Dow went up 94 with buying iin the last hour, decliners over advancers 5-4 & NAZ rose 185. The MLP index fell 1+ to 185 & the REIT index gained 5+ to the 476s. Junk bond funds slid lower & Treasuries were a little higher in price. Oil tumbled about 9 to 105 & gold pulled back 27 to 1926 (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)
Pres Biden's 2023 federal budget proposes tax hikes on the ultra-wealthy & corps while providing Bs of $s in new spending for the Defense Dept & the Justice Dept. The proposal touts a reduction in the federal budget deficit of more than $1T over the next 10 years. This is paid for, in part, by raising the corp tax rate from 21% up to 28%, a rate favored by progressive Dems but opposed by key moderates. It also proposes a new 20% minimum tax on the top 0.01% of earners & households worth more than $100M. White House officials credited this economic policies with creating economic growth that was strong enough to justify cutting back pandemic assistance programs. As a result of fewer pandemic safety net costs & higher tax revenue, the White House projects the 2022 budget deficit will be $1.3T less than the 2021 deficit, which the Biden administration touted as “the largest ever one-year decline in our country’s history.” Overall, the 2023 fiscal year budget shifts focus away from the pandemic, which has subsided after the massive omicron wave late last year. Notably, there are no emergency pandemic or supplemental funds being requested. In place of Covid, the budget focuses on the need to tackle crime & public safety, & the global peril created by Russia's invasion of Ukraine. The budget also serves as a blueprint for Dems in Congress with slim majorities in the House & Senate but face strong headwinds going into Nov elections. For them, the budget contains a little bit of everything. Progressives in deep-blue districts are likely to focus on Biden's proposed tax hikes & on the budget's additional climate change funding. For moderate Dems, the additional funding in the budget requests for the Pentagon & for police will likely be popular with their constituencies.
Biden’s 2023 budget would hike taxes on the ultra-rich and corporations, boost defense spending
Despite the increase in closure rates, 30% of small businesses surveyed worldwide reported higher sales in Jan 2022 compared to the previous year, up from 28% in Jul 2021. In the US, 36% of small businesses reported higher sales in Jan 2022, compared to 44% in Jul 2021. Pennsylvania saw 55% of small businesses report higher sales, followed by Texas (42%) & North Carolina. Meanwhile, another 36% of small businesses reported lower sales, up 2 percentage points from Jul 2021. Ohio reported that 52% of its small businesses saw lower sales, down 20 percentage points from Jul 2021, followed by Illinois with 46% reporting lower sales, down 16 percentage points. Black-owned small businesses are facing record levels of lower sales, with 51% reporting Jan sales were lower than the same month a year ago. Changes to employment have remained stable since Jul 2021, with 41% of small businesses globally reporting that they had hired at least some of their current workforce during the pandemic & 11% reporting increased employment. In the US, just 9% of small businesses surveyed reported increased employment. The largest increase was in Ohio, with 19% of small & businesses increasing employment, up from 6% in Feb 2021. Pennsylvania, Tennessee, Florida & North Carolina also reported increases of 14%, 13%, 11% & 10%, respectively. Approximately 37% of small businesses reported hiring employees since the pandemic began, with 20% hiring ½ or more of their current employees during this period. Approximately 15% stated that over ½ of their hiring activity consisted of rehiring workers who were previously laid off or placed on furlough. Small businesses making new hires were greatest in Texas (47%) & Pennsylvania (47%) & lowest in Illinois (25%) & Washington (26%). In comparison, 24% of small businesses indicated decreased employment due to COVID-19 & 67% reported stable employment levels since the start of the pandemic. The highest rate of decreased employment was in Missouri (36%), Texas (34%) & Washington (34%). Despite the increase in closure rates, 30% of small businesses surveyed worldwide reported higher sales in Jan 2022 compared to the previous year, up from 28% in Jul 2021.
OUT OF WORK: Meta survey finds shocking stats about small business closures
The UAE energy & infrastructure minister has insisted that Russia will always be a part of OPEC+ even as govs across the globe shun the oil exporter over its war in Ukraine. A former pres of the oil alliance, said no other country could match Russia's energy output & argued politics should not distract from the group's efforts to manage energy markets. “Always, Russia is going to be part of that group and we need to respect them,” he said. “OPEC+, when they speak to us, they need to speak to us including Russia,” he added, referring to the group’s negotiations with energy importers. The US, Europe & Japan have called on oil-producing nations to do more to tackle record-high prices amid the war in Ukraine & ongoing supply shortages. But, Al Mazrouei said Russian oil would play a vital role in achieving that. The comments come as Western allies express concern that Russian energy imports are indirectly topping up Pres Vladimir Putin's war chest with oil & gas revenue. “Who can replace Russia today? I cannot think of a country that can in a year, two, three, four or even 10 years replace 10 million barrels. It’s not realistic,” he noted. OPEC+, led by Saudi Arabia & Russia, has the capacity to increase oil output & bring down crude prices, which have jumped to over $100 a barrel. “We are in agreement with their target or their objective of trying to calm the market and balance the market,” Al Mazrouei said. “But you don’t do it this way. You don’t do it by putting sanctions on a hydrocarbon that you cannot replace — unless you want the prices to go high.” “They are doing something but expecting the opposite reaction, and it’s not going to happen.”
Russia will ‘always’ be a part of OPEC+, UAE energy minister says
Gold futures fell for a 2nd straight session as the $ strengthened & investors eyed developments in the Russia-Ukraine war. Gold for Apr fell $14 (0.7%) to settle at $1939 an ounce after climbing by 1.3% last week. Ukrainian Pres Volodymyr Zelensky said he was willing to discuss his country adopting a neutral status & offer security guarantees to Russia to secure peace “without delay.” Zelensky added that neutrality, which would keep Ukraine out of NATO or other military alliances, should be put to Ukrainian voters in a referendum after Russian troops withdraw. Moscow last week said its focus was now on securing the entire eastern Donbas region, which has been partially controlled by Russia-backed separatists since 2014. Meanwhile, the $ was stronger versus major rivals, with the ICE US Dollar Inde up 0.3%. A stronger $ can be a negative for commodities priced in the currency, making them more expensive to users of other currencies. Treasury yields rose sharply last week, but edged back a bit today. Higher yields raise the opportunity cost of holding nonyielding assets.
Gold ends lower, pressured by strength in the dollar as investors eye Russia-Ukraine developments
Oil prices dropped about 7% to settle at their lowest level in more than a week, as a worsening COVID outbreak in China threatened to hurt energy demand & hope for progress in peace talks between Russia & Ukraine helped ease some concerns over risks to energy supplies. West Texas Intermediate (WTI) crude for May dropped $7.94 (about 7%) to settle at $105.96 a barrel. Front-month prices rose 10.5% last week. May Brent crude, the global benchmark, sank $8.17, or 6.8%, to end at $112.48 a barrel on ICE Futures Europe after climbing by nearly 12% last week. Brent & WTI futures logged their highest settlements since Mar 18. China began to lock down the bulk of its financial capital & largest city Shanghai today. The 2-phased rollout will be the most extensive since officials confined the entire population of Wuhan — the epicenter of the original outbreak — to their homes in early 2020. Traders also remained wary of escalating tensions & violence over Russia's ongoing war in Ukraine as there were peace talks between Russian & Ukraine for potential progress that could ease risks to global energy supplies. Several EU countries have resisted pressure to join a UK & US embargo on Russian oil due to their heavy reliance on energy supplies from the country. Another geopolitical hot spot appeared to cool today, as Iranian-backed rebels in Yemen reportedly offered a truce on Sat. That came after Saudi Arabia & its allies attacked targets in that country in response to a Houthi rebel attack on an oil depot Fri in Jeddah. Markets also looked ahead to the Thurs meeting of OPEC+. The market appears to mostly agree that producers will stick to the current plan for gradual output increases. In a Jul meeting last year, OPEC+ said that starting May 1, 2022, baseline output for the group would climb to 45.5M barrels a day from 43.8M. Given those baseline changes the current OPEC+ plan would call for May increases of 432K barrels per day.
Oil drops about 7% as China COVID outbreak clouds demand outlook
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