Dow rose 139 with buying into the close, advancers over decliners about 2-1 & NAZ added 40. The MLP index stayed in the 209s & the REIT index jumped 9+ to the 489s. Junk bond funds continued strong & Treasuries were sold. Oil slid lower, closing below 100, & gold plunged 25 to 1928 (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)
Gross domestic product (GDP) growth in the US was less than previously estimated in Q4-2021 & downwardly revised to 6.9%, according to the 3rd and final estimate from the Bureau of Economic Analysis (BEA). The
revision was a decrease from the 2nd estimate of 7% but up from the
GDP increase of 2.3% in Q3, the BEA said. It added that
the updated estimate was "based on more complete source data" than
previously available. Q4 GDP was driven
primarily by increases in private inventory investment exports, personal
consumption expenditures (PCE) & exports, which were partially offset
by drops in federal, state & local gov spending. Despite
the revised economic activity estimate being lower than its
previous estimate, 6.9% economic growth rate is still strong for today's
economy. Consumers who want to take advantage of interest rates
before the Fed's next rate hike can consider refinancing their private
student loans. Private inventory investment helped boost real GDP growth in Q4 2021,
led by business investments made by motor vehicle dealers. The demand for new cars continues to surge as some drivers are waiting 6-9 months
just to get their new vehicles & dealers face record-low inventory
levels. In fact, the total sales for new vehicles was forecast to
reach nearly 1.25M cars in Dec 2021, down 20.5% from the
year before. The GDP growth rate surged from Q3 to Q4 in 2021, but it could take a
turn & begin decreasing in the year ahead due to the Federal Reserve's
announcement that it is raising interest rates this year.
Final estimate reduces Q4 2021 GDP to 6.9%: Bureau of Economic Analysis
The Russian invasion of Ukraine is unleashing a new era of military spending across Europe. Member countries of the North Atlantic Treaty Organization (NATO), such as Germany, have done an about-face on its defense budget in recent weeks. “The Russian invasion of Ukraine was a wake-up call for a lot of Germans, for politicians and for voters, who previously would have been skeptical that military power could still be an important tool of influence in Europe today,” said Sophia Besch, senior research fellow at the Centre for European Reform. Poland has moved to increase defense spending to 3% of GDP. Germany has signed a deal to buy F-35 fighter jets & several NATO allies are looking to upgrade from Soviet-era equipment, such as MiG-29s & Russian-produced surface-to-air missile systems, to US.-made weapons. The US, the top military spender in the NATO alliance by far, is looking at increasing its own defense budget while selling high-tech arms to friendly nations.
Why Russia’s invasion of Ukraine could spark a NATO defense spending spree
The wealth of America's wealthiest people increased by a total of $6.5T last year, mainly driven by soaring stock prices & financial markets, according to the Federal Reserve. The total wealth of the 1% reached a record $45.9T at the end of Q4, said the Federal Reserve's latest report on household wealth. Their fortunes increased by more than $12T, or more than a 3rd, during the course of the pandemic. The top 1% owned a record 32.3% of the nation's wealth as of the end of 2021. The share of wealth held by the bottom 90% of Americans, likewise, has declined slightly since before the pandemic, from 30.5% to 30.2%. The wealth growth at the top has potentially stalled or declined slightly so far this year due to stock declines. The main drivers for the richest Americans last year were stocks & private businesses. About $4.3T of the overall gains for the 1% last year came from corp equities & mutual fund shares. The stock portfolios of the top 1% are now worth $23T they own a record 53.9% of individually held shares. A Gallup poll in 2021 found that 56% of Americans owned at least some stock — slightly above the average of 55% in 2019 & 2020, but still down from the 62% high before the 2008 financial crisis. Private businesses have also been a powerful engine of wealth for those at the very top. The 1% own 57% of private companies & the value of private businesses held by the wealthiest increased by 36% ($2.2T) last year.
The richest 1% got $6.5 trillion richer last year, according to the Fed
Housing prices in the US hit a record high in Mar. The median home price in the country was $405K, according to Realtor.com’s latest Monthly Housing Trends Report. The report shows the record-breaking median listing price is up 13.5% from Mar 2021. Compared to Mar 2020 – the start of the COVID-19 pandemic – the current March 2022’s median listing price is up 26.5%. Despite the record price tag, the experts at Realtor.com believe the housing market is set to "moderate" in the near future. "Buyer demand is moderating in the face of high costs, and we're beginning to see more homeowners take price cuts on their listings and overall inventory declines lessen in response," said Realtor.com's Chief Economist Danielle Hale, in a statement. "Assuming all these factors and new construction hold steady, we could begin to see inventory increases this summer – welcome news for buyers who have endured pandemic home shopping and can continue their journey despite higher buying costs," Hale continued. "For buyers currently in the market, there's good reason to aim to find a home before interest rates increase further. But if it takes longer than a few months, don't give up hope, as there may be more to choose from in the summer months." While the national listing price median for Mar was $405K, home prices varied significantly in the 50 US metro areas Realtor.com evaluated, which it selected based on size. Last year, mortgage-finance company Freddie Mac estimated that the US had a shortage of 3.8M homes, which has likely contributed to the competitive home-buying market. Realtor.com reports that home construction in the US is near 16-year highs.
Housing prices hit record-high, giving buyers hard punch in pocket
Gold futures settled lower, posting a a weekly loss of more than 1%, with prices pressured by a rise in Treasury yields on the heels of a climb in Mar employment & wages. The US created a robust 431K jobs in Mar & the unemployment rate slid to 3.6% from 3.8%, the gov reported. Hourly pay rose sharply in Mar, pushing the increase in the past 12 months to 5.6%. Gold for Jun fell $30 (1.6%) to settle at $1923 an ounce. Based on the most-active contracts, gold marked a 1.6% weekly decline. The yield on the 10-year Treasury note touched highs above 2.45%. Strength in Treasury yields can be a negative for gold as they raise the opportunity cost of holding nonyielding assets. The ICE US Dollar Index was also up by 0.3% today, putting pressure on $-denominated gold prices.
Gold posts a loss for the session, down nearly 2% for the week, after U.S. jobs data
Oil futures ended lower, with prices posting their largest one-week percentage loss in nearly 2 years. Prices declined on the back of the largest-ever release from US crude reserves & news of a coordinated release by other Intl Energy Agency members from emergency stockpiles. West Texas Intermediate (WTI) crude for May shed $1.01 (1%) to settle at $99.27 a barrel, the lowest finish since Mar 16. Front-month prices closed out Q1 with a 33% gain & a 4.8% rise for Mar. Jun Brent, the global benchmark, lost 32¢ to $104.39 a barrel. The expired May Brent had climbed nearly 6.9% for the month & 39% for the qtr. Oil prices extended their loss from Thurs, when Pres Biden authorized the release of 1M barrels of oil per day for the next 6 months from the Strategic Petroleum Reserve. The move could keep a lid on prices in the near term, but they see it as only a temporary fix for tight global supplies, especially as the war in Ukraine grinds on. Members of the Intl Energy Agency, which includes the US, most of Europe, Canada, Mexico, Japan & South Korea, said today that they've also agreed to release oil from their emergency reserves, to join the US move. The IEA plans to release details on the release early next week. But a volatile week left crude, on a front-month contract basis, with a bruising weekly drops of 12.8% for US benchmark WTI & 11.1% for Brent. Both saw their biggest weekly percentage declines since late Apr 2020. Geopolitical headlines continued to attract attention today after Russia accused Ukraine forces of an attack on an oil facility just north of the border between the 2 countries. Peace talks between the 2 sides continued by videoconferencing despite fighting on the ground. Yesterday also saw an OPEC+ meeting that rubber-stamped a previously agreed plan that will lift its production target by 432K barrels a day in May.
Oil futures suffer biggest weekly percentage decline in nearly 2 years
Stocks struggled for direction as investors mulled strong employment data that reaffirmed expectations for more hawkish monetary tightening plans by the Federal Reserve. Meanwhile, West Texas Intermediate crude oil fell to dip below $100 per barrel. US-allied countries in the Intl Energy Agency (IEA) agreed to their 2nd coordinated deployment of oil stockpiles in a month to calm Russia-Ukraine war-roiled energy markets, one day after Pres unveiled plans for the largest ever release from the Strategic Petroleum Reserve. For the week, Dow fell all of 43.
Dow Jones Industrials
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