Dow tumbled 526 (near session lows), decliners over advancers about 7-2 & NAZ sank 304. The MLP index fell 5+ to the 199s & the REIT index plunged 11+ to the 459s. Junk bond funds dropped in price & Treasuries saw very heavy selling, raising the yield on the 10 year Treasury by an enormous 10 basis points to 2.03%. Oil in volatile trading finished ip 1+ to the 91s & gold was off 7 to 1829 (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)
It is not just food & energy prices that are getting more expensive, add borrowing costs to the list as bond yields spiked. Mortgage rates have returned to pre-pandemic levels with the 30-year fixed-rate hitting 3.69% today, according to Freddie Mac. "Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand," said Sam Khater, Freddie Mac's chief economist. Yields on the 10-year Treasury, which dictates mortgage rates, rose to 2%, the highest level since 2019, after the Consumer Price Index jumped 7.5% in Jan, the highest in nearly 40 years. Rates for a 15-year adjustable-rate mortgage or ARM, also rose, to 2.93%, while a 5/1 ARM ticked up to 2.8%. Higher rates will accompany higher home costs tied to short supply, according to the National Association of Realtors. In Q4, mortgage payment for an average single-family home valued around $361K, with a 20% down payment, was $1240. That's a nearly 17% jump from a year ago. Expect those figures to rise well into 2022.
Mortgage rates hits pandemic era high
Coca-Cola (KO), a Dow stock & Dividend Aristocrat, reported quarterly earnings & revenue. that beat expectations as consumers drank more of its products away from
home, topping pre-pandemic levels for the first time. But the company issued a weaker-than-expected outlook, predicting that higher inflation would continue to weigh on its profits throughout 2022. EPS was 56¢, up from 34¢ a year earlier. Excluding items, EPS of 45¢, beating the 41¢ expected. Net sales rose
10% to $9.5B, topping expectations of $8.9B. Revenue was hurt by 6 fewer days than the prior year & the
timing of concentrate shipments. Organic
revenue, which strips out the impact of acquisitions & divestitures,
jumped 9% & unit case volume also rose 9%. The
sparkling soft drinks segment, which includes its namesake soda, saw
volume grow 8% & Coke Zero Sugar saw double-digit growth. For 2022, Coke is expecting comparable EPS growth of
5-6%, while analysts were forecasting 6.1% growth. It
expects higher commodity costs to hit earnings by mid-single digits. The
company is also predicting organic revenue growth of 7-8% for the
full year. “While we are seeing some impacts from the omicron
variant through the first few weeks of the year, we’re not seeing the
same level of disruption as previous waves and our system is better
equipped,” CEO James Quincey said. The stock rose 33¢.
If you would like to learn more about KO click on this link:
club.ino.com/trend/analysis/stock/KO_aid=CD3289&a_bid=6ae5b6f
Coca-Cola earnings beat as demand for drinks away from home tops pre-Covid levels
Walt Disney (DIS), a Dow stock, posted its Q1 results for fiscal year 2022, showing the global entertainment titan surpassed
expectations by reaching just under 130M subscribers to
its Disney+ streaming service. Expectations were for the subscriber total to reach 124M, but Disney+ subscribers hit 129.8M internationally as of
Jan 1. The company also saw a 76% year-over-year increase in ESPN+ streaming subscribers to 21.3M & a 15% rise in Hulu watchers to 45.3. "We’ve
had a very strong start to the fiscal year, with a significant rise in
earnings per share, record revenue and operating income at our domestic
parks and resorts, the launch of a new franchise with Encanto, and a
significant increase in total subscriptions across our streaming
portfolio to 196.4 million, including 11.8 million Disney+ subscribers
added in the first quarter," CEO Bob Chapek said. Chapek expressed optimism about the continued growth in Disney+
subscribers. The CEO noted that while the DIS brand has a strong
appeal to families, roughly ½ their current customers do not have
children & said that adding broader content to the streaming service
will likely be a trend for the firm moving forward. DIS also surpassed expectations of $20.2B in revenue for fiscal Q1, reporting $21.8B, which was up from $16.25B from the same qtr last year. The stock rose 5.02 (3%).
If you would like to learn more about DIS click on this link:
club.ino.com/trend/analysis/stock/DIS_aid=CD3289&a_bid=6ae5b6f
Disney stock gets a boost as Disney+ subscriptions hit nearly 130 million
Gold futures ended higher for a 5th session in a row, shaking off earlier weakness to mark their longest streak of gains since Nov, after a reading on US inflation came in higher than expected. The consumer price index rose 0.6% in Jan to 7.5%, holding ground at a 40-year high. The 7.5% surge in the cost of living in the past 12 months is the biggest since 1982. Gold moved lower shortly after the CPI data, but then gradually moved up, stretching their streak of gains into a 5th consecutive session, the longest since the 7-session rise seen in Nov. Apr gold futures edged up by chump change to settle at $1837 an ounce, with most-active contract prices marking another finish at the highest since Jan 25.
Gold marks longest streak of gains since November after higher than expected U.S. inflation reading
The Federal Reserve should launch an aggressive interest rate hike campaign with a cumulative 100 basis points in increases by Jul 1, said St Louis Fed Pres James Bullard. Speaking after US consumer price inflation data earlier today, Bullard said he was already more hawkish than his colleagues but has now increased dramatically the amount of rate hikes the central bank should do. To get the Fed's policy rate up 100 basis points by Jul 1, one of the Fed's policy moves would have to be more than a qtr-point, if the Fed moves only at policy meetings. Bullard said his proposed path of rate hikes was not “shock and awe” but rather a sensible response to a surprise inflation shock that the US economy got last year that it did not expect. He added that in the past the Fed would have had a meeting after such a report & raised rates right away. He also said the Fed should consider such a strategy.
Fed’s Bullard backs aggressive rate hike path
Oil futures rose, building on gains scored the previous session after data showed an unexpected drop in US crude inventories. Traders were also keeping close tabs on talks that could return Iran to an intl nuclear accord, freeing up oil exports. Tensions around Ukraine also remained in focus. West Texas Intermediate crude for Mar rose $1.59 (1.8%) to $91.25 a barrel. Apr Brent crude the global benchmark, rose $1.31 (1.4%) to $92.86 a barrel. Crude earlier this week pulled back from 7-year highs as investors focused on signs of progress in talks aimed at returning Iran to the nuclear agreement. The Trump administration pulled the US out of the deal in 2018, reimposing sanctions on Iranian crude exports. Analysts have estimated Iran could return around 1M barrels a day of crude to the market within a year of an agreement. Pres Biden & King Salman of Saudi Arabia on Tues discussed energy supplies & rising fuel prices as well as developments in the Middle East in a call yesterday. Traders kept an eye on developments around Ukraine. Russian troops began joint drills in Belarus, underlining worries about a military buildup near Ukraine that has fueled Western fears of an invasion. Oil futures remained higher after OPEC in its monthly report, left its forecast for oil-demand growth in 2022 unchanged at 4.2M barrels a day. The data followed an EIA report released yesterday that showed weekly declines in US crude, gasoline & distillate supplies.
U.S. oil prices build on gains scored after inventory drop; Brent ends lower
Dow Jones Industrials
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