Dow was off 7, decliners over advancers 5-2 & NAZ dropped 189. The MLP index was flattish in the 195s & the REIT index dropped another 7+ to the 449s. Junk bond funds were mixed & Treasuries saw more buying, but the yield on the 10 year Treasury is still at a hefty 1.81%. Oil was off 1+ to the low 86s after yesterday's advance to a 7 year high & gold sold off 37 to 1792 (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 IMF has warned of further turbulence ahead for financial markets, particularly as govs around the world shift gears into recovery mode. Central banks' moves to tighten monetary policy & curb rising inflation could push riskier stocks deeper into the red even as policymakers pledge a smooth transition, the IMF's Tobias Adrian, financial counselor & director of monetary & capital markets, said. “We could certainly see further tightening of financial conditions, and that means that risk assets such as equities could sell off further,” Adrian added. The market reaction will hinge largely on central banks'’ ability to communicate their intentions, Adrian said, urging order & transparency. Yesterday, the Federal Reserve signaled that it could halt its asset purchasing program & start raising interest rates as soon as Mar. “This is hopefully not going to be disorderly, but it’s going to be an orderly adjustment in terms of valuations,” he said. “We are estimating, for example, for an unexpected further tightening of 50 basis points you could see a substantial further sell-off in the equity markets,” he added, noting that some sectors would be worse affected than others. His comments come as the IMF released its Global Financial Stability report. It follows the release of its World Economic Outlook earlier this week, which downgraded global growth to 4.4% in 2022. Despite downward pressure from rising interest rates, this report noted that corp earnings are forecast to surpass pre-pandemic levels in 2022 in most sectors. Meanwhile, bond spreads —a key metric for measuring the price of a group of bonds — remain below average 2019 levels.
IMF sees potential for further market turbulence as central banks hike rates
The number of American workers filing unemployment claims declined as expected this week, suggesting the country may be recovering from disruptions to the economy caused by the Omicron variant. Workers filed 260K initial jobless claims for last week, the Labor Dept said. The number of claims was down 30K compared to the previous week's revised tally, when claims unexpectedly surged to 290K. Unemployment claims, which are seen as a proxy for layoffs, declined on a weekly basis for the first time in 2022. The foecast projected jobless claims would decline 21K to 265K for the week. The 4-week moving average of jobless claims was 247K, an increase of 15K compared to the previous week's revised average. The moving average smooths out volatility in the weekly claims figure. About 1.67M Americans were claiming continuing unemployment benefits for the latest week. The Omicron variant has renewed pressure on businesses throughout the country, with many forced to temporarily close or experiencing declines in customer traffic. Meanwhile, many are workers calling out sick. A record number of COVID-19 cases has contributed to the uptick in jobless claims, which had reached a 52-week low of just 188K as of Dec 4. Last week's rise in claims marked the highest number since mid-Oct. Jobless claims remain low compared to historic levels as companies compete for workers in a tight labor market. The US unemployment rate dipped to 3.9% in the Dec jobs report.
US jobless claims drop to 260K as employers weather Omicron
Natural-gas prices rallied, with traders shocked by a more than
46% jump in prices at the settlement, as the front-month Feb
futures contract expired at the end of the trading session. Natural gas
for Feb delivery settled at $6.265 per M British thermal
units, up $1.99 (46.5%) - the largest one-day percentage move on
record & highest finish since Oct. The 219B-cubic-foot
weekly fall in US supplies of the fuel reported by the Energy
Information Administration leaves stockpiles more than 10%
below last year's levels. Meanwhile, oil futures
posted their first loss in 3 sessions, easing back from
the multiyear highs seen a day earlier. Traders remained focused on the
Russia-Ukraine situation & the possibility of a disruption to global
crude supplies. Mar West Texas Intermediate crude fell 74¢
(0.9%) to settle at $86.61 a barrel, after settling yesterday at
$87.35, the highest front-month contract finish since 2014.
Natural-gas futures jump by more than 46%; oil settles lower
Gold prices fell sharply
to settle below the key $1800 mark for the first time in nearly 3
weeks, pressured by strength in the $ which followed
indications from the Federal Reserve that it plans to raise interest
rates as soon as Mar. Feb gold lost a big $36 (2%) to settle
at $1793 an ounce. That was the first finish below $1800 since Jan
10 & lowest settlement since Jan 6. Apr gold
which is also among the most active, settled at $1795, down $37
(2%).
Gold futures fall to a 3-week low as dollar surges after Fed points to start of rate hikes in March
The Port of Savannah hit a container record last year, handling 5.6M container units of imports & exports, an increase of 1M
container units from the year before amid continued supply chain disruptions. The Georgia Ports Authority provided the data, noting the 20%
increase in shipping containers moving thru the Port of Savannah in
2021 as seaports across the US struggled to keep up with the surge in
cargo that packed container yards and forced ships to wait at sea. Exec director of the Georgia Ports Authority Griff Lynch said that while every major port is experiencing a backup of ships, the Port
of Savannah is "fortunate that we have the expansion capability," which
is helping to navigate the situation. He told said that a
few months ago more space was needed "in order to get the cargo moving
and once we did that, we’d be able to get those ships caught up, well
more space has come." He noted that while more capacity has been added, "we are only part of the way done." Retailers rushed to refill inventories & kept ordering in an
attempt to keep shelves stocked while online shopping also continued to
grow amid the coronavirus pandemic, contributing to the record volumes at the Port of Savannah during all 12 months of 2021. "It
literally is three to four years of growth in one year," Lynch said, stressing that "it didn’t come
out without pain." He went on to note that the port's container yard is still largely full and said the outlook for 2022 remains uncertain.
Major US port hits container record as supply chain disruptions roil US
This has not been a good time for those feint of heart. Wild trading continued today. Dow started with a solid gain on the GDP report. At midday it tumbled 600 & continued at depressed levels for the rest of the session. Dow's back to where it was at mid Apr. The bull market can not overcome the headwinds. REITs have had an a major rally in the last 2 years. But this year, the REIT index, mentioned above, has dropped 10% from its peak. REIT's are very sensitive to high interest rates which have already starting climbing. However, energy markets remain quite strong.
Dow Jones Industrials
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