and U.K. showing smaller gains in new cases. China reported its sixth straight day without a fatality. Hong Kong extended social distancing measures, even as infections have dropped off
- Southern U.S. states moved to open their economies, though the nation’s top infectious disease expert warned that relaxing restrictions too soon could cause even more harm
- The U.S. is seeking details about Kim Jong Un’s health after receiving information that the North Korean leader was in critical condition after undergoing cardiovascular surgery last week, a U.S. official said. CNN had earlier reported, citing a U.S. official with direct knowledge of the matter, that Kim may be in “grave danger” after the surgery
- The Reserve Bank of Australia said it’s likely smaller and less frequent purchases of government bonds would be required if economic and market conditions continued to improve, according to minutes of its April 7 meeting
- South Korea’s exports plunged this month so far, underscoring the hit to global trade caused by lockdowns to combat the global coronavirus pandemic. Exports slid 27% during the first 20 days of April from a year earlier, the Korea Customs Service said in a statement Tuesday. Shipments to the country’s biggest trading partner, China, dropped 17%. Semiconductor sales fell 15%
- President Donald Trump said he wants to add as much as 75 million barrels of oil to the nation’s Strategic Petroleum Reserve, taking advantage of record low prices for crude, and that he’ll consider blocking imports of crude from Saudi Arabia
- President Donald Trump said he’ll sign an executive order temporarily suspending immigration into the United States as the country tries to contain the spread of the coronavirus
Asian equity markets were negative across the board following the weak handover from Wall St where sentiment was subdued. Oil markets drew a lot of attention after WTI crude futures plunged and the May contract turned negative for the first time in history, briefly resulting to losses of over 300% and lows of around USD -40/bbl. This was due to the ongoing supply glut and filling storage culminating to a lack of buying interest on a contract which is due for settlement today. Note, the more widely-traded June contract remained above USD 20/bbl throughout the chaos and the May contract gradually returned to positive territory. ASX 200 (-2.5%) weakened with focus on corporate updates including mixed quarterly production numbers from BHP which subsequently weighed on the mining giant and with Virgin Australia going into voluntary administration in an effort to recapitalize amid the government’s refusal for a bailout. Nikkei 225 (-2.0%) was pressured by the flows into the currency and the KOSPI (-1.0%) was initially among the worst hit amid uncertainty regarding the geopolitical climate for the Korean peninsula after reports that North Korea leader Kim was in grave danger following cardiovascular surgery which boosted defence stocks, although South Korea have denied the reports of Kim’s condition. Elsewhere, Hang Seng (-2.1%) and Shanghai Comp. (-0.9%) also traded lower with underperformance in Hong Kong after social distancing restrictions were extended for 14 days and after the recent sovereign rating downgrade by Fitch. Finally, 10yr JGBs were choppy with initial gains seen amid the risk averse tone and similar upside in T-notes but with price action only mild as participants also digested mixed results from the 20yr JGB auction which saw a lower b/c and wider tail in price.
Top Asian News
- Genting Plans Unprecedented Pay Cut as Virus Shuts Casinos
- Oil’s Slide Favors India’s Bonds Versus Indonesia, JPMorgan Says
- Debt Monetization Is Creeping Closer by the Day in New Zealand
- Virgin Australia Becomes First Asia Airline to Fail After Virus
Europe has latched onto the downbeat lead from the Asia-Pac session (Euro Stoxx 50 -2.1%), as oil markets continue to crater whilst stock also weighs the COVID-19 impact on large-cap earnings. US equity futures fare slightly better than its counterparts across the pond – with the prospect of another State-side stimulus package potentially providing some support. Broader sectors are lower across the board and point towards risk aversion. Energy underperforms amid the depressing performance in the crude complex, whilst the breakdown has Oil & Gas as the marked laggard, closely following by Basic Resources and Banks. In terms of individual movers, SAP (-2.3%) fell post earnings after cutting its FY total revenue guidance alongside its FCF guidance, adding to the woes for the IT sector after IBM earnings overnight. The company expects a deterioration in Q2 before gradual improvement in Q3 and Q4. PSA (-0.5%) remains subdued by its respective update in which it sees European car sales -25% and China -10% in FY20. Richemont (-3.0%) and Swatch (-2.9%) bear the brunt of Swiss watch sales slumping over 20% YY.
Top European News
- Italy Vows to Reopen as Europe Takes Steps to Ease Virus Curbs
- U.K. Takes Heart on Slowing Death Toll With Parliament Returning
- SAP Ends Co-CEO Role After Virus Brought Leadership Problem
In FX, it remains to be seen whether the Kiwi and Aussie fall prey to the phenomenon of ‘turnaround Tuesday’, but for now the tide has certainly changed markedly as RBNZ Governor Orr reiterated dovish guidance overnight and the option of more stimulus at the May policy meeting, while his RBA counterpart delivered a daunting economic outlook to compound a sharp decline in wages and the stats bureau publishing figures for March 14-April 4 revealing a 6% drop in employment. In response, Nzd/Usd is back below 0.6000 and Aud/Usd is under 0.6300 again, while the Aud/Nzd cross pivots 1.0500. For the record, RBA minutes did not really impact even though scaling back QE was mentioned if conditions improve. Elsewhere, Loonie losses are accumulating almost in lock-step with oil prices, as WTI and Brent lose grip of Usd12 and Usd19/brl handles respectively in the June contracts after Monday’s May capitulation, with Usd/Cad up through 1.4200 and eyeing 1.4250 ahead of Canadian retail sales data.
- USD/JPY - The Yen is marginally eclipsing the Dollar as safe-haven currency of choice amidst renewed risk-off positioning and the ongoing rout in crude markets, as Usd/Jpy edges towards 107.00 and the DXY tests resistance above 100.00 around 100.300 again that has been rejected a couple of times in recent sessions.
- NOK/GBP/SEK/CHF/EUR - No shock that the Norwegian Krona, Russian Rouble and Mexican Peso are all underperforming alongside oil, but broader risk asset contagion is also weighing heavily on the likes of the Swedish Crown, British Pound and even Swiss Franc. Indeed, better than expected jobs data and a wider trade surplus have been largely ignored, while the Euro has only derived partial encouragement from the latest German ZEW survey showing some signs of improvement in sentiment to counter the steep deterioration in current conditions. Eur/Nok has been up above 11.5900, Usd/Rub as high as 77.2400+, Usd/Mxn over 24.3000, while Eur/Sek straddles 10.9000, Cable gives up another big figure at 1.2400 and breaches the 21 DMA (1.2357), Usd/Chf rebounds from sub-0.9700 to circa 0.9715 and Eur/Usd rotates either side of 1.0850.
- EM - Contrasting fortunes for the Zar and Hkd as the Rand weakens on more SA financial strain given a missed loan payment by the Land and Agricultural Development Bank, while the HKMA has sold Hong Dollars to maintain the peg for the first time in over 4 years despite yesterday’s ratings downgrade by Fitch.
In commodites, WTI and Brent June contracts are posting unprecedented losses. Attention remains on the oil market since yesterday WTI May crude futures plunged to negative territory for the first time in history, briefly resulting to losses of over 300% and lows of around USD -40/bbl. This was sparked by the ongoing supply glut and filling storage culminating to a lack of buying interest on the contract which is due for expiry later today. The volatile price action followed through to today’s trade with WTI June contracts -42% at one point, and Brent down over 25% - with the former dipping below USD 12/bbl, to trigger a 2-minute circuit breaker and the latter residing sub-20/bbl. Russia’s Kremlin emerged amid the volatile action and downplayed the moves in the oil market, stating that its speculation sparked the movements. Kremlin also stated talks between OPEC+ members can be set up if needed; Moscow has all reserves it needs to offset weak oil prices. Meanwhile yesterday, WSJ citing sources noted that Saudi is mulling applying the agreed-upon oil cuts as soon as possible instead of waiting until May 1st. Elsewhere, today will see the second official Texas Railroad Commission (RRC) meeting, where the Texas regulatory agency is expected today to provide more colour on its stance regarding potential oil production curtailment in the state. However, the RRC is reportedly unlikely to vote on a plan to mandate oil production cuts for Texas at the Tuesday meeting, according to Energy Intel citing sources. As a reminder, the meeting last week saw disagreement on whether cuts should be implemented or not, with larger producers mostly arguing for market-driven declines, and smaller players supportive of cuts. Elsewhere, spot gold trades relatively flat and meanders just south of USD 1700/oz. Copper prices meanwhile track sentiment and the downside in stocks, with the red metal now below USD 2.25/lb.
US Event Calendar
- 10am: Existing Home Sales, est. 5.25m, prior 5.77m
- 10am: Existing Home Sales MoM, est. -9.01%, prior 6.5%
Just a thought, with the total crash in #crudeoil, the status of the U.S. Dollar erodes as the World's reserve currency and so does the Petro Dollar? Saudi Arabia collapses because of debt levels and no more petro cash flow from the west? OPEC and the middle east could become rather unstable? Russia and OPEC appear to be winning the #crudeoilcrash war?
It would be impossible to say that the price of #WTI could trade at $0.00, so is it possible that the world's stock markets pull a #WTI scenario, and the #DowJonesIndustrialAverage goes to $0.00? What would the World's Economy look like if the #S&P500 went to $0.00 or went negative like $WTI did today? Is it possible for global stock markets to go -negative, Crude oil did, so could stocks?
Is WWIII right around the corner? Welcome to the new economy?
WTI Crude Plummets On Weak Demand And Dwindling Capacity To Store Crude
May WTI crude oil (CLK20) this morning is down -9.49 (-51.94%), Jun Brent crude oil (CBM20) is down -1.41 (-5.02%), and May RBOB gasoline (RBK20) is down -0.0006 (-0.08%).
Crude oil prices are sharply lower today with May WTI crude at a record nearest-futures low (data from 1983). The Jun WTI crude oil contract fell to a 1-month low and Brent crude fell to a 2-week low. Crude prices are under pressure today due to demand destruction from the coronavirus pandemic, excess inventories, and dwindling capacity in global storage facilities.
The front-month May WTI crude futures contract is feeling the brunt of today's plunge in crude prices as funds roll positions ahead of tomorrow's expiration of the May WTI crude oil contract. The U.S. Oil Fund, which accounts for nearly 25% of all outstanding May WTI futures contracts, conducted its normal monthly roll by liquidating its May position and rolling the position to June and July contracts. The May WTI crude contract is currently trading more than $14 per barrel below the Jun WTI contract.
The glut of global crude oil caused by demand destruction from the pandemic is quickly filling up global storage facilities. Crude stockpiles at Cushing, the delivery point for WTI futures, has jumped 48% to nearly 55 million bbl since the end of February, according to EIA data. Cushing currently has a working storage capacity of only 76 million bbl as of September 30, according to the EIA.
A supportive factor for crude is today's surge in the crack spread to a 1-3/4 year high, which encourages refiners to purchase crude to refine into gasoline.
Last Friday's weekly data from Baker Hughes was bullish for crude as it showed active U.S. oil rigs in the week ended Apr 17 fell by another -66 rigs to a 3-1/2 year low of 438 rigs.
Today's monthly economic report from the German Bundesbank was pessimistic for economic growth prospects and energy demand. The report said that despite the easing of containment measures to slow the spread of the coronavirus, substantial restrictions will probably remain until a medical solution is found and therefore "a rapid and strong economic recovery seems unlikely from the current perspective."
Today's global economic data was negative for energy demand and bearish for crude prices. The U.S. Mar Chicago Fed national activity index fell -4.25 to an 11-year low of -4.19, weaker than expectations of a decline to -3.00. Also, the UK Apr Rightmove house prices rose +2.1% y/y, the smallest pace of increase in 4 months. In addition, Japan Mar exports fell -11.7% y/y, weaker than expectations of -9.4% y/y and the biggest decline in 3-1/2 years.
Last Wednesday’s weekly EIA data showed that U.S. crude oil inventories as of Apr 10 were +6.2% above the seasonal 5-year average, gasoline inventories were +12.1% above the 5-year average, and distillate inventories were -7.0% below the 5-year average. U.S. crude production in the week ended Apr 10 fell -0.8% w/w to 12.3 million bpd, down by -6.1% from Feb's record-high of 13.1 million bpd.
#OILPRICE- Oil Price Goes Negative As Industrial and Consumer Demand Collapses; Stocks Dip WTI is Crashing as Global Economy Sinks in Economic Depression. Is it ok to use the "D" word?
Negative -GDP next for Q1 and Q2+? Q1 Earnings starting to roll in this week, it doesn't look good? Downward guidance everywhere.
Stocks are tanking with economic depression currently unfolding, welcome to the United States of Zimbabwe, with Hyperinflation on its way?
Gold Bullion Looking good! Gold Jun '20 (GCM20)1,705.5 +6.7 (+0.39%)
NEW YORK (AP) — Oil prices plunged below zero on Monday as demand for energy collapses amid the coronavirus pandemic and traders don’t want to get stuck owning crude with nowhere to store it.
Stocks were also slipping on Wall Street in afternoon trading, with the S&P 500 down 0.9%, but the market’s most dramatic action was by far in oil, where benchmark U.S. crude for May delivery plummeted to negative $3.70 per barrel, as of 2:15 pm. Eastern time.
Much of the drop into negative territory was chalked up to technical reasons — the May delivery contract is close to expiring so it was seeing less trading volume, which can exacerbate swings. But prices for deliveries even further into the future, which were seeing larger trading volumes, also plunged. Demand for oil has collapsed so much due to the coronavirus pandemic that facilities for storing crude are nearly full.
Tanks could hit their limits within three weeks, according to Chris Midgley, head of analytics at S&P Global Platts.
Benchmark U.S. crude oil for June delivery, which shows a more ”normal” price, fell 14.8% to $21.32 per barrel, as factories and automobiles around the world remain idled. Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it’s not enough.
“Basically, bears are out for blood,” analyst Naeem Aslam of Avatrade said in a report. “The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut.”
Halliburton swung between gains and sharp losses, even though it reported stronger results for the first three months of 2020 than analysts expected. The oilfield engineering company said that the pandemic has created so much turmoil in the industry that it “cannot reasonably estimate” how long the hit will last. It expects a further decline in revenue and profitability for the rest of 2020, particularly in North America.
Brent crude, the international standard, was down $1.78 to $26.30 per barrel. .
In the stock market, the mild drops ate into some of the big gains made since late March, driven lately by investors looking ahead to parts of the economy possibly reopening as infections level off in hard-hit areas. Pessimists have called the rally overdone, pointing to the severe economic pain sweeping the world and continued uncertainty about how long it will last.
The Dow Jones Industrial Average was down 364 points, or 1.5%, to 23,887. The Nasdaq was down 0.1%..
More gains from companies that are winners in the new stay-at-home economy helped limit the market’s losses Amazon rose 1.4%, and Netflix jumped 3.8% as people shut in at home buy staples and look to fill their time. Clorox likewise rose toward a new record and was up 1% as households and businesses that remain open look to stay clean.
In Tokyo the Nikkei 225 fell 1.1% after Japan reported that its exports fell nearly 12% in March from a year earlier as the pandemic hammered demand in its two biggest markets, the U.S. and China.
The Hang Seng index in Hong Kong lost 0.2%, and South Korea’s Kospi fell 0.8%.
European markets were modestly higher The German DAX was up 0.5%, the French CAC 40 was up 0.7% and the FTSE 100 in London gained 0.7%.
In a sign of continued caution in the market, Treasury yields remained extremely low. The yield on the 10-year Treasury slipped to 0.64% from 0.65% late Friday. It started the year near 1.90%. Bond yields drop when their prices rise, and investors tend to buy Treasurys when they’re worried about the economy.
Stocks have been on a generally upward swing recently, and the S&P 500 just closed out its first back-to-back weekly gain since the market began selling off in February. Promises of massive aid for the economy and markets by the Federal Reserve and U.S. government ignited the rally, which sent the S&P 500 up as much as 28.5% since a low on March 23.
More recently, countries around the world have tentatively eased up on business-shutdown restrictions put in place to slow the spread of the virus.
But health experts warn the pandemic is far from over and new flareups could ignite if governments rush to allow ”normal” life to return prematurely.
The S&P 500 remains about 15% below its record high in February as millions more U.S. workers file for unemployment every week amid the shutdowns.
Many analysts also warn that a significant part of the recent recovery in stocks is due to the expectation among some investors that the economy will rebound sharply once economic quarantines are lifted. They’re essentially predicting that a line chart of the economy will ultimately resemble the letter “V,” with a wild ride down but then a quick pivot to a vigorous recovery.
That may be to optimistic. “We caution that a U-shaped recovery is also quite likely,” where the economy bottoms out and stays at that low level for a while before recovering, strategists at Barclays warned in a recent report.
Without strong testing programs for COVID-19, businesses likely won’t feel comfortable bringing back their full workforces for a while.
”With risk assets now overbought, the chance for a correction has increased,” Morgan Stanley strategists wrote in a report.
Precious Metals Close Higher On Weak Stocks And The Outlook For Additional Central Bank Stimulus
Precious metals on Monday settled higher as a decline in stocks boosted safe-haven demand for precious metals. Also, the actions by global central banks to cut interest rates and expand stimulus measures continues to boost demand for gold as a store of value.
A plunge in crude oil prices on Monday undercut energy stocks and weighed on the overall equity market, which in turn supported safe-haven demand for gold. Pandemic concerns are also weighing on stocks after Anthony Fauci, the top infectious disease expert on the White House coronavirus task force, said on Monday that lifting stay-at-home orders early may backfire and the U.S. economy won't recover until the coronavirus is "under control." The World Health Organization (WHO) also warned on Monday that countries that were "lifting lockdown restrictions should know that this is not the end of the epidemic in any country, it's just the beginning of the next phase."
Gold prices also pushed higher Monday on the likelihood of additional U.S. loan stimulus after Treasury Secretary Mnuchin on Sunday said U.S. lawmakers are close to an agreement that would add as much as $450 billion to a U.S. loan program for small businesses along with aid to hospitals and for coronavirus testing.
In a supportive factor for gold, the People's Bank of China (PBOC) on Monday announced a -20 bp cut in the benchmark 1-year loan prime rate (LPR) to 3.85% from 4.05% and a -10 bp cut in the 5-year loan prime rate to 4.65%.
The prospects for additional stimulus from the Bank of England (BOE) is also supportive for gold. The UK government's extension of its stay-at-home measures for an additional 3 weeks will force the government to expand stimulus measures even further. The UK's Office of Budget Responsibility (OBR) projects a 218 billion pound increase in borrowing costs above its March budget forecast of 55 billion pounds, leaving the overall deficit at 14% of GDP in 2020/21.
Monday's monthly economic report from the Bundesbank boosted gold prices but was negative for silver. The report said substantial restrictions on business activity will probably remain in place until a medical solution to the coronavirus is found and therefore "a rapid and strong economic recovery seems unlikely from the current perspective."
Fund buying of gold continues as long positions in gold ETFs rose for a 20th consecutive session last Friday to a record 2,928.39 MT, the highest since the data series began in 2002. The global pandemic has fueled physical demand for gold as 142,000 ounces of American Eagle coins were purchased in March, the most in 3 years.
Monday's global economic data was mostly supportive for gold but negative for industrial metals demand and silver prices. Japan Mar exports fell -11.7% y/y, weaker than expectations of -9.4% y/y and the biggest decline in 3-1/2 years. Also, the U.S. Mar Chicago Fed national activity index fell -4.25 to an 11-year low of -4.19, weaker than expectations for a decline to -3.00.
Precious metal prices continue to see underlying safe-haven demand on the global coronavirus pandemic. Confirmed cases of the virus have risen above 2.42 million globally with deaths exceeding 166,000.
Slack prices pressures are negative for gold demand as an inflation hedge after Monday's data showed German Mar PPI fell -0.8% y/y, right on expectations but still the steepest pace of decline in 3-1/2 years.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs rose to a new all-time high of 2,928.39 MT last Friday, the highest since the data series began in 2002. Also, long silver positions in ETFs rose to a new record high of 673.006 million ounces last Friday.
Look at this Weekly Chart, Find the 50% Rally back place after the first leg down \ crash. Are we now at the place on this chart that points to the Bear Flag - Dead Cat Bounce (Gained Retraced 50%)? Look what happens next in 1930, the Dow then crashes from 300 to 50 into 1932 -1933? Lookout below?
Be Very Careful with this 50% Rally back in the DOWI$. Huge Bear Flag, Dead Cat Bounce? The next Big Leg \ wave down is pending? Look at the weekly DOWI$ chart Big wave down pending in stock prices? Support always becomes resistance!
Is the Dow Jones Industrial Average going to lose 89% like it did from 1929 - 1932? Dow Jones next price level $14,500, then big 50% rally back after it loses 50% from $30,000? Then the Big Economic Depression begins and the Dow goes to $3,000 or a 89% total loss?
Some are saying that this Economic Depression will be 4X worse than the 1929 Economic Depression!
Q1 Earnings do not look good, economy not opening anytime soon? Negative interest rates next?
Gold Reaches 7-1/2 Year High On Expectations For More Central Bank Stimulus =Hyperinflation in the future?
Time to be a Big Gold Bug? Central Banks are buying Gold Bullion, consumers are purchasing Toilet Paper!
Jun Comex gold (GCM20) on Tuesday closed up +7.5 (+0.43%), and May silver (SIK20) closed up +0.593 (+3.82%).
Precious metals prices on Tuesday pushed higher with Jun gold at a contract high and nearest-futures Apr at a 7-1/2 year high. Also, silver prices climbed to a 1-month high. A weaker dollar on Tuesday along with expectations of additional global stimulus measures sparked buying of precious metals.
The dollar index on Tuesday tumbled to a 2-week low, which is bullish for precious metals prices.
Tuesday's action by the International Monetary Fund (IMF) to cut its global 2020 GDP forecast to a contraction of -3.0% from a Jan estimate of an expansion of +3.3% was bullish for gold prices but negative for silver. Expectations for weaker growth are dovish for Fed policy and may prompt the Fed to further expand its balance sheet with QE operations, which is bullish for gold as a store of value.
Ramped-up asset purchases by the ECB are also bullish for gold as the ECB bought 36.9 billion euros ($40.3 billion) of bonds last week. The ECB may purchase up to 1.1 trillion euros of debt this year as it boosts its QE measures in an attempt to support the pandemic-stricken Eurozone economy.
Fund buying of gold continues as long positions in gold ETFs rose for a 16th consecutive session on Monday to a record 2,893.05 MT, the highest since the data series began in 2002. The global pandemic has fueled physical demand for gold as 142,000 ounces of American Eagle coins were purchased in March, the most in 3 years.
Precious metal prices continue to see underlying safe-haven demand as the global coronavirus pandemic continues. Confirmed cases of the virus have risen above 1.98 million globally with deaths exceeding 125,000.
Gold prices fell back from their best levels Tuesday on comments from Chicago Fed President Evans who said he expects inflationary pressures to be low due to the economic downturn and that he is more worried about too-low inflation than too-high inflation.
Gold prices were undercut by slack U.S. price pressures after Tuesday's data showed Mar import prices fell -4.1% y/y, better than expectations of -5.0% y/y but still the steepest pace of decline in 3-3/4 years.
Silver prices garnered some support Tuesday from stronger-than-expected Chinese trade data, which was supportive for industrial metals demand. China Mar exports fell -6.6% y/y, stronger than expectations of -13.9% y/y. Mar imports fell -0.9% y/y stronger than expectations of -9.8% y/y.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs rose to a new all-time high of 2,893.05 MT Monday, the highest since the data series began in 2002. Also, long silver positions in ETFs rose to a new record high of 657.843 million ounces Friday.
Stocks Rally Sharply On Strength In Tech Stocks And Hopes The Pandemic Is Slowing
The S&P 500 Index ($SPX) on Tuesday closed up +3.06%, the Dow Jones Industrials Index ($DOWI) closed up +2.39%, and the Nasdaq 100 Index ($IUXX) closed up +4.31%.
U.S. stock indexes on Tuesday rallied sharply with the S&P 500 and Nasdaq 100 at 5-week highs and the Dow Jones Industrials at a 1-month high. Strength in technology stocks was supportive for the overall market on Tuesday. Also, signs that the spread of the coronavirus may be slowing in Europe boosted European stocks and provided carry-over support for U.S. stock indexes.
Apple gained +4.8% on Tuesday and led a rally in technology stocks. Apple rose after the China Academy of Information and Communications Technology, a government think tank, reported that Apple iPhone shipments in China jumped 19% y/y in March to 2.5 million units, recovering from a -60% y/y plunge in February when much of China's economy was closed.
U.S. stocks had carry-over support from Tuesday's +0.86% rally in the Euro Stoxx 50 to a 1-month high on signs the spread of the coronavirus may be receding, which may allow parts of Europe to reopen from the lockdown. Spain reported its fewest new coronavirus cases in more than 3 weeks and Germany reported a drop in new cases of the virus for the fifth consecutive day. Confirmed cases of the coronavirus have risen above 1.98 million globally with deaths exceeding 125,000.
Weak U.S. price pressures are dovish for Fed policy and positive for stocks after Tuesday's data showed U.S. Mar import prices fell -4.1% y/y, better than expectations of -5.0% y/y but still the steepest pace of decline in 3-3/4 years.
Stocks also found support on Tuesday's comments from Atlanta Fed President Bostic that suggest he favors additional Fed easing measures when he said, "this is unprecedented times that require dramatic action" and Fed policy is most effective "if we go big."
Stronger-than-expected Chinese trade data on Tuesday was supportive for the global economy and stock prices after the China Mar trade surplus of +$19.90 billion was slightly narrower than expectations of +$20.00 billion and the smallest trade balance in 11 months. Mar exports fell -6.6% y/y, stronger than expectations of -13.9% y/y. Mar imports fell -0.9% y/y stronger than expectations of -9.8% y/y.
Stocks were undercut when the International Monetary Fund (IMF) on Tuesday cut its global 2020 GDP forecast to a contraction of -3.0% from a Jan estimate of an expansion of +3.3%. The IMF predicts the "Great Lockdown" will push the global economy this year into its deepest recession since the Great Depression.
Weakness in bank stocks on Tuesday was a bearish factor for the overall market. JPMorgan Chase closed down -2.9% Tuesday and Wells Fargo fell -4.2% after both banks posted their highest loan-loss provisions in a decade in Q1 from the unprecedented economic shutdown caused by the coronavirus pandemic.
The VIX S&P 500 Volatility Index ($VIX) on Tuesday dropped to a 3-week low of 37.31 and finished the day down -3.41 at 37.76. The VIX has fallen sharply from the 11-1/4 year high of 85.47 posted on March 18.
The rally back continues in the the stock market while the economic data being released is getting worse? Whats up with this price action? Almost to a fifty percent (50%) rally back from the crash lows set just a few weeks ago on March 23, 2020! That 50% rally back has a lot of history, The same rally back happened in 1930, then the Big Plunge in a 89% crash for stocks into 1932. What would Jessie Livermore think right about now?
Now is decision time for most of the investors and traders on the planet. Stay long the stock markets and pray that the Fed central banks and new fiscal policy has saved the global stock markets? Or sell into the rally and prepare for massive QE, bailouts and Super Hyperinflation?
Look at the price of Gold, Gold Jun '20 (GCM20) 1,734.8 +50.5 (+3.00%) Gold looks like it wants to goto $5,000 per ounce? Gold is a Strong Buy on it's long term trend! In this type of economy (economic depression), "Gold is Never to High to Buy"!
Stocks Close Higher On Expectations For Additional Stimulus
The S&P 500 Index ($SPX) on Wednesday closed up +3.41%, the Dow Jones Industrials Index ($DOWI) closed up +3.44%, and the Nasdaq 100 Index ($IUXX) closed up +2.24%.
U.S. stock indexes on Wednesday closed sharply higher as U.S. lawmakers push for additional fiscal rescue plans to provide relief to the U.S. economy. Also, stocks garnered support on hopes that the coronavirus may soon peak, which could allow the U.S. economy to reopen sooner than earlier thought.
House Speaker Pelosi said Tuesday night that Democrats will propose a fourth coronavirus rescue plan of at least $500 billion, with $250 billion in aid to small businesses, $100 billion for hospitals, and $150 billion for state and local governments.
Stocks also moved higher today on hopes the U.S. economy can reopen sooner than earlier thought. President Trump said late Tuesday that his administration is developing plans to reopen parts of the country that haven't been hit by the coronavirus, while keeping "hot spots' such as New York and New Orleans shuttered for longer.
Stock gains accelerated Wednesday afternoon after Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, said the start of a turnaround in the fight against the coronavirus could come after this week. Confirmed cases of the coronavirus have risen above 1,490,000 globally with deaths exceeding 87,000.
Strength in energy stocks was also supportive for the overall market Wednesday after May WTI crude oil rallied by more than +6% on optimism that OPEC+ will agree to cuts in crude production.
A negative for U.S. stocks is concern about a weak stimulus response in Europe. Union finance ministers failed to agree on a 500 billion euro ($543 billion) coronavirus rescue package after a marathon 16-hour teleconference on Tuesday. Talks will reportedly continue. The main sticking point is reportedly a dispute between the Netherlands and Italy over the conditions attached to the potential use of credit lines from the Eurozone's bailout fund to finance the spending needed to counter the economic effects of the coronavirus pandemic.
Also, earlier optimism faded that the coronavirus may have peaked in Europe after Spain said fatalities from the coronavirus on Wednesday rose to their highest in four days, infections in Germany increased by the most in three days, and Belgium had its deadliest day of the outbreak.
Stocks fell back from their best levels Wednesday after Chicago Fed President Evans said the economic downturn will be deep from the coronavirus outbreak and the U.S. economy will be less prosperous coming out of the crisis.
The minutes of the emergency Mar 15 FOMC meeting stated that policy makers saw risks pointing to the downside with an "extremely large degree" of outlook uncertainty that warranted a "forceful" response.
The VIX S&P 500 Volatility Index ($VIX) on Wednesday fell to a 2-week of 42.53 and finished the day down -3.35 to 43.35. The VIX has fallen sharply from the 11-1/4 year high of 85.47 posted on March 18.
The Bear Market Rally always appears to be a very strong upward "against" the Down trend! The Dow Jones has now had close to a 50% rally back from its low around 18k to 23-24 K. Lookout below? Dow Jones 30k, then 18K, then rally back to 24K, if Dow Jones closes below 18K, then next stop is 14k then another rally back, then the big crash to Dow Jones 3k?
What individuals are purchasing stocks at this time? Those that knew that the stock market was going to crash and central banks are purchasing stocks in the stock market. The bear market short covering rally? This blog did predict the rally back, however is this short term momentum going to continue? The stock market rally back going to fail and the Dow Jones Industrial Average pulls a "L" recovery and eventually loses 89% of it's value and goes to 3,000 on the Dow Jones like it did from 1929 to 1932-1933? Time will tell. Stay tuned for momentum updates! Sell the Rally or Buy the Dip?
Stocks Extend Monday's Rally On Hopes The Pandemic's Peak May Be Nearing
The S&P 500 Index ($SPX) this morning is up +1.89%, the Dow Jones Industrials Index ($DOWI) is up +2.39%, and the Nasdaq 100 Index ($IUXX) is up +0.84%.
U.S. stock indexes this morning have extended Monday's rally with the S&P 500 and Dow Jones Industrials at 3-1/2 week highs and the Nasdaq 100 at a 4-week high. Global stock markets are moving higher today on hopes that the pandemic in hotspots may be slowing. Italy, France and Germany today announced lower numbers of new coronavirus cases, and China reported no new deaths for the first time since the pandemic emerged, although Spain did report an uptick in deaths. Confirmed cases of the coronavirus have risen above 1,370,000 globally with deaths exceeding 76,000.
Comments today from White House adviser Kudlow were bullish for stocks when he said credit markets look much better today than two weeks ago and that "the president would like to reopen the economy as soon as he can, and we are planning internally."
U.S. stock indexes fell back from their best levels this morning after New York reported 731 daily deaths from the coronavirus, the single-largest daily number of deaths, raising the total to 5,489 from 4,758.
Today's global economic data was mostly positive for economic growth prospects and bullish for stocks. U.S. Feb JOLTS job openings fell -130,000 to 6.882 million, which showed a stronger labor market than expectations for a larger decline to 6.500 million. Also, German Feb industrial production unexpectedly rose +0.3% m/m, stronger than expectations of -0.8% m/m. In addition, Japan Feb household spending fell -0.3% y/y, stronger than expectations of -3.4% y/y.
The VIX S&P 500 Volatility Index ($VIX) today is up +1.41 at 46.65. On Monday the VIX fell to a 2-week low of 43.45 and is well below the 11-1/4 year high of 85.47 posted on March 18.
Stocks Settle Lower On Uncertainty Over Length Of Partial U.S. Economic Shutdown
The S&P 500 Index ($SPX) on Tuesday closed down -1.60%, the Dow Jones Industrials Index ($DOWI) closed down -1.84%, and the Nasdaq 100 Index ($IUXX) closed down -0.96%.
U.S. stock indexes on Tuesday gave up an early advance and moved lower on uncertainty about how long the U.S. economy will remain in a partial lockdown as the coronavirus pandemic has yet to peak. Month-end and quarter-end selling by money managers added to losses in stocks on Tuesday.
Another negative factor for stocks Tuesday was Goldman Sachs' revised forecast for U.S. Q2 GDP to contract by -34% (q/q annualized), worse than its previous estimate of -24%.
Stock losses accelerated Tuesday afternoon on comments from San Francisco Fed President Daly who said, "if we are not already in a recession right now, we will be, and I expect that we already are."
U.S. stock indexes on Tuesday moved higher early with the Nasdaq 100 at a 2-week high on stronger-than-expected economic data along with hopes for a new Washington rescue package to combat the negative economic developments from the coronavirus pandemic.
U.S. lawmakers are moving toward a fourth rescue package to get the U.S. economy through the coronavirus pandemic. The White House has compiled a list of requests from government agencies totaling about $600 billion, including state aid and financial assistance for mortgage markets and travel industries. House Speaker Pelosi said Monday night that Democrats are "collecting information and taking inventory" on what might be needed in another rescue package.
An upbeat assessment from the World Health Organization (WHO) was briefly positive for stocks after the WHO said there are signs of some stabilization in Europe's coronavirus outbreak. Also, Anthony Fauci, the U.S. government's top infectious disease export, said today that he's starting to see "glimmers" that social distancing may be slowing the path of the virus, though he warned the situation remains dangerous. Globally, confirmed cases of the virus have risen above 842,000 and deaths have exceeded 418,000.
China's stronger-than-expected PMI reports Monday night were supportive for global stocks. China's Mar manufacturing PMI rose +16.3 to 52.0, stronger than expectations of +9.1 to 44.8 and the strongest pace of expansion in 2-1/2 years. Also, the Mar non-manufacturing PMI rose +22.7 to 52.3, stronger than expectations of 12.4 to 42.0. However, China's Bureau of Statistics warned that the single-month data didn't mean the economy has returned to normal.
Other global economic data on Tuesday was mostly supportive for stocks after German Mar unemployment rose +1,000, showing a stronger labor market than expectations of +25,000. Also, Eurozone Mar CPI rose +0.7% y/y, weaker than expectations of +0.8% y/y and the slowest pace of increase in 5 months, which was dovish for ECB policy. In addition, Japan Feb industrial production rose +0.4% m/m, stronger than expectations of unch m/m.
Tuesday's U.S. economic data was mostly better-than-expected and was supportive for stocks. The Conference Board's U.S. Mar consumer confidence index fell -12.6 to a 2-3/4 year low of 120.0, which was stronger than expectations for a decline to 110.0. Also, the Mar Chicago PMI fell -1.2 to 47.8, stronger than expectations of -9.0 to 40.0. Conversely, the Jan S&P CoreLogic composite-20 home price index rose +0.3% m/m and +3.1% y/y, slightly weaker than expectations of +0.4% m/m and +3.2% y/y.
The VIX S&P 500 Volatility Index ($VIX) on Tuesday fell -3.54 to 53.54. The VIX last Tuesday tumbled to a 2-week low of 36.24 from the 11-1/4 year high of 85.47 posted on March 18.
Stocks Close Sharply Lower On Concern The Pandemic May Last Longer Than Initially Feared-Lot of Uncertainty in the World's Stock Markets.
Selling of the Rally into Bear Market Bear Flags! 1929 all over again?
The S&P 500 Index ($SPX) on Friday closed down -3.37%, the Dow Jones Industrials Index ($DOWI) closed down -4.06%, and the Nasdaq 100 Index ($IUXX) closed down -3.91%.
U.S. stock indexes on Friday moved sharply lower on concern the coronavirus pandemic may last longer than earlier expected, which would do even more damage to the U.S. economy. Cases of the coronavirus in the U.S. have now surpassed China as the U.S. now has 96,968 confirmed cases, compared with China's 81,340. Globally, confirmed cases of the coronavirus have risen above 585,000 with deaths exceeding 26,000. The coronavirus shows no signs of slowing as it took 67 days to reach the first 100,000 reported cases. Since then, the next 100,000 jump from 400,000 to 500,000 cases took just 48 hours.
Stock indexes recovered from their worst levels Friday after the House of Representatives voted to pass the $2 trillion rescue package and President Trump signed it into law.
A -4% plunge in the Euro Stoxx 50 on Friday also undercut U.S. stock index as European leaders were unable to agree on the idea of issuing jointly-liable coronabonds, a shared debt instrument to finance borrowing. Germany is resisting calls to mutualize debt, warning against unrealistic expectations.
Upbeat comments on Friday from Atlanta Fed President Bostic were supportive for stocks when he said strains in some markets seem to be easing and the economy may rebound quite robustly after a "substantial contraction" in Q2.
New stimulus measures from global central banks are also supportive for stock prices. On Friday, the Bank of India (RBI) cut interest rates and the Bank of Canada (BOC) cut interest rates and expanded its QE measures. Also, the Bank of England (BOE) said Friday that it will expand its pace of bond purchases next week.
Friday's U.S. economic data was mixed for stocks after Feb personal income rose +0.6%, stronger than expectations of +0.4%. Also, Feb personal spending rose +0.2%, right on expectations. Conversely, the final-March University of Michigan U.S. consumer sentiment index fell by -6.8 points from early-March to a 3-1/4 year low of 89.1, weaker than expectations of -5.9 to 90.0 and leaving the index down by a total of -11.9 points from February.
An uptick in U.S. prices pressures is a slight negative factor for stocks after the Feb PCE core deflator rose +1.8% y/y, stronger than expectations of +1.7% y/y and the fastest pace of increase in 14 months.
The VIX S&P 500 Volatility Index ($VIX) on Friday rose +4.54 to 65.54. The VIX on Tuesday tumbled to a 2-week low of 36.24 as it retreated from last Wednesday's 11-1/4 year high of 85.47.
Big Picture U.S. Stock Market Factors: Bearish factors for the U.S. stock market include (1) the severe damage being done to the global economy and corporate earnings by the coronavirus pandemic, (2) the sharp cut in expectations for S&P 500 earnings growth from pre-pandemic levels of +8% (earnings growth was +1% in 2018 and +23% in 2018), (3) severe stress on the global financial system, (4) ongoing U.S./Chinese trade and tech tensions despite the phase-one agreement, and (5) geopolitical risks from Iran, North Korea, and Venezuela. Bullish factors include (1) the aggressive fiscal and monetary stimulus measures being taken worldwide to battle the impact from the coronavirus, (2) reduced trade tensions after the U.S./China phase-one trade agreement, although most penalty tariffs remain in place and phase-two negotiations are scheduled to begin later in 2020, and (3) extremely low bond yields in the U.S., UK, and Eurozone.
Bottom of the Stock Market Crash set?; or is this a Dead Cat Bear Market rally going on?
Biggest surge in the Dow since 1933 probably doesn’t mark the bottom of this bear market?
Stocks Rally On Quick Senate Passage Of $2 Trillion Rescue Package, QE and Bailouts.
The S&P 500 Index ($SPX) this morning is up +3.75%, the Dow Jones Industrials Index ($DOWI) is up +4.25%, and the Nasdaq 100 Index ($IUXX) is up +3.22%.
U.S. stock indexes this morning are moving higher with the S&P 500 and Dow Jones Industrials at 1-1/2 week highs. Stocks are climbing today on expectations that the $2 trillion rescue package poised to pass Congress will help alleviate some of the damage on the U.S. economy from the corona virus pandemic. The markets were pleased that the Senate late Wednesday night passed the $2 trillion virus rescue package by a unanimous vote of 96-0 and the House will now vote on the package Friday.
Today's comments from Fed Chair Powell were positive for stocks as he reassured the market the Fed will keep credit flowing and said, "when it comes to lending we're not going to run out of ammunition."
U.S. stock indexes have continued support from the Fed's announcement on Monday of an unlimited QE program and additional measures to provide targeted lending to troubled sectors of the financial system and economy. Also, the dollar fell for a fourth day today to a 1-week low, which suggests that the Fed is having some success in easing the emergency demand for dollar liquidity around the world and calming the global financial system. The weaker dollar is also positive for stocks since it makes U.S. exports more competitive and boosts the value of repatriated overseas corporate earnings.
Today's action by the ECB to remove restrictions on the sovereign debt it can purchase under its emergency QE program also gave stocks a lift. The ECB today published the text of its 750 billion euro ($819 billion) Pandemic Emergency Purchase Program (PEPP), which stated that it will scrap the issuer limits on purchases of bonds and widen the scope of buying to include instruments with as little as 70 days left to maturity. This decision removed virtually all constraints on the ECB's asset purchases.
Market volatility remains elevated as the coronavirus pandemic continues to expand throughout the world. Confirmed cases of the virus have risen above 486,000 in 198 countries and territories with deaths exceeding 22,000.
Today's U.S. labor market data was negative for stocks after weekly initial unemployment claims surged +3.001 million to a record 3.283 million (data from 1967), showing a weaker labor market than expectations of 1.700 million.
Today's European economic data was negative for stocks after the German Apr GfK consumer confidence index fell by -5.6 points to a 10-3/4 year low of 2.7, weaker than expectations of a decline to 7.5. Also, UK Feb retail sales ex-auto-fuel fell -0.5% m/m, weaker than expectations of -0.2% m/m.
The VIX S&P 500 Volatility Index ($VIX) this morning is down -4.95 at 59.00. The VIX on Tuesday tumbled to a 2-week low of 36.24 as it retreated from last Wednesday's 11-1/4 year high of 85.47.
Careful with the Rally Back...Bear Market rally? Bear Flag? Stocks Rally Sharply On Optimism Congress Will Soon Pass A Rescue Bill
The S&P 500 Index ($SPX) this morning is up +7.01%, the Dow Jones Industrials Index ($DOWI) is up +7.99%, and the Nasdaq 100 Index ($IUXX) is up +6.38%.
U.S. stock indexes this morning are sharply higher on optimism that Congress will pass a rescue bill to combat the coronavirus pandemic that has shut down most of the world's economic activity. Senate Democratic leader Schumer met with Treasury Secretary Mnuchin into late Monday evening and said leaders expect to have a deal Tuesday morning. Stock gains accelerated this morning after House Speaker Pelosi said she is optimistic a fiscal stimulus plan can be reached "in a few hours."
Stocks also have carry-over support from Monday when the Fed announced that it could make unlimited securities purchases and announced several more measures for targeted lending to troubled sectors of the financial system. Also, the dollar is lower today, which suggests that the Fed is having success in easing the emergency demand for dollar liquidity around the world.
Confirmed cases of the coronavirus have risen above 392,000 in 196 countries and territories with deaths exceeding 17,000.
Today's global PMI manufacturing data showed overall weakness but was not as dire as initially feared. The U.S. Mar Markit manufacturing PMI fell -1.5 to 49.2, stronger than expectations of -7.2 to 43.5 but still a 10-1/2 year low. Also, the Eurozone Mar Markit manufacturing PMI fell -4.4 to a 7-1/2 year low of 44.8, which was not as bad as expectations for a decline to 39.0. In addition, the UK Mar Markit manufacturing PMI fell -3.7 to 48.0, stronger than expectations of -6.7 to 45.0.
Today's global PMI services reports were weaker-than-expected and were negative for economic growth prospects and for stocks. The U.S. Mar Markit composite PMI fell -9.1 to 40.5, the steepest pace of contraction since the data began in 2009. Also, the Eurozone Mar Markit composite PMI fell -20.2 to 31.4, weaker than expectations of -12.8 to 38.8 and the steepest pace of contraction since the data began in 1998. In addition, The UK Mar Markit/CIPS composite PMI fell -15.9 to 37.1, weaker than expectations of -8.0 to 45.0 and the steepest pace of contraction since the data began in 1998.
The VIX S&P 500 Volatility Index ($VIX) this morning tumbled to a 2-week low of 36.24 on the sharp rally in stocks and is currently down -7.37 at 54.22. The VIX has fallen back sharply from last Wednesday's 11-1/4 year high of 85.47.
Stocks Sink Into The Close On Severe Economic Prospects
U.S. stock indexes on Friday gave up early gains and sold off into the close and the severe damage to the U.S. economy from the coronavirus pandemic. Other states on Friday followed California’s stay-in-place order on Thursday, including New York, New Jersey, and Illinois.
Concern about the growing economic fallout from the coronavirus pandemic has raised recession concerns and hammered stock prices this week. The S&P 500 on Wednesday fell to a 3-year low, the Dow Jones Industrials tumbled to a 3-1/4 year low, and the Nasdaq 100 slumped to a 9-1/4 month low. The New York Times reported late Thursday that the Trump administration has asked state labor officials to hold off on releasing figures for unemployment filings until the federal government issues national totals. Several states have already released running totals of claims this week, which has prompted Goldman Sachs to estimate that U.S. unemployment benefits are poised to surge to a record 2.25 million by next week. Confirmed cases of the coronavirus have risen above 271,000 in more than 160 countries and territories with deaths exceeding 11,200.
The negative economic developments from the coronavirus pandemic have caused a surge in U.S. layoffs and a collapse in spending. Goldman Sachs project that U.S. Q1 GDP will contract by -6% (q/q annualized) and Q2 GDP will contract by -24% (q/q annualized) before rebounding in the second half.
Energy stocks tumbled Friday when crude oil prices plunged 10% after Russia ramped up its crude production.
U.S. stocks earlier Friday opened higher on hopes that measures taken by global governments and central banks will soften the economic damage from the coronavirus pandemic. House Senate leader McConnell said Friday he wants the Senate to pass the phase-three stimulus plan on Monday that would give individuals a $1,200 tax rebate and married couples $2,400 as part of the package, subject to income limits.
An easing of liquidity concerns on Friday was a positive for the stock market after the Fed, along with the central banks of Europe, Japan, the UK, Canada and Switzerland, announced a coordinated action today to bolster dollar liquidity swap line arrangements. The central banks said, "to improve the swap limes' effectiveness in providing dollar funding, they have agreed to increase the frequency of 7-day maturity operations from weekly to daily." Also, the Fed on Friday said that it expanded its Money Market Mutual Fund Liquidity Facility (MMMFLF) to include purchases of municipal securities, which will provide additional liquidity for states and municipalities.
A rally in European stocks Friday was an early positive for U.S. stocks as the Euro Stoxx 50 on Friday closed up +3.85% after Der Spiegel reported that the German government is planning a fund of 500 billion euros ($538 billion) to provide firms with loan guarantees and injections of cash. Also, global bond yields and stocks rose fell on expectations for an expansion of QE measures after ECB President Lagarde said Friday that the ECB is "fully prepared to increase the size of our asset-purchase programs" to deal with the economic challenge from coronavirus.
In a positive, though obsolete report, U.S. Feb existing home sales rose +6.5% to a 13-year high of 5.77 million, stronger than expectations of +0.9% to 5.51 million.
The VIX S&P 500 Volatility Index ($VIX) on Friday closed -5.96 at 66.04, falling farther from Wednesday's 11-1/4 year high of 85.47.
Big Picture U.S. Stock Market Factors: Bearish factors for the U.S. stock market include (1) the severe damage being done to the global economy and corporate earnings by the coronavirus pandemic, (2) the sharp cut in expectations for S&P 500 earnings growth from pre-virus levels of +8% (earnings growth was +1% in 2018 and +23% in 2018), (3) severe stress on the global financial system, (4) ongoing U.S./Chinese trade and tech tensions despite the phase-one agreement, and (5) geopolitical risks from Iran, North Korea, and Venezuela. Bullish factors include (1) the aggressive fiscal and monetary stimulus measures being taken worldwide to battle the impact from the coronavirus, (2) reduced trade tensions after the U.S./China phase-one trade agreement, although most penalty tariffs remain in place and phase-two negotiations are scheduled to begin later in 2020, and (3) extremely low bond yields in the U.S., UK, and Eurozone.
Look for a 50% price retracement in the Dow Jones Industrial Average (the Dow) 29,551.42 divided by 1/2 =
14,775.71, then we see a 50% bounce back up to 22,162? The 50% to 14,775 price retracement, should happen very quickly, then we see a "super rally" back up. After the rally back up we then see price retracement back down to close
below 14,775 and then a price retracement to 3,250 (89%) for the Dow Jones Industrial Average? Time will tell. This is what transpired from 1929 to 1932-1933. Lets see what happens.
We can survive this!
Careful with the rally back in stock prices in an economic recession \ depression = Bear Flag!
Silver bullion crashing due to margin calls and "slow down" in manufacturing, look for 20%
unemployment and crashing Global GDP.
Stocks Settle Sharply Higher On The Prospects For Additional Stimulus Measures
The S&P 500 Index ($SPX) on Tuesday closed up +6.00%, the Dow Jones Industrials Index ($DOWI) closed up +5.20%, and the Nasdaq 100 Index ($IUXX) closed up +6.46%.
U.S. stock indexes on Tuesday rallied sharply on expectations of more fiscal stimulus measures, along with additional actions from the Fed to alleviate a funding squeeze in segments of the markets.
Stocks opened higher Tuesday and extended their gains after U.S. Treasury Secretary Mnuchin said he is pushing for a $1.2 trillion stimulus package that would send out $250 billion in direct cash payments to Americans in April, with another $250 billion to follow in May if the economy is still struggling. Senate Majority leader McConnell said on Tuesday that the Senate won't adjourn until more fiscal stimulus measures are passed.
U.S. stock indexes whipsawed lower for a brief time Tuesday morning on elevated funding concerns after the 3-month cross currency basis for the euro, a proxy for how expensive it is to acquire dollars, widened to -128.5 bp today, the most in 8-1/4 years and a sign of tension in dollar funding markets. However, stocks recovered and pushed higher after the Fed said it will reinstate its Commercial Paper Funding Facility (CPFF) as soon as Tuesday in an attempt to alleviate stress in the corporate short-term funding market.
U.S. stock indexes are attempting to stabilize above Monday's lows where the S&P 500 fell to a 14-1/2 month low, the Dow Jones Industrials slumped to a 3-year low, and the Nasdaq 100 dropped to a 9-1/4 month low. Stocks sold off sharply Monday as the coronavirus pandemic hammers near-term global economic growth prospects. Confirmed cases of the virus have risen above 197,000 in 162 countries and territories with deaths exceeding 7,900.
The European Union on Tuesday agreed to shut its borders for 30 days as it attempts to slow down the spread of the coronavirus. In the U.S., cities across the country have closed schools and limited restaurants and bars to takeout and delivery service. The CDC recommended that events of 50 people or more not be held for about 2 months.
Tuesday's U.S. economic data was negative for growth prospects and bearish for stocks. Feb retail sales unexpectedly fell -0.5% and -0.4% ex-transportation, weaker than expectations of +0.2% and +0.1% ex-transportation. Also, Feb manufacturing production rose +0.1%, slightly weaker than expectations of 0.2%. In addition, the Mar NAHB housing market index fell -2 to 72, weaker than expectations of unchanged at 74.
Global economic data on Tuesday was mixed after the German Mar ZEW survey expectations of economic growth index plunged by -58.2 to an 8-1/4 year low of -49.5, weaker than expectations of -38.7 to -30.0. Also, the UK Jan ILO unemployment rate unexpectedly rose +0.1 to 3.9%, showing a slightly weaker labor market than expectations of unchanged at 3.8%. Conversely, Japan Jan industrial production was revised slightly higher to +1.0% m/m from the originally reported +0.8% m/m.
The VIX S&P 500 Volatility Index ($VIX) on Tuesday posted a new 11-1/4 year high of 84.83 but then fell back as stocks recovered and finished the day down by -6.78 at 75.91.
Stocks Plunge On Fears The Coronavirus Pandemic Will Temporarily Decimate The Global Economy
The S&P 500 Index ($SPX) this morning is down -9.07%, the Dow Jones Industrials Index ($DOWI) is down -9.53%, and the Nasdaq 100 Index ($IUXX) is down -8.82%.
U.S. stock indexes this morning are plunging with the S&P 500 at a 14-1/2 month low, the Dow Jones Industrials at a 3-year low, and the Nasdaq 100 at a 9-1/4 month low. Stocks selling off sharply this morning as the spread of the coronavirus pandemic hammers near-term global economic growth prospects. The World Health Organization (WHO) warned that Europe is reporting more new cases each day than China did at its peak. Confirmed cases of the virus have risen to 167,000 to 110 countries with deaths exceeding 6,400. Cities across the U.S., including New York, Chicago, and Los Angeles, have closed schools and limited restaurants and bars to takeout and delivery service, while the Centers for Disease Control and Prevention (CDC) recommended that events of 50 people or more not be held for about 2 months.
A plunge of more than -5% in crude oil prices today is weighing on energy stocks. Airline stocks are sharply lower as countries around the world implement air travel restrictions and as airlines slash their schedules.
Today's global economic data was mostly negative for growth prospects and bearish for stocks. The U.S. Mar Empire manufacturing survey general business conditions index plunged by -34.4 points to an 11-year low of -21.5, weaker than expectations of -9.9 to 3.0. Also, China Feb industrial production fell -13.5% year-to-date y/y, weaker than expectations of -3.0% year-to-date y/y, and the steepest pace of contraction since the data began in 1998. In addition, China Feb retail sales plunged -20.5% year-to-date y/y, weaker than expectations of -4.0% year-to-date y/y and the steepest pace of contraction since the data began in 1998. Conversely, Japan Jan core machine orders unexpectedly rose +2.9% m/m, stronger than expectations of -1.0% m/m.
Sunday's action by the Fed to cut interest rates and announce a QE program was supportive for stocks. The FOMC on Sunday cut its funds rate target by -100 bp to 0.00/0.25% and announced a new QE program where it would buy at least $500 billion of Treasury securities and $200 billion of mortgage-backed securities in coming months. The Fed's action should help to prevent systemic cracks in the financial system.
Today's action by the Bank of Japan (BOJ) was also supportive for equities. The BOJ raised its ETF-purchasing target to 12 trillion yen ($112 billion) from 6 trillion yen, thus expanding its QE program.
The VIX S&P 500 Volatility Index ($VIX) this morning is up sharply by +17.29 at 75.12%, just below last Thursday's 11-1/4 year high of 76.83.
This Great Economic Crash is feeling more and more like 1929-1933 Great Depression?
The stock market crash of 1929 was a collapse of stock prices that began on Oct. 24, 1929. By Oct. 29, 1929, the Dow Jones Industrial Average had dropped 24.8%, marking one of the worst declines in U.S. history. It destroyed confidence in Wall Street markets and led to the Great Depression.
- The stock market crash of 1929 was one of the worst declines in U.S. history.
- The three key trading dates of the crash were Black Thursday, Black Monday, and Black Tuesday. The latter two days were among the four worst days the Dow has ever seen, by percentage decline.
- The overconfidence in stock market investments during the Roaring Twenties created an unsustainable asset bubble.
- Overnight, many people lost their businesses and life savings, setting the stage for the Great Depression.
The first day of the crash was Black Thursday. The Dow opened at 305.85.1 It immediately fell 9%, signaling a stock market correction. Trading was triple the normal volume. Wall Street bankers feverishly bought shares to prop it up. The strategy worked. By the end of the day, the Dow was down just 2%.
On Friday, October 25, the positive momentum continued. The Dow rose 0.6% to 301.22. A short trading day on Saturday, October 26, removed that gain. The Dow closed at 298.97. On Black Monday, October 28, the Dow fell 12.8% to 260.64.
On Black Tuesday, October 29, the Dow fell 11.7% to 230.07. Panicked investors sold 16,410,310 shares.
Black Monday and Tuesday were among the four worst days in Dow history, after one-day declines of more than 20% in 1914 and 1987.
Important: By percentage decline, single-day losses in the Dow Jones Industrial Average in March 2020 haven't surpassed those of the 1929 crash. However, if measured by point declines, March 2020 has seen the worst Dow days ever.
The Dow was already down 30% from its September 3 high, according to S&P Dow Jones Indices. That signaled a bear market. In late September, investors had been worried about massive declines in the British stock market. Investors in Clarence Hatry's company lost billions when they discovered he used fraudulent collateral to buy United Steel. A few days later, Great Britain's Chancellor of the Exchequer, Philip Snowden, described America's stock market as "a perfect orgy of speculation." The next day, U.S. newspapers agreed.
In response, the Dow dropped significantly on both of those days and again on October 16. By the 19th and 20th, The Washington Post reported a drop in ultra-safe utility stocks.
The day before Black Thursday, The Washington Post headlines blared "Huge Selling Wave Creates Near-Panic as Stocks Collapse," while The Times screamed "Prices of Stocks Crash in Heavy Liquidation." By Black Thursday, panic had set in for the worst stock market crash in history.
The crash followed an asset bubble. Since 1922, the stock market had gone up by more than 20% a year. Everyone invested, thanks to a financial invention called buying "on margin." It allowed people to borrow money from their broker to buy stocks. They only needed to put down 10%-20%. Investing this way contributed to the irrational exuberance of the Roaring Twenties.
The crash wiped people out. They were forced to sell businesses and cash in their life savings. Brokers called in their loans when the stock market started falling. People scrambled to find enough money to pay for their margins. They lost faith in Wall Street.
You can’t have a healthy economy without confidence in the market.
By July 8, 1932, the Dow was down to 41.22 That was an 89.2% loss from its record-high close of 381.17 on September 3, 1929. It was the worst bear market in terms of percentage loss in modern U.S. history. The largest one-day percentage gain also occurred during that time. On March 15, 1933, the Dow rose 15.34%, a gain of 8.26 points, to close at 62.1.
The timeline of the Great Depression tracks critical events leading up to the greatest economic crisis the United States ever had.
The Depression devastated the U.S. economy. Wages fell 42% as unemployment rose to 25%.6 7 U.S. economic growth decreased 54.7% and world trade plummeted 65%.8 As a result of deflation, prices fell more than 10% a year between 1929 and 1933.
Below you can see a chart tracking key events leading up to the 1929 stock market crash.
1929 Stock Market Crash Timeline
Aug. 8: Federal Reserve Bank of NY raises discount rate to 6%. Sept. 3: Dow peaks at 381.17; a 27 percent increase YOY. Sept. 26: Bank of England raises rate to protect gold standard. Oct. 24: Black Thursday, panicked sellers trade almost 13 million shares on NY Stock Exchange (3x normal volume then); investors lose $5 billion. Oct. 28: Black Monday, stocks fall 13%. Oct. 29: NY Stock Exchange share prices collapse.
- March 1929: The Dow dropped, but bankers reassured investors "Don't Panic".
- August 8: The Federal Reserve Bank of New York raised the discount rate to 6%.
- September 3: The Dow peaked at 381.17. That was a 27% increase over the prior year's peak.
- September 26: The Bank of England also raised its rate to protect the gold standard.
- September 29, 1929: The Hatry Case threw British markets into panic.
- October 3: Great Britain's Chancellor of the Exchequer Phillip Snowden called the U.S. stock market a "speculative orgy."
- October 4: The Wall Street Journal and The New York Times agreed with Snowden.
- October 24: Black Thursday.
- October 28: Black Monday.
- October 29: Black Tuesday.
- 1933: President Roosevelt launched the Federal Deposit Insurance Corporation to insure bank deposits. After the crash, banks only had enough to honor 10 cents for every dollar. That's because they had used their depositors' savings, without their knowledge, to buy stocks.
- November 23, 1954: The Dow finally regained its September 3, 1929, high, closing at 382.74.
Careful with the rally back in stock prices going into an economic recession\depression. Major Bearish Sell trend still intact in the $DOWI and the $SPX!
Yesterday was "forced" margin call day for the $DOWI and the $SPX! Today is relief rally day for stock indexes.
Watch the plunge in Silver May '20 (SIK20) 14.500 -1.505 (-9.40%). Silver bullion is "needed" for industrial production vs. gold bullion that is "desired". Silver May '20 (SIK20) is tanking because no need for industrial production in the future?
Stocks Rebound Sharply As Global Governments Boost Stimulus Measures
cmdtyNewswires - Fri Mar 13, 10:18AM CDT
The S&P 500 Index ($SPX) this morning is up +4.42%, the Dow Jones Industrials Index ($DOWI) is up +3.78%, and the Nasdaq 100 Index ($IUXX) is up +4.52%.
U.S. stock indexes this morning are moving sharply higher as expectations of additional stimulus measures from global governments has sparked short-covering in stocks. June E-mini S&Ps rebounded from a 14-1/2 month low in overnight trading and are sharply higher today after House Speaker Pelosi said late Thursday night that she is near an agreement with the Trump administration on a plan to mitigate some of the negative developments from the coronavirus outbreak. Pelosi said the plan will include free coronavirus testing, 14 days of paid sick leave, increased funds for Medicaid, and enhanced unemployment benefits and food aid.
Stock indexes extended their gains this morning on signs there will be ample liquidity in financial markets after U.S. Treasury Secretary Mnuchin said he's in "constant conversations" with Fed Chair Powell and that "there will be liquidity available and whatever the Fed or Congress needs to do, we will provide liquidity."
Stocks found support after the People's Bank of China (PBOC) today added $79 billion of liquidity into the banking system. The PBOC cut the reserve-requirement-ratios by 50-100 bp depending on the bank and said joint stock banks will get an additional reduction of 100 bp from their original level.
In a supportive factor for the Eurozone economy, European Union (EU) Executive vice-president Dombrovskis said today that the European Commission could suspend EU fiscal rules for member states in the case of a severe economic downturn caused by the coronavirus outbreak. Also, European Commission President Leyen said the EU will launch a 37 billion euro investment initiative as part of a package of measures to cushion EU bloc economies from the impact of the coronavirus.
German Finance Minister Scholz said today that there will be "no limit" to the money available to combat the economic impact of the coronavirus and Germany may need to take on additional debt to finance the spending spree. Germany seems ready to loosen fiscal rules to combat the virus after ECB Governing Council member and Bundesbank President Weidmann said today that "it's really not the right time to be dogmatic about Black Zero" budget policy" in light of the coronavirus challenge.
Today's U.S. economic data was bullish for stocks. The Feb import price index ex-petroleum rose +0.2% m/m, slightly stronger than expectations of +0.1% m/m. Also, the preliminary-March University of Michigan U.S. consumer sentiment index fell by -5.1 to a 5-month low of 95.9, but that was stronger than expectations of -6.0 to 95.0.
The VIX S&P 500 Volatility Index ($VIX) this morning is down -6.23 to 69.24 as it falls back from Thursday's 11-1/4 year high of 76.83.
It is now Friday the 13th 3/13/2020
Prepare for the "Financial Antichrist"!!
Worst Day On Wall Street Since 1987 As Virus Fears Spread
NEW YORK (AP) — The escalating coronavirus emergency Thursday sent stocks to their worst losses since the Black Monday crash of 1987, extending a sell-off that has now wiped out most of Wall Street’s big run-up since President Donald Trump's election.
The S&P 500 plummeted 9.5%, for a total drop of 26.7% from its all-time high, set just last month. That puts it way past the 20% threshold to make this a bear market, snapping an unprecedented, nearly 11-year bull-market run. The Dow Jones Industrial Average sank 10% for its worst day since a nearly 23% drop on Oct. 19, 1987.
European markets lost 12% in one of their worst days ever, even after the European Central Bank pledged to buy more bonds and offer more help for the economy.
The heavy losses came amid a cascade of cancellations and shutdowns across the globe — including Trump's suspension of most travel to the U.S. from Europe — and rising worries that the White House and other authorities around the world can’t or won’t counter the economic damage from the coronavirus pandemic any time soon.
"The news just continues to get worse, and the travel ban puts an exclamation point on the weakness we're going to see in global GDP and, in turn, the U.S.," said Liz Ann Sonders, chief investment strategist at Charles Schwab. “We're starting to get a sense of how dire the impact on the economy is going to be. Each day the news doesn't get better, it gets worse. It's now has hit Main Street to a more significant degree.”
Stocks fell so fast on Wall Street at the opening bell that they triggered an automatic, 15-minute trading halt for the second time this week. The so-called circuit breakers were first adopted after the 1987 crash, and until this week hadn't been tripped since 1997.
The Dow briefly turned upward and halved its losses at one point in the afternoon after the Federal Reserve announced it would step in to ease “highly unusual disruptions” in the Treasury market. But the burst of momentum quickly faded.
Trump often points proudly to the big rise on Wall Street under his administration and warned a crowd at a rally last August that "whether you love me or hate, you gotta vote for me," or else your 401(k) will go “down the tubes.”
Just last month, the Dow was boasting a nearly 50% gain since Trump took the oath of office on Jan. 20, 2017. By Thursday's close, the Dow was clinging to a 6.9% gain, though it was still up nearly 16% since just before Trump's election in November 2016.
On Wednesday, the Dow finished the day down more than 20% from its all-time high, set just last month, officially entering what is known as a bear market for the first time in over a decade.
The combined health crisis and retreat on Wall Street heightened fears of a recession.
“This is bad. The worst and fastest stock market correction in our career," Chris Rupkey, chief financial economist at MUFG Union, said in a research note overnight. "The economy is doomed to recession if the country stops working and takes the next 30 days off. The stock market knows it.”
The coronavirus has infected around 128,000 people worldwide and killed over 4,700. The death toll in the U.S. climbed to 39, with over 1,300 infections. For most people, the virus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illnesses, including pneumonia. The vast majority of people recover from the virus in a matter of weeks.
In a somber prime-time address Wednesday night from the White House, Trump announced the new travel ban as well as measures to extend loans, payroll tax cuts and other financial relief to individuals and businesses hurt by the crisis.
But the travel restrictions represented another heavy blow to the already battered airline and travel industries, and the other measures did not impress Wall Street.
"What markets are waiting for are efforts to contain the virus in a very aggressive way, ways we've seen in other countries," said Nela Richardson, investment strategist at Edward Jones. “Short of that, nibbling around the edges, maybe doing something that can help a firm with a very short-term impact or help an employee, doesn't hurt, but it's not the bull's-eye, and it's not as targeted as the markets would like to see.”
Michael McCarthy of CMC Markets said: “The market judgment on that announcement is that it’s too little, too late.”
The damage was worldwide and eye-popping. Among the big moves:
— Travel stocks again were among the hardest hit. Norwegian Cruise Line and Royal Caribbean Cruises both lost roughly a quarter of their value. Another drop for United Airlines put its loss for the year at more than 50%.
— Oil continued its brutal week, with benchmark U.S. at $31 per barrel.
— In Asia, stocks in Thailand and the Philippines fell so fast that trading was temporarily halted. Japan’s Nikkei 225 sank 4.4% to its lowest close in four years, and South Korea’s market lost 3.9%.
Perhaps more alarming were complaints in recent days by investors that trading in the Treasury market wasn’t working well. For reasons that weren't immediately clear, traders said they were seeing surprisingly large gaps in prices being offered by buyers and sellers. That threatened to cause the market to seize up.
In a surprise move, the Fed said it would pump in at least $1.5 trillion to help calm the market and facilitate trading.
After earlier thinking that the virus could remain mostly in China and that any dip in the economy would be followed by a quick rebound, investors are seeing the damage and disruptions mount, with Italy locking itself down, the NBA suspending games and authorities in the U.S. and beyond banning large gatherings and closing schools.
Dow Plummets Again As Sell-Off Over The Coronavirus Deepens
NEW YORK (AP) — The deepening coronavirus crisis sent stocks into another alarming slide Thursday, extending a sell-off that has wiped out most of the big run-up on Wall Street since President Donald Trump's inauguration.
The Dow Jones Industrial Average plummeted more than 2,250 points, or nearly 9.7%, at one point but started climbing back after the Federal Reserve said it would step in to the bond market to address “highly unusual disruptions” in trading of Treasury securities. Still, the Dow was still down nearly 1,600 points, or 6.7%, in the early afternoon, while the broader S&P 500 was off 6.3%.
European markets lost 12% in one of their worst days in history, even after the European Central Bank pledged to buy more bonds and offer more help for the economy.
The heavy losses came amid a cascade of cancellations and shutdowns across the globe — including Trump's suspension of most travel to the U.S. from Europe — and rising worries that the White House and other authorities around the world can’t or won’t counter the economic damage from the coronavirus pandemic any time soon.
"The news just continues to get worse, and the travel ban puts an exclamation point on the weakness we're going to see in global GDP and, in turn, the U.S.," said Liz Ann Sonders, chief investment strategist at Charles Schwab. “We're starting to get a sense of how dire the impact on the economy is going to be. Each day the news doesn't get better, it gets worse. It's now has hit Main Street to a more significant degree.”
On Wall Street, stocks fell so fast at the opening bell that they triggered an automatic, 15-minute trading halt for the second time this week. The so-called circuit breakers were first adopted after the 1987 crash, and until this week hadn't been activated since 1997.
Trump often points proudly to the big rise on Wall Street under his administration and warned a crowd at a rally last August that "whether you love me or hate, you gotta vote for me," or else your 401(k) will go “down the tubes.” Just last month, the Dow was boasting a nearly 50% gain since he took the oath of office on Jan. 20, 2017.
By early Thursday afternoon, the Dow was clinging to a 9% gain, though it was still up 17% since just before Trump's election in November 2016.
A drop on Wednesday sent the Dow into what is known as a bear market for the first time in more than a decade when the index lost more than 20% from its all-time high, set just last month. The S&P 500 was likewise in danger of finishing the day Thursday in bear market territory. That would bring to a close the longest bull run in Wall Street history.
“This is bad. The worst and fastest stock market correction in our career," Chris Rupkey, chief financial economist at MUFG Union, said in a research note overnight. "The economy is doomed to recession if the country stops working and takes the next 30 days off. The stock market knows it. Bet on it.”
In a somber prime-time address Wednesday night from the White House, Trump announced the new travel ban as well as measures to extend financial help to individuals and businesses hurt by the crisis. But the travel restrictions represented another heavy blow to the already battered airline and travel industries, and the other measures did not seem to impress Wall Street.
"What markets are waiting for are efforts to contain the virus in a very aggressive way, ways we've seen in other countries," said Nela Richardson, investment strategist at Edward Jones. “Short of that, nibbling around the edges, maybe doing something that can help a firm with a very short-term impact or help an employee, doesn't hurt, but it's not the bull's-eye, and it's not as targeted as the market's would like to see.”
Michael McCarthy of CMC Markets said: “The market judgment on that announcement is that it’s too little, too late.”
The damage was worldwide and eye-popping. Among the big moves:
— Travel stocks again were among the hardest hit. Norwegian Cruise Line and Royal Caribbean Cruises both lost roughly a quarter of their value. Another drop for United Airlines put its loss for the year at more than 50%.
— Oil continued its brutal week, with benchmark U.S. down to $31 per barrel.
— In Asia, stocks in Thailand and the Philippines fell so fast that trading was temporarily halted. Japan’s Nikkei 225 sank 4.4% to its lowest close in four years, and South Korea’s market lost 3.9%.
— The interest payments that investors are willing to accept for buying U.S. Treasury bonds fell even further in another sign of fear in the market. In uncertain times, investors looking for safety sink money into bonds, pushing up the price but driving down the yield.
After earlier thinking that the virus could remain mostly in China and that any dip in the economy would be followed by a quick rebound, investors are seeing the damage and disruptions mount, with Italy locking itself down, the NBA suspending games and authorities in the U.S. and beyond banning large gatherings and closing schools.
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illnesses, including pneumonia. The vast majority of people recover from the virus in a matter of weeks.
Stocks Tumble On Pandemic Declaration And Lack Of Fiscal Stimulus Plan As Yet
The S&P 500 Index ($SPX) on Wednesday closed down -4.89%, the Dow Jones Industrials Index ($DOWI) closed down -5.86%, and the Nasdaq 100 Index ($IUXX) closed down -4.37%.
U.S. stock indexes on Wednesday closed sharply lower on disappointment about the lack of specifics thus far on a stimulus program to combat the economic fallout from the coronavirus. President Trump said he will give a statement on virus plans at 2000 EST Wednesday evening.
Stock futures down huge after presidents speaks. Bans travel from Europe to the U.S. Nasdaq Futures limit down!
Lock Limit Down on the stock market today. Reminds me of the price action in 1929. Stocks Plummet Amid Coronavirus Fears And Oil-Price Crash. I followed the Presidents investment advise and bought the Dip, Bought some Marathon Oil stock at $4.04 per share. Great company with huge dip, also looking to purchase some OXY petroleum.
Stocks took their worst one-day selloff on Wall Street since the global financial crisis of 2008 as a collapse in oil prices Monday combined with mounting alarm over what the coronavirus could do to the world economy.
The drop was so sharp that it triggered the first automatic halt in trading in more than two decades. European stock indexes likewise registered their heaviest losses since the darkest days of the 2008 meltdown and are now in a bear market.
Together, the sell-offs reflected growing anxiety over the potential global economic damage from the coronavirus, which has infected more than 110,000 people worldwide and killed about 4,000 while prompting factory shutdowns, travel bans, closings of schools and stores, and cancellations of conventions and celebrations big and small.
On November 15, 1907 the Dow Jones industrial Average closed at
53 down from just over 100 in about four years, a Great 50% price retracement! The
Dow Jones at 53 was a steal! The Dow Jones is going to 14,500 over the next four years,
or is the Dow Jones going to 2,900 down from 29,000 like it did in 1929?
This is the Big Economic Crash 1929-1933 = 90% stock crash! 2020 next?
Does this 1929 Dow stock market chart look just like what the 2020 Dow stock
market chart looks like? Rising wedge, Dow up 30% parabolic etc?
“History doesn't repeat itself but it often rhymes,” as Mark Twain is often reputed to have said.
Precious Metals Rally On Weak Stocks And Prospects For Additional Stimulus Measures
Apr Comex gold (GCJ20) this morning is up +16.0 (+0.98%), and May silver (SIK20) is up +0.058 (+0.34%).
Precious metals this morning are higher with gold prices at a 1-week high. Ramped-up coronavirus concerns are hammering stocks today and boosting the safe-haven demand for precious metals. A slump in the dollar index to a 1-3/4 month low is also bullish for precious metals, while the prospects for additional monetary stimulus measures from global central banks to combat the coronavirus is positive for gold prices.
U.S. stock indexes are sharply lower this morning after the state of California declared a state of emergency due to the coronavirus. Also, airline stocks are plunging this morning after the International Air Transport Association said the coronavirus outbreak would cost the airline industry between $63 billion and $113 billion in lost revenue this year. Confirmed cases of the coronavirus have now risen to more than 95,550 in more than 60 countries, with 3,285 deaths.
Concern the slowdown of the global economy from the coronavirus will prompt the world's central banks to keep cutting interest rates is boosting demand for gold as a store of value. The Institute of International Finance (IIF) said today that global growth "could conceivably approach" 1% in 2020, down from 2.6% in 2019 and the weakest pace of growth since the global financial crisis in 2009.
Lower global bond yields are supportive for gold prices as the 10-year UK gilt yield today dropped to a record low of 0.326% on speculation the BOE will follow the Fed with an emergency rate cut this month. UK government spokesman Slack said today that UK Prime Minister Johnson discussed the response to the coronavirus with BOE Governor Carney and Chancellor of the Exchequer Sunak and "they're working to ensure the economy is properly protected."
Today's U.S. economic data was mostly bullish for gold but negative for industrial metals demand and silver prices. Weekly initial unemployment claims fell -3,000 to 216,000, showing a slightly weaker labor market than expectations of -4,000 to 215,000. Also, U.S. Jan factory orders fell -0.5%, weaker than expectations of -0.1%.
A bullish factor for silver prices was today's German economic data that showed the German Feb Markit construction PMI rose +0.9 to 55.8, the fastest pace of expansion in 2 years, which is supportive for industrial metals demand.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs rose to a new all-time high of 2,647.51 MT Wednesday, the highest since the data series began in 2002. Long silver positions in ETFs rose to a new record high on Sep 2, 2019, but then fell back to a 6-month low in late-January.
Is the Bond Market in a Bubble? T-Notes Climb As Stocks Tumble On Coronavirus Concerns
#Bitcoin #BTC $Bitcoin
#BTChalving #Tezos #XTZ #Ripple
#XRP #0x #ZRX
#Zcash #ZEC #EOS
#Stellar #XLM #stockmarketcrash
#dowjones #1929 #1907 #2000 #1987
#plunger #jessielivermore #1933
Bear Market Rally? Dow Jones want to "Fill the Gaps" up to record close again, and then plunge into 1907,1929, 1987, 2000 and 2008 scenario? Careful with the rally back?
Watch the 30 year long bond and the Eurodollar, up up and away!
Negative interest rates coming to the U.S.?
U.S. Stocks Settle Sharply Higher On Expectations For Global Policy Makers To Boost Stimulus
The S&P 500 Index ($SPX) on Wednesday closed up +4.22%, the Dow Jones Industrials Index ($DOWI) closed up +4.53%, and the Nasdaq 100 Index ($IUXX) closed up +4.13%.
U.S. stock indexes on Wednesday rallied sharply on expectations that the world's policymakers will follow the Fed's lead and boost stimulus measures to stem the negative effects of the China coronavirus on the global economy. Confirmed cases of the coronavirus have now risen to more than 93,000 in more than 60 countries, with 3,201 deaths.
Stocks also moved higher Wednesday after Joe Biden, who is seen as a more business-friendly presidential candidate than Bernie Sanders, won 9 out of 14 states in Tuesday's primary for the Democratic presidential nominee. Managed health-care stocks rallied Wednesday on Biden's strong showing, which reduced concern about Sanders' Medicare for All proposal, which had fueled losses in managed health-care stocks after Sanders took an early lead in Democratic presidential primaries.
U.S. stock indexes extended their gains Wednesday after the Bank of Canada (BOC) cut its benchmark interest rate by 50 bp to 1.25%.
Upbeat comments on Wednesday from St. Louis Fed President Bullard (non-voter) were positive for stocks when he said the baseline of the U.S. economy is quite good and that the impact of the coronavirus will be temporary and that we will get through it.
Stocks had carry-over support from Tuesday when the Fed announced an emergency rate cut of -50 bp, saying "the coronavirus poses evolving risks to economic activity." The Fed said it is "closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy." Market expectations are for at least two more 25 bp rate cuts by the Fed before the end of the year.
In a negative factor for stocks on Wednesday, International Monetary Fund (IMF) managing director Georgieva said the global economic outlook has shifted to "more dire scenarios" as the coronavirus has spread undetected.
Wednesday's global economic data was mostly bullish for stocks. Feb ADP U.S. employment rose +183,000, stronger than expectations of +170,000. Also, the U.S. Feb ISM non-manufacturing index unexpectedly rose +1.8 to a 1-year high of 57.3, stronger than expectations of -0.7 to 54.8. In addition, Eurozone Jan retail sales rose +1.7% y/y, stronger than expectations of +1.1% y/y. Conversely, the China Feb Caixin services PMI tumbled -15.3 to a record low 26.5 (data from 2012), weaker than expectations of -3.8 to 48.0.
Wednesday's Fed Beige Book was neutral to slightly positive for stocks as it stated the U.S. economy expanded at a modest to moderate rate in the month through Feb 24 and that the coronavirus and upcoming presidential election were potential risks.
The VIX S&P 500 Volatility Index ($VIX) on Wednesday fell sharply by -4.98 to 31.84, well below last Friday's 2-year high of 49.48.
20+ Year Trsy Bull 3X Direxion (TMF)
Big Bull rally in TMF, 30 year bond yield is crashing!
Surprise Cut From Fed Fails To Stem The Stock Market's Dread
NEW YORK (AP) — Stocks are falling sharply on Wall Street Tuesday after an emergency interest-rate cut by the Federal Reserve failed to wipe out fears that a fast-spreading virus outbreak could lead to a recession.
Major indexes were down more than 3% in afternoon trading, bringing the Dow Jones Industrial Average down more than 800 points.
It took just 15 minutes for an early rally to evaporate following the Fed's surprise move . While the cut helped raise confidence for some investors, traders were still debating how effective a rate cut can be on what is ultimately a health crisis. Some investors are also questioning whether more aid is on the way to stabilize the market, while others called the Fed's move premature to begin with. For more than a few, the Fed's steepest rate cut since 2008 recalled the dark days of the financial crisis.
After popping to a 1.5% gain shortly after the Fed's announcement, the S&P 500 swung between modest gains and losses for about an hour before turning decisively lower in the late morning. The index was down 3.2%, as of 2:11 p.m. Eastern time, and on pace for its eighth drop in the last nine days. Other indexes had similar, jagged moves.
Everything from bonds to a gauge of traders' fear of large stock moves swung sharply following the Fed's cut, and the yield on the 10-year Treasury fell below 1.00% for the first time in history. Markets have been on edge for nearly two weeks, as the virus spreads beyond China and companies across continents and industries say they expect it to hit their profits.
The Fed has a long history of coming to the market's rescue with lower rates and other stimulus, which has helped this bull market in U.S. stocks become the longest in history. Some analysts said the Fed's latest cut should provide some more confidence.
“Confidence in markets is crucial,” said Quincy Krosby, chief market strategist at Prudential Financial. “Without confidence, you don’t have a market.”
The Dow had jumped 5% Monday to its best day in more than a decade on rising anticipation for aid from the Fed and other central banks. Even before Tuesday's rate announcement, traders were convinced that the Fed would cut rates by half a percentage point at its next meeting, scheduled for March 17-18. Monday's surge followed up the worst week for the S&P 500 since the financial crisis as worries about the virus' economic toll mounted.
But doubts are high about whether the medicine provided by central banks can be as effective this time around. Lower rates can encourage shoppers and businesses to borrow and spend more, but they can't reopen factories that have been shut or recall workers out due to quarantines.
Fed Chairman Jerome Powell acknowledged that central banks can't solve the health crisis. But he said the Fed recognizes the fast spread of the virus is a risk for the economy, and he cited concerns from the travel and hotel industries.
The high stakes pushed the Fed to cut rates outside of a regularly scheduled meeting for the first time since the 2008 financial crisis, when investors were considering a complete meltdown of the world's financial system as possible if not likely. That in itself may have added to the market's dread Tuesday.
“I don’t believe that market participants woke up this morning thinking we were facing a crisis similar to the global financial crisis," said Kristina Hooper, chief global market strategist at Invesco. "But that’s what the Fed’s actions suggested to some.”
She said investors will likely have mixed emotions about the move for days.
Some economists also called the Fed's move premature, given that U.S. economic data has yet to show a sharp drop due to the virus.
"The nature of today's announcement could send the wrong signal to market participants, including individual investors who are concerned with recent market volatility," said Roger Aliaga-Diaz, chief economist of the Americas at Vanguard.
The Dow was down 849 points, or 3.2%, at 25,862. It was down as many as 356 points shortly after trading opened, only to swing to a gain of 381 points after the Fed's announcement before turning sharply lower as day went on. The Nasdaq was down 3%.
European stock markets were broadly higher. Asian markets were also generally strong, though Japan's Nikkei 225 fell 1.2%.
Bond yields swung following the Fed's announcement. The yield on the 10-year Treasury slumped to 0.96% from 1.08% late Monday. The 10-year yield tends to fall when expectations are for weak economic growth and inflation.
Shorter-term yields, which move more on Fed actions, had even more dramatic drops. The two-year Treasury yield sank to 0.64% from 0.81%. The one-month yield fell to 0.92%.
Gold jumped $49.50, or 3.1%, to $1,644.30. Investors often pile into the metal when they're looking for safety or when they're anticipating lower interest rates.
A gauge of fear in the stock market swung wildly up and down through the day. The VIX measures how much traders are paying to protect themselves from future swings in stocks, and it was down roughly 25% immediately after the Fed's announcement, only to swing to up 10% in the afternoon.
Earlier in the day, the Group of Seven major industrialized countries pledged support for the global economy, but they stopped short of announcing any specific new measures. Disappointment in the lack of action helped push U.S. stocks lower at the opening of trading, before the Fed surprised markets with its announcement of the steep, half-point rate cut at 10 a.m. Eastern time.
The G-7, which includes the U.S., Japan and Germany, among others, made its statement after weeks of warnings from companies that the virus will hit their finances. Economic groups have also warned of worsening forecasts for global economic growth.
Investors are still speculating whether other central banks will join and cut rates and offer stimulus in a coordinated effort around the world. Before the Fed made its move, the Reserve Bank of Australia cut its key interest rate to a record low 0.5%.
Payments processor Visa is among the latest companies warning investors. It expects first-quarter revenue to suffer because of the damage to international travel. Chipmaker Microchip Technology withdrew its profit forecast for the year because of the uncertainty surrounding the virus’ impact.
Worldwide, more than 90,000 people have been sickened and 3,100 have died. The number of countries hit by the virus has reached at least 70, with Ukraine and Morocco reporting their first cases.
U.S. markets have been hit hard by fear over the virus’ impact. Stocks surged on Monday over hopes that central banks will help shield the global economy. That followed a broad sell-off last week that erased gains for 2020 and sent indexes into what market watchers call a "correction," or a fall of 10% or more from a peak.
The Bear market rally is always the "Strongest" trend backup during a bear market! Lets see how far back up the Dow Jones Industrial average does the rally back? If it achieves a record high close, then the shorts get burned. The next leg down for the Dow Jones, if it happens, will be the "Big One"? 1929-1933-1937 showed a 90% price reduction in stock prices. Talk about a Dip!
If the Dow Jones Industrial Average plunges lower after the Bear Market Rally back up (with a lower low), then lookout below, it is 1929, 1907 all over again folks. Will the Fed\Central banks be able to inject enough Liquidity into the system and lower global\U.S. interest rates into negative Territory? Have the Central Banks lost control? Has the global debt system reached it's limits?
The Eurodollar: https://www.barchart.com/futures/quotes/GEH20/overview
and the Long Bond: https://www.barchart.com/futures/quotes/ZBH20/overview
tells the economic depression story. With both the Eurodollar and the Long Bond in very strong
up-trends, plus the inverted yield curve, economic depression is at hand? Look at both of these charts in combination.
The U.S. Stock market has it's Greatest point Economic Crash in history
(worst week since 1933) from Monday February 24th through Friday February 28th 2020.
Precious Metals Plunge With Gold At A 3-Week Low As Margin Calls On Equities Spurs Long Liquidation In Gold
Apr Comex gold (GCJ20) on Friday closed down -75.8 (-4.61%), and Mar silver (SIH20) closed down -1.271 (-7.20%).
Precious metals on Friday plunged with gold at a 3-week low and silver at a 6-1/2 month low. The week-long plunge in equity markets has led to the selling of long gold positions to cover margin calls in stocks. Also, concerns the China coronavirus will soon become a pandemic and derail the global economy, and industrial metals demand is hammering silver prices.
Lets look at past crashes:
Panic of 1893: https://en.wikipedia.org/wiki/Panic_of_1893
From Wikipedia, the free encyclopedia
The Panic of 1893 was a serious economic depression in the United States that began in 1893 and ended in 1897. It deeply affected every sector of the economy, and produced political upheaval that led to the realigning election of 1896 and the presidency of William McKinley.
The Panic of 1907: https://en.wikipedia.org/wiki/Panic_of_1907