Dow dropped 112, decliners over advancers 5-4 & NAZ pulled back 95. The MLP index was up chump change above 191 & the REIT index added 1 to the 481s. Junk bond funds continued higher & Treasuries saw active buying, bringing lower yields. Oil advanced 2+ to the 84s & gold went up 4 to 1824 (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)
Household debt passed $15T for the first time in Q3, as rising prices pushed up balances for homes & autos, the NY Federal Reserve reported. Mortgages rose 2.2% to nearly $10.7T & autos increased $28B as part of an overall $286B increase in debt that brought the total household burden to $15.2T, up 1.9% ($286B) from Q2. The household debt growth represented a 6.2% gain from the same period a year ago. The report covered the Jul-Sep period, part of a time when US economic growth slowed to a 2% annualized pace amid worries over surging inflation & a pandemic-induced slowdown. Housing debt accelerated with $1.1T in newly originated mortgages, more than 2/3 of which came from those with credit scores above 760 & just 2% to subprime borrowers. The trend comes with median housing prices up 19.9% for the qtr to more than $404K, according to the Census Bureau. Education loan debt crept higher by $14B to $1.6T as students went back to college. Just 5.3% of the loans were in serious delinquent or default status as a gov forbearance program extends thru Jan 31. Despite worries over growth, credit card balances increased by $17B to around $800B for the qtr, reversing a trend that began with the pandemic as consumers paid down revolving debt. Officials stressed that even with the rising debt loads, delinquency rates remain low and are declining, due in large part to an influx of gov payments that have led to elevated levels of saving & personal income. Credit scores for mortgage originations “remain very high,” the report said, even though they have declined slightly since the early days of the pandemic.
Household debt total passes $15 trillion for the first time
Boeing (BA), a Dow stock, delivered 27 planes to customers last month, but deliveries of its
787 Dreamliners remain suspended, just as airlines are gearing up for a
revival in international travel. The US lifted a
pandemic travel ban on visitors from 33 countries & airline executives
have said bookings for intl trips have jumped. Deliveries of
wide-body jets, which are often used for intl flights, have
been suspended for much of the past year after BA disclosed a series
of manufacturing flaws & took extra time to inspect its jets. American Airlines (AAL) & United Airlines (UAL)
are among the carriers with outstanding orders of the Dreamliner. Both
carriers are aiming to expand intl flying next year, eager to
make up for lost ground from 2 years of weak demand for foreign travel
due to the pandemic & a host of travel restrictions. Among BA's 27 deliveries last month were 18 737 Maxes, one 747
freighter, one 767 freighter & 2 777 freighters. Cargo jets & air
freight capacity have been in high demand during the pandemic amid
supply chain issues & a loss of belly capacity from other passenger
planes. The stock fell 1.88.
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 delivered 27 planes in October, airlines still waiting on new Dreamliners
The Congressional Budget Office (CBO) announced that there is currently no set timeline for when they will have a score for the Build Back Better Act, the social spending bill Dems are trying to pass. The CBO provides "scores" for legislation that estimate how bills would impact the budget by looking at factors such as spending, revenue & deficits. Given the sheer length of the social spending bill, the agency said they are working on a score, but it will take time. "Over the past several months, we have provided technical assistance to committees as they developed their proposals for various parts of the bill," CBO Director Phillip Swagel stated on the agency's website. "The analysis of the bill’s many provisions is complicated, and CBO will provide a cost estimate for the entire bill as soon as practicable." While these scores do not always come out before lawmakers vote on a bill, several moderate Dems have said they are looking to see what the score will be for the social spending bill. "In order to ensure the final bill is indeed fiscally responsible, we must first have the proper CBO/JCT scoring information before any floor consideration," said a letter to House Speaker Nancy Pelosi from Reps Ed Case, Jared Golden, Josh Gottheimer, Stephanie Murphy & Kurt Schrader. "Therefore, we cannot lend our support to advancing the BBB Act until we have had a chance to review these scores which provide the true cost of the legislation." With Dems holding a slim majority in the House, this demand from 5 party members could hold up a vote on the bill. Swagel said that while it will take time before they can release a score for the whole bill, CBO will release analyses of portions of the bill as they are ready, beginning later this week. "When we determine a release date for the cost estimate for the entire bill, we will provide advance notice," he added.
Biden spending bill: No date yet for CBO score, a key demand of moderates
Gold futures settled higher, stretching their streak of
consecutive gains to a 4th session, as inflation concerns &
interest-rate expectations remained in focus. St Louis Fed Pres
James Bullard yesterday said he expects
the central bank to raise interest rates twice in 2022. Dec gold climbed by $2 to settle at
$1830 an ounce, after trading as low as $1821. Tues marked a 4th straight session rise for most-active gold futures, the longest
run since a 5-day rise ended Jul 7. Prices settled at their highest since Sep 3. Gold is seen on a bullish uptrend, particularly as inflation fears climb & the $ has been somewhat subdued. Wholesale prices in the US.
surged again in Oct with the producer-price index up 0.6% last
month, offering little sign that the biggest increase in inflation in
decades is going to peter out soon. Treasury yields moved lower
despite the surge in wholesale inflation data, with the 10-year
Treasury yield at 1.425%, down from 1.496% yesterday. A fall in yields
can lower the relative cost of owning gold, which doesn't offer a
coupon.
Gold futures post 4th straight gain
Oil futures settled at their highest level in 2 weeks, with some analysts pointing out that talk of a potential release of crude from the US Strategic Petroleum Reserve (SPR) highlights the shortage of supplies. In a monthly report, the Energy Information Administration (EIA) said it estimates that world crude oil consumption has “exceeded” crude-oil production for 5 consecutive quarters going back to Q3-2020. It expects global crude oil demand to exceed global supply thru the end of this year, but global oil stocks will begin building in 2022, driven by rising production from OPEC+ & the US, along with slowing growth in oil demand. The EIA raised its forecast for 2022 US oil production by 1.4% to 11.9M barrels a day. Some analysts said the EIA’s monthly report would play a role in a decision by the Biden administration on whether to tap the Strategic Petroleum Reserve in an effort to lower oil & gasoline prices. An SPR release, however, would be a short-term measure at best, since any inventory drawn from the reserve would have to eventually be replenished. Oil prices may even rise in response to an SPR release as the move will be seen as a desperate attempt that highlights the acute shortage of oil. West Texas Intermediate (WTI) crude for Dec rose $2.22 (2.7%) to settle at $84.15 a barrel. Jan Brent, the global benchmark, gained $1.35 (1.6%) to $84.78 a barrel. Both WTI & Brent crude marked the highest front-month contract settlements since Oct 26.
Oil prices end at 2-week high as talk of potential U.S. SPR release highlights supply shortage
Dow Jones Industrials
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