Top News  Shutterstock Over the weekend, the Senate passed a $1.9T coronavirus relief bill that contains $1,400 stimulus checks for many Americans, $300/week more in jobless benefits, as well as aid for state and local governments. The measure is expected to pass in the Democratic-held House on Tuesday. It would then be sent to President Biden's desk before a March 14 deadline to renew unemployment aid programs.
"With the Senate's passage, we expect growth momentum to accelerate and forecast global GDP growth will surge to a 7.5% annualized rate in the middle quarters of the year," JPMorgan wrote in a research note. "Every $1T of fiscal stimulus adds around $4-$5 to EPS, implying 6-7% upside for the remainder of the year."
Outlook: This time around, investors are getting worried about a sharp acceleration in inflation, with the 10-year Treasury yield rising another 5 bps overnight to 1.6%. Contrast that with a stock market where bulls were rooting for another big stimulus package during the push-and-pull negotiations at the end of the Trump administration. In fact, stock futures are pointing to another fall to start the week, particularly in the tech space, where high-growth valuations have been underpinned by low rates: Dow -0.3%; S&P 500 -0.8%; Nasdaq -1.9%
Thought bubble: While many are concerned about inflationary effects, the Fed has been vocal that it has no immediate plans to tighten monetary policy. In fact, its main worry doesn't appear to be inflation, but rather the damage done to the labor market by the pandemic. The last time the U.S. had a bad bout of sustained price increases was in the 1970s, when its economy was more insulated from the world, it depended on foreign oil and ended the Bretton Woods system that rendered the dollar a fiat currency. That picture looks much different today, and since the 2008 financial crisis, the U.S. economy has even struggled to achieve its inflation goals. (32 comments)
   | | Top News Shutterstock Over the weekend, the Senate passed a $1.9T coronavirus relief bill that contains $1,400 stimulus checks for many Americans, $300/week more in jobless benefits, as well as aid for state and local governments. The measure is expected to pass in the Democratic-held House on Tuesday. It would then be sent to President Biden's desk before a March 14 deadline to renew unemployment aid programs.
"With the Senate's passage, we expect growth momentum to accelerate and forecast global GDP growth will surge to a 7.5% annualized rate in the middle quarters of the year," JPMorgan wrote in a research note. "Every $1T of fiscal stimulus adds around $4-$5 to EPS, implying 6-7% upside for the remainder of the year."
Outlook: This time around, investors are getting worried about a sharp acceleration in inflation, with the 10-year Treasury yield rising another 5 bps overnight to 1.6%. Contrast that with a stock market where bulls were rooting for another big stimulus package during the push-and-pull negotiations at the end of the Trump administration. In fact, stock futures are pointing to another fall to start the week, particularly in the tech space, where high-growth valuations have been underpinned by low rates: Dow -0.3%; S&P 500 -0.8%; Nasdaq -1.9%
Thought bubble: While many are concerned about inflationary effects, the Fed has been vocal that it has no immediate plans to tighten monetary policy. In fact, its main worry doesn't appear to be inflation, but rather the damage done to the labor market by the pandemic. The last time the U.S. had a bad bout of sustained price increases was in the 1970s, when its economy was more insulated from the world, it depended on foreign oil and ended the Bretton Woods system that rendered the dollar a fiat currency. That picture looks much different today, and since the 2008 financial crisis, the U.S. economy has even struggled to achieve its inflation goals. (32 comments)
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| Energy Brent crude oil futures (CO1:COM) popped above $70 a barrel overnight, while U.S. WTI crude (CL1:COM) hit its highest level in more than two years, after a key Saudi oil site came under attack by missiles and bomb-laden drones. Iranian-backed Houthi rebels in Yemen claimed responsibility for the assault on the Ras Tanura export terminal, which is capable of exporting about 6.5M barrels a day (nearly 7% of global demand). While such attacks rarely result in big damages, their frequency has created unease in the Gulf and in oil markets.
Quote: Such acts of sabotage do not only target the Kingdom of Saudi Arabia, but also the security and stability of energy supplies to the world, and therefore, the global economy," said a spokesman for the Saudi Ministry of Energy. "They affect the security of petroleum exports, freedom of world trade, and maritime traffic."
Last month, the Biden administration said it would remove the Iran-backed Houthi rebels in Yemen from the Foreign Terrorist Organization and Specially Designated Global Terrorist lists. It also announced the end of U.S. support for offensive operations by its allies in Yemen, which has been devastated by a six-year civil war in which more than 110,000 people are believed to have died.
Outlook: Crude prices have been rising sharply since OPEC and allied producers decided to keep output cuts largely unchanged in April, accelerating a rally this year that has seen prices surge more than 35%. The OPEC move sparked several analysts to raise their price forecasts, with Goldman Sachs estimating Brent crude will hit $75/bbl by Q2 and top $80/bbl during Q3. (129 comments)
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