Dow dropped 327 (session lows), decliners over advancers about 2-1 & NAZ was off 373. The MLP index crawled up to the 202s & the REIT index slid to the 416s. Junk bond funds were mixed &Treasuries had heavy buying after the inflation data. Oil ended at $105.71, up $5.95 (6%), & gold gained 11 to 1852 (more below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Pres Biden, reacting to Apr's consumer price index, acknowledged that inflation is "unacceptably high," & maintained that lowering prices for American families is his "top economic priority," while again blaming the surging numbers on COVID-19 & Russian Pres Vladimir Putin. Inflation rose more than expected in Apr, running near a 40-year high amid supply chain constraints, Russia's war in Ukraine & strong consumer demand. The Labor Dept said that the consumer price index, a broad measure of the price for everyday goods including gasoline, groceries & rents, rose 8.3% in Apr from a year ago, slightly below the 8.5% year-over-year surge recorded in Mar. Prices jumped 0.3% in the one-month period from Mar. "While it is heartening to see that annual inflation moderated in April, the fact remains that inflation is unacceptably high," the pres said. "As I said yesterday, inflation is a challenge for families across the country and bringing it down is my top economic priority." The pres delivered remarks yesterday, laying out his plan to tackle inflation & drawing a stark contrast between his administration's proposals versus congressional Rep plans, which he said would raise taxes on American families. The pres stressed that his policies "help, not hurt" with regard to inflation. Biden said addressing inflation "starts with the Federal Reserve, which plays a primary role in fighting inflation in our country."
Biden breaks silence on inflation surge as prices near 40-year record
UK Prime Minister Boris Johnson has signed a security declaration with Sweden, pledging to support the Nordic country if it comes under military attack. He is expected to do the same with Finland on a subsequent visit to Helsinki in the coming 24 hours. Ukraine's allies in the West appear to be preparing for a long war, with no resolution to the conflict between Moscow & Kyiv on the horizon. The US believes Russian Pres Vladimir Putin is preparing for a long conflict in Ukraine, & a Russian victory in the Donbas in the east of the country might not end the war, the US Director of National Intelligence Avril Haines warned yesterday. Meanwhile, Ukrainian officials claim that their troops have pushed back Russian forces from several villages surrounding the city of Kharkiv, in northeastern Ukraine. Elsewhere, the US House has passed legislation that’s set to deliver $40B in military & humanitarian aid to Ukraine. The Dept of Defense also announced it has committed more than $4.5B in security assistance to Ukraine since the start of the Biden administration. Of that, around $3.8B has gone to fund Ukraine's war efforts since Russia's invasion began on Feb 24.
UK signs security pact with Sweden; Russian forces ‘pushed back’ from second-largest city Kharkiv
The Dallas Federal Reserve has named a new pres to succeed its former one, who resigned last year amid a controversy over stock trading. Lorie K Logan will serve as head of the central bank branch. Central bank watchers know Logan’s name well, as she currently serves as head of the New York Fed's pivotal trading desk. Her official title is manager of the System Open Market Account (SOMA), meaning she oversees the $9T balance sheet of bonds & other assets. Logan will take on her new duties officially on Aug 22. In addition to running the SOMA operation, Logan also is also the New York Fed VP. That makes her no stranger to the interest rate-setting FOMC meetings. Logan also represents the Fed at the Bank for Intl Settlements. The move comes after Robert Kaplan stepped down from the post last Oct. That followed a scandal across the Fed in which multiple high-ranking officials engaged in big-$ equity trading that coincided with the resignation of Kaplan & the early retirement of Boston Fed Pres Eric Rosengren. A joint statement from Thomas J Falk & Claudia Aguirre, who headed the presidential search committee, said the group was looking for someone who could handle the needs of the district, which spans Texas, northern Louisiana & New Mexico. “We found all of that and more in Lorie Logan,” the statement said. “She has been a successful leader of the Markets Group at the New York Fed, and her deep financial markets background and expertise in monetary policy and the financial system make her well qualified to contribute in a meaningful way to the monetary policy issues of the FOMC.” “Lorie understands how our nation’s current economic challenges and the Fed’s actions impact all Americans, and will work toward a stronger economy for all,” the committee leaders added.
Dallas Federal Reserve names Lorie Logan new president to succeed Robert Kaplan
The US gov posted a $308B surplus in Apr, a record for any month, as receipts nearly doubled from a year earlier amid a strong economic recovery from the COVID-19 pandemic, the Treasury Dept reported. The Apr surplus compares to a $226B deficit for Apr 2021, when receipts were reduced by a one-month delay in the annual tax filing deadline until May 17. The previous record monthly surplus was $214B in Apr 2018. Apr has traditionally been a budget surplus month due to the traditional Apr 15 tax filing deadline, but recent Apr deficits were recorded in 2009, 2010 & 2011 after a financial crisis, & in 2020 & 2021 due to the COVID-19 pandemic. Apr receipts rose 97% from a year earlier to $864B, also a record for any month. Apr outlays fell 16% to $555B, reflecting lower spending for COVID-19 relief. For the first 7 months of the 2022 fiscal year, the gov reported a deficit of $360B, down 81% from the year-earlier deficit $1.9T. Year-to-date receipts swelled by 39% to $3T -- a record for the period -- while outlays fell 18% to $3.3T.
US Treasury Posts Record Budget Surplus in April
Gold futures closed higher, bouncing after the lowest
finish in 3 months, as traders digested a reading on inflation that
came in hotter than expected. Gold for Jun rose $1 (0.7%) to settle at $1853 an ounce on,
booking its best daily percentage increase for the most-active contract
since Apr 29. The upswing came a
day after it ended at its lowest since Feb. 10. The Apr consumer price index showed inflation at a 8.3% annual rate,
down from 8.6% the previous month. It
marked the first time in 5 months the index hasn't climbed at the
fastest rate in 40 years, while also underscored the pain American
households likely will feel for some time from price pressures. Core prices, which exclude food & energy, gained 0.6%, up from a 0.3% advance in Mar, disappointing traders. Gold has been under pressure as the $ has rallied sharply
versus its major rivals. A rally by the ICE US Dollar Index eased up today after trading near a 20-year high. A stronger $ can be a weight on commodities priced in the currency, as it
makes them more expensive to users of other currencies. Rising
Treasury yields, which have backed off this week from 3½-year highs,
also can be a headwind for gold. Higher yields raise the opportunity
cost of holding nonyielding assets.
After an early rise despite the dreary inflation news, stocks rallied. But that didn't last. The inflation was too much for investors to take. Tomorrow the producer price index for Apr will be released. That's sort of more important because it gives a glimpse of price increases in the coming weeks. Once again, the data is not expected to be pretty.
Dow Jones Industrials
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