Dow sank 503 (near session lows), decliners over advancers about 3-1 & NAZ retreated 394. The MLP index rose 6+ to the 206s & the REIT index declined 3+ to the 455s (where it was in Jul on the way up). Junk bond funds were sold along with stocks & Treasuries saw heavy buying in late day trading taking the yield on the 10 year Treasury down 8 basis points to 1.95% from over 2% in early trading. Oil jumped 3+ to the 93s (another 7 year high) & gold surged 26 to 1863 (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)
Senior US health officials have sought to reassure a pandemic-weary public that the country is moving closer to a time when Covid-19 won't dominate our daily lives, as an unprecedented surge of infections & hospitalizations declines in many parts of the country. White House chief medical advisor Dr Anthony Fauci said this week the US is heading out of the “full-blown pandemic phase” Covid-19. Fauci has made clear the US won’t eradicate Covid, but he's confident the nation can bring the virus under control so it no longer threatens to push hospitals to their breaking point or disrupt the economy. At that moment, people could return to a semblance of normal life after 2 years of disruption & uncertainty following repeated waves of infection. “The president has been clear that we’re moving toward a time when Covid won’t disrupt our daily lives, a time when Covid won’t be a constant crisis so we’re no longer fearing lockdowns and shutdowns, but getting back to safely doing what we all love,” Jeff Zients, the White House’s Covid response coordinator, said. Real-world studies from around the globe have demonstrated that the omicron variant, though more contagious, generally doesn't make people as sick as delta. While infections have skyrocketed, hospitalizations & deaths have not risen at the same rate.
Omicron is fading, but nobody knows when the pandemic will finally end
US consumer sentiment fell to its lowest level in more than a decade in early Feb amid expectations that inflation would continue to increase in the near term, but that was unlikely to derail spending against the backdrop of excess savings & a strengthening labor market recovery. The decline in sentiment reported by the University of Michigan was entirely among households with incomes of $100K or more, which could reflect falling stock market prices. It followed news on yesterday that consumer prices recorded their largest annual increase in 40 years in Jan, which prompted markets to price in a hefty 50 basis points interest rate hike from the Federal Reserve next month. The consumer sentiment index dropped to 61.7 in the first ½ of this month, the lowest since 2011, from a final reading of 67.2 in Jan. The forecast was for the index edging up to 67.5. The index is sensitive to gasoline prices & the stock market. It is, however, much weaker than most other sentiment measures, including the Conference Board, which is comfortably above levels hit during the first mandatory COVID-19 lockdowns in the spring of 2020. The Conference Board survey puts more weight on the labor market, which is rapidly churning out jobs. Sentiment among households with incomes of $100K or more dropped by 16.1% from last month. The impact of higher inflation on personal finances was spontaneously cited by 1/3 of all consumers, with nearly ½ of all consumers expecting declines in their inflation adjusted incomes during the year ahead. The gauge of current economic conditions fell to a reading of 68.5, the lowest since 2011 from 72.0 in Jan. Its measure of consumer expectations declined to 57.4, the lowest since 2011, from 64.1 in Jan. The survey's one-year inflation expectations rose to 5.0%, highest since 2008, from 4.9% in Jan & its 5-10-year inflation outlook held steady at an 11-year high of 3.1%.
U.S. consumer sentiment hit more than 10-year low
Oil prices jumped in the PM amid escalating tensions between Ukraine & Russia. With about 2 hours left to the trading day, National Security Advisor Jake Sullivan said that there were signs of Russia escalation at the Ukraine border & that it was possible that an invasion could take place during the Olympics, despite speculation to the contrary. “We continue to see signs of Russian escalation, including new forces arriving at the Ukrainian border. As we’ve said before, we are in the window when an invasion could begin at any time,” Sullivan said. Sullivan noted that the US is not certain that Russian Pres Vladimir Putin has made a final decision to invade Ukraine. But “it may well happen soon,” he said. Stocks came off their lows and oil and bond prices retreated from their highs of the trading session following that comment. The US & UK have urged citizens to leave Ukraine. A Downing Street spokesperson said Prime Minister Boris Johnson feared for the “security of Europe in the current circumstances.” The spokesperson added that Russian Pres Vladimir Putin “had to understand that there would be severe penalties that would be extremely damaging to Russia’s economy, and that Allies needed to continue with efforts to reinforce and support the Eastern frontiers of NATO.” US West Texas Intermediate crude futures, the US oil benchmark, rose 4.7% to trade at $94.21 per barrel, it's highest price since 2014. Intl benchmark Brent crude also rose to its highest level in more than 7 years, jumping 4% to trade at $95.18 per barrel.
Oil jumps amid escalating tensions between Russia and Ukraine
Oil futures ended solidly higher, extending gains after White
House National Security Adviser Jake Sullivan warned that a Russian
invasion of Ukraine could happen "any day now." West Texas Intermediate
crude for Mar rose $3.22 (3.6%) to close at $93.10 a
barrel
Oil ends higher, extending gains as Ukraine fears rise
Gold futures ended higher, posting weekly gains as the yellow metal found support after a continued surge in inflation. Gains were extended in electronic trade after the bell after the White House warned that a Russian invasion of Ukraine could happen “any day now.” Gold for Apr delivery rose $4 to close at $1842 an ounce for a 1.9% weekly rise. After the bell, gold, a traditional haven during periods of geopolitical uncertainty, extended its rise, trading below $1860 an ounce in recent action. White House National Security Adviser Jake Sullivan told reporters that while the US hadn’t concluded that Russian Pres Vladimir Putin had made a final decision, an invasion next week as Winter Olympic Games continue in Beijing was a possibility. Gold extended its winning streak to a 5th session yesterday, even as data showed the Jan consumer-price index rose at a hotter-than-expected year-over-year rate of 7.5%. Treasury yields rose sharply as investors priced in a more aggressive Federal Reserve & St Louis Federal Reserve Bank Pres James Bullard called for 100 basis points of rate increases by Jul 1. Rising yields can be a drag on gold because they raise the opportunity cost of holding nonyielding assets.
Gold ends higher, extends rise after bell on Fed worries, Ukraine jitters
There was unlimited speculation today on the next moves by the Fed. Of course, the next meeting for the FOMC is more than a month away & today's thoughts will mean little next month. The Dow was trading near break even until the last 2 hours after the press conference. Sullivan hinted that Russia might invade Ukraine. Dow tumbled 400 & the bulls stayed away for the rest of the day. Dow finished down 350 this week & is facing severe headwinds next week.
Dow Jones Industrials
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