Dow lost 201, decliners over advancers 2-1 & NAZ pulled back 55. The MLP index rose 4+ to 202 & the REIT index dropped 2+ to the 466s. Junk bond funds drifted lower & Treasuries saw VERY heavy buying, taking the yield on the 10 year Treasury up an astounding 16/. basis points to 2.3%. Oil jumped 7+ to 112 & gold edged up 4 to 1933 (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)
Federal Reserve Chair Jerome Powell vowed tough action on inflation, which he said jeopardizes an otherwise strong economic recovery. “The labor market is very strong, and inflation is much too high,” the central bank leader said. The speech comes less than a week after the Fed raised interest rates for the first time in more than 3 years in an attempt to battle inflation that is running at its highest level in 40 years. Reiterating a position the FOMC made Wed in its post-meeting statement, Powell said interest rate hikes would continue until inflation is under control. He said the increases could be even higher if necessary than the qtr-percentage point move approved at the meeting. “We will take the necessary steps to ensure a return to price stability,” he added. “In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.” The sudden policy tightening comes with inflation as measured by the consumer price index running at 7.9% on a 12-month basis. A gauge that the Fed prefers still has prices up 5.2%, well above the central bank’s 2% target. As he has before, Powell ascribed much of the pressures coming from Covid pandemic-specific factors, in particular escalated demand for goods over services that supply could not meet. He conceded that Fed officials & many economists “widely underestimated” how long those pressures would last. While those aggravating factors have persisted, the Fed & Congress provided more than $10T in fiscal & monetary stimulus since the pandemic’s start. Powell said he continues to believe that inflation will drift back to the Fed's target, but it's time for the historically easy policies to end.
Powell says ‘inflation is much too high’ and the Fed will take ‘necessary steps’ to address
The Russian Ministry of Foreign Affairs said it summoned Ambassador John Sullivan in Moscow to formally protest Pres Biden's decision last week to label Russian Pres Putin a “war criminal.” Sullivan was told that Biden's accusation had put “Russian-American relations on the verge of rupture,” according to the Foreign Ministry. Biden said Wed that he believes Putin “is a war criminal” for ordering Russia's brutal invasion of Ukraine. It was the first time Biden had publicly branded Putin with that phrase. Biden's comment came hours Ukrainian Pres Volodymyr Zelenskyy & other top officials met virtually with the Intl Criminal Court’s top prosecutor, who 2 weeks ago opened an investigation into possible war crimes by Russia. A State Dept spokesperson did not immediately respond. But the Embassy in Moscow tweeted that Sullivan met with Russian diplomats in order to demand consular access to US citizens detained in Russia, “including those in pretrial detention.” While the formal process proceeds slowly, top officials in the Biden administration have openly alleged that Putin is a war criminal & that Russia is committing war crimes in Ukraine. One day after Biden's comment, Secretary of State Antony Blinken said, “Personally, I agree” with the president's assessment of Putin. “Intentionally targeting civilians is a war crime. After all the destruction of the past three weeks, I find it difficult to conclude that the Russians are doing otherwise,” added Blinken.
Russia says Biden’s ‘war criminal’ claim has put relations ‘on the verge of rupture’
US health experts are warning an emerging, highly contagious Covid omicron variant, called BA.2, could soon lead to another uptick in domestic coronavirus cases. White House chief medical advisor Dr Anthony Fauci said BA.2 is about 50-60% more transmissible than omicron, but it does not appear to be more severe. Health officials continue to stress coronavirus vaccines & boosters remain the best ways to prevent serious illness from the virus. “It does have increased transmission capability,” Fauci added. “However, when you look at the cases, they do not appear to be any more severe and they do not appear to evade immune responses either from vaccines or prior infections.” The variant has already caused cases to increase in China & parts of Europe. It is estimated to account for about 25-30% of new cases in the US, but it could become the country's most dominant variant, Fauci said. Fauci said he expects “an uptick in cases” due to BA.2, but not necessarily a massive surge like other variants have caused. That's despite the Centers for Disease Control & Prevention recently relaxing mask recommendations for most Americans. US Surgeon General Vivek Murthy & Dr Scott Gottlieb, a former head of the Food & Drug Administration, also expressed similar views regarding BA.2.
Health experts predict uptick in U.S. Covid cases due to new BA.2 variant
Gold futures eked out a gain after suffering a loss last week, posting only their 2nd gain in 7 sessions as investors weighed developments in the Russia-Ukraine & the Federal Reserve's next moves to help stave off inflation. Gold prices traded lower for most of the session after Federal Reserve Chair Jerome Powell said inflation is much too high & left the door open for more than one interest-rate hike of more than 25 basis points this year. Gold for Apr edged up pennies to settle at $1929 an ounce. The yellow metal declined 2.8%, last week, marking the biggest weekly percentage decline for a most-active contract since Nov 26. The Fed last week delivered a widely expected qtr-point rate increase & signaled it expected to deliver a total of 10 or 11 such hikes through the end of 2023. Some Fed officials have argued for the prospect of lifting rates by a ½-point increment in the future. Today, Atlanta Fed Pres Raphael Bostic said the goal of Fed monetary policy is to get its policy rate up to neutral as quickly as possible. He sees a total of 6 qtr-point rate increases this year & 2 more in 2024 to get close to neutral. Meanwhile, the Ukrainian gov refused demands by Russia to surrender the southern port city of Mariupol as Russian forces continued to bombard Ukrainian cities. The demand by Russia came hours after Ukrainian authorities said Moscow's forces bombed an art school that was sheltering about 400 people. Stiff resistance has prevented Russian forces from making a quick takeover of the country. There was a report that senior US officials see signs Russia is adjusting its strategy to secure territorial objectives & use leverage to pressure Kyiv to accept neutrality between Moscow & the West.
Oil prices climbed sharply, posting their highest finish in almost 2 weeks, as EU foreign ministers considered a ban on Russian energy as punishment over that country’s nearly monthlong invasion of Ukraine. West Texas Intermediate crude for Apr climbed $7.42 (7.1%) to settle at $112.12 a barrel. The front-month Apr expires at the end of tomorrow's session, dropped 4.2% last week. May Brent crude rose $7.69 (7.1%) to $115.62 a barrel after dropping 4.2% last week. Brent & WTI oil futures settled at their highest levels since Mar 8, when prices ended at their highest since 2008. Support for an EU-wide ban on the purchase of Russian oil is growing inside the bloc according to diplomats involved in the discussion. Ahead of a meeting of the bloc's foreign minsters today, Lithuania's representative Gabrielius Landsbergis & Ireland’s Simon Coveney both expressed support for imposing sanctions on Russian energy. The US & UK have both banned Russian oil, but the EU is much more conflicted, give its reliance on that country’s energy supplies. The discussions follow another weekend of death & destruction in Ukraine, with heavy Russian shelling across the country, & a diplomatic solution still seemingly far off. In the latest developments, Russia was accused of shelling an art school sheltering 400 people & Ukraine rejected a Moscow ultimatum that Ukrainians in the besieged city of Mariupol surrender their weapons in exchange for a safe exit. Pres Biden will stop in Poland this week before arriving in Brussels for urgent talks with NATO & European allies on a continuing response to Russia's aggression, along with boosting the bloc's own deterrence & defense. Also helping lift prices of oil was an attack on Saudi Arabian facilities over the weekend by Houthi rebels. Though no serious damage was caused, this make it clear that supply outages are also a distinct possibility there, which would be virtually impossible to offset in current environment,
Oil prices post highest finish in almost 2 weeks as EU considers ban on Russian oil
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