Dow was off 21 with selling in the last ½ hour, advancers slightly ahead of decliners & NAZ gained 218. The MLP index rose 2 to the 206s & the REIT index was off 4+ to the 463s. Junk bond funds fluctuated & Treasuries continued weak, bringing substantially higher yields. Oil rose about 2 to the 92s (another 7 year high) & gold edged up 3 to 1807 (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)
Gas prices rose to the highest level in more than 7 year, on the heels of the US oil benchmark topping $90 per barrel for the first time since 2014. The national average for a gallon of gas (WTI) stood at $3.423, according to AAA, slightly surpassing the prior high-water mark of $3.422 from Nov.8. This price means consumers are now paying the most at the pump since 2014. The national average stood at $2.14 a year ago. The rapid rise in prices is contributing to inflationary fears across the economy & is creating a headache for the Biden Administration. “Gas prices at the pump are up. We’re working to bring them down, but they’re up,” Pres Biden said within the context of higher prices across the board for consumers. Oil prices did move lower at the end of Nov & in Dec, but that was primarily driven by fears that the omicron variant would dent demand. Once it became clear that the variant wouldn't have as much of an impact as initially feared, oil prices reversed course and starting moving higher again. WTI is now more than $10 above where it was in Nov — when the SPR release was announced. With calls for $100 oil, Patrick De Haan of GasBuddy said prices at the pump will face upward pressure. “It’s going to be potentially a pricier year than anticipated,” he said, adding that the national average could top $4 per gallon by Memorial Day.
Gas prices climb to highest level in more than 7 years as oil surges above $90
Long-term unemployment fell significantly in Jan, continuing a downward trajectory from its pandemic-era peak after having plateaued in recent months. The number of Americans out of work for at least 6 months declined by 317K since Dec, to about 1.7M in Jan, according to Dept of Labor. The long-term unemployed accounted for 25.9% of all unemployed Americans in Jan, down from 31.7% the month prior. That monthly decline (5.8 percentage points) is the largest since Mar 2021, when long-term joblessness began a steady descent. Until Jan, the share had leveled off around 32% over the 3 prior months. “What we’ve seen over the last year is a steady stream of workers back into the labor force and employment,” said Daniel Zhao, a senior economist at the career site Glassdoor. “Long-term unemployment is a reflection of that,” he added. “As the recovery marches on, more opportunities open up for workers who’ve been unemployed for a longer period of time.” Long stretches of unemployment pose serious financial risks for households. And a big share of long-term-jobless workers can weigh on the US economy. Aside from a prolonged lack of job income, it becomes more difficult to find another job as unemployment drags on. The odds of earning a lower future wage also increase.
Long-term unemployment tumbles in January
AT&T (T) sharp div cut freed up cash that can be used to boost the company's results, CEO John Stankey said. “I’d
much rather be pouring some of that cash back into the infrastructure
of this business to [generate] returns at a higher level than what we
pay out on the dividend. So it’s time to make that transition for this
company,” Stankey said. AT&T on Tues cut its annual div nearly in ½ to $1.11 per share, as the company announced it will spin off WarnerMedia in a $43B deal that will merge its media properties with DISCBiscovery. “I think there was a little bit of adjustment that went on once the
dividend numbers settled in,” Stankey added. “We had not decided whether
we were going to spin or split, we couldn’t state a dividend number.” AT&T
expects the WarnerMedia spin-off to be completed in Q2. Under the merger deal, announced last May, AT&T
shareholders will own 71% of the new Warner Bros Discovery company &
receive a 0.24 share of Warner Bros. Many of the financial details of
the transaction became known for the first time this week. The
combination will bring together AT&T-owned CNN, HBO & the Warner
Bros studio & Discovery's channels, including Animal Planet, TLC &
its namesake Discovery Channel. Stankey said that despite
concerns, he expects the merger to ultimately bring value
to those who own the newly-minted company’s stock — though not without
some volatility along the way. AT&T stock fell 37¢.
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AT&T CEO says dividend cut reflects shift to put more cash back in the business
Oil futures rallied, with US benchmark prices marking their highest settlement since Sep 2014. Oil prices soared as winter storms sweep across the US, boosting demand for heating oil & as supply concerns persist & financial players turn away from traditional tech stocks in favor of less volatile commodities. West Texas Intermediate crude for Mar rose $2.04 (2.3%) to settle at $92.31 a barrel. That was the highest finish for a front-month contract since 2014. Prices were up more than 6% for the week. Baker Hughes reported that the number of active US rigs drilling for oil was up by 2 to 497 this week. That followed a climb of 4 oil rigs the week before
U.S. oil futures gain more than 6% for the week, settle at highest since September 2014
Gold futures edged higher, notching the steepest weekly gain since mid Nov, following a stronger-than-expected monthly rise in the US job market. Payrolls were expected to be weak because the spread of the omicron variant was peaking at the time when the gov was compiling labor data last month. However, the US added a robust 467K jobs in Jan & hiring was much stronger at the end of 2021 than originally reported. The forecast was for 150K new jobs. Gold for Apr rose $3 to settle at $1807 an ounce. Prices had briefly dipped below the key $1800 after the jobs data & touched an intraday of $1792. Gold logged a weekly gain of 1.2%, which would represent its sharpest such advance since a 2,85% advance in the week ended Nov 12. Gold has risen despite continued expectations the Federal Reserve will move aggressively to raise interest rates, likely beginning in Mar & take other actions to withdraw monetary stimulus in an effort to rein in inflation. Yesterday, prices also fell below the key $1800 mark, but strong buying support entered the market, quickly reversing the fall.
Gold registers sharpest weekly gain in about 3 months after Friday’s jobs report
Disappointing payroll data depressed stocks in early trading. But bulls returned later to bring the Dow well into the black, although below the best levels of the day. For the week, Dow gained 380 & NAZ was up 330.
Dow Jones Industrials
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