Dow dropped 405, decliners over advancers 5-2 & NAZ pulled back 205. The MLP index was up a little in the 209s & the REIT index fell 3 to 463 on fears of higher interest rates. Junk bond funds were weak along with stocks & Treasuries saw a little selling bringing higher yields. Oil jumped 3+ to the 118s & gold advanced 19 to 1985 as it close on 2000.
AMJ (Alerian MLP index tracking fund)
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The US national average price for a gallon of regular gasoliie notched $4.065 as supply disruptions continue to drive up oil prices to new highs, according to AAA. "Supply disruptions are getting worse as oil traders, vessel owners, governments, ports, and dock workers do not want to touch anything related to Russia," Lipow Oil Associates Pres Andy Lipow said. Gas is now a nickel shy of an all-time high of $4.11 per gallon reached in 2008. Oil surged to a 13-year high yesterday as US officials discussed the possibility of banning Russian oil imports in retaliation of Vladimir Putin's invasion of Ukraine. Meanwhile, US lawmakers on both sides of the political aisle have been ramping up pressure on the Biden administration to ban all Russian oil & gas imports, but the administration has said it wouldn't be possible without creating an even bigger hike in gas prices at home. During his State of the Union last week, Pres Biden announced the US is releasing 30M barrels from its Strategic Petroleum Reserve to protect consumers from the rising prices, but the average continued to climb. Secretary of State Antony Blinken said the US is now considering a ban on Russian oil, but that it will be "in coordination" with European & NATO allies.
Gas prices nearing all-time high as Biden weighs Russian oil ban
Russia's invasion of Ukraine could reduce global production of new cars & trucks by Ms of units this year. Local Russian production is expected to feel the greatest near-term impact as companies suspend operations. But, officials say, the longer the war continues, the higher the risk of ripple effects across the automotive industry. “There’s no question. It’s going to ripple. It’s just going to be really dependent on obviously how long this goes on,” said Jeff Schuster, pres of global forecasting & the Americas at LMC Automotive. “The sanctions and trade impact play a big role in that.” The invasion is already creating new supply problems for parts such as wire harnesses, which act as a vehicle's wiring system. The war is also expected to further escalate existing supply limitations of parts such as catalytic converters & semiconductor chips that use materials and gases from the region. The crisis could worsen rising inflation & propel already record-high vehicle prices even higher. “This does have global implications in terms of adding to inflationary pressure, pricing pressure and ultimately dealing another blow to the consumer,” Schuster added. For US consumers, the most immediate impact is higher gas prices. Early forecasts for the reduction in vehicle output resulting from the conflict vary greatly given the fluidity of the situation. LMC's Schuster said the impact could amount to Ms of units of production in 2022. His firm has already adjusted its forecast to cut 700K units of European production, he said.
Russia-Ukraine war could cut auto production by millions of vehicles in 2022
The announcement that American credit card companies will suspend services in Russia has delivered the most devastating blow to everyday citizens, an economics expert said. A number of American tech companies
have suspended services in Russia, but Joel Griffith, a research fellow for the Institute for
Economic Freedom & Opportunity at the Heritage Foundation, said the
credit card services will do by far the most damage. "When it
comes to going to subway stations and not being able to use Google or
Apple Pay for those transactions, but now it comes to – like Americans –
Russians rely on Visa and Mastercard services, and you compound it with
so many companies pulling out … like Ikea is pulling out, a lot of
automobile manufacturers, these sanctions will have rippling effects for
everyday Russians," Griffith added. "This is making life
not just inconvenient but almost unbearable." Visa (V), a Dow stock, & Mastercard (MA) announced yesterday the suspension of all services
in Russia & in the case of Visa all cards originally issued in
Russia. American Express (AXP), a Dow stock, followed with an announcement of similar
sanctions just hours later, cutting Russians off from the most
widely-used credit card services globally. It was
reported that Russia will attempt to switch over to Chinese card
service UnionPay in order to bolster Russia’s Mir network, but Griffith
argued that China's service is not ready to adopt the Russian banks. "Our
infrastructure has been developed over decades and we’ve been cutting
edge," Griffith said. "The Chinese system is not fully ready for them to
be tapping into, so there is no full alternative [to American
systems]."
Russia sanctions: Tech cutoff is bad, but credit suspension 'unbearable' for citizens
Oil continues to soar to near record highs. In all fairness, it's good to remember that periods of supply shortages are followed by glut periods. Meanwhile the war in Europe is already starting to pinch the economic recovery. Thurs the consumer price index will be reported (last months prices). Next week the producer price index will be reported (prices in the coming months). Then FOMC has its meeting will which will show how those guys feel about the future of interest rates & the US economy. The bulls are in hiding.
Dow Jones Industrials
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