Dow dropped 342, decliners over advancers 5-2 & NAZ pulled back 69. The MLP index added 2 to 197 & the REIT index dropped 9 to 478 on fears of rising interest rates. Junk bond funds drifted lower & Treasuries were sold, bringing higher yields. Oil climbed to almost 83 & gold was off 1 to 1820.
AMJ (Alerian MLP index tracking fund)
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US retail sales unexpectedly declined in Dec, suggesting that consumers are pulling back on spending as they face surging prices & an acceleration in COVID-19 infections. The value of total sales decreased 1.9% from the prior month, the Commerce Dept said, marking the steepest drop in 10 months. The forecast expected sales to be flat at 0%. It follows an increase of 0.2% in Nov, revised Commerce Dept figures show. The core retail sales, which excludes automobiles, gasoline, building materials & food services & is most closely correlated with the consumer spending aspect of the nation's GDP, tumbled 3.1% last month. The gov reported earlier this week that the consumer price index climbed 0.5% in Dec, bringing the year-over-year gain to 7%, the highest since 1982. Wholesale prices also increased, rising 0.2% in Dec & 9.7% in a 12-month period, the fastest pace since record-keeping began in 2010. Restaurants & bars, which saw a stunning 41.3% annual gain in 2021, declined 0.8% in Dec as more Americans stayed home amid an unprecedented virus surge. Gas stations, meanwhile, saw a 41% surge in sales, but fell 0.7% in Dec. Gasoline prices fell 0.5% in Dec. Just 2 categories saw sales increase in Dec: miscellaneous store retailers, up 1.8%, & building materials & gardening centers, which grew by 0.9%.
Retail sales unexpectedly fell in December as consumers pulled back on spending
Federal Reserve governor Lael Brainard, Pres Biden's nominee for the central bank's #2 spot, said that combating red-hot inflation is the Fed's top priority, suggesting that policymakers could raise interest rates as soon as Mar to quell soaring prices. Testifying at her confirmation hearing before the Senate Banking Committee, Brainard acknowledged that inflation is "too high," & is hurting working-class Americans. "We are taking actions that I have confidence will be bringing inflation down, while continuing to allow the labor market to return to full strength over time," she added. Fighting inflation, she continued, is the Fed's "most important task." Her comments are notable given that she is the lone Dem who sits on the Fed's board of governors & has a reputation as a policy dove who played a key role in keeping monetary policy ultra-easy over the past year. But, she endorsed a more aggressive path toward normalizing policy. "The committee has projected several hikes over the course of the year," she said. "We will be in a position to do that, I think, as soon as asset purchases are terminated. And we will simply have to see what the data requires over the course of the year." The Fed began tapering its bond purchases in Nov by $15B a month & announced during its Dec meeting that it would double that to $30B beginning in Jan. Under that timeframe, the central bank is poised to conclude the program by Mar, allowing Fed officials to begin hiking interest rates & reducing the $8.8T balance sheet. Chair Jerome Powell, who testified on Wed said he expects inflation to subside by the middle of the year, but that the Fed needs to take whatever actions are needed to prevent higher prices from becoming "entrenched." Minutes released from the central bank's Dec meeting show that officials are prepared to raise rates "sooner and faster" than initially expected in order to combat the inflation surge. "We are going to have to be humble but a bit nimble," Powell told lawmakers.
Fed nominee makes her top priority clear and doesn't hold back
JPMorgan 's (JPM), a Dow stock, Q4 profit fell 14%, the bank said. The slowdown didn't stop the bank from setting a record for annual profit. The nation's biggest bank
earned $48.3B in 2021, compared with the pre-pandemic high of
$36.4B in 2019. The recovering economy, raucous markets &
frantic merger volumes drove fees to new highs. Also, JPM last year freed $9B that it had set aside for pandemic loan defaults, which didn't materialize. In 2020 it had set aside $19. Q4 EPS rose to $3.33, better
than expectation for $3.01. Revenue
was roughly flat at $29.3B, compared with the $29.8B that had been expected. Full-year revenue also hit a record, rising 1% to
$121.6B, with the investment bank, commercial bank & asset &
wealth management division all notching their best years ever. In the corp & investment bank, revenue rose 2% to $11.5B. Surging investment banking fees more than offset a slowdown from the boom in trading revenue. Revenue in the consumer bank fell 4% to $12.3B. Loans increased from the prior year for both consumer & wholesale
customers. JPM predicted single-digit loan
growth in 2022. Spending on credit cards rose 29% & card loans increased 7%. Mortgage originations rose 30%. Net-interest
margin, a measure of what the bank makes on loans minus what it pays on
deposits, ticked up to 1.63% from 1.62% in Q3, the first
increase since the pandemic began in 2020. The stock sank 9.32 (6%).
If you would like to learn more about JPM click on this link:
club.ino.com/trend/analysis/stock/JPMa_aid=CD3289&a_bid=6ae5b6f
JPMorgan's fourth-quarter profit drops 14%
The outlook for the economy has turned gloomy. REITs were hot last year, but they're being sold on fears of higher interest rates. Fighting inflation has become the main objective at the Fed. Dreary retail Dec sales did not help matters today. The bears are taking back the stock market which is already vastly overbought.
Dow Jones Industrials
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