Dow gave back 425, decliners over advancers better than 3-1 & NAZ sank 338. The MLP index went up 1+ to the 191s & the REIT index dropped, taking index down 7+ to the 458s. Junk bond funds fluctuated & Treasuries eased lower bringing higher yields. Oil bounced back 1 to the 84s & gold added 5 to 1846.
AMJ (Alerian MLP index tracking fund)
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Pres Biden held a meeting with White House officials yesterday to discuss the administration's plan for combating rising prices as inflation continues to surge throughout the US, reaching levels not seen in 40 years. The pres touted an exec order he signed in Jul aimed at increasing competition by cracking down on larger firms in industries that the administration sees as too "consolidated," referring to the issue as a decades-old problem the federal gov needs to address. Biden then pointed to an NYU study he says showed that "between generating higher prices and lower wages, lack of competition cost the median American family household … $5,000 a year," saying, "My executive order is changing that." The pres went on to point to directives implemented by federal agencies as a result of the exec action, including lifting restrictions on where people can get electronics like smartphones repaired, allowing folks to buy hearing aids without a prescription & addressing non-compete clauses that restrict workers from taking jobs from an employer's competitors within a period of time. Biden further emphasized his mission to take action in the meat industry, where consumers have seen eye-popping increases in pricesfor several months. The pres has vowed to provide "more protections for farmers and ranchers." He went on to signal further antitrust priorities, taking aim at "Big Ag," "Big Tech" & "Big Pharma" for "consuming competitors" rather than "competing for customers."
Biden touts plan to lower prices as inflation reaches fever pitch
Treasury yields were mixed with investors focused on the Federal Reserve's policy meeting & geopolitical tensions. The yield on the benchmark 10-year Treasury note was marginally higher at 1.739% & the yield on the 30-year Treasury bond was less than a basis point lower at 2.076%. Yields move inversely to prices & 1 basis point is equal to 0.01%. The Fed's 2-day meeting kicks off today, with a policy decision tomorrow. The central bank is not expected to raise interest rates following the Jan meeting, with many investors expecting the first hike to be announced in Mar. However, the Fed is expected to signal a continued tightening of monetary policy. Investors see the central bank nodding toward the end of its asset purchases in the next month or 2 & an outright rundown of the balance sheet to start around midyear. Investors will also be keeping an eye out for updates on tensions between Ukraine & Russia. The State Dept recommended Sun that all US citizens in Ukraine depart the country immediately, citing Russia’s extraordinary military buildup on the border.
Treasury yields are mixed with Fed meeting and geopolitical tensions in focus
The IMF downgraded its global growth forecast for this year as rising Covid-19 cases, supply chain disruptions & higher inflation hamper economic recovery. In its delayed World Economic Outlook report, the IMF said it expects global GDP to weaken from 5.9% in 2021 to 4.4% in 2022 — with this year's figure being ½ a percentage point lower than previously estimated. “The global economy enters 2022 in a weaker position than previously expected,” the report noted, highlighting “downside surprises” such as the emergence of the omicron Covid variant, & subsequent market volatility, since its Oct forecast. The revised outlook is led by growth markdowns in the world's 2 largest economies; the US & China. The US is expected to grow 4.0% in 2022, 1.2 percentage points lower than previously forecast as the Federal Reserve moves to withdraw its monetary stimulus, even as supply chain disruptions weigh on the economy. The updated outlook also removed Pres Biden's signature Build Back Better fiscal policy package from its baseline projection after failure to pass the original bill. China, meanwhile, is predicted to grow 4.8% this year, down 0.8 percentage points from earlier estimates amid disruptions caused by its zero-Covid policy, as well as projected financial stress” among its property developers. Elsewhere, still surging Covid cases coupled with rising inflation and higher energy prices weighed on growth estimates globally, most notably in Brazil, Canada & Mexico. The IMF said higher inflation is set to persist for longer than previously anticipated, but added that it should ease later this year, “as supply-demand imbalances wane in 2022 & monetary policy in major economies responds. Looking ahead, the report upgraded its 2023 growth forecast by 0.2 percentage points to 3.8%. However, it warned that the estimate precluded the emergence of a new Covid variant, & said any pickup would be dependent on equitable global access to vaccines & health care.
IMF cuts 2022 global growth forecast as U.S., China recovery wanes
US consumer confidence ebbed slightly in Jan, with more consumers planning to purchase homes, automobiles & other big ticket items even as they grew less optimistic about business & labor market conditions in the near term. The Conference Board consumer confidence index slipped to a reading of 113.8 this month from a slightly downwardly revised 115.2 in Dec. The forecast had forecast the index declining to 111.8 from the previously reported reading of 115.8 in Dec. "The Present Situation Index improved, suggesting the economy entered the new year on solid footing," said Lynn Franco, senior director of economic indicators at The Conference Board. "However, expectations about short-term growth prospects weakened, pointing to a likely moderation in growth during the first quarter of 2022." Franco also noted that the proportion of consumers planning to purchase homes, automobiles, & major appliances over the next 6 months all increased. The dip in confidence likely reflects rising COVID-19 infections.
U.S. consumer confidence dips in Jan; spending
Another wild day for stocks. The cut for global growth in 2021 (including for the US) was very troubling for investors & sluggish consumer confidence in the US did not help. Now everybody is waiting for the Fed to speak tomorrow.
Dow Jones Industrials
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