Happy Tuesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.



a man and a woman wearing a suit and tie: On The Money: Pelosi, citing 'leverage' over Trump, holds strong to $2.2T in COVID-19 aid | McConnell to force vote on 'targeted' relief bill next week | Trump again asks court to shield tax records


© Greg Nash
On The Money: Pelosi, citing ‘leverage’ over Trump, holds strong to $2.2T in COVID-19 aid | McConnell to force vote on ‘targeted’ relief bill next week | Trump again asks court to shield tax records

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THE BIG DEAL-Pelosi, citing ‘leverage’ over Trump, holds strong to $2.2T in COVID-19 aid: Speaker Nancy Pelosi (D-Calif.) on Tuesday shot down entreaties from some Democrats to cut a $1.8 trillion deal with the White House on coronavirus relief, arguing that President Trump’s pleas for Congress to “go big” have given her leverage to hold out for more aid.

“I appreciate the, shall we say, a couple people saying, ‘Take it, take it, take it,'” Pelosi said in a phone conference with Democrats, according to source on the call. “Take it? Take it? Even the president is saying, ‘Go big or go home.'”

  • Pelosi and Treasury Secretary Steven Mnuchin have been in near-daily talks in search of an elusive stimulus agreement, even as the prospect of a deal before the Nov. 3 elections has faded.
  • Mnuchin last week had offered a $1.8 trillion package, up from an earlier proposal of $1.6 trillion, prompting a growing number of House Democrats to urge the Speaker to come down from her $2.2 trillion proposal.
  • That figure was already a reduction from the Democrats’ $3.4

Crude-oil futures finished Monday at their lowest price in a week, with production in Libya, Norway and the Gulf of Mexico set to recover.

Libya lifted force majeure at its largest oil field, producers began restoring output in the Gulf of Mexico following Hurricane Delta, and crude output in Norway looked to recover following the end of an oil-worker strike.

West Texas Intermediate crude for November delivery
CL.1,
-0.02%

fell $1.17, or 2.9%, to settle at $39.43 a barrel on the New York Mercantile Exchange. December Brent crude
BRN00,
-0.04%

lost $1.13, or 2.6%, at $41.72 a barrel on ICE Futures Europe.

Front-month WTI, the U.S. benchmark, and global benchmark Brent on Monday both marked their lowest settlements since Oct. 5, according to Dow Jones Market Data.

With the passing of the hurricane and the resolution of the strike in Norway, “investors are more concerned about the higher output in the face of subdued demand,” said Mihir Kapadia, chief executive of Sun Global Investments, in emailed comments. “However, more disruptions in the Gulf are likely in the coming weeks as the hurricane season continues. This could see prices increase again as workers will be expected to halt production during this time. ”

Hurricane Delta hit Louisiana as a Category 2 storm with sustained winds of over 100 miles an hour on Friday. The Bureau of Safety and Environmental Enforcement estimated Monday that 69.4% of oil output in the Gulf of Mexico remained shut in due to the storm, along with 47.1% of natural-gas production. That’s a big improvement from Sunday, when 91.01% of oil output and 62.15% of natural-gas production were shut in.

Offshore output was returning in the aftermath of the hurricane, said Robbie Fraser, senior commodity analyst at Schneider Electric, in a note.

The year 2020 has seen

Let’s start the week by looking at last week’s fund flows from ETF.com:

Both SPY and QQQ had outflows last week, although QQQ’s was massive. IWM stands in contrast. This partially explains why small-caps are doing better than larger caps right now. The long end of the treasury market also had a decent inflow of fresh capital.Only defensive sectors had outflows last week — which is interesting since these securities are rising relative to others. Financial services had the largest inflow. This is a bit odd since this sector is probably about to report increased losses and delinquencies caused by the Spring lockdowns. The other inflows were modest, relatively speaking.

Europe is experiencing a virus resurgence (emphasis added):

Earlier in the week, France, Europe’s second-largest economy, downgraded its forecast for the pace of expansion for the last three months of the year from an already minimal 1 percent to zero. Overall, the national statistics agency predicted the economy would contract by 9 percent this year.

The diminished expectations are a direct outgrowth of alarm over the revival of the virus. France reported nearly 19,000 new cases on Wednesday — a one-day record, and almost double the number the day before. The surge prompted President Emmanuel Macron to announce new restrictions, including a two-week shutdown of cafes and bars in Paris and surrounding areas.

In Spain, the central bank governor warned this week that the accelerating spread of the virus could force the government to impose restrictions that would produce an economic contraction of as much as 12.6 percent this year.

This is the same scenario that several Fed governors have warned about: a rising number of virus cases force localities to issue orders that slow economic growth. It’s a very real possibility this fall as flu season gets underway.

(Bloomberg) — Oil dropped the most in more than a week with Gulf of Mexico production starting to resume and Libya reopening its biggest field.

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Futures in New York declined 2.9%, falling to its lowest in a week and breaching its 100-day moving average in a sign of further selling pressure ahead. Global benchmark Brent futures settled below both its 100-day and 200-day moving averages.

A string of supply disruptions that have supported prices subsided. Royal Dutch Shell Plc, BHP Group and Chevron Corp said they have begun resuming operations at Gulf of Mexico platforms. Earlier, Libya’s National Oil Corp. lifted force majeure on the nation’s largest field, which will reach its daily capacity of almost 300,000 barrels in 10 days, a person with knowledge of the situation said.

“Delta was mostly priced in last week on the high side,” said Michael Lynch, president of Strategic Energy & Economic Research. “People are taking the profits now that it has moved on.”



graphical user interface, chart: Brent settles below key technical levels as supply disruptions abate


© Bloomberg
Brent settles below key technical levels as supply disruptions abate

Along with supply disruptions easing in the U.S. and Libya, the cancellation of a workers’ strike in Norway is returning more output to a market facing anemic demand due to the pandemic. U.K. Prime Minister Boris Johnson will tighten restrictions as infections rise, while Italy and the Netherlands are also considering new measures. Meanwhile, the Organization of Petroleum Exporting Countries and its allies are mulling whether to proceed with a plan to restore more output in January.

“They look at the balances as carefully as anybody else, and they’re looking at what the demand picture is,” said Andrew Lebow, senior partner at Commodity Research Group. “It’s highly unlikely that they’re going to pursue a tapering strategy. If anything, they might talk about having to reduce

This column assumes that ETFs are the primary investment tool for the reader.

Please see my weekly market summation for a review of the macro-economic environment and general macro-level market trends.

Investment thesis: the macro-averages are now in a bullish posture; it’s a good time to take a new position. But be careful; defensive sectors are starting to rise, indicating traders are a bit more cautious.

Let’s start by looking at last week’s market activity, beginning with the treasury market:

TLT 5-day

The treasury market moved lower on Monday and then traded sideways for the rest of the week. Volatility was higher on late Tuesday and Wednesday as the market digested the whipsaw activity regarding additional fiscal measures. Also note the sharp sell-off and subsequent rally on Friday, likely due to additional fiscal talk.

SPY 5-day

SPY trended higher for the entire week as shown by the central tendency line in blue. t took the index an entire day to recover from Tuesday’s sell-off, but it did recover.

IWM 5-minute

I noted in my weekly round-up that smaller-caps led the market higher this week. Notice that IWM had a very strong move higher earlier in the week. This explains why small caps did so well last week.

Let’s pull the lens back to the 2-week time frame:

IEF 2-week

During the last two weeks, the treasury market has clearly trended lower, as shown by the 200-minute EMA (in magenta). The ETF has gapped lower twice and then consolidated sideways.

QQQ 2-week

While larger caps are higher, their respective charts are messier. QQQ – which has led the markets higher for most of the post-lockdown rally – is struggling. It’s also been prone to sharper, higher-volume sell-offs.

IJH 2-week

In contrast, smaller caps have stronger charts. Mid-caps have a solid uptrend