Dow finished up all of 1 after starting trading solidly in the black, decliners over advancers better than 3-1 & NAZ dropped 262. The MLP index sank 6+ to the 196s & the REIT index was off 3+ to the 454s. Junk bond funds remained weak & Treasuries had massive selling with the yield on the 10 year Treasury jumping 13 basis points to 2.13%. Oil was off 7+ to 102 & gold sank 28 to 1956 (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)
Americans' inflation fears skyrocketed again in Feb, with concerns over rising prices hitting the highest level in over a decade, according to a key Federal Reserve Bank of New York survey. The median expectation is that the inflation rate will be up 6% one year from now, matching an 11-year-high recorded in Nov, according to the New York Federal Reserve's Survey of Consumer Expectations. Inflation expectations over the next 3 years also rose to 3.8% in Feb; although an increase from Jan, when it declined sharply to 3.5%, that's a marked improvement from late 2020. "Median inflation uncertainty – or the uncertainty expressed regarding future inflation outcomes – decreased slightly at the one-year horizon and increased at the three-year horizon. Both measures remain elevated relative to their pre-pandemic levels," the survey said. With consumers raising their expectations for inflation over the next year, they believe that things like gasoline, food, medical care, rent & college tuition will get more expensive for them to buy. The report is based on a rotating panel of 1300 households. The survey plays a critical role in determining how Fed policymakers respond to the recent inflation spike. That's because actual inflation depends, at least in part, on what consumers think it will be. It's a sort of self-fulfilling prophecy – if everyone expects prices to rise by 3% in the year, that signals to businesses that they can increase prices by at least 3%. Workers, in turn, will want a 3% pay raise to offset the rising costs. "This is about well-anchored inflation expectations," Fed Vice Chair Richard Clarida said during a question-&-answer session at the Cleveland Fed last year. "Getting actual inflation down close to 2% is going to be an important part of keeping those expectations anchored."
Inflation fears hit highest level in over a decade, survey shows
As the 2-year anniversary of the coronavirus pandemic declaration approached last week, White House chief medical advisor Dr Anthony Fauci was in no mood to predict the future. “The answer is: We don’t know. I mean, that’s it,” Fauci Said when asked what may come next for Covid-19 vaccinations. Given the durability of protection from the shots, “it is likely that we’re not done with this when it comes to vaccines,” he added. 2 years into a pandemic that has killed more than 6M globally & nearly 1M in the US, leaders in public health, academia & industry expressed ambivalence as much of the rest of the world — or at least the U.S. — appears to be trying to move on. Despite progress in beating back the highly transmissible omicron variant, they stressed that globe leaders cannot let their vigilance lapse. “Everybody wants to return to normal, everybody wants to put the virus behind us in the rearview mirror, which is, I think, what we should aspire to,” said Fauci. While he acknowledged “we are going in the right direction” as cases, hospitalizations and deaths decline after the omicron surge, he pointed out “we have gone in the right direction in four other variants” before the pandemic took a devastating turn. As states & cities scrap many of their pandemic restrictions, dire public health conditions linger. The US is still recording more than 1200 deaths per day from the coronavirus. Hospitalizations have recently ticked higher in the UK, a previous harbinger for what may hit the US.
Fauci warns not to forget pandemic’s ‘completely catastrophic experience’
US oil tumbled more than 8% today, breaking below $100 per barrel, amid talks between Russia & Ukraine as well as new Covid-19 lockdowns in China — which could dent demand. West Texas Intermediate (WTI) crude futures, the US oil benchmark, lost 8.75% to trade at $99.76 per barrel. Intl benchmark Brent crude shed 8% to $103.68 per barrel. In the PM some of the losses were recovered. WTI stood 6.1% lower at $102.68, while Brent was down 5.4% at $106.58. The sell-off builds on last week's decline, which saw WTI & Brent register their worst week since Nov. Oil surged above $100 in late Feb as Russia invaded Ukraine, prompting fears that supply would be disrupted in what was already a tight market. It was the first time oil breached the triple-digit level since 2014. And the climb didn't stop there. WTI traded as high as $130.50 last week, with Brent almost reaching $140. The market has been whipsawing between gains & losses in what's been an especially volatile time for oil prices. The surge has sent the national average for a gallon of gas in the US to the highest on record, unadjusted for inflation, which is adding to inflationary fears across the economy. Even with today's big decline, both Brent & WTI are still up more than 30% YTD.
U.S. oil tumbles more than 8%, dips below $100 per barrel
Euro zone finance ministers are likely to endorse the European Commission's view that fiscal policy should move from supportive to neutral in 2023, but that they must be ready with more cash should the war in Ukraine make it necessary. Finance ministers from the 19 countries sharing the € met to discuss their fiscal stance next year as Russia's invasion of Ukraine increased uncertainty & risks to EU economic growth that is rebounding after the pandemic. "It's going to be more difficult than we thought still a few weeks ago," a senior euro zone official involved in the preparation of the talks said. The Commission recommended on March 2 that EU govs should move to a neutral fiscal stance next year from a supportive stance now, but be ready to adapt quickly if the Ukraine crisis produces new challenges for the rest of Europe. EU gov borrowing limits are likely to stay suspended in 2023, the Commission indicated, but high debt countries such as Italy & Greece should still focus on tightening fiscal policy, while low debt ones focus more on investment. "The situation is evolving fast and we need to update the picture as new information arrives. The situation in Ukraine is first and foremost a massive human tragedy. In economic terms, its impact on the euro area is likely to be serious but bearable," the official added. "The current expectation is that growth will continue but at a noticeably slower pace, with stronger inflationary pressure than we anticipated," the official continued. The ECB forecast last week that euro zone growth will be 0.5 percentage point slower this year because of the war in Ukraine, but still come in at a respectable 3.7%, slowing to 2.8% in 2023. Inflation, however, is set to average 5.1% in 2022 & 2.1% in 2023, well above the bank's target of 2.0%. "There are good reasons to be optimistic about the resilience of our economies but we are in a situation where uncertainty is very high and downside risks have increased so we realize that we need to be ready to update our assumptions and adjust our policies as needed," the official said.
Euro zone to back neutral, flexible 2023 fiscal stance amid Ukraine war
Gold futures settled lower,
with prices down a 2nd straight session to their lowest finish since
Mar 3. It looks like precious metals, as well as other commodities,
have got past their initial shock at Russia's invasion. Apr gold fell $24 (1.2%) to settle at $1,960.80 an ounce.
Gold prices settle lower as 'initial shock' of Russian invasion wears off
Oil futures finished lower, pressured by reports that the US is looking to Venezuela to help boost oil supplies in the wake of the Russia-Ukraine war, as well as lockdowns in China following a surge in COVID-19 cases, which could hurt demand for energy. West Texas Intermediate crude for Apr fell $6.32 (5.8%) to settle at $103.01 a barrel after dipping below the $100 mark during the session. May Brent crude the global benchmark, dropped $5.77 (5.1%) to $106.90 a barrel. WTI last week briefly traded above $130 a barrel, while Brent neared $140 before pulling back as volatile trading conditions continued. Reports that the US was looking to lift sanctions on Venezuelan oil, which would help ease any supply losses from Russia following its invasion of Ukraine, pressured oil prices today. Oil prices sold off early on peace talks between Russia & Ukraine, then bounced back a bit when it seemed those talks had little chance for success. A 4th round of talks between Russian & Ukraine officials were held today, stoking optimism among investors, helping lift European equities. US benchmark stock indices, however, moved lower, with no apparent progress in the talks, which are now expected to resume tomorrow. Today, there were reports that the US is going to allow Venezuela to do some oil-for-debt swaps, in an attempt to get more oil on the market. China, meanwhile, moved to lock down the key southeastern manufacturing hub of Shenzhen as it combats a COVID outbreak in the northeast of the country.
Oil settles lower on reports the U.S. is looking to ease sanctions on oil from Venezuela
Dow Jones Industrials
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