Dow was off a relatively mild 105, decliners over advancers 2-1 & NAZ fell 175. The MLP index slid back 1 to the 168s & the REIT index dropped 6+ to the 483s. Junk bond funds fluctuated & Treasuries dipped a little lower. Oil remained lower, below 71, & gold declined 15 to 1773 (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)
Congress came one step closer to finally raising the debt ceiling when the Senate approved a procedural vote 50-49 on a bill to raise the debt ceiling $2.5T. The vote puts the chamber on path to pass the bill shortly. Then the House of Representatives is expected to quickly sync up with the Senate, sending the bill to Pres Biden's desk & averting a potential default after months of brinksmanship. "Last week, we advanced bipartisan legislation that will enable this chamber to address the debt ceiling on a fast-track basis," Senate Majority Leader Chuck Schumer said yesterday. "The Senate will act [Tuesday] to prevent default." Schumer said today the debt ceiling increase is expected to last until 2023 (after the midterm election). Nearly all Senate Reps earlier this year said they would vote against any debt ceiling increase in protest of Dems plans to spend Ts of $s along party lines. Reps insisted Dems use budget reconciliation to raise the debt limit, which is the process they used to advance their massive COVID spending bill earlier this year & are using again their social spending bill now. But Dems, led by Senate Majority Leader Chuck Schumer refused to use that process, which led to a standoff this fall between Reps & Dems that took the US just days away from defaulting on its debt. But Senate Minority Leader Mitch McConnell agreed to a temporary hike in the debt limit that prevented default until Dec. He emphasized that Dems shouldn't count on GOP votes to raise the debt ceiling again but still angered some in his party who saw the move as caving to Dems. Then, as the US approached a projected default date again this month, McConnell & Schumer cut a deal that would allow Reps to all vote against raising the debt ceiling without Dems using reconciliation. They slipped language in a must-pass bill to prevent Medicare cuts that allowed the Senate on a one-time basis to raise the debt ceiling via a simple-majority threshold rather than with the 60-vote threshold it needs to clear on most bills. This allows Dems to use their 50 votes, plus VP Harris as a tiebreaker, to pass the bill without involving a vote-a-rama or the other procedural hurdles associated with reconciliation – which Reps were going to help speed along anyway. But some in the GOP were unhappy with McConnell over the deal & wanted to keep fighting to either force Dems to make fiscal concessions to raise the debt limit, or to do it on their own with reconciliation. "I leaned ‘yes,’ when I first heard about it," Sen. Kevin Cramer said of McConnell's deal with Schumer. "But as I look at the calendar and the clock, I think we have more time to fight harder."
Senate inches closer to raising debt ceiling by $2.5T
The World Health Organization warned the new Covid-19 omicron variant is spreading faster than any previous strain & it is probably present in most countries of the world. “Omicron is spreading at a rate we have not seen with any previous variant,” WHO Director-General Tedros Adhanom Ghebreyesus said during a Covid update. “Seventy-seven countries have now reported cases of omicron. And the reality is that omicron is probably in most countries, even if it hasn’t been detected yet.” Tedros said the WHO is worried that countries are dismissing omicron as a mild variant. Though omicron is more contagious, it is not yet clear whether the strain causes more mild or severe disease than past variants of the virus. “We have learned by now that we underestimate this virus at our peril,” Tedros added. “Even if omicron does cause less severe disease, the sheer number of cases could once again overwhelm unprepared health systems,” he continued. He warned that vaccines alone will not protect countries from omicron, emphasizing the importance of masks & social distancing. “It’s not vaccines instead of masks. It’s not vaccines instead of distancing. It’s not vaccines instead of ventilation or hand hygiene. Do it all. Do it consistently. Do it well,” Tedros said. The omicron variant significantly reduces the protection against infection provided by Pfizer (PFE) & BioNTech's (BNTX) 2-dose vaccine, according to preliminary lab data released last week. Scientists at the University of Oxford published a study yesyterday that also found the PFE & AstroZeneca (AZN) vaccines are less effective against omicron. However, the 2-dose vaccines likely still protect against severe disease. PFE & BNTX found that a booster shot provides significant levels of protection against omicron infection.
Omicron is spreading faster than any other Covid variant, WHO warns
The omicron Covid-19 variant ago now makes up about 3% of cases sequenced in the US, according to data from the Centers for Disease Control & Prevention (CDC). While the delta variant still dominates the US at about 97% of all Covid cases analyzed, omicron is quickly gaining ground. The new variant represented an estimated 2.9% of all cases sequenced last week, up from 0.4% the previous week, according to the CDC. More than 2 dozen states have reported omicron cases so far. California was first to confirm an omicron case in the US on Dec 1 in a resident who flew from South Africa. But the CDC on Fri said the've confirmed an earlier case of omicron in a patient who developed symptoms on Nov 15. It's not clear when the variant first arrived in the US. The CDC on Fri said one vaccinated person has been hospitalized with omicron, but no deaths have been reported among the 43 patients that have been followed up on. The most common symptoms so far are cough, fatigue, congestion & a runny nose. Among those patients, 58% were 18-39 years of age & 79% were fully vaccinated at least 14 days before symptom onset or testing positive. The CDC reported that 33% of the 43 patients traveled internationally during the 14 days prior to developing symptoms or testing positive, indicating that community spread is underway in the US.
Omicron now makes up almost 3% of U.S. Covid cases, according to the CDC
Gold futures declined with prices marking their lowest finish in nearly 2 weeks. Investors braced for the outcome of meetings among central bankers this week, headlined by the Federal Reserve, which could catalyze moves in precious metals. The Fed will end its 2-day, monetary-policy meeting tomorrow & Chair Jerome Powell said last month that the bank needed to shift its focus toward preventing rising inflation which has reached its highest level since 1982, by at least one measure. Feb gold fell $16 (0.9%) to settle at $1772 an ounce for the lowest finish since Dec.2. Prices saw a modest gain a day earlier, which marked the highest settlement for a most-active contract since Nov 22. Gold prices extended their decline shortly after data released today showed that the producer price index climbed 0.8% last month, exceeding the average 0.5% rise forecast. The increase in wholesale prices in the past 12 months rose to 9.6% from 8.8%, marking the biggest advance since a major change in the index in 2009. The ECB, Bank of England & Bank of Japan are also scheduled to meet this week.
Gold settles at a nearly 2-week low ahead of this week’s Fed decision
Oil futures declined to their lowest settlement in more than
week, after the Intl Energy Agency (IEA) said the omicron variant of
the coronavirus that causes COVID-19 would slow a recovery in demand for
crude. The gov reported that the producer price index climbed by a more-than-expected 0.8% last month. Also, the Paris-based IEA, in its monthly report, cut its 2022
supply forecast from non-OPEC producers by 100K barrels a day &
reduced its demand forecast by the same amount, saying it expects the
surge in coronavirus cases to stymie the recovery in global demand. West Texas Intermediate crude for Jan fell 56¢ (0.8%) to settle at $70.73 a barrel after tapping an intraday low of $69.51. Feb Brent crude,
the global benchmark, lost 69¢ (0.9%)) to $73.70 a barrel. Both WTI & Brent crude contracts marked their lowest front-month contract settlements since Dec 6 Central banks are also in focus, with the Federal Reserve expected to
move tomorrow to more quickly wind-down its monthly bond purchases,
setting the stage for interest rate increases by next spring.
Those guys in DC will have another nail biter tonight, playing games involving massive sums of money. The debt ceiling really moans little because they increase it any time they need to. This is not the way to manage spending money. However the money is not theirs so they don't care. The virus war lingers on & shows no sign of giving up soon. Tomorrow when the Fed speaks, investors will listen!!
Dow Jones Industrials
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