Dow dropped 392, decliners over advancers better than 4-1 & NAZ sank 522. The MLP index was off 1+ to the 186s & the REIT index plunged 14+ to the 492s. Junk bond funds continued mixed & Treasuries saw more selling, raising the yield on the 10 year Treasury 3 basis points to 1.71%. Oil rose in the 77s & gold advanced finished off 3 to 1811. In electronic trading not long after the Fed minutes release, Feb gold dropped from the settlement (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 Federal Reserve at its Dec meeting began plans to start cutting the amount of bonds it is holding, with members saying that a reduction in the balance sheet likely will start sometime after the central bank starts raising interest rates, according to minutes. While officials did not make any determination about when the Fed will start rolling off the nearly $8.3T in bonds it is holding, statements out of the meeting indicated that process could start in 2022, possibly in the next several months. “Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the meeting summary stated. Market expectations currently are for the Fed to start raising its benchmark interest rate in Mar. The minutes also indicated that once the process begins, it could move faster than the last time the Fed reduced its balance sheet, in 2017. As expected, the Fed's policymaking group following the meeting kept its benchmark interest rate anchored near zero. However, officials also indicated that they foresee up to 3 qtr-percentage-point increases in 2022, as well as another 3 hikes in 2023 & 2 more than the year after that. In addition, the committee announced it would speed up the tapering pace of its monthly bond-buying program. Under the new plan, the program would now end around Mar, after which it would free up the committee to start hiking rates. Fed officials indicated that the reasoning behind the moves was in response to inflation that is higher & more persistent than they had figured. Consumer prices are rising at their fastest pace in nearly 40 years. Policymakers also discussed when they might start reducing the Fed's $8.8T balance sheet, which has more than doubled since the beginning of the Covid pandemic.
Federal Reserve releases minutes from its December meeting
Dr Anthony Fauci said a growing body of data indicates that the Covid omicron variant is less severe than the delta strain, but cautioned that hospitals could still face stress through the unprecedented number of new infections sweeping across the US. “Multiple sources of now-preliminary data indicate a decrease severity with omicron,” Fauci said. “However, we really do need more definitive assessment of severity with longer-term follow up here and in different countries.” Fauci cited a study from Ontario, Canada, that found the risk of hospitalization or death was 65% lower among people infected with omicron compared with individuals who caught delta. The risk of admission to an intensive care unit or death from omicron was 83% lower. He also pointed to a study from South Africa that found about 5% of infections during the omicron wave resulted in hospital admission, compared with 14% during delta. Patients admitted to the hospital during the omicron wave were 73% less likely to have severe disease compared with the delta wave. Fauci said the lung infection from omicron appears less severe than previous variants, citing recent animal studies of mice & hamsters. “It was shown that the virus of omicron proliferates very well in the upper airway and bronchi, but actually very poorly in the lungs,” Fauci said. While this does not definitively prove omicron is more mild, it is consistent with the variant transmitting very quickly but causing less severe lung infections,” he added. Fauci said the omicron variant also appears less severe for children when compared with delta. However, he cautioned that hospitalizations are rising among kids, mostly the unvaccinated, because omicron is so contagious. He urged parents of children ages 5-17 make sure their kids are immunized against Covid. Fauci warned that even if omicron proves less severe, the variant is spreading so quickly that it could still produce a large number of patients who do require hospital care, straining the nation’s health-care system.
Fauci says multiple preliminary studies find omicron is less severe than delta
Ford's (F) sales last year declined 6.8% compared to 2020, but the automaker
said it made strides toward the end of the year in overcoming
disruptions caused by an ongoing semiconductor chip shortage. The
automaker sold 508K vehicles in Q4, a 27% increase over the previous qtr — far better
than the industry's decline of about 3% during that period. Inventory
jumped in Dec to 247K vehicles, up 22K from Nov, a
turnaround from earlier in the year caused by the chip shortage. Andrew Frick, VP of Ford sales in the US & Canada,
described 2021 as “turbulent and dynamic” & the company was “pleased” with Ford's finish for the year. Overall,
the US automotive industry sold 15.1M vehicles in 2021 despite
major supply chain disruptions & the lingering impact of the coronavirus pandemic. It was the weakest sales year since 2012. Ford also beat out GM to become the country's 2nd best-selling automaker of all-electric vehicles behind Tesla (TSLA). The stock dropped 65¢.
If you would like to learn more about Ford click on this link:
club.ino.com/trend/analysis/stock/Fa_aid=CD3289&a_bid=6ae5b6f
Ford’s 2021 sales fall 6.8%, but automaker ends with strong fourth quarter
The Covid-19 omicron variant now makes up nearly
all sequenced cases in the US, driving a massive increase of
infections across the nation that threatens to strain hospitals &
disrupt daily life. Omicron represented 95% of sequenced Covid
cases in the US during the week ended New Year's Day, while the
once-dominant delta variant is now only 4.6% of sequenced cases,
according to data from the Centers for Disease Control & Prevention. The highly contagious omicron variant has overtaken delta in just a
matter of weeks. At the beginning of Dec, omicron represented less
than 1% of sequenced cases while delta made up 99% of them. The
US reported a pandemic record of more than 1M new infections on
Mon. The
nation is now reporting a 7-day average of more than 480K new
infections, nearly double the previous week. Omicron is driving up cases, at least in
part, due to its ability to partially evade the immunity generated by
vaccines & cause breakthrough infections in large numbers.
U.S. reports over 1 million new daily Covid cases as omicron surges
Gold futures climbed, with prices up a 2nd session in a row, finding support from a “flight to safety” as cases of the omicron variant grow & benchmark US stock indices & the $ weakened. In electronic trading, however, prices pulled back from the settlement following the release of the FOMC minutes from the Dec meeting, which came about a ½ hour after gold futures prices settled today. The minutes showed that officials generally thought rate hikes could come sooner, at a faster pace then they previously expected. Feb gold rose $10 (0.6%) to settle at $1825 an ounce, following a 0.8% rise yesterday. Prices had fallen at the start of the week to their lowest level since Dec 21. In electronic trading not long after the Fed minutes release, Feb gold edged down from the settlement to trade at $1816. The official US jobs report is due Fri, with a forecast looking for the economy to have added a total 422K jobs.
Gold futures tally back-to-back session gains, then retreat after FOMC minutes
Oil futures rose sharply, with the US benchmark posting its highest finish since late Nov after gov data revealed a 6th consecutive weekly decline in domestic crude supplies, along with a more than 1M-barrel climb in gasoline inventories. The Energy Information Administration (EIA) reported that US crude inventories fell by 2.1M barrels for last week. The forecast was for a fall of 4.4M barrels. The American Petroleum Institute reported yesterday that US crude supplies fell by 6.4M barrels last week. The EIA, however, also reported weekly inventory increases of 10.1M barrels for gasoline & 4.4M barrels for distillates. The numbers were well above the average 1.9M barrels each for the gasoline & distillate categories forecast. West Texas Intermediate crude for Feb rose 86¢ (1.1%) to settle at $77.85 a barrel. Prices based on the front month ended off the day's high of $78.58, but still finished at the highest since Nov 24. Mar Brent crude, the global benchmark, added 80¢ (1%) to $80.80 a barrel — the highest settlement since Nov 25. Crude stocks at the Cushing, Okla, Nymex delivery hub edged up by 2.6M barrels last week, the EIA reported, though total domestic petroleum production was unchanged at 11.8M barrels per day. Crude supplies in the US Strategic Petroleum Reserve fell 1.3M barrels for the week to 593M barrels. Crude prices had climbed on yesterday after OPEC+ held to plans to boost output by 400K barrels a day in Feb. While oil has bounced back from the selloff sparked by the discovery of the omicron variant of the coronavirus that causes COVID-19 in late Nov, the market might not be out of the woods.
Oil settles at a 6-week high as U.S. crude supplies fall, but gasoline stocks surge
Dow Jones Industrials
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