Dow sank 240, decliners over advancers better than 2-1 & NAZ tumbled 263. The MLP index was off 3+ to the 188s while oil prices dropped & the REIT index declined 1+ to the 479s. Junk bond funds fluctuated & Treasury yields soared, rising an enormous 12 basis points to 1.55%. Oil sank 3 to the 81s & gold soared 20 to 1851 (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)
After weeks of plunging US Covid-19 cases, the decline in infections has stalled out. New infections have dropped to an average of more than 74K per day over the past week, a 57% fall from the delta wave's peak level of 172K new cases per day on Sep 13. While that surely is good news, the downward trajectory has leveled off in recent weeks, bouncing between 70-75K new cases a day for nearly 3 weeks, according to Johns Hopkins University. Covid-hotspots across the US, in the meantime, have shifted away from much of the South. The daily death toll still remains elevated, with more than 1200 fatalities per day reported over the past week, up 1% from a week ago. Cases have fallen most sharply in the South, where the delta wave hit earliest & hardest over the summer, with average daily infections in the region down by about 84% from peak levels & continuing to fall. The decline has been so steep that Florida, where hospitals were overrun as it fought one of the worst Covid outbreaks in the nation this summer, is now the state with the fewest number of average daily new cases on a population-adjusted basis. Hospitalizations & deaths are also down in the South. The region's 7-day average of 112 Covid patients per 1M residents is the lowest in the country, according to data from the Dept of Health & Human Services. Things are trending in the opposite direction outside of the US South. Cases are up 25% in the Midwest, 18% in the Northeast & 4% in the West over the past 2 weeks. Hospitalizations, which lag reported infections, are down 9% in the Northeast over that same period but largely flat in the Midwest & West.
After weeks of declines, U.S. Covid cases have stalled at a high level:
What looked like a big jump in workers' wages during Oct turned into just another gut-punch after accounting for inflation. The Labor Dept reported Fri that average hourly earnings increased 0.4% in Oct, about in line with estimates. That was the good news. However, the dept reported today that top-line inflation for the month increased 0.9%, far more than what had been expected. That was the bad news – very bad news because it meant that all told, real average hourly earnings when accounting for inflation, actually decreased 0.5% for the month. So an apparent solid paycheck increase actually turned into a decrease & another setback for workers still struggling to shake off the effects of the Covid pandemic. While consumer confidence leaped higher from the lows of the pandemic around Apr 2020 for a solid year after, it has come down substantially since, coinciding with the rise of inflation to its highest pace in more than 30 years. The University of Michigan's closely watched index of consumer sentiment for Aug slumped to around its lowest level in nearly a decade. Wages, though, have swelled during the period, with average hourly earnings up 4.9% year over year in Oct. However, compared with inflation, real hourly wages actually have declined more than 1.2% during the same timeframe, according to the Labor Dept. Real weekly earnings have been even worse, dropping 1.6% during the period when accounting for the 0.3% decrease in the average workweek. Consumers have responded by ramping up their inflation expectations, which historically have been tied closely to gasoline prices. Costs at the pump have swelled 49.6% over the past 12 months, the Labor Dept reported in today's consumer price index reading. The Fed finds itself under increasing pressure to adjust policy accordingly. Central banks raise interest rates to combat inflation, though officials have said repeatedly they don't anticipate doing so until at least well into 2022.
Inflation has taken away all the wage gains for workers and then some
The House version of the Dem spending bill due to be voted on later this month includes a number of sweeping immigration provisions -- even as the chances of them passing the Senate appear to be shrinking. The House version of the Build Back Better Act, a $1,750,000,000,000 ($1.75T) spending package that Dems are trying to get thru both chambers without needing Rep support, includes a number of provisions on both legal & illegal immigration. Perhaps most significantly is a provision that would allow for a parole period until 2031 to an estimated 6.8M illegal immigrants if they were present in the country before 2011. Current law says that parole can be used on a case-by-case basis for "urgent humanitarian reasons or significant public benefit" but the Biden administration has been using that power in a much broader fashion. It would allow illegal immigrants not only protection, but also the ability to obtain travel & work permits, as well as state ID. On aid & public benefits, the bill expands student aid eligibility to include some illegal immigrants such as recipients of Deferred Action for Childhood Arrivals (DACA) protections. The bill also repeals social security number requirements for the child tax credit -- meaning illegal immigrants would be eligible for the public benefit if they file taxes thru an Individual Taxpayer Identification Number (ITIN). Illegal immigrants are not eligible for social security numbers. Immigration hawks have noted that this is a measure supported by Big Tech companies & have said that it would undermine American workers.
House Dems defend plan to give work permits to millions of illegal immigrants
Gold futures rallied settling at their highest since Jun, as data showing the US rate of inflation at its highest in 3 decades lifted prices for bullion for a 5th-consecutive session. The cost of living rose sharply again in Oct, with the consumer-price index up 0.9% last month, the gov said. The pace of inflation over the past year marched to 6.2% in Oct — the highest rate since 1990. The $ was up 0.9% at 94.781, as gauged by the ICE U.S. Dollar Index a measure of the buck against a ½-dozen currencies. Strength in the $ often pressures prices for $-denominated gold. Dec gold rose $17 (1%) to settle at $1848 an ounce, with prices notching a 5th straight session rise, the longest run since a 5-day rise ended Jul 7. Prices settled at their highest since Jun 16.
Gold logs highest finish since June as the rate of U.S. inflation climbs to a nearly 31-year high
Oil futures fell, posting their first loss in 4 sessions, pressured by a weekly rise in US crude inventories, as well as strength in the $ on the heels of a hotter-than-expected inflation reading which boosted bond yields. West Texas Intermediate crude for Dec fell $2.81 (3.3%) to settle at $81.34 a barrel after posting gains in each of the last 3 sessions. YTD front-month prices are still up nearly 68%. Jan Brent, crude the global benchmark, lost $2.14 (2.5%) at $82.64 a barrel, snapping a 3-session rise. Demand is still strong & the pace of inflation over the past year marched to 6.2% in Oct, the highest rate since 1990. Prices are going up everywhere on everything. Even with the threat of releasing oil from the Strategic Petroleum Reserve, there should be very short-lasting weakness in energy prices.
The gloomy news on inflation was taken relatively well in the stocks market, even though Treasury yields & gold each had a significant rally. Sellers appeared in the PM, but buying into the close reduced the decline a little at the close. Inflation is an ugly tax that affects EVERYBODY. Because of that, the FED may feel it needs to get more involved & raise interest rates sooner that previously predicted. In the background, the fight against the virus is making progress. But it's not over.Dow Jones Industrials
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