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Post by thelivyjr » Fri Feb 19, 2021 1:40 p


"Wall St closes down on tech slide, rising jobless claims"

By Herbert Lash

February 18, 2021

NEW YORK (Reuters) - Stocks on Wall Street closed lower on Thursday as investors shifted out of big technology names, while an unexpected rise in weekly U.S. jobless claims pointed to a fragile recovery in the labor market.

Shares of Apple Inc, Tesla Inc and Facebook Inc weighed the most on both the benchmark S&P 500 and the tech-heavy Nasdaq.

Facebook shares dropped 1.5% to $269.39 as Wall Street assessed the wider ramifications of its move to block all news content in Australia.

The Dow Jones Industrial Average fell 119.68 points, or 0.38%, to 31,493.34, the S&P 500 lost 17.36 points, or 0.44%, to 3,913.97 and the Nasdaq Composite dropped 100.14 points, or 0.72%, to 13,865.36.

Volume on U.S. exchanges was 13.13 billion shares.

Strong earnings, progress in the vaccination rollout and hopes of a $1.9 trillion federal stimulus package helped U.S. stock indexes again hit record highs at the start of the week.

But the months-long rally suggests stocks now have high valuations, said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.

“We are still in the cautiously bullish environment for the market on the whole,” Pride said, citing two reasons.

“We’re going to get a vaccine-induced economic recovery, that’s No. 1."

"The flip side of that story is the markets have largely priced that in and driven themselves to over-valued territory."

"Markets are going to struggle with that,” he said.

Concerns over a rising inflation outlook have pushed investors to book profits on stocks with high valuations in the S&P 500 technology and communications services sectors, which have underpinned a 76% rise in the S&P 500 since its March 2020 lows.

Peter Essele, head of portfolio management at Commonwealth Financial Network in Boston, said there was a lot of irrational exuberance built into stock prices heading into this year.

“We started to enter an environment where risk actually became a factor once again and notably, inflationary risk,” he said.

“Now it’s a question of whether the fundamentals are going to match the level of prices that currently exist.”

A Labor Department report showed initial claims for state unemployment benefits rose to 861,000 last week from 848,000 the prior week, partly due to potential claims related to the temporary closure of automobile plants due to a global semiconductor chip shortage.

Of the 11 major S&P 500 sectors, only utilities and consumer discretionary rose, while real estate barely fell, off 0.02%.

Walmart Inc slid 6.5% to $137.66 after the world’s largest retailer missed quarterly profit estimates and predicted a low-single digit rise in fiscal 2022 net sales.

“We’re getting mixed readings."

"Strong retail sales and then lousy claims."

"We’re going to see that probably for the rest of this quarter,” said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.

“Even the Walmart story wasn’t that bad on the surface; they’re going to make more investments,” Ablin said.

Walmart has invested heavily in online advertising and healthcare businesses over the past year, using pandemic-led sales momentum to diversify beyond brick-and-mortar retail.

Marriott International Inc rose 0.5% to $131.98 after reporting a quarterly loss as the hotel chain’s bookings declined due to pandemic-induced travel restrictions.

Declining issues outnumbered advancing ones on the NYSE by a 2.30-to-1 ratio; on Nasdaq, a 2.53-to-1 ratio favored decliners.

The S&P 500 posted 15 new 52-week highs and no new lows; the Nasdaq Composite recorded 104 new highs and 17 new lows.

Reporting by Herbert Lash; additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty, Anil D’Silva and Dan Grebler ... SKBN2AI1MG

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Post by thelivyjr » Fri Feb 19, 2021 1:40 p


"Family Of Woman Who Portrayed Aunt Jemima Speaks Out About Quaker Oats's Rebranding Decision"

Robin Young, Allison Hagan

June 29, 2020

Quaker Oats announced earlier this month it's rebranding Aunt Jemima pancake mix and syrup because of its racist history.

But descendants of Lillian Richard, who portrayed Aunt Jemima for years, say the company decided to rename the brand without consulting the families of the women who brought the character to life.

While Vera Harris, Richard’s niece, supports the decision and the Black Lives Matter movement, Aunt Jemima represents a part of history for her family and the town of Hawkins, Texas.

“Erasing my Aunt Lillian Richard would erase a part of history,” says Harris, who serves as family historian for the Richard family of Hawkins.

“All of the people in my family are happy and proud of Aunt Lillian and what she accomplished.”

Aunt Jemima portrays the white, romanticized notion of an Antebellum “mammy,” detached from the cruel reality of enslavement during the late 19th century.

The inspiration for the character came from the song “Old Aunt Jemima.”

Starting at the World's Fair in 1893, a formerly enslaved woman named Nancy Green was the first to travel around the country wearing an apron and bandana as Aunt Jemima.

Richard served as one of 12 brand ambassadors starting in 1925.

In Hawkins, a historical marker dedicated to her commemorates how she made a career during the time when Black women had very few opportunities.

When Richard turned 20, she went to Dallas to look for work during a time when most jobs for Black women were domestic maids and cooks, Harris says.

Quaker Oats discovered Richard and offered her an ambassador job.

“I think she was excited about it because first off, it was a job,” Harris says, “and she would go around to give demonstrations at fairs, and at stores and other public places.”

To keep her aunt’s legacy alive, Harris says her family hopes Quaker Oats comes out with a commemorative box to recognize the many women who portrayed Aunt Jemima over the years.

The back of the box could list their names and put a spotlight on one of the women each month, she suggests.

Harris would like to see the box include a photo of her aunt dressed as Aunt Jemima with the scarf — but also a photo of Richard looking like herself to show people a complete picture.

“She was an intelligent, young, vital, beautiful Black woman that took the job."

"She understood the times that she lived and she just wanted to work,” she says.

As a child, Harris’ family told her about her aunt’s portrayal of Aunt Jemima.

Richard is buried near Harris’ parents, so the family hopes to continue celebrating her legacy.

Quaker Oats didn’t consult the Richard family before announcing their decision to rebrand, but Harris says they have since reached out to the company about preserving Richard’s legacy.

After all, Richard and the other Black women who played Aunt Jemima helped build the Quaker Oats brand.

“For that, I think Quaker Oaks owes them a large gratitude of thanks,” she says.

Marcelle Hutchins produced and edited this interview for broadcast with Tinku Ray. Allison Hagan adapted it for the web.

This segment aired on June 29, 2020. ... ts-rebrand

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Post by thelivyjr » Fri Feb 19, 2021 1:40 p


"Bearish Cocktail Hits Oil Prices"

by Andreas Exarheas | Rigzone Staff

Friday, February 19, 2021

A bearish cocktail of market events is really hitting prices hard this Friday, causing a steep drop that strips oil of a good part of its recent gains.

That’s what Rystad Energy’s head of oil markets, Bjornar Tonhaugen, said in report sent to Rigzone today, adding that prices had been “inflated” recently.

“[Prices] had reached so high - under a pandemic status quo - … that when the bearish news hit, they hit hard,” Tonhaugen stated.

“It’s not only that traders look to avert risk in the end of the week, it is also refinery outages that strip demand, a window to bring Iran and the U.S. back to the negotiating table, and indications that OPEC+ is planning to increase its supply from April,” Tonhaugen added.

The Rystad Energy representative noted that oil production in Texas has seen significant volumes cut over the last few days but highlighted that the net effect is “surprisingly bearish”.

“Refinery shutdowns are larger volumetrically than oil supply losses, at least for some days …"

"Production can fall as it may, but if refineries cut their processing capacity to an even larger extent, the imbalance naturally pushes prices lower,” Tonhaugen said.

The Rystad Energy head also stated that the White House opened the door for the start of a diplomatic roadmap with Iran.

Tonhaugen highlighted that the U.S. said it would accept an invitation from the European Union for a P5+1 meeting to discuss a diplomatic roadmap on Iran’s nuclear program.

“Iran is the single-largest upside supply risk for the oil market, after the OPEC+ spare capacity in terms of volumes."

"The 1.7 million barrels per day of shut-in capacity can likely come onstream in a matter of 6-9 months post the lifting of sanctions, if there is enough demand in the market,” Tonhaugen said.

“Iran is still a very important factor for oil markets, not only for the oil price formation but also because of the dilemma it would cause within OPEC, as the group already produces below what most of its members would ideally like to do,” he added.

Drawing attention to emerging reports that OPEC+ aims to open its production taps a bit more from April, Tonhaugen said this was an “expected development and justified by oil prices”.

“For how long could the alliance – which has taken most of the market burden since the pandemic started – show restraint when everyone else benefits from the price levels it helped create?” Tonhaugen said.

“OPEC members aim, and rightly so, to start enjoying the fruit of their efforts to bring healthy price levels back to the market, faster than even the most optimistic market observers would expect,” he added.

To contact the author, email ... 0-article/

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Post by thelivyjr » Sat Feb 20, 2021 1:40 p


"Light Crude Ends Week Below $60"

by Bloomberg | Andres Guerra Luz

Friday, February 19, 2021

(Bloomberg) -- Oil fell to the lowest in a week as output slowly resumed in Texas, while margins for processing gasoline surged as Gulf Coast refineries are seen taking weeks to restart operations after the deep freeze.

Crude futures in New York plunged $1.28 on Friday, its biggest decline in dollar terms since late December.

Producers including Marathon Oil Corp. are using restored power from grids or generators to resume output that was halted by the frigid weather this week in the Eagle Ford shale basin.

Meanwhile, fuel margins jumped with four of the biggest refineries in Texas seen taking several weeks to resume operations, raising the potential for fuel shortages.

“Gasoline crack spreads have exploded, and for good reason,” said Andrew Lebow, senior partner at Commodity Research Group.

“Crude production is going to come back up a lot faster than refineries, leaving more crude available than there will be demand for it coming up over the next few weeks.”

Oil is still up more than 20% this year due to Saudi Arabia’s unilateral output cuts in February and March and an improving demand outlook.

The market largely expects Saudi Arabia to roll some of the output cuts back, “but how much they try and bring back is the question mark we’re all waiting for,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy.

“We don’t see them discontinuing the cut entirely."

"We still haven’t seen the recovery in global demand, even though there’s all kinds of positive outlooks.”


West Texas Intermediate fell $1.28 to settle at $59.24 a barrel, falling less than 1% over the week.

Brent for April settlement slipped $1.02 to end the session at $62.91 a barrel, posting its largest daily drop since Jan. 15.

The contract eked out a slight weekly gain.

Gasoline futures rose by 1.26 cents per gallon to $1.8069.

The refining margin for Nymex gasoline versus WTI futures surged as much as over 16% on Friday, rising to the highest since April

There should be only a small and transitory impact on global oil prices from the U.S. freeze as the supply and demand impacts balance out, Goldman Sachs Group Inc. said.

Still, Brent’s nearest timespread remains at one-year highs in a structure indicating tighter supplies and WTI’s discount to Brent has widened further past $3 a barrel this week, as replacements are sought for U.S. crude exports.

The cold snap and power cuts affected more than 20 refineries in Texas, Louisiana and Oklahoma.

Crude-processing capacity fell by about 5.5 million barrels a day, said Amrita Sen, chief oil analyst for Energy Aspects Ltd.

Meanwhile, the White House said it would be willing to meet with Tehran to discuss a “diplomatic way forward” in efforts to return to the nuclear deal that the U.S. quit in 2018, adding further pressure to prices.

Iran is pressing the U.S. to lift sanctions and rejoin the deal if talks are to resume.

Other oil-market news

More than 1,700 gas stations are without electricity on Friday because of the Texas power disaster, threatening to push pump prices even higher with key refineries in the state still shut.

The number of frack crews active in the U.S. shale patch plunged this week to a record low as frigid weather brought most of the Texas oil industry to a halt.

The Texas power grid has returned to normal operations as a historic cold blast eases, but the impact of the deep freeze on vital infrastructure is just being realized.

Presidential climate envoy John Kerry vowed on Friday that the U.S. would take aggressive steps to reduce its carbon emissions as the nation officially rejoins the Paris climate accord.

--With assistance from Alex Longley. ... 3-article/

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Post by thelivyjr » Sat Feb 20, 2021 1:40 p


"Treasury yields rise amid concerns about higher inflation"

Maggie Fitzgerald @mkmfitzgerald Vicky McKeever @vmckeevercnbc

Published Fri, Feb 19 2021

Treasury yields climbed on Friday amid concerns about the possibility of higher inflation.

The yield on the benchmark 10-year Treasury note advanced to 1.34% at around 3:45 p.m. ET, while the yield on the 30-year Treasury bond rose to 2.14%.

Yields move inversely to prices.

Treasury Secretary Janet Yellen told CNBC on Thursday that she still thinks President Joe Biden’s $1.9 trillion stimulus package is needed to get the U.S. economy back to full strength.

“We think it’s very important to have a big package [that] addresses the pain this has caused – 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing,” Yellen said.

She said her support for the package is despite signs that momentum is building in the first two months of 2021 and investors’ fears inflation could return.

“Inflation has been very low for over a decade, and you know it’s a risk, but it’s a risk that the Federal Reserve and others have tools to address,” she said.

“The greater risk is of scarring the people, having this pandemic take a permanent lifelong toll on their lives and livelihoods.”

The Treasury secretary also said that any future tax increases proposed to help offset the cost of Biden’s big-ticket infrastructure and investment plans, expected later this year, will phase in gradually.

Yields tend to rise with inflation expectations as bond investors start to believe central banks will take their foot off the gas and reduce their asset purchases.

There are no auctions scheduled to be held Friday.

— CNBC’s Tom Franck and Elliot Smith contributed to this report.

Data also provided by Reuters ... ation.html

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Post by thelivyjr » Sat Feb 20, 2021 1:40 p


"Fed's Williams does not expect economy to overheat due to fiscal aid"

By Reuters Staff

February 19, 2021

(Reuters) - New York Federal Reserve President John Williams said on Friday he’s not worried the economy will overheat due to government overspending, adding that employment and inflation are far below levels that would prompt the U.S. central bank to dial back its own support.

“The economy has quite a ways to go to get back to maximum employment, and we have a ways to go to get back to our 2% inflation target, so I’m not really concerned about stimulus, about fiscal support right now being excessive or anything like that,” Williams said on CNBC.

“The economy has been in a very slow period due to the winter wave of COVID, spread of COVID, so right now I am in a wait-and-see mode and we are going to watch the data and see how the economy does and specifically focusing on the progress on our two goals and make the decisions that are appropriate to achieve those goals.”

His comments suggest the Fed will keep its foot to the monetary gas pedal even as the Biden administration pushes for a $1.9 trillion pandemic relief package that critics, including former U.S. Treasury Secretary Larry Summers, say is liable to lit a fire under inflation.

Janet Yellen, who was Fed chief until early 2018 and is now Treasury secretary, says that’s a risk worth taking, given that millions of Americans are still unemployed.

Williams, who worked for Yellen when she ran the San Francisco Fed and is now a key advisor to Fed Chair Jerome Powell, sounded equally sanguine about the recent rise in Treasury yields and the values of a range of assets including stocks and homes.

Some analysts have warned of froth and risk-taking that could create risks for the financial system if allowed to continue.

“Very strong asset prices” fundamentally reflect “optimism among investors that the U.S. economy and the global economy is going to have a strong recovery and expansion, and expectations of low (interest) rates well off into the future,” Williams said.

But as for asset prices running “out of control,” “I don’t see, really, the evidence for that,” he said.

The Fed’s latest semi-annual monetary policy report, which was released earlier on Friday, pointed to downside risks for the financial system, including the potential for “sharp declines” in highly-valued commercial real estate and possible spillovers from financial vulnerabilities in emerging markets to the U.S. financial system and economy.

Reporting by Ann Saphir, Editing by Franklin Paul and Paul Simao ... SL1N2KP21Z

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Post by thelivyjr » Sat Feb 20, 2021 1:40 p


"Fed's Rosengren says large fiscal package appropriate, hopes for full employment within two years"

By Jonnelle Marte

February 19, 2021

(Reuters) - The $1.9 trillion fiscal relief package lawmakers are considering is appropriately large given the pandemic’s effects on the labor market and policymakers will have time to pull back support as the economy approaches full employment, Boston Federal Reserve Bank President Eric Rosengren said on Friday.

“It is a big fiscal package that is being considered right now - I think it’s appropriately big,” Rosengren said in an interview with Reuters.

“I am much less concerned than some commentators about it being a problem of overheating the economy.”

His comments were in line with remarks made by other Fed officials, including Fed Chair Jerome Powell, who called last week for a broad national effort to get Americans back to work after the pandemic.

“The economy has quite a ways to go to get back to maximum employment, and we have a ways to go to get back to our 2% inflation target, so I’m not really concerned about stimulus, about fiscal support right now being excessive or anything like that,” New York Fed President John Williams said Friday on CNBC.

Rosengren said he is hopeful the recovery will be strong enough for the labor market to return to full employment within two years, though he said the pace will depend on what happens with new variants of the virus and the distribution of vaccines.

Some service sector workers risk facing prolonged periods of joblessness as people remain hesitant to travel or crowd into restaurants and bars, he said.

As more businesses fail, those displaced workers may need help with learning new skills and moving into other industries, Rosengren said.

“Once we get closer to full employment, then we can worry about fiscal sustainability issues,” he said.

Reporting by Jonnelle Marte; Editing by Chizu Nomiyama ... SL1N2KP26A

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Post by thelivyjr » Sat Feb 20, 2021 1:40 p


"TREASURIES-Longer-term yields soar, 30-year TIPS yield turns positive"

By Karen Pierog

February 19, 2021

CHICAGO, Feb 19 (Reuters) - U.S. Treasury yields on the longer end of the curve rose to new one-year highs on Friday as Congress was poised to act on a massive fiscal stimulus package, while the yield on 30-year inflation-protected securities (TIPS) turned positive for the first time since June.

The benchmark 10-year yield reached its highest level since Feb. 26, 2020 at 1.363%.

It was last up 5.8 basis points at 1.3448%.

The 30-year Treasury yield reached a fresh one-year high of 2.155%.

It was last 6.3 basis points higher at 2.1386%.

The approximately 14-basis-point rise in 10- and 30-year yields this week was the biggest since the week that ended Jan. 8.

In a letter on Friday to the U.S. Senate Democratic Caucus, Senate Majority Leader Chuck Schumer said a $1.9 trillion stimulus package to aid the coronavirus-battered economy was on track to be sent to President Joe Biden before March 14.

"The bond market's trying to reprice the fact that the Treasury is going to borrow more money to pay for the stimulus package," said Tom di Galoma, a managing director at Seaport Global Holdings in New York.

New York Federal Reserve Bank President John Williams said on Friday that he is not worried that too much government spending could overheat the U.S. economy.

Di Galoma said that comment and a rise in European bond yields were also contributing to the upward momentum in Treasury yields.

Meanwhile, the 30-year TIPS yield, which had been in negative territory since June, surpassed the 0% mark, rising after a weak auction of $9 billion of the securities on Thursday.

It was last at 0.029%.

"It's hard to build a fundamental case for 30-year TIPS yields to be negative ever," said Jim Vogel, senior rates strategist at FHN Financial in Memphis, Tennessee.

"Over 30 years, that's a lot of Fed accommodation for a long time."

The 10-year TIPS yield also rose to its highest level since November.

It was last at -0.807%.

The two-year Treasury yield, which typically moves in step with interest rate expectations, was last unchanged at 0.1088%.

It fell to 0.105% on Thursday, matching a record low reached on Feb. 8.

A closely watched part of the yield curve, which measures the gap between yields on two- and 10-year Treasury notes was at its widest since February 2017.

It was last about 4.90 basis points higher at 123.43 basis points.

Looking ahead to next week, the Treasury Department will auction $60 billion of two-year notes on Tuesday, $61 billion of five-year notes on Wednesday and $62 billion of seven-year notes on Thursday.

"Five-year supply should be absorbed, (two-year notes) will go away and aren't really supply and (seven-year notes) will be the big question mark," Vogel said, pointing to concern over whether the seven-year note action can clear below 1%. ... SL1N2KP1PT

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Post by thelivyjr » Sun Feb 21, 2021 1:40 p


"U.S. factory activity cools; cost pressures mounting"

By Lucia Mutikani

February 19, 2021

WASHINGTON (Reuters) - U.S. factory activity slowed in early February likely as a global semiconductor chip shortage hurt production at automobile plants, while prices of inputs and manufactured goods soared, which could heighten fears of strong inflation growth this year.

The report from data firm IHS Markit on Friday also showed businesses in the services industry were experiencing higher costs related to the procurement of personal protective equipment, a greater proportion of which they were passing on to clients “through a marked rise in selling prices.”

Inflation is being closely watched amid concerns from some quarters that President Joe Biden’s proposed $1.9 trillion COVID-19 rescue package could cause the economy to overheat.

The package would be on top of nearly $900 billion in additional fiscal stimulus provided at the end of December.

“A concern is that firms’ costs have surged higher, driving selling prices for goods and services up at a survey record pace and hinting at a further increase in inflation,” said Chris Williamson, chief business economist at IHS Markit.

IHS Markit’s flash U.S. manufacturing PMI dropped to 58.5 in the first half of this month from a final reading of 59.2 in January.

Extreme weather in large parts of the United States was also blamed.

The data was in line with economists’ forecasts.

A reading above 50 indicates growth in manufacturing, which accounts for 11.9% of the U.S. economy.

Manufacturing has powered ahead as the pandemic left Americans grounded at home, shifting demand to household goods from services like airline travel and hotel accommodation.

But the coronavirus has disrupted labor at both suppliers and manufacturers, leading to shortages of goods critical to the production processes.

Motor vehicle manufacturers have been hit by a semiconductor chip shortage, leading some to temporarily close assembly plants this month.

General Motors announced it would take down production entirely at its Fairfax plant in Kansas City during the week of Feb. 8.

Ford Motor has reduced shifts at its Dearborn truck plant and Kansas City assembly plant.

The supply chain bottlenecks, which are widespread across the manufacturing sector as well as the services industry, have led to higher prices for inputs, including raw materials.

The survey’s measure of prices paid by manufacturers shot up to its highest level since April 2011.

A gauge of prices received by factories surged to its highest level since July 2008.

Though price pressures are expected to rise as last year’s low readings drop out of the calculation, there is no consensus among economists whether higher inflation would stick beyond the so-called base effects.

Federal Reserve Chair Jerome Powell said last week while he expected inflation to be boosted by base effects and pent-up demand when the economy fully reopens, that would be transitory, citing three decades of lower and stable prices.

The inflation outlook will likely hinge on the labor market, which is currently experiencing considerable slack, with at least 18.3 million Americans on unemployment benefits.

While the manufacturing expansion cooled, activity in the services industry gained traction this month.

The IHS Markit’s flash services sector PMI edged up to 58.9 from a final reading of 58.3 in January.

The highest reading since March 2015 came as new COVID-19 infections and hospitalization rates dropped, allowing authorities to roll back some restrictions on consumer-facing businesses.

The services sector, which accounts for more than two-thirds of U.S. economic activity, has borne the brunt of the pandemic.

Cost burdens for services businesses increased at their steepest pace since October 2009, leading to firms boosting their selling prices at the sharpest rate on record.

Stocks on Wall Street were trading higher.

The dollar fell against a basket of currencies.

U.S. Treasury prices were lower.


Manufacturing and housing are leading the economy’s recovery from the pandemic recession.

In a separate report on Friday, the National Association of Realtors said existing home sales rose 0.6% to a seasonally adjusted annual rate of 6.69 million units in January.

Economists polled by Reuters had forecast sales would fall 1.5% to a rate of 6.61 million units in January.

The second straight monthly increase in sales was despite contracts to buy a home declining for four consecutive months.

The NAR attributed the misalignment to different sample sizes.

Home resales, which account for the bulk of U.S. home sales, surged 23.7% on a year-on-year basis.

The gains have defied tight supply, which has led to a surge in house price inflation.

Sales last month were concentrated in the mid-to-upper price range of the market.

Sales fell in the Northeast and West.

They, however, rose in the South and the Midwest.

“Existing home sales will remain strong but will be unable to move significantly higher until more supply appears,” said David Berson, chief economist at Nationwide in Columbus, Ohio.

The housing market is being driven by still historically low mortgage rates, and demand for spacious accommodations for home offices and schooling.

There were a record-low 1.04 million previously owned homes on the market in January, down 25.7% from one year ago.

The median existing house price shot up 14.1% from a year ago to $303,900 in January.

At January’s sales pace, it would take 1.9 months to exhaust the current inventory, down from 3.1 months a year ago.

A six-to-seven-month supply is viewed as a healthy balance between supply and demand. ... SKBN2AJ1PN

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Post by thelivyjr » Sun Feb 21, 2021 1:40 p


"Fed sees 'considerable' risk of ongoing U.S. business failures"

By Reuters Staff

February 19, 2021

WASHINGTON (Reuters) - The risks of ongoing business failures in the United States “remain considerable” even as the economy emerges from the coronavirus pandemic, the Federal Reserve said on Friday in its semi-annual monetary policy report to Congress.

Business borrowing “now stands near historic highs,” the U.S. central bank said in the report.

Even though large cash balances, low interest rates, and renewed economic growth may dampen problems in the near term, “insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.”

Fed Chair Jerome Powell will present the report in hearings before the U.S. Senate Banking Committee on Tuesday and the U.S. House of Representatives Financial Services Committee on Wednesday.

After presenting his own summary of where the economy stands he will field questions from lawmakers that are likely to focus on how much more help the economy needs from the federal government to reach the point where ongoing COVID-19 vaccinations make it safe to resume normal commerce.

The Biden administration is pushing a $1.9 trillion stimulus plan that has already cleared a major hurdle in the Senate, money on top of the nearly $900 billion approved late last year and the roughly $3 trillion appropriated at the start of the crisis in 2020.

Those federal payments, including one-time checks to families, increased unemployment insurance, and loans to small businesses, led to faster-than-expected economic growth and less-than-anticipated financial stress among households and the banks that hold their mortgages and credit card loans.

But while banks and household balance sheets remain in reasonable shape, the Fed’s reference to business debt highlights the potential economic hangover still to come after a historically trying year.

Along with business failures, the report noted how changes to the economy that are still underway could, for example, cut the market for already highly-valued commercial real estate and lead to “sharp declines” in prices - a potential blow to investors or lenders involved with those properties.

The report also noted that the borrowing and spending used in some countries to fight the pandemic had made their financial systems “more vulnerable” than before, and the situation may be getting worse.

Stress in some emerging market nations, the report warned, could spill over “and produce additional strains for the U.S. financial system and economic activity.”

Next week will be Powell’s first appearance on Capitol Hill since Democrats won the White House and control of both chambers of Congress.

The Fed has pledged to keep its current policy of low interest rates and $120 billion in monthly bond purchases intact until the recovery is more complete.

That may be tested in coming months if, as expected, the reopened U.S. economy begins to generate rising inflation.

Reporting by Howard Schneider; Editing by Paul Simao ... SKBN2AJ1YS

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