Dow finished down 129 after another wild day in trading, decliners ahead of advancers 2-1 & NAZ inched up 2. The MLP index crawled higher in the 195s & the REIT index dropped 7+ to the 256s. Junk bond funds rose in price & Treasuries were hit with heavy selling, taking rates higher. Oil gained 1+ to the 87s & gold sank 33 to 1818 (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 signaled it could "soon" raise interest rates for the first time in 3 years, paving the way for a Mar liftoff as policymakers seek to keep prices under control & combat the hottest inflation in nearly 4 decades. Although central bank officials left rates unchanged during their 2-day, policy-setting meeting this week, they indicated broad support to begin aggressively normalizing policy – including hiking rates from near-zero as soon as Mar – amid growing concern over the rapid increase in consumer prices. The rate increase would mark the first since Dec 2018. "With inflation well above 2 percent and a strong labor market, the committee expects it will soon be appropriate to raise the target range for the federal funds rate," the Fed's post-meeting statement said. Economic projections show that every Fed official has penciled in at least one rate hike next year – a considerable shift from Sep, when ½ of the central bankers believed interest rate increases were not warranted until at least 2023. Officials now project rates to stand at 0.9% at the end of 2022, 1.6% at the end of 2023 & 2.1% at the end of 2024.
Fed signals interest rate hike could come 'soon' as inflation rages
CDC Director Dr Rochelle Walensky warned against easing up on Covid-19 safety protocols as the omicron variant drives cases & hospitalizations to record highs, even though it tends to produce milder infections than past strains. “Milder does not mean mild and we cannot look past the strain on our health systems and substantial number of deaths,” Walensky said. “It’s important to remember we’re still facing a high overall burden of disease,” Walensky added, urging the public to get vaccinated, wear masks & “remain vigilant.” There are about 155K patients in US hospitals with Covid, according to a 7-day average of Dept of Health & Human Services data as of yesterday, higher than peak levels seen last winter. The US is also reporting a 7-day average of about 2260 daily Covid deaths per day, according to Johns Hopkins University, the highest level since Feb. The surge in cases is putting even more strain on the already thin health-care industry. Several thousand workers have resigned in the past year. Those still working in the field have been struggling with an onslaught of breakthrough cases, forcing them to spend days at home in isolation & away from work. “I know many people are tired, but many of our hospitals are still struggling beyond capacity,” Walensky said. “It’s been a long two years. However, please now do your part to lean into this current moment.” The Centers for Disease Control & Prevention had slashed its isolation time for health workers & the Biden administration has deployed hundreds of military doctors & nurses to support overwhelmed hospitals, but workers have said they're still struggling. To be sure, an end to the omicron wave could be nearing soon. White House chief medical adviser Dr Anthony Fauci said earlier this week that most states will reach a peak of omicron cases by mid-Feb & several states have already started to report declines. Still, on the other side of the peak could still be several thousand more infections. Walensky stressed that Americans should still adhere to strict Covid prevention measures, like wearing protective masks & getting boosted.
CDC director says ‘milder doesn’t mean mild’ as Covid hospitalizations reach record highs
Brent crude futures, the intl oil benchmark, topped $90 for the
first time since 2014, adding to oil's blistering recovery since its
pandemic-era lows in Apr 2020. The threshold breakthrough comes
amid growing geopolitical tensions between Russia & Ukraine, as
supply remains tight amid a rebound in demand. The contract added more than 2%, hitting $90.07. West Texas Intermediate crude futures, the US oil benchmark, also advanced more than 2% to $87.43 per barrel. OPEC & its oil-producing allies have been returning crude to the
market, but the group's been unable to ramp up production to hit its
targets. Meanwhile, US shale oil growth has slowed & omicron hasn't
been the demand hit that was initially expected. Additionally,
inventory levels remain depleted. The Energy Information
Administration said Wednesday that crude oil inventories rose by 2.4M barrels last week versus an increase of just 150K barrels that was expected.
Global oil benchmark tops $90 for the first time since 2014
Gold futures settled at their lowest in over a week, pulling back from a 2-month high a day earlier. Prices then showed little reaction in electronic trading after the Federal Reserve said it would soon be appropriate to raise interest rates. After gold futures settled for the session, the central bank's policy-setting Federal Open Market Committee said that “with inflation well above 2% & a strong labor market, the FOMC expects it will soon be appropriate to raise the target range for the federal funds rate.” Feb gold traded at $1829 an ounce in electronic trading shortly after the announcement. The contract had fallen by $22 (1.2%) to settle at $1829 an ounce, the lowest finish since Jan 18. The moves follow a 0.6% rise for the precious metal in the previous session, which saw the highest settlement for a most-active contract since Nov 18. Worries about the damaging effects rising interest rates could have on nonyielding bullion buying have been seen as a one of the main bearish near-term drivers for gold, keeping prices in check. Theoretically, gold should also benefit from rising inflation concerns because it is viewed as a hedge against pricing pressures, but the prospect of rising rates can be a negative for precious metals which don't offer a coupon. But this week, gold has drawn safe-haven bids amid wild swings in values for stocks & geopolitical tensions in Europe, where there are fears about a potential Russian invasion of Ukraine.
Gold retreats from a 2-month high, holds its ground after Fed decision
Boeing (BA), a Dow stock, hit a key milestone in its yearslong 737 Max crisis as a jump in deliveries helped it generate cash in Q4 for the first time in nearly3 years. But
it now faces mounting expenses in its 787 Dreamliner program,
disclosing $5.5B in costs tied to manufacturing flaws
that have prevented BA from handing over those new jets to customers
for most of the last 15 months. The manufacturer took a $3.5B pretax charge in Q4 on the Dreamliner & it expects $2B in
additional costs after it slashed production of the planes, double its
previous estimate. BA first disclosed the defects — tiny, incorrect spacing on some
of the fuselages —in 2020. Flaws were also detected on other parts of
some planes & BA has had to inspect the undelivered jets. “While I don’t like any of the charges, the progress has been significant,” CEO Dave Calhoun said about the 787. He declined to say when he expects
regulators to sign off & deliveries to resume. “We can’t rush it.” BA
reported free cash flow of $494M for Q4, up from
an outflow of $4.3M a year earlier, a milestone BA
execs previously said they wouldn't hit until 2022. It was driven
by a surge in deliveries last year of the 737 Max after regulators
lifted bans on the jets following fatal crashes in 2018 & 2019. BA lost $4.29B last year, its 3rd annual loss in a row as the Covid pandemic & production issues continued to hurt its bottom line, an
improvement from 2020 when the company had a loss of $11.9B. For Q4, BA reported a net loss of $4.16B, less
than ½ of the $8.44B it lost a year earlier. Sales fell 3%
from a year ago to $14.8B, lower than the $16.6B expected. The stock dropped 9.89 (5%).
If you would like to learn more about BA click on this link:
club.ino.com/trend/analysis/stock/BAa_aid=CD3289&a_bid=6ae5b6f
Boeing posts third annual loss in a row as Dreamliner costs hit $5.5 billion
Dow Jones Industrials
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