Dow jumped 653 (near session highs), advancers over decliners 3-1 & NAZ shot up 459. The MLP index slipped 2+ to the 206s & the REIT index jumped 6+ to the 461s. Junk bond funds rose along with stocks & Treasuries saw more selling, taking the yield on the 10 year Treasury up 8 basis points to 1.95%. Oil plunged 14 to the 109s & gold tumbled an amazing 47 to 1995 (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)
The House will vote today on legislation that would fund the gov thru Sep & send nearly $14B in aid to Ukraine as it struggles to fend off an invasion by Russia. Congress has to pass a spending bill by Fri to prevent a gov shutdown. To give the Senate enough time to vote on it, the House plans to pass a 2nd bill to extend current funding thru Tues. Lawmakers crafted the larger $1.5T bill after weeks of talks. Dems & Reps had to settle disputes over how much to hike spending on domestic programs & the military — a debate that evolved after Russia attacked Ukraine last month. “This bipartisan agreement will help us address many of the major challenges we face at home and abroad: from Covid-19, to the vicious and immoral attack on Ukraine, to the need to lower costs for hardworking American families,” Dem House Speaker Nancy Pelosi & Senate Majority Leader Chuck Schumer said. The legislation is expected to pass with support from both parties. Rep Senate Minority Leader Mitch McConnell backs the funding bill & said he would urge his caucus to vote for it.
House to vote on funding bill that includes nearly $14 billion in Ukraine aid
Macy’s (M) says the American consumer is still healthy & spending. But, as escalating oil prices translate into higher prices at the gas pump & bigger grocery bills, the department store chain said it anticipates some consumers will be impacted more than others. “From a consumer demand standpoint, we still have a healthy consumer,” said CFO Adrian Mitchell. He noted that many American families benefited from rounds of gov stimulus payments around this time last year, but that savings rates have remained elevated this year compared with prepandemic levels. However, according to Mitchell, the consumer is also under increased pressure. “Inflation is elevated with the geopolitical instability that we’re seeing with Ukraine and Russia. We’re seeing oil prices escalate, which will only elevate the expenses around essential goods,” he added. He said that Macy's forecasts that lower-income families, which devote a bigger portion of their monthly paychecks toward essential goods such as groceries, will be affected more than others. As a result, the company is already thinking about how to communicate value to those customers differently, versus a luxury customer who has more capacity to spend. “Clearly value is going to matter, but it’s going to mean something different depending on the tier [of income],” he said.
Macy’s CFO warns that lower-income shoppers could soon cut back as inflation soars
Oil prices dropped in a sudden move, giving back some of the rally this month amid supply disruptions stemming from Russia's invasion of Ukraine. US WTI crude oil tumbled more than 13% to trade at $108 per barrel, on track for its worst day since Apr 2020. Earlier this week, WTI topped $130 per barrel briefly — a 13-year high — during escalated geopolitical tensions. Brent crude oil, the intl benchmark, fell a similar 12% to $112, headed for its biggest one-day drop since Nov. Brent hit $139 on Mon, its highest since 2008. The move in oil lower came amid indications of possible progress by the US in encouraging more oil production from other sources. Iraq said it could increase output if OPEC+ asks. Secretary of State Antony Blinken also signaled that UAE would support increased production by OPEC+. Last week, the Intl Energy Agency released 60M barrels of oil reserves to compensate for supply disruptions following Russia's invasion, & the agency called the move “an initial response” & said more could be released if needed. Still, oil prices have surged this month with WTI crude oil up 15% as Russia, the world's 2nd-largest crude exporter, invaded Ukraine. The UK announced its own restrictions on buying Russian oil imports, saying it will phase out the country's imports by the end of the year. The EU also unveiled a plan to wean itself off of Russian fossil fuels.
U.S. oil prices take sudden leg downward, now off 10%
The world's food prices are about to get higher. In response to the ongoing Russian invasion, Ukraine has banned the export of various food items from its country. These items include wheat & oats, which is expected to have a significant impact on food supplies across Europe, Africa & Asia. Ukraine's minister of agrarian & food policy Roman Leshchenko explained that the decision was made as part of the country's efforts to keep its own civilians fed during the crisis. As Russian forces slowly move across the country, normal supply lines are being cut off from various areas. Ukraine is often referred to as the breadbasket of the world & the halt of its wheat & grain exports could threaten the food supply across Europe & other regions. The country has also banned the export of millet, buckwheat, sugar, cattle & other meats, including meat byproducts from cattle. About a qtr of the world's wheat trade & 1/5 of the world's corn comes from the region. Since Russia invaded Ukraine, both countries have had to close ports used for exporting goods. It's unknown when either side will be able to reopen these ports again.
Food prices are about to get higher worldwide
Gold futures posted their first loss in 5 sessions, pulling back from near record highs, as most equity bourses across the globe rallied, drawing flows away from perceived havens. Apr gold fell $55 (2.7%) to settle at $1988 an ounce, following a 2.4% gain yesterday that took the yellow metal to $2043 — its highest finish in about 19 months. Prices have traded near the record settlement high of $2069 from Aug 2020. Over the past 2 weeks, investors have been fixated on the conflict in Ukraine, which has fueled a surge in commodities, currencies & gov debt, as investors weigh the implications of Western sanctions on Russia the global economy. Investors also are reacting to plans for aggressive monetary policy paths by central banks, which have been reacting to the prospects of a surge inflation that could be amplified by hostilities in Eastern Europe. The ECB is scheduled to deliver its latest policy update tomorrow, a week ahead of the key gathering of the Federal Reserve, where Chair Jerome Powell has said that he will endorse & propose an increase of 25 basis points of benchmark Fed funds futures, likely commencing a series of rate increases to quell inflationary pressures. Meanwhile, a 1.1% drop in the $, as gauged by the ICE US Dollar Index, appeared to do little to limit the decline in $-denominated prices of gold, while a rise in benchmark yields, with the 10-year Treasury note yield at 1.94%, contributed to the metal's losses. A weaker $ can make bullion more appealing for overseas buyers, but higher yields can increase the opportunity costs of owning gold, which doesn't offer a coupon over gov debt.
Gold futures fall back under $2,000, post first loss in 5 sessions
Oil futures traded lower, pausing after a push to nearly 14-year highs in the previous session when Pres Biden banned US imports of Russian energy, upping pressure on Moscow over its decision to invade Ukraine. West Texas Intermediate crude for Apr fell $5.74 (4.6%) to $117.96 a barrel, after ending yesterday at its highest since Aug 2008. May Brent crude the global benchmark, fell $6.42 (5%) to $121.56 a barrel. It ended yesterday at its highest since Jul 2008. Crude has soared since Russia's Feb. 24 invasion amid volatile trading action. Biden announced a ban on Russia oil, liquefied natural gas, and coal imports yesterday. Russia is the world's 2nd-biggest petroleum exporter & usually exports 4.5M barrels of crude & 2.5M of oil-products each day. However, last year only about 8% of US imports of oil & petroleum products came from Russia. Last year, the US imported nearly 700K barrels per day of crude oil & refined petroleum products from Russia. While crude was giving back some of its recent gains today, activity is likely to remain volatile, with crude set to extend its push toward all-time highs or beyond if Western allies join the US in banning Russian energy imports. The Energy Information Administration (EIA) reported that U.S. crude inventories fell by 1.9M barrels for the week ended Mar 4. On average, the EIA was expected to show crude inventories down by 700K barrels. The American Petroleum Institute reported a 2.8M-barrel increase. The EIA data showed crude stocks at the Cushing, Okla, Nymex delivery hub edged down by 600K barrels for the week. Separately, a survey from S&P Global Commodity Insight showed members of OPEC+ with output quotas pumped 38.4M barrels a day in Feb. That was still 764K barrels per day short of their collective production targets.
Global oil prices drop more than 13% from their highest finish in nearly 14 years
These are wild times for the stock market. The Dow dropped Mon & Tues with a sharp recovery today. But it's still down 300 (1%) this week. Grrr!! YTD the Dow has fallen about 3000. Brave investors were bargain hunting today. The outlook remains gloomy with high inflation & interest rates all but guaranteed. And the economic recovery for the global economy looks gloomy, at best. Long term investors need to be strong during these trying times.
Dow Jones Industrials
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