Dow fell 118 to around session lows, advancers over decliners 3-2 & NAZ was off 20. The MLP index added 1+ to the 193s & the REIT index shot up 5+ to the 454s. Junk bond funds were mixed & Treasuries continued in demand. Oil was up pennies, heading for 81, & gold went up 4 to 1760 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Americans' inflation fears skyrocketed to another record high in Sep, driven by the rising price for an array of consumer goods, according to a Federal Reserve Bank of New York survey. The median expectation is that the inflation rate will be up 5.3% one year from now, the 11th consecutive monthly increase & another new high for the gauge, according to the New York Federal Reserve's Survey of Consumer Expectations. Inflation expectations over the next 3 years increased to a median of 4.2%, a 3rd monthly increase & the highest rate since the survey launched in 2013. "Median inflation uncertainty – or the uncertainty expressed regarding future inflation outcomes – was unchanged at the short-term horizon and decreased at the medium-term horizon," the survey said. "Both measures are still well above the levels observed before the outbreak of COVID-19." Even though consumers are braced for the highest inflation levels in nearly a decade, they still said they expect the price of things like food, gasoline, medical care, rent & college tuition to decrease over the next year. Americans also anticipate that the prices of homes will fall slightly, with one-year expectations decreased slightly to 5.5% in Sep, marking the 4th straight monthly decline. Despite the decline, it's still substantially higher than the previous one-year average of 3.7%. The report is based on a rotating panel of 1300 households. Inflation has accelerated as the economy recovers from last year's brief but extremely severe recession. Federal Reserve Chairman Jerome Powell has largely attributed the spike in consumer prices to pandemic-induced disruptions in the supply chain, a shortage of workers that's pushed wages higher and a wave of pent-up consumers flush with stimulus cash. Still, he's maintained the rise in inflation is likely "transitory" & has warned about the dangers of the Federal Reserve acting superfluously to lower the benchmark federal funds rate. Projections from the Fed's rate-setting meeting predicted an annual inflation rate of 4.2% by year's end, an increase from 3.4% in Jun. Still, policymakers projected that inflation will cool to about 2.2% next year, closer in line with their goal range.
US inflation expectations surge to highest level since 2013
House Problem Solvers Caucus Chairman Josh Gottheimer says in an op-ed for NJ.com that the House of Representatives should pass the bipartisan infrastructure bill quickly to get "shovels in the ground" during negotiations on Dems' reconciliation bill. The missive from Gottheimer comes despite the fact that top congressional Dems, progressives & even Pres Biden's White House are all moving forward with a strategy of holding onto the infrastructure bill until negotiations on Dems' reconciliation bill are complete. In the piece, Gottheimer blames "some" of his colleagues for holding up the infrastructure bill. "You can see why many of us want to vote on it as soon as possible, send the infrastructure bill to the president’s desk, and immediately get shovels in the ground and people to work," Gottheimer continued. "But here’s the rub. Recently, despite broad popularity, some of my colleagues blocked a vote on the infrastructure package. They wanted us to wait on it until we vote on the reconciliation bill." He added: "But the details of that legislation are still up in the air and require considerable debate and negotiation in the House and with the Senate. Meanwhile, infrastructure was passed in August and is still sitting in the House awaiting a vote." Gottheimer said he supports passing a reconciliation bill, even if he disagrees with some Dems on what he should look like. And in the op-ed he characterized these differences over what the reconciliation bill should look like as "small." That is perhaps a stretch given the fact progressives want a bill that is Ts of $s more expensive than what Sen Joe Manchin is demanding with his $1.5T topline. But he nevertheless argued that Democrats should take their time negotiating on reconciliation while pushing thru the infrastructure bill now. "Yes, it’s true — not everyone agrees on the size and scope of the bill; that’s still being debated," Gottheimer said. "[W]e are still debating the full scope of the plan and how to pay for child care, climate, and other provisions. But, in the meantime, I just didn’t think Congress should hold up the president’s historic bipartisan infrastructure investments and millions of jobs."
Gottheimer tells Dems to stop blocking infrastructure bill
Boeing (BA), a Dow stock, reported net aircraft sales for the 8th consecutive month, but
deliveries of its Dreamliner planes remain suspended as they undergo
quality checks. The aircraft manufacturer posted sales of 27
aircraft, including 16 "737 Max planes" & 6 "777 freighters" in
Sep as well as cancellations of 5 planes. BS delivered 35 jets last month. Those included 26 737 "Maxes." Net orders for the year thru Sep are 349. BA stock fell 2.81.
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7
Boeing aircraft orders outpace cancellations for eighth consecutive month
Energy prices are surging & the economy is already feeling the pinch of higher fuel costs though it is far from stalling out. There is an unusual coincidence of much higher oil, natural gas & coal prices, combined with other rising commodities & supply chain disruptions. That perfect storm of shortages & higher prices begs the question of whether the economy could go into a serious tailspin or even a recession. Economists say, for now, the jump in prices is not the type of oil shock that will turn US growth negative, but there will be economic consequences of higher energy costs, particularly in places like Europe where natural gas prices have skyrocketed. American consumers have already been paying up for gasoline, & heating & electricity costs could rise more this winter. Oil prices are up more than 65% this year so far, while natural gas prices have jumped more than 112% since Jan. Since last Oct, gasoline prices have risen about $1.10 per gallon & are now at $3.27 per gallon for unleaded. Oil prices were depressed & even turned negative when the pandemic shut down the economy in 2020. Now, forecasts for $100 oil are getting more common, as West Texas Intermediate oil futures trade above $80 per barrel for the first time since 2014. Coal prices have also been rising & supplies are short, creating a power supply crunch in China. The country burns coal to generate electricity, but the inventory at its power plants faced a 10-year low in Aug. That has also increased the demand for natural gas. But economists say the rise in energy prices would have to be sharper & much more prolonged to cause a recession.
Sharp surge in energy prices threatens economic recovery and is already slowing growth
Gold futures marked the first gain in 4 sessions, with prices for the precious metal settling at their highest in almost a week after the IMF said the global economy is losing momentum. In its World Economic Outlook report, the IMF said it sees global growth of 5.9% this year, down one-10th of a % from Jul. It also said it sees slowing to 4.9% growth in 2022. For the US the IMF cut its growth estimate for this year by 1% to 6%. Against that backdrop, Dec gold rose $3 to settle at $1759 an ounce, following a fractional drop yesterday, which marked a 3rd consecutive decline. Prices for the most-active contact logged the highest finish since Oct 6. Federal Reserve Vice Chair Richard Clarida said the labor market hurdle need for tapering bond purchases “has all but been met.” The 10-year Treasury note was yielding around 1.584% down from 1.604% on Fri. The Treasury market was closed yesterday, even as other markets were open. Meanwhile, the $ was up 0.2% at 94.546. A pause in the rise of yields & the $ can pave the way for higher moves in precious metals which are priced in $s & don't offer a coupon. Meanwhile, concerns about inflation, as the global economy tries to claw back from the aftershocks of the COVID-19 pandemic, has complicated the outlook for precious metals because an overheated economy may force central bankers to dial up interest rates sooner, a negative for gold prices. A reading of consumer prices, the consumer-price index, is due to be released tomorrow & prices for wholesalers, the producer-price index, is due Thurs.
Gold prices post first gain in 4 sessions to settle at highest in nearly a week
Oil futures ended on a mixed note, with US prices
stretching their streak of gains to a 4th session, but global crude
benchmark prices settled lower after the IMF
trimmed its global economic growth forecast. US & global
crude-oil prices had posted 3rd consecutive session gains on
the back of tight supply, fueled by the global energy crisis that lifted
both benchmarks to multiyear highs. However, the IMF said
the global economy is losing momentum. It now sees global growth of
5.9% this year, down one-10th of a % point from Jul & also
sees growth slowing to 4.9% next year. West Texas Intermediate (WTI) crude for Nov briefly
fell back toward $80 a barrel, but
moved up by 12¢ to settle at $80.64 a barrel. WTI
marked its 2nd straight finish above the key $80 mark & saw the
highest finish since Oct 2014. Global
benchmark Dec Brent crude however, lost 23¢
to settle at $83.42 a barrel, after settling yesterday at a nearly 3-year high. Meanwhile, expectations that nuclear talks with
Iran may soon resume put some pressure on prices. A top
European official was due to travel to Tehran as early as this week in
an effort to reach an agreement to restart nuclear talks between Iran & world powers. Also, analysts said steep backwardation — a condition in which
nearby contracts trade at a premium to later-dated contracts —
underscores tight supply conditions.
U.S. oil prices tally 4th straight gain, but Brent ends lower as IMF trims global growth outlook
The news behind the stock market is touchy. The recovery is coming along & the fight against the virus is going better. However the story about higher inflation & slower economic growth are worrisome. So the Dow remains in its sideways trend.
Dow Jones Industrials
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