Dow climbed 61 (400 below early highs), decliners over advancers 5-4 & NAZ was off 1. The MLP index went up 1+ to the 209s & the REIT index was off 3+ to the 476s. Junk bond funds were mixed & Treasuries saw selling, raising yields. Oil was flattish in the 101s & gold fell 17 to 1886 (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)
Dr Anthony Fauci expressed optimism about the state of the pandemic in the US. “We are certainly right now in this country out of the pandemic phase,” Fauci said. He added that the US had entered the “control” stage of the pandemic, since the coronavirus is causing far lower levels of hospitalizations & deaths than during the winter omicron surge. Fauci has previously described 5 phases of the pandemic. The first, a full-blown pandemic, is where the US spent most of the last 2 years. The 2nd is deceleration & the 3rd is control, which indicates that the virus is becoming endemic in the population. After this should come elimination & eradication, though the virus will probably never be eradicated. Fauci said that entering a new phase doesn't mean the entire pandemic is over. “The world is still in a pandemic. There’s no doubt about that. Don’t anybody get any misinterpretation of that. We are still experiencing a pandemic,” he continued. The US is recording around 51K Covid cases & just under 400 deaths per day. But that case average has risen 49% in the last 2 weeks, even as infections go undercounted due to the common use of at-home tests. Still, many people in the US have some form of immunity that should protect them from severe disease. “If you add up the people who’ve been infected plus the people who’ve been vaccinated and hopefully boosted, you have a rather substantial proportion of the United States population that has some degree of immunity that’s residual,” he added.
Fauci says U.S. is transitioning out of ‘pandemic phase’
Amid rising costs & supply chain instability, General Motors (GM) reaffirmed its earnings expectations for 2022 despite reporting a lower net profit & margin compared to a year ago. Adjusted EPS was: $2.09 vs a $1.68 estimate & revenue was $36B vs the $37B estimate. GM
reaffirmed its pretax adjusted earnings forecast of $13-15B for the year, while raising its net income expectations
from $9.4-10.8B to $9.6-11.2. Q1 profit margin was 8.2%, down from 9.3% a year
earlier. GM also increased its adjusted EPS
guidance for the year to $6.50-7.50, up from $6.25-7.25. The adjustment is a result of the
company increasing its ownership stake in its Cruise autonomous vehicle unit & including the operation's losses in its consolidated income tax return. On an unadjusted basis, net income was $2.9B for Q1 compared with $3B a year earlier. The automaker reported
pretax adjusted earnings of $4B for Q1, down from
$4.4B a year earlier. GM also reaffirmed plans to produce 25- 30% more vehicles this year than last year. The stock was up 61¢.
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club.ino.com/trend/analysis/stock/GM_aid=CD3289&a_bid=6ae5b6f
General Motors (GM) earnings Q1 2022
The Russian war in Ukraine has sent the global cost of food & energy soaring, & costs are expected to remain elevated in the coming 3 years, the World Bank said in a grim economic forecast. The institution said there is a risk that high commodity costs lasting until the end of 2024 could lead to stagflation, the 1970s-style economic phenomenon characterized by persistently high inflation & high unemployment. Over the past 2 years, the world has seen the biggest increase in energy prices since the 1973 oil crisis & the largest jump in food & fertilizer prices since 2008. Although the costs of food & energy may cool slightly from their current levels, they are expected to remain above the past 5-year average until at least 2024. As a result of the disruptions from the Ukraine war, the World Bank is now forecasting a 50% rise in energy prices this year, with the price of Brent crude oil, the global benchmark, expected to average $100 a barrel in 2022. That would mark the highest level since 2013. Although prices are projected to fall slightly to $92 a barrel in 2023, that's well above the 5-year average of $60 a barrel. "This amounts to the largest commodity shock we’ve experienced since the 1970s. As was the case then, the shock is being aggravated by a surge in restrictions in trade of food, fuel and fertilizers," said Indermit Gill, a World Bank VP. "These developments have started to raise the specter of stagflation." Commodity prices were already rising before the invasion began on Feb 24, & the war has exacerbated already sky-high inflation. The Labor Dept reported earlier this month that the consumer price index soared 8.5% in Mar from the year-ago period, the fastest pace since 1981. The World Bank already lowered its forecast for global growth in 2022 to 3.2% – a sharp drop from the 4.1% prediction in Jan, The decline stems from a cut in the outlook for Europe & Central Asia, which include both Russia & Ukraine. By comparison, the global economy expanded by 5.7% in 2021. World Bank Pres David Malpass the war between Russia & Ukraine – the worst conflict that Europe has seen in decades – has exacerbated the financial pressures from the COVID-19 pandemic as well as the rising cost of living, saying there is a need to provide assistance immediately. "I’m deeply concerned about developing countries," Malpass said. "They are facing sudden price increases for energy, fertilizer and food, and the likelihood of interest rate increases. Each one hits them hard."
Persistently high food, energy prices could lead to stagflation, World Bank warns
A soaring $ again to take the steam out of gold, with the yellow metal posting its lowest finish in 2 months. Gold for Jun fell $15 (0.8%) to close at $1888 an ounce, the lowest close for a most actively traded contract since Feb 25. Gold has failed to find haven-related supported, even after Russia halted natural-gas supplies to Poland & Bulgaria in an escalation of tensions surrounding the Russian invasion of Ukraine. Analysts said the $'s continued rise versus major rivals, with the ICE US Dollar Index touching levels last seen in 2017, remains a headwind for gold. A stronger $ makes commodities priced in the unit more expensive to users of other currencies. The $ has been lifted on expectations the Federal Reserve will move aggressively to raise interest rates & otherwise tighten monetary policy in response to inflation running at its hottest in 4 decades.
Gold ends at 2-month low as U.S. dollar jumps
Oil futures shook off early weakness to end highery, finding support after a large drop in US inventories of gasoline & distillates. Earlier in the session, oil futures edged lower after Russia cut off natural-gas deliveries to Poland & Bulgaria & as investors also assessed the threat to demand from China's COVID lockdowns. A soaring $ was also seen weighing on oil & other $-priced commodities. Worries over crude demand initially weighed on prices after Beijing moved to rapidly test residents for COVID amid fears of a lockdown in China's capital, though the People's Bank of China promised monetary-policy support for small businesses & industries hit hardest by COVID-19. Meanwhile, state-controlled Russian giant Gazprom said that it had cut natural gas deliveries to Poland & Bulgaria as they refused to pay in Russian rubles, as demanded by Pres Vladimir Putin. Futures tracking Europe's wholesale gas price reached a high of EUR119 per megawatt hour in early trading today, before paring back. The € & British £ slumped versus the $, with the ICE Us Dollar Index, a measure of the currency against a basket of 6 major rivals, surging to levels last seen in 2017. A stronger $ is seen as a headwind for commodities priced in the unit, making them more expensive to users of other currencies. Oil trimmed losses, however, eventually ending positive after the Energy Information Administration reported weekly inventory data.
Oil scores gain after big drop in U.S. gasoline, distillate inventories
This was not an impressive rally. Tech shares should have led a rally, but they didn't. The advance decline ratio should been positive, but it wasn't. The world bank's gloomy forecast may have caused investors to "wait & see." Earnings season is not going well & reports next month will probably not give a lift. So far, Dow is down 3K YTD with a grim outlook.
Dow Jones Industrials
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