Dow fell 71 (250 below the early highs), advancers modestly ahead of decliners & NAZ was off 30. The MLP index added 1 to the 196s & the REIT index crawled up 1+ to 489. Junk bond funds were mixed & Treasuries saw limited buying. Oil gained 1+ to the 82s & gold went up 5 to 1823.
AMJ (Alerian MLP index tracking fund)
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Inflation rose at the fastest pace in nearly 4 decades in Dec,
as rapid price gains fueled consumer fears about the economy and sent
Pres Biden's approval rating tumbling. The consumer price index rose 7% in Dec from a year ago,
according to a new Labor Dept report, 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. The forecast
expected the index to show that prices surged 7% in Dec from the
year-ago period & 0.4% from the previous month. Core
prices, which exclude more volatile measurements of food & energy,
soared 5.5% in Dec from the previous year – a sharp increase from
Nov, when it rose 4.9%. It was the steepest 12-month increase since
1991. Although energy prices fell 1.1% in
Dec from the previous month, they're still up 29.3% from last year. Gasoline, on average, costs 49.6% than it did last year. Food prices
have also climbed 6.3% higher over the year, while used car & truck
prices – a major component of the inflation increase – are up 37.3%. Shelter costs, which make up nearly a 3rd of the total increase,
jumped 0.4% for the month & 4.1% year-over-year, the fastest pace
since 2007. The eye-popping reading – which marked the 7th consecutive month the
gauge has been above 5% – will likely ramp up pressure on the Federal
Reserve to begin hiking interest rates as soon as Mar to
combat the recent price surge. Hiking interest rates tends to create
higher rates on consumers & business loans, which slows the economy by
forcing them to cut back on spending.
Inflation surges as Americans’ economic fears hurt Biden’s approval
Consumers spent more than $204B online during the 2021 holiday season, marking a record high despite ongoing supply chain woes coupled with painfully high inflation. According to the Adobe Digital Economy Index, a record $204B was spent between Nov 1 - Dec 31, an 8.6% increase compared to the same time last year. Adobe Digital Insights lead analyst Vivek Pandya said that the nearly 9% growth was "is in line with what we were expecting," "The Covid-19 pandemic had created a step change in online spend that could have been challenging to exceed, but even before the holiday season, we were seeing the lasting impacts of changing consumer behaviors," Pandya added. This year, Adobe's data indicated that consumers spread out their shopping rather than sticking to the major shopping holidays such as Cyber Monday & Black Friday. Before Thanksgiving, from Nov 1-24, spending grew 19.2% compared to the same time in 2020. However, spending was down 1.4% during Cyber Week, the 5-day period between Thanksgiving & Cyber Monday, compared to last year. The weeks following Cyber Monday, between Nov 30 & Dec 31, online spending increased 5.6% compared to 2020. Overall, about 38 days this holiday season surpassed $3B in daily spending, marking another record, according to Adobe's data. Only 25 days in 2020 hit this mark. The figures underscore that "demand for online shopping was not deterred by persistent supply chain challenges, as retailers contend with congested ports, cargo delays, and disruptions in overseas manufacturing." Prices of goods online in Dec increased 3.1% compared to a year ago. However, Nov marked a record high with online prices increasing 3.5%. Still, inflation didn't stop consumers from spending a record $855B online throughout 2021. It marked a 9% increase from 2020, "attesting to the strength of the digital economy overall," according to Adobe
Consumers spend record $204B on 2021 holiday shopping season
The 10-year Treasury yield hovered around 1.73% today after Dec's consumer price index came in at a hefty 7% annual increase. The yield on the benchmark 30-year Treasury bond rose about a basis point to 2.085%. Yields move inversely to prices & 1 basis point is equal to 0.01%. The Dec consumer price index, a key inflation measure, increased 7%, according to the Bureau of Labor Statistics. On a monthly basis, CPI increased 0.5%.
10-year Treasury yield pulls back slightly to 1.73
Investors are taking inflation news reasonably well. At least so far. Retail sales data is helping the optimists. However, high inflation remains a nagging problem for the stock market.
Dow Jones Industrials
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