Dow dropped 170, advancers over decliners 5-4 & NAZ was off 19. The MLP index was up 3+ to the 189s & the REIT index recovered 1 to the 493s. Junk bond funds remained weak & Treasuries saw more selling. Oil rose 2 to just under 80 & gold tumbled 37 to 1788 (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)
The US trade deficit surged to a near-record high of $80.2B in Nov as exports slowed at the same time that imports jumped sharply. The Nov deficit was 19.3% higher than the Oct deficit of
$67.2B & was just below the all-time monthly record of $81.4B set in Sep, the Commerce Dept reported. Nov
imports, goods Americans bought from other countries, jumped 4.% to
$304B in Nov while exports, those the US sends overseas,
edged up a scant 0.2% to $224B. Thru the first 11
months of 2021, the US trade deficit is 28.6% higher than during the
same period in the prior year with the economic recovery in the US
outpacing other nations, as is the readiness of Americans to spend. For all of 2020, the US trade deficit stood at $677B, a slight 0.1% above the 2019 figure. The politically sensitive deficit with China in goods rose 2.9% to
$32.3B in Nov & is up 12.8% for the first 11 months of
this year compared to the same period in 2020. The US & China, the world's 2 largest economies, engaged in a contentious
trade battle under former Pres Trump, who accused China of
unfair trade practices that had cost Ms of American jobs. Each
country imposed tit-for-tat punitive tariffs on its economic rival. So far, the Biden administration has taken a more cautious approach in its economic dealings with China.
November trade deficit hits near multi-billion record-high
The World Health Organization warned the unequal distribution of vaccines around the globe has contributed to the emergence of new Covid variants, such as omicron, that threaten the global economic recovery. “Vaccine inequity is a killer of people and jobs, and it undermines a global economic recovery,” WHO Director-General Tedros Adhanom Ghebreyesus said. Tedros said the inability of world leaders to work together to increase vaccine coverage in poorer nations with less-developed health systems was one of the biggest failures of 2021. Low vaccine coverage in many countries was a major factor in the emergence of variants such as delta & omicron, Tedros said. Delta was first detected in India in late 2020 while omicron was first found by health officials in southern Africa in Nov. The WHO had set a target to vaccinate 40% of the population in every nation of the world by the end of 2021. However, 92 countries did not achieve that despite the distribution of 9B shots worldwide. The WHO has set a goal to vaccinate 70% of the population in every country of the world by the middle of this year. “Global leaders who have shown such resolve in protecting their own populations will extend that resolve to make sure that the world, the whole world is safe and protected,” Tedros said. “And this pandemic will not end until we do that.” The IMF is expected to downgrade its global growth forecast due to the emergence of the omicron variant. The IMF has delayed the release of its World Economic Outlook until the end of Jan in order to take the impact of omicron into account. “A new variant that may spread very rapidly can dent confidence, and in that sense, we are likely to see some downgrades of our October projections for global growth,” IMF Managing Director Kristalina Georgieva said last month. The IMF in Oct forecast the global economy would grow 5.9% in 2021 & 4.9% in 2022. The organization warned at the time that the emergence of new variants had created increased uncertainty. The IMF projected that the pandemic could reduce GDP worldwide by $5.3T over the next 5 years compared with current estimates. It called on world leaders to do more to increase vaccine coverage in low-income nations.
WHO says vaccine inequity undermines economic recovery: It’s ‘a killer of people and jobs’
India's financial hub Mumbai has a robust health-care infrastructure that can withstand a growing number of Covid cases, the city's governing civic body said. India faced a critical shortage of oxygen last year during the 2nd Covid wave in Feb-May. I n June, the state of Maharashtra — where Mumbai is located — directed local oxygen producers to ramp up production and storage capacities to tackle future waves of infection. “The health infrastructure in Mumbai is so robust that we are prepared for the worst, but we hope for the best,” the commissioner of the Brihanmumbai Municipal Corporation said. India is preparing for a third wave of Covid infections as cases rise again. Gov data showed that daily reported cases crossed 90K today for the first time since Jun. Like the rest of the country, daily reported cases in Maharashtra are also ticking higher & the state accounts for nearly 800 cases attributed to the omicron variant that was first identified by South African scientists. More than 15K new cases over a 24-hour period yesterday. The commissioner said he wasn’t worried. “There’s absolutely no need to panic because you see in spite of 62,000 cases, we have 84% beds lying vacant and the symptoms are very mild,” he added. “The best thing about omicron is that it takes the space of delta variant, which was lethal, which would take you to oxygenated and ICU ventilator beds very fast.”
Mumbai is ‘prepared for the worst’ as 3rd Covid wave sweeps: City commissioner
A day after minutes of the Federal Reserve's Dec gathering, marking the sharpest daily fall for the precious metal in 6 weeks, revealing what officials thought was a rate hike. The increase could happen sooner & possibly at a faster pace than they had previously expected as inflation heats up. Inflation is generally a boon for bullion, but higher rates are likely undercutting the appeal of non-fertile precious metals against Treasury yields, which are also being sold & rates rise as a result. Feb gold fell $34 (2.1%) to 17xx. The asset was below $1800, often seen as a psychological support level for the yellow metal, after gaining 0.6% yesterday, was down $35 (2%) at $1789 an ounce. Federal Open Market Committee minutes from the Dec meeting, which came nearly a ½-hour after gold futures prices yesterday, also indicated policymakers would take more aggressive steps to close off the central bank's $8.9T balance sheet. may be willing to take up. The minutes have helped drive sales in bonds, with increased expectations of tighter financial conditions on the horizon & the possibility that Fed deliberations could lead to at least 3 rate hikes this year. Against that background, with the 10-year Treasury note yields rose higher to 1.726% near the highest rate since Mar at 1.73%. Investors scrutinized weekly jobless claims, which climbed from 7K to 207K last week & data on the US trade deficit rose to $80.2B in Nov, up from $67.2B in the prior month.
The Federal Reserve could raise interest rates as soon as Mar & is now in a "good position" to take even more aggressive steps against inflation, as needed, after a policy reset last month, St Louis Fed Pres James Bullard said. The central bank in Dec agreed to end its asset purchases in Mar & laid the groundwork for the start of rate increases that all policymakers, even the most dovish, now feel will be appropriate in 2022. The Fed "is in good position to take additional steps as necessary to control inflation, including allowing passive balance sheet runoff, increasing the policy rate, and adjusting the timing and pace of subsequent policy rate increases," Bullard said. An initial rate increase could be approved "as early as the March meeting ... Subsequent rate increases during 2022 could be pulled forward or pushed back depending on inflation developments," Bullard added. Projections issued in Dec showed ½ of the Fed policymakers expect 3 qtr-percentage-point rate increases will be needed this year. Inflation is now running at more than twice the Fed's 2% target & Bullard said that the inflation "shock" experienced by the country means the central bank should be able to satisfy its inflation targeting goals now for several years to come. The Dec policy shift came just as the Omicron variant of the coronavirus was beginning to raise daily infection rates. But Bullard said he did not think the current wave of cases would throw the economy or the Fed off course. Infections in the US "are projected to follow the pattern where the variant was first identified," in South Africa, Bullard said, citing projections that daily case counts may peak late this month.
Fed's Bullard says first interest rate hike could be in
Oil futures ended higher, building on a strong start to 2022, as traders worried about unrest in Kazakhstan & production outages in Libya. Dozens of people were killed in Kazakhstan today as authorities responded to countrywide protests over soaring fuel prices. A Russian-led military alliance, the Collective Security Treaty Organization, said early today that it would send peacekeeper troops to Kazakhstan at the request of Pres Kassym-Jomart Tokayev. West Texas Intermediate (WTI) crude for Feb rose $1.61 (2.1%) to close at $79.46 a barrele, after trading above $80 a barrel for the first time since Nov 17. Mar Brent crud, the global benchmark, finished with a gain of $1.19 (1.5%) to $81.99 a barrel. WTI saw its highest close since Nov 16, while & Brent posted its highest close since Nov 25. Libya on Mon said it expected output to fall by another 200K barrels a day this week as workers attempt to fix a damaged pipeline. Combined with oil field outages, Libyan output is seen down by more than 500K barrels a day.
Oil ends higher for 4th straight session as traders weigh Kazakhstan unrest, Libya outages
There was a lot of selling in the PM fueled by anxiety about rate hikes (along with high inflation) this year. Also people are getting used to dealing with the new variant of the virus. But that will take time. Hedge funds have been selling tech which explains the decline for NAZ this year. Today brought a sense of calm & there was bargain hunting on beaten up tech shares. Tomorrow brings the jobs report which will drive the stock market.
Dow Jones Industrials
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