Dow lost 59 (above session lows), decliners over advancers 5-2 & NAZ tumbled 295. The MLP index fell 1+ to the 172s. & the REIT index was off 13+ to the 473s. Junk bond funds saw selling & Treasuries were heavily bought in the PM, cutting the yield on the 10 year Treasury a very big 10 basis pints to 1.34%. Oil finished lower into the 65s & gold rose 23 to 1785 (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)
Holiday sales could exceed even the rosiest expectations for the major shopping season, according to the National Retail Federation (NRF). The major trade group's economist, Jack Kleinhenz, said that spending in Nov & Dec could grow as much as 11.5% compared with the same period a year ago — higher than many retail analysts & NRF itself had predicted. The NRF had already called for a record holiday season, projecting in late Oct that sales would rise 8.5-10.5% from last year. The group said it expected sales in Nov & Dec would hit an all-time high of $834-859B. The sales forecast excludes spending at automobile dealers, gas stations & restaurants. Last year, holiday sales rose 8.2% from 2019 to a record $777B. “People have the ability to spend and I think they are in the mood to spend,” Kleinhenz said. He pointed to strong balance sheets coming out of the pandemic, the low unemployment rate & the desire to reunite for holiday gatherings. He acknowledged uncertain factors, including how consumers will react to the omicron variant & whether that may change how they shop & celebrate or what they may buy. “There’s no crystal ball to provide a definitive answer, but the latest data is encouraging and provides useful insights,” he added. “In fact, the season could turn out even better than we expected.” So far, this holiday season has had a different rhythm & unique challenges. Shoppers began buying gifts early because of concerns about product availability & shipping delays. Retailers worked to keep goods moving amid congested ports & truck driver shortages. And inflated prices on everything from materials to fuel means consumers are finding fewer deals whether they shop online or in stores. That pulled forward a lot of spending into Oct & early Nov, stealing some of the thunder from major shopping holidays like Black Friday & Cyber Monday. The total number of shoppers & average spending dropped during the extended Thanksgiving weekend compared with each of the past 2 years. He said thinks shoppers will keep spending, even if they have already bought many gifts. “If you look If you look at what happened last November, we had an early October and we had a very, very strong November,” he added. “People are creatures of habit. There’s still a lot of time between now and the holidays.”
Holiday sales set to blow past spending record, topping trade group’s forecast
The Federal Resrve should tighten monetary policy at a faster pace in light of rising inflation risks, the International Monetary Fund (IMF)said. The Fed decided in early Nov to start tapering — which refers to a reduction in the amount of bonds it purchases — “later this month” at a pace of $15B every month.. However, with the identification of a new Covid variant & inflation running above target, the IMF argued this pace should be accelerated. “We see grounds for monetary policy in the United States — with gross domestic product close to pre-pandemic trends, tight labor markets, and now broad-based inflationary pressures — to place greater weight on inflation risks as compared to some other advanced economies including the euro area,” the IMF said. “It would be appropriate for the Federal Reserve to accelerate the taper of asset purchases and bring forward the path for policy rate increases.” Speaking earlier this week, Fed Chair Jerome Powell indicated that the central bank could step up its tapering efforts & that this would likely be discussed at a meeting this month. Data released in Nov showed that the consumer price index rose 6.2% in Oct from a year ago — hitting its highest level in 30 years. However, when it comes to raising interest rates, the Fed has said that market players should not interpret tapering as a sign of an imminent rate hike. In this context, the IMF is asking central banks, not just the Federal Reserve, to communicate their plans clearly. “It is essential for major central banks to carefully communicate their policy actions so as not to trigger a market panic that would have deleterious effects not just at home but also abroad,” the IMF said.
IMF urges Fed to speed up monetary policy tightening amid rising inflation fears
The World Health Organization (WHO) said the Covid omicron variant has been detected in 38 countries, up from 23 just 2 days ago, with early data suggesting the strain is more contagious than delta. “We do see an increasing growth rate, we see increasing numbers of omicron being detected,” Maria Van Kerkhove, the WHO’s Covid-19 technical lead, said. “But we have reports of omicron in 38 countries in all six WHO regions.” “There is a suggestion that there is increased transmissibility, what we need to understand is if it’s more or less transmissible compared to delta,” Van Kerkhove added, noting that the delta variant is still dominant across the globe. Dr Mike Ryan, exec director of the WHO's health emergencies program, said “clearly the virus does appear to be transmitting efficiently.” “And we saw that before with delta. So again, there’s certain things we shouldn’t be surprised with,” Ryan continued. Omicron has some 30 mutations on the spike protein, which is the mechanism used to bind to human cells. Some of these mutations are associated with higher transmission and the ability to escape immune protection, according to the WHO. South African scientists this week found that omicron is associated with a “substantial ability” to reinfect people who already had Covid, compared with past variants of the virus. The study has not yet been peer reviewed. Van Kerkhove said it's still too early to understand the severity of disease caused by omicron. Early reports of mild symptoms in some of the first cases where it was identified were based on a cluster of university students who tend to be younger & experience more mild symptoms than older adults, she said.
WHO says Covid omicron variant detected in 38 countries, early data suggests it’s more contagious
Gold futures climbed, holding the bulk of their gains after
US jobs growth fell short of expectations, but prices ended a bit
lower for the week a day after posting a more than 7 week low. Nov US payrolls data showed a gain of 210K jobs,
against expectations for a rise of 573K & a rise of 531K in
Oct. The jobless rate, however, fell to 4.2% from 4.6% & touched a
new pandemic low. A reading of the Institute for Supply Management’s services index showed a rise to a higher-than-expected 69.1% in Nov from 66.7% in Oct. The most active Feb gold contract rose 1.2% ($21) to settle at $1783 an ounce. For the
week, gold prices based on the most-active contract traded a tad
lower. Yesterday gold dropped 1.2% to finish at $1762 an ounce, the lowest settlement for a most-active contract since Oct 12. Investors continue to watch for updates on the omicron variant that
was brought to the world's attention late last week by South African
scientists which has triggered days of market turmoil. Gold
has disappointed investors in recent days who were hoping the precious
metal would draw haven bids & retake the psychologically important
level of $1800 an ounce.
Gold ends higher after disappointing jobs data, but falls slightly for the week
Oil futures ended on a mixed note, but both the US & global benchmarks suffered their 6th weekly decline in a row — the longest streak of declines in 3 years — as the emergence of the omicron variant of the coronavirus threatened the outlook for energy demand. West Texas Intermediate (WTI) crude for Jan fell 24¢ to settle at $66.26 a barrel, after touching a high at $69.22. Feb Brent crude, the global benchmark, tacked on 21¢ to end at $69.88 a barrel. For the week, WTI lost 2.8% & Brent fell 2.4%, based on the front months. The move for oil prices follows yesterday's decision by OPEC+ to rollover a current production policy & raise monthly overall output by 400K barrels per day in Jan. The group of major oil producers also said its meeting would remain “in session,” essentially leaving the door open to make immediate adjustments to output based on market developments. Meanwhile, a recent report that Saudi Arabia, the de facto head of OPEC, may braise prices for Asia in Jan for its Arab Light crude, also has lifted bullishness within the crude complex that demand for oil remains healthy. Still, worries about the near-term demand, in the face of the new variant is expected to continue to weigh on markets as traders eye prospects for economic activity & oil demand.
Oil futures fall for a 6th straight week, the longest streak of declines since 2018
This was another dreary day although there was buying in the last hour of treading. But the Dow still finished down 320 in this wild week. The chart below shows investors want to take a pause after a major rally from the depression lows early last year.
Dow Jones Industrials
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