Dow declined 201, decliners over advancers about 2-1 & NAZ rebounded 84. The MLP index gained 3+ to the 198s & the REIT index fell 4+ to the 483s. Junk bond funds continued weak & Treasuries had heavy selling (maybe some from from the Fed) raising interest rates. Oil jumped 1+ to the 83s on tensions between Russia & Ukraine & gold slid 4 to 1816 (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)
US holiday sales hit a record $886B in 2021, data from a trade body showed, as people rushed to buy gifts online & in stores amid a jump in Covid-19 cases & supply chain issues that threatened to upend the crucial shopping season. The National Retail Federation (NRF) said holiday sales, including e-commerce, jumped 14.1% during Nov & Dec, marking the highest growth in at least 2 decades & exceeding its latest forecast of a rise of as much as 11.5%. “Despite supply chain problems, rising inflation, labor shortages and the Omicron variant, retailers delivered a positive holiday experience to pandemic-fatigued consumers and their families,” NRF CEO Matthew Shay said. The shopping season, the busiest time of the year for retailers, was marked by shipping delays caused by the pandemic & subsequent product shortages. To ensure supply over the make-or-break season, some retailers re-rerouted goods to less congested ports & even chartered their own vessels to get holiday items to their shelves on time. An Omicron-led surge in coronavirus cases at the end of the year also added to retailers' woes, limiting staffing & reducing store traffic. That led to retail sales in Dec, excluding automobile dealers, gasoline stations & restaurants, falling 2.7% from Nov, according to NRF data. E-commerce& other non-store sales, however, jumped 11.3% in the holiday season.
U.S. holiday sales endure supply chain, Omicron snags to hit $887 billion, NRF says
Consumer sentiment soured in early Jan, falling to the 2nd lowest level in a decade as Americans fretted about soaring inflation & doubted the ability of gov economic policies to fix it, a survey showed. The Univ of Michigan said its preliminary consumer sentiment index fell to 68.8 in the first ½ of this month from a final reading of 70.6 in Dec. Lower income households held a more negative outlook than wealthier ones, with sentiment dropping by 9.4% among households with total incomes below $100K, but rising by 5.7% among households above that threshold. The forecast for the index was a decline, but only to 70.0. The sharper-than-expected drop in sentiment comes as Americans face various headwinds despite an overall strong economy, with inflation topping the list of concerns amid a record level of COVID-19 cases due to the Omicron variant that could in turn prolong high prices. "While the Delta and Omicron variants certainly contributed to this downward shift, the decline was also due to an escalating inflation rate," Richard Curtin, the survey director, said. "Three-quarters of consumers in early January ranked inflation, compared with unemployment, as the more serious problem facing the nation," he added. The current inflation readings have bolstered expectations that the Federal Reserve will start raising interest rates in Mar as it seeks to bring down the rate of price increases closer to its 2% flexible target. The Biden administration has said it is also prioritizing ways to help curb inflation. The survey showed confidence in gov economic policies is at its lowest level since 2014. Consumers also raised their expectations for medium term inflation, another measure the central bank is closely monitoring to ensure that inflation expectations remain anchored. One-year inflation expectation ticked higher to 4.9%, from 4.8% & its 5-year inflation outlook edged up to 3.1% from 2.9% in Dec. Despite the inflation woes, economic growth is still expected to have grown last year at its fastest pace in almost 4 decades after falling into a brief recession in 2020 caused by the coronavirus pandemic.
U.S. consumer sentiment sours in early January to second
Wells Fargo (WFC) posted Q4 earnings that handily beat forecasts amid broader improvement in the economy & net reserves. The bank reported EPS of $1.38 a share versus 66¢ in the comparable
year-earlier qtr. The forecast had been looking for EPS of $1.11. Revenue came in at $20.9B, up from $18.5 in Q4-2020. The forecast expected revenue of $18.8B. Net interest income declined 1% to $9.3B while non-interest
income jumped 27% to $11.6B, driven in part by strong results in
the company's venture capital & private equity businesses. Improvement
in the broader economy, net reserve releases & strong credit quality
helped bolster the bottom line. At the
same time, provision for credit losses in Q4-2021 included
an $875M decrease in the allowance for credit losses "due to
continued improvements in the economic environment, as well as a
decrease in net charge-offs," the company said. The stock rose 2.05.
If you would like to learn more about WFC click on this link:
club.ino.com/trend/analysis/stock/WFCa_aid=CD3289&a_bid=6ae5b6f
Wells Fargo Fourth-Quarter Earnings Blow Past Forecasts
Gold futures ended with a loss, as some investors sold the precious metal ahead of the 3-day holiday weekend in the US, but prices still tallied a gain for the week — their 5th in 6 weeks. Prices for the precious metal had found earlier support from overall weakness in the $ & declines in the US retail sales & consumer sentiment readings. Feb gold fell by $4 to settle at $1816 an ounce after trading as high as $1829 during the session. Gold prices had spent time moving higher in the aftermath of data showing US retail sales declined by 1.9% in in Dec & a closely-followed gauge of consumer sentiment fell to 68.8 in Jan from 70.6 in the prior month. Dec industrial production, meanwhile, slipped by 0.1%. For the week, gold marked a 1.1% weekly gain, based on the most-active contract, following a decline of 1.7% last week ended. Before that, gold futures had registered 4 weekly gains in a row. Investors have been bracing for tighter US monetary policy in the coming months & worrying about how effective central banks will be in combating inflation that is surging above trend. The $ as measured by the ICE US Dollar Index was up 0.4% on the session so far but down 0.6% on the week. A weaker greenback can make $-priced bullion less expensive to overseas buyers. A rise in Treasury yields, with the 10-year Treasury now yielding around 1.768%, can also siphon away appetite for gold, which competes with gold for safe-haven demand.
Gold prices settle lower, but tally a gain for the week
Oil futures moved up sharply, for a 4th straight weekly gain, with rising tensions between Russia & Ukraine boosting concerns over a potential disruption to global crude supplies. Traders also remained upbeat over energy demand prospects as widespread lockdowns tied to omicron fail to materialize. Russia began moving tanks & other military equipment westward toward Ukraine from its Far East bases as diplomats held negotiations over the crisis. OPEC+ stuck to a plan to incrementally boost production, resisting pressure from the Biden administration & others to speed up increases. At the same time, some members have failed to meet boosted quotas. Oil prices traded higher today despite news of a potential release of crude from China's strategic reserves & a weekly rise in the number of active US oil drilling rigs. A report said that China will release oil near the Lunar New Year, which falls on Feb 1, as part of an effort by global consumers coordinated by the US. Baker Hughes said the number of active US rigs drilling for oil was up by 11 to 492 this week. That followed a rise of just one oil rig the week before & marked the biggest weekly climb since Oct. Some analysts see scope for oil prices to take a breather near current levels.
Oil rallies as analyst warns Ukraine crisis could be a ‘seismic event’ for the energy market
Buying in the last 2 hours trimmed losses. The Dow finished the week down 320 & NAZ crawled up 40. Earnings season looks to be giving choppy results with all the chaos in the US economy & sluggish consumer confidence.
Dow Jones Industrials
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