Dow finished down 313 after starting the day with a solid gain, decliners over 2-1 & NAZ dropped 186. The MLP index was fractionally lower to 196 & the REIT index dropped 6+ to the 465s. Junk bond funds were pretty much steady & Treasuries saw a little selling. Oil slid back to the 86s after recent buying & gold drifted down 2 to 1840 (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)
Americans are increasingly worried that red-hot inflation will erode their purchasing power this year, with the cost of living soon outpacing their income. That's according to a new study published by Primerica, a financial services firm, which found that 68% of Americans said they were concerned their income is falling behind the cost of living in Dec. That's up from 65% in Aug & 56% from Apr, marking the highest number reported since the quarterly survey began a year & a ½ ago. Despite the concern over surging inflation, a majority of respondents (64%) said they felt "good" or "excellent" about their personal financial outlook & just ½ of respondents said they would rate the economic health of their community as "not so good" or "poor." At the same time, 62% of Americans said their ability to save for the future is "poor" or "not so good." "Middle-income families remain optimistic about their financial situations, while almost 9 out of every 10 households feel increasing costs for groceries and gas could impact their budgets," Primerica CEO Glenn Williams said. Families are increasingly worried about the cost of everyday necessities like food, with 19% of survey respondents saying they are anxious about being able to pay for food & groceries. Almost all the respondents – 92% – agreed that the cost of groceries has increased recently. Recent Labor Dept data shows that average hourly earnings for all employees actually decreased 2.4% in Dec from the same period a year ago when factoring in the impact of rising consumer prices. On a monthly basis, average hourly earnings increased by just 0.1% in Dec, when factoring in the 0.5% inflation spike. By that measure, the typical US worker is actually worse off today than he was a year ago, even though nominal wages are rising at the fastest pace in years because inflation is also surging. The gov reported that the consumer price index (CPI) rose 7% in Dec from a year ago, marking the fastest increase since 1982, when inflation hit 7.1%. The CPI, which measures a bevy of goods ranging from gasoline & health care to groceries & rents, jumped 0.5% in the one-month period from Nov.
Americans worried rising inflation will outpace their wages this year
It’s too soon to know if Covid’s omicron variant will hasten the end of the nearly 2-year-long Covid-19 pandemic. But some experts say that when it comes to contagiousness, omicron could be the “most transmissible the virus can get.” The reason: Due to “evolutionary constraints” on how many mutations & changes the virus can make, omicron could be “the ultimate version of this virus,” Dr William Moss, exec director of the Intl Vaccine Access Center at the Johns Hopkins Bloomberg School of Public Health, said. Studies show that omicron is more than 4 times as transmissible as Covid's delta variant, & that it evades immunity better than delta. As long as the virus keeps spreading, Moss says, it'll continue to mutate going forward, creating more variants down the road. But those mutations will probably be like “sons of omicron,” he says — not so different that the virus can escape immunity from vaccines or previous omicron infections. For Covid to stop spreading, a significant portion of a population needs to maintain some level of simultaneous immunity — a challenge, since “natural immunity” provides inconsistent levels of protection for unpredictable amounts of time. It's estimated that 94% of the population must carry some form of immunity to interrupt the chain of transmission. Moss' theory is “my own kind of gut feeling, and I know other people don’t agree with this,” he admits. Other experts say his theory could be accurate, but it's simply too soon to tell.
Omicron might be the worst Covid gets when it comes to transmissibility: experts
American Airlines (AAL) posted its highest revenue of the Covid pandemic
during Q4 as bookings rose, but it still reported a
loss, as the spread of the omicron variant hurt travel demand. “Over
the past year, we have experienced periods of high travel demand
countered by periods of decreased demand due to new COVID-19 variants,” CEO, Doug Parker, who steps down at the end of Mar, said. “This
volatility has created the most challenging planning environment in the
history of commercial aviation.” Parker added that bookings for trips a month or 2 away are stronger
than current levels & that fares would likely rise as business
travelers return. The airline had a loss of $931M in Q4 on
revenue of $9.4B, which was down from $11.3B in sales in
the last 3 months of 2019, before the pandemic. In the year-earlier
period, AAL had a loss of $2.2B on revenue of $4B. Adjusting for one-time items, AAL lost $1.42 a share, compared with the estimate for a $1.48 share loss. For Q1, AAL expects revenue to be off 20-22% from
the same period of 2019 when it generated $10.6B in sales & it projected capacity for the first 3 months will be 90-92% restored. The stock fell 55¢.
If you would like to learn more about AAL click on this link:
club.ino.com/trend/analysis/stock/AALa_aid=CD3289&a_bid=6ae5b6f
American Airlines posts slightly higher revenue, narrower loss than expected
Oil prices finished with a loss after the Energy Information Administration reported an unexpected weekly rise in US crude inventories. However, concerns over potential disruptions to global crude supplies, particularly as the market weighs the possibility of a Russian invasion of Ukraine, helped to limit price losses. Feb West Texas Intermediate crude fell 6¢ to settle at $86.90. The contract, which expired at the end of the session, finished yesterday at the highest since 2014. Mar, which is now the front-month contract, settled at $85.55, down 25¢.
Oil prices settle lower as February WTI contracts expire
Gold futures ended with a slight loss, a day after posting the best one-day advance since Dec highest settlement in w months. Feb gold fell chump change to settle at $1842 an ounce, following a 1.7% rise a day ago. Yesterday's rise brought the most-active contract to the highest finish since Nov. 19 on the back of the strongest daily advance of this year. The recent move up in gold came amid some weakness in the $ & a pullback in Treasury yields, which have been rising & raising the opportunity cost of owning nonyielding gold over gov debt which bears a coupon. Today, a pop in the $ & a rebound in equities likely contributed to the modest decline for safe-haven gold. The 10-year Treasury yield was up modestly at around 1.837% today, while the ICE US Dollar Index was trading up 0.2%. The rate-setting FOMC next gathers on Jan 25-26 & is expected to set the stage for a series of interest-rate increases, which strategists argue could ultimately weigh heavily on the longer-term outlook for bullion. Applications for US unemployment benefits surged by 55K last week to 286K & hit a 3-month high. Separately, the Philadelphia Federal Reserve's index of manufacturing conditions rose by 8 points in Jan to 23.2, showing businesses are still growing despite the omicron outbreak.
Gold ends slightly lower a day after posting best daily advance since December
The stock market began trading with a good gain. After an hour, sellers came & dragged the Dow down for a loss which was 800 below its early high. Biden's press conference yesterday did not get good reviews. The fight with Covid keeps stumbling along & inflation worries on the minds of most Americans. The Dow chart below has b een trending sideways since roughly Aug while the economy has been struggling in its recovery. Now there's talk of $100 oil, whatever that means.
Dow Jones Industrials
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