Dow rebounded 380, advancers over decliners better than 2-1 & NAZ climbed 220. The MLP index rose 2 to the 219s & the REIT index jumped 9+ to 490. Junk bond funds are being purchased along with stocks & Treasuries were sold, taking the yield on the 10 year Treasury over 2.9%. Oil dropped 4+ to the 103s & gold plunged 30 to 1956.
AMJ (Alerian MLP index tracking fund)
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Treasury yields rose, as traders fret over concerns of rising inflation & tighter monetary policy. The yield on the benchmark 10-year Treasury note rose 6 basis points to 2.923%, reaching levels not seen since late 2018. The yield on the 30-year Treasury bond rose nearly 5 basis points to hit 3%. Yields move inversely to prices & 1 basis point is equal to 0.01%. Concerns around rising inflation & its effect on economic growth has seen investors sell out of bonds over the past couple of months, pushing up yields. Data released last week showed consumer & producer prices continued to rise in Mar, fueling investor beliefs that the Federal Reserve could increase the size of its interest rate hikes, in a bid to control this inflation. St Louis Fed pres James Bullard said that “quite a bit has been priced in” in terms of Fed actions. The Russia-Ukraine war has exacerbated pricing pressures. The World Bankcut its annual global growth forecast for 2022 from 4.1% to 3.2%. The Ukrainian military says Russia's long-expected offensive push into eastern Ukraine has started, with intensified assaults yesterday in the Slobozhansky & Donetsk operational districts in the north & east of the country. In economic news, housing starts & building permits in Mar came in above expectations
10-year Treasury yield touches 2.92%, a level not seen since late 2018
The IMF cut its global growth projections for 2022 & 2023, saying the economic hit from Russia's unprovoked invasion of Ukraine will “propagate far and wide.” The institution is now projecting a 3.6% GDP rate for the global economy this year & for 2023. This represents a 0.8 & 0.2 percentage point drop, respectively, from its forecasts published in Jan. “Global economic prospects have been severely set back, largely because of Russia’s invasion of Ukraine,” Pierre-Olivier Gourinchas, economic counselor at the IMF, said, marking the release of the IMF's latest World Economic Outlook report. Russia launched its invasion of Ukraine on Feb 24 with officials like NATO’s Jens Stoltenberg noting that Moscow is hoping to gain control of the whole of its neighbor. “The effects of the war will propagate far and wide, adding to price pressures and exacerbating significant policy challenges,” Gourinchas added. The World Bank also cut its global growth expectations, now estimating a growth rate for 2022 of 3.2%, down from 4.1%. The US, Canada, the UK & the EU have imposed several rounds of sanctions targeting Russian banks, oligarchs and energy. The IMF said these penalties will have “a severe impact on the Russian economy,” which estimated that the country's GDP will fall by 8.5% this year & by 2.3% in 2023. However, the fund has forecast an even bleaker assessment for the Ukrainian economy. “For 2022, the Ukrainian economy is expected to contract by 35%,” while adding that more precise analysis on the economic hit was “impossible to obtain.” “Even if the war were to end soon, the loss of life, destruction of physical capital, and flight of citizens will severely impede economic activity for many years to come,” the organization added. More broadly, Russia's decision to invade Ukraine has intensified supply shocks to the global economy, while also bringing about new challenges. “Russia is a major supplier of oil, gas, and metals, and, together with Ukraine, of wheat and corn. Reduced supplies of these commodities have driven their prices up sharply,” the fund continued. This is expected to hurt lower-income households globally & lead to higher inflation for longer than previously anticipated. The IMF estimates the inflation rate will reach 7.7% in the US this year & 5.3% in the euro zone. “The risk is rising that inflation expectations drift away from central bank inflation targets, prompting a more aggressive tightening response from policymakers,” the fund said.
IMF cuts global growth forecasts on Russia-Ukraine war
Johnson & Johnson (JNJ), a Dow stock & Dividend Aristocrat, lowered its full-year sales & earnings outlook & stopped providing Covid-19 vaccine revenue guidance due to a global supply surplus & demand uncertainty. JNJ
is now forecasting 2022 sales of $94.8-95.8B, about
$1B lower than the guidance provided in Jan. The company
lowered its full-year adjusted EPS by 25¢ to $10.15-10.35, from a previous forecast of $10.40-10.60. Q1 sales were $23.4B, slightly missing expectations but growing 5% over the same qtr last year. The
company posted EPS of $2.67, beating expectations & increasing 3.1% over the same period of 2021. Net
income was $5.15B, a nearly 17% decrease over Q1-2021. The company sold $457M of its Covid vaccine globally. CFO Joe
Wolk said that developing nations have limited capacity in terms
of refrigeration & getting shots in arms, which has created a backlog
of the vaccines. When asked about no longer providing a sales outlook
for the shots, Wolk said it was unusual to provide guidance for a
specific product to begin with. The board has approved a 6.6% quarterly div increase to $1.13 due to the company's strong 2021 performance. The stock rose 7 to the 184s..
If you would like to learn more about JNJ click on this link:
club.ino.com/trend/analysis/stock/JNJ_aid=CD3289&a_bid=6ae5b6f
J&J slashes 2022 outlook, stops giving Covid vaccine sales guidance
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