Dow went up 36, advancers over decliners 3-2 & NAZ rose 46. The MLP index added 2 to 211 & the REIT index gained 2+ to 483. Junk bond funds remained in demand & Treasuries saw selling, taking yields higher. Oil was little changed above 100 & gold dropped 25 to 1928.
AMJ (Alerian MLP index tracking fund)
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Amid soaring inflation & worries about a looming recession, the US economy added slightly fewer jobs than expected in Mar as the labor market grew increasingly tighter. Nonfarm payrolls expanded by 431K for the month, while the unemployment rate was 3.6%, the Bureau of Labor Statistics reported. The forecast had been looking for 490K on payrolls & 3.7% for the jobless level. An alternative measure of unemployment, which includes discouraged workers& those holding part-time jobs for economic reasons fell to a seasonally adjusted 6.9%, down 0.3 percentage point from the previous month. The moves in the jobless metrics came as the labor force participation rate increased one-tenth of a percentage point to 62.4%, to within 1 point of its pre-pandemic level in Feb 2020. The labor force grew by 418K workers & is now within 174K of the pre-pandemic state. Average hourly earnings, a closely watched inflation metric, increased 0.4% on the month, in line with expectations. On a 12-month basis, pay rose nearly 5.6%, just above the estimate. The average work week, which figures into productivity, edged down by 0.1 hour to 34.6 hours. As has been the case thru much of the Covid pandemic era, leisure & hospitality led job creation with a gain of 112K. The survey of households painted an even more optimistic picture, showing a total employment gain of 736K. That brought the total employment level within 408K of where it stood pre-pandemic. Revisions from prior months also were strong. Jan's total rose 23K to 504K, while Feb was revised up to 750K compared with the initial count of 678K. For Q1, job growth totaled 1.7M, an average of nearly 562K.
Economy adds 431,000 jobs in March despite worries over slowing growth
Russia will want some form of victory before backing down from the war in Ukraine — & escalation in the war is still possible at this point. Even if Moscow is genuine about its pledge to reduce military activity near Kyiv, it is likely to regroup & focus on the Donbas region where they have seen some headway. The Donbas is a breakaway region in eastern Ukraine which comprises 2 pro-Russian self-proclaimed republics: Donetsk & Luhansk. Following Russia's illegal annexation of Crimea from Ukraine in 2014, Russian-backed separatists in the region broke away from the Ukrainian gov. Russia likely expected a quick victory when it invaded Ukraine on Feb.24. Instead, there has been fierce resistance from the Ukrainians, & Moscow is still struggling to gain ground after more than a month of fighting. Moscow' announcement that it would cut back military activity around Ukraine’s capital has been met with skepticism. Russia & Ukraine are set to resume talks tomorrow, according to a member of Ukraine's delegation.
Russia needs to show ‘success at home’ to justify war in Ukraine
Industry leaders are putting more emphasis on domestic oil production rather than relying on foreign countries to heat our homes & fill up gas tanks. The Permian Basin in west Texas is the epicenter of domestic oil production – a region where 50% of all the US'crude oil is produced. "That is the lifeblood of our economy," said Patrick Cohorn, an operations manager with Henry Resources. Henry Resources is an independent oil & gas producer in the Permian Basin. Their drilling is a 24/7, year-round operation, producing around 10K barrels a day of crude oil. They need at least 100 people to run a single rig. Yet 50K employees in the region were laid off during the pandemic & about 1M nationally. Henry Resources says they've been lucky to keep their staff, but other companies had to shut down some of their drilling rigs in 2020. Only 2/3 of the workforce has returned. "The oil and gas business is very cyclical, and the pendulum tends to swing very hard from one side to the other," Cohorn said. Oil producers' ideal situation would be selling crude oil at high prices with low operating costs. Right now, crude oil prices are high, but operating costs are also high. They're also dealing with supply chain issues & inflation. Even with these challenges, the Permian Basin has been operating at near-historic levels of production, about 5M barrels a day. Drilling permits are also increasing year to year: 1600 active drilling permits from Jan-Feb 2021 compared to 1800 active drilling permits in the same time frame. Yet the profit just isn't there for producers.
Oil producers pump through new struggles as Russia-Ukraine war rages
Favorable jobs report & unemployment data are not getting respect. Investors are worried about numerous problems starting with war & inflation.
Dow Jones Industrials
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