Dow shot up 351 (with a strong finish & well above 36K), advancers over decliners 2-1 & NAZ gained 217. The MLP index added 3+ to the 175s & the REIT index jumped 8+ to the 503s for another record. Junk bond funds were higher & Treasuries continued in demand with higher prices. Oil went up 1+ to the 175s & gold slid back 2 to 1809 (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)
Energy prices exploded in 2021 & 2922 may bring a repeat unless the Biden administration changes its anti-fossil fuel agenda. Canceled pipelines & drilling moratoriums have created a toxic
environment for US oil & gas investment. Because of this, the US
will be undersupplied in the new year unless the omicron variant shuts
us down or if rising costs drive the economy into a recession. If these
shadows of our current energy policy remain unaltered, then oil prices could surge to $100 a barrel next year. Looking back at 2021, that this was a year of the great
inflation expansion, unlike anything seen in a generation. In
Nov consumer price inflation was up 6.8%, the highest since 1982 & while supply chain issues due to COVID-19 were a big part of what
was pushing prices higher, a look at the big picture showed it was the
cost of energy as one of the root causes. Rising
energy costs were not just COVID-19-related but a self-inflicted wound
by the Biden administration as it signaled an ill-advised war on fossil
fuels during a pandemic that sucked $s from the US economy into
the economies of Russia & OPEC. Saudi Arabian energy minister
Abdulaziz bin Salman warned that the reduced investment in oil & gas
would cause global oil production to fall by 30M barrels a day & would only enhance the cartel's dominance in the global oil & gas
space. For many years economists were stunned that we could see the economy
grow at a rapid pace while inflation remained subdued. Federal Reserve
officials were confused as to why we were not seeing inflation creep
back into the marketplace. Yet a big part of that was to the credit of
the US energy producer. The shale revolution provided plentiful &
cheap energy, which allowed businesses to grow without seeing their
costs increase & that kept price pressures low. That also created
jobs, not just in the energy industry but also from manufacturers that
benefited from low US fuel costs. Large & small businesses flourished, powered by cheap US - produced oil & gas. Now inflation is on the rise as US oil & gas production has
faltered. One might think cheap, plentiful, affordable energy would be a
godsend, but fixations over climate change & a green energy agenda
have discouraged much-needed investment in the US energy & gas
space. Pres Biden will bear responsibility for this
underinvestment. Oil prices are hovering near the $72-per-barrel
level as investors gauge the possibility of future lockdowns. If we
sidestep those, oil supplies will be even tighter despite the false
impression of adequate supply. Demand numbers may jump right into the
new year.
Oil may hit $100 in 2022 as US energy independence dwindles
As shoppers kick off a wave of returns & exchanges or rush in to spend gift cards, retailers appear to have reason to celebrate: Holiday spending rose 8.5% compared with a year ago, according to Mastercard SpendingPulse. The gain was slightly less than the 8.8% increase that Mastercard had predicted, but it was the biggest annual increase in 17 years. Still, some are concerned that a strong holiday season could set up a more challenging Jan & Feb. Retailers and investors are just starting to get a read on the peak shopping season. The Mastercard data, one of the first looks at the season, tracks in-store & online retail sales from Nov 1- Dec 24 across all forms of payment, excluding automotive sales. By its measure, retail sales significantly exceeded pre-pandemic levels, with total sales increasing 10.7% this holiday compared with the same time in 2019. In-store sales grew 2.4% & online sales surged 61.4% versus the 2-year-ago period. Since the pandemic, online shopping has become a common holiday-shopping habit. E-commerce sales jumped 11% from 2020 to 2021. Online sales made up nearly 21% of total retail spending, roughly in line with the year-earlier period & up from 14.6% in 2019. Some retail categories especially shined. Apparel sales & jewelry sales rose 47% & 32%, respectively, versus the year-ago period. They were up 29% & 26% when compared with the holiday season in 2019. Electronics sales jumped 16% compared with the year-ago period.
Holiday sales jumped 8.5%, Mastercard says, as shoppers shrug off higher prices
Holiday shopping returned with a vengeance this year. But going into debt is one gift that can't be returned. After Americans paid off a record $83B in credit card debt in 2020, helped by gov stimulus checks & fewer opportunities for discretionary purchases, credit card balances are heading higher once again. Overall, credit card balances rose by $17B in Q3, according to the most recent data from the Federal Reserve Bank of New York. In Q4, fueled by the return of holiday plans, consumers charged Bs more. By the end of the year, Americans are now on track to end up with $70B more in credit card debt, according to a projection by personal finance site WalletHub. The average household's card balance is now $8006, WalletHub found. Balances are expected to continue to rise in 2022, ending Q1 as much as 10% higher than a year ago, as more consumers apply for credit & increase their spending, according to a forecast by TransUnion. Usually, card balances decline in the first months of the year as borrowers pay off their holiday spending. By Q4-2022, total balances are expected to reach $806B, TransUnion found — the highest level since the start of the Covid-19 pandemic.
Holiday shopping fuels the return of credit card debt
Gold futures finished in negative territory, halting a string of gains at 3 consecutive sessions but managing to hold above the psychologically significant price at $1800 to start the final week of trading in 2021. Contracts for gold for Feb traded $2 lower to end at $1808 an ounce, but had traded intraday at $1803-$1814. Trading was closed Fri last week, when gold put in a weekly advance of 0.4%, which brought it to the highest price since Nov 19. For the year, gold futures declined 4.6%. Gold's trade to start the week comes as the $ was gaining some traction, with little data & news to constrain the buck in the week following Christmas. Greenbacks were rising inched up on the session & have gained nearly 7% so far in 2021, as measured by the ICE US Dollar Index. A stronger $ could impede buying in commodities priced in the currency such as precious metals. Optimism that the latest surge of the pandemic, led by the omicron variant of the virus that causes COVID-19, won't disrupt the economy has helped to push stock markets higher in the recent session, capping the upswing in assets considered havens.
Gold closes slightly lower to start final week of 2021
Crude-oil futures stutter-stepped to a sharply higher finish, with investors shaking off earlier concerns in the session tied to the spread of the omicron variant of the coronavirus that causes COVID-19. Initially, US oil traded under selling pressure, as COVID-fueled travel disruptions over the holiday raised fresh questions about demand for energy, highlighting what has been a seesaw shift in mood amid the viral pandemic. However, crude futures gained support from a focus on optimistic news, including out of China, one of the biggest importers of commodities in the world. The People;s Bank of China pledged greater support for the real economy, with the central bank saying that it would aim for targeted policy measures to stimulate the world's 2nd-largest economy. Energy experts also pointed to reported comments from Saudi Energy Minister Prince Abdulaziz bin Salman, in which the energy official of one of the biggest oil producing nations said the world faces a 30M-barrel-a-day supply shortfall by the end of the decade. Next week OPEC+ is set to gather on Jan 4. West Texas Intermediate crude for Feb was trading $1.78 (2.4%) higher, to settle at $75.57 a barrel, after putting in a 4.3% weekly gain on Thurs, which pushed the US benchmark contract to the highest finish since Nov 24. Meanwhile, Feb Brent, the global benchmark, rose $2.46 (3.2%) to close at $78.60 a barrel, following a 3.6% weekly finish on Fri, with the ICE Europe market open on Christmas Eve.
U.S. oil rebounds to end back above $75, after omicron sparked early Monday slump
In light trading, buyers were encouraged by reports of strong US retail sales. The Dow kept rising for the entire trading session. Oil trading has gone thru an usually wild time in the last 2 years. It started out 2020 at a low level & then plunged below zero in Apr on fears of the spreading virus. OPEC imposed severe productions, &, from strong demand, oil prices returned to where they had been in recent years. 2020 is a year that will be long remembered. The news that the Chinese gov will stimulate their economy was bullish for oil & stocks.
Dow Jones Industrials
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