Dow finished up 26, advancers were modestly ahead decliners & NAZ was down 142. The MLP index gained 3+ to 210 & the REIT index fell 2+ the 4278s. Junk bond funds saw a little selling & Treasuries remained in demand bringing lower yields. Oil went up 3 to the 113s & gold added 6 to 1814 (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)
Amid swelling prices, most Americans see inflation as the biggest issue facing the country — far exceeding other concerns, according to a survey from Pew Research. Some 70% say inflation is “a very big problem” for the country, followed by roughly 55% for health-care affordability & violent crime, based on a poll of 5074 US adults in Apr-May. However, responses varied by political affiliation, with 84% of Reps & right-leaning independents saying inflation is the top issue. By contrast, 57% of Dems & left-leaning independents were most concerned about rising prices. The findings come as inflation hovers near a 40-year high, with an 8.3% annual increase in Apr, slightly lower than the 8.5% growth reported in Mar. Still, US households are spending $341 per month more than a year ago, according to an analysis by Moody's Analytics. Lingering high inflation has prompted aggressive action from the Federal Reserve, approving a ½ percentage point interest rate hike in May, the biggest increase in 2 decades, following a qtr-point boost in Mar. The central bank also plans to reduce bond holdings starting in Jun. Federal Reserve Chair Jerome Powell said he can’t guarantee a soft landing for the economy — aiming for 2% inflation while keeping the labor market strong. The central bank has faced criticism for not responding to inflation sooner. Former Fed Chair Ben Bernanke questioned the central bank's delayed response. “The question is why did they delay that. ... Why did they delay their response? I think in retrospect, yes, it was a mistake,” he said. “And I think they agree it was a mistake.”
Inflation is the ‘top problem’ facing America, survey shows
Americans are continuing to borrow money despite rising interest rates, sending household debt up $266B (1.7%) in Q1, according to the Federal Reserve Bank of New York's Household Debt & Credit Report. Mortgage balances hit $11.2T by the end of Mar, rising $250B in Q1. Loan balances are $1.7T higher when compared to the end of 2019, the report added, which was just before the COVID-19 pandemic began. "The first quarter of 2022 saw an increase in mortgage and auto loan balances coupled with a typical seasonal decrease in credit card balances," said Andrew Haughwout, the New York Fed's director of household & public policy research division. "However, mortgage originations declined from the historically high volumes seen in 2021, reflecting an unwinding in the demand for refinances." The NY Fed's report showed that credit card debt dropped by $15B in Q1, while other forms of credit increased. However, credit card balances are still $71B higher than they were in Q1-2021, a substantial annual increase. Borrowers also appear to be less interested in taking out new credit in recent months. The number of credit inquiries — which indicate demand of consumer credit — within the past 6 months was at 109M, according to the report, a drop of 5.1% compared with the previous qtr. In total, 229M new accounts were opened in Q1, a rise from Q4-2021 & slightly higher than typical pre-pandemic levels.
Household debt surges to more than $15 trillion in Q1, according to NY Fed
The Food & Drug Administration (FDA) is working on allowing baby formulas intended for sale in other countries to be diverted to the US in an effort to boost supplies on American store shelves amid ongoing domestic shortages, the agency's chief said. "Over the weekend, one of the things that we worked on continuously was putting forth a set of rules that would enable the use of formula that was intended for other countries, some of it even manufactured in the US intended for other countries," FDA Commissioner Robert Califf said when asked whether Americans struggling to find formula should be able to buy alternatives from European manufacturers. Califf explained some complexities in doing so, such as proper labeling, saying, "You can imagine that it’s really important that we make sure that the constituents – remembering that formula has over 30 different constituents that have to be in the formula – and also that the instructions for use are in English, or a language that the consumer can understand, because mixing up the formula, getting the right formula for the infant is critical." The FDA commissioner said that he expects further details on the plan to be released by the agency by the end of today. "Over time, they should have a big effect because we’ll have access to a lot more formula from different manufacturers," Califf said of the new measures. "This will gradually improve over a period of a few weeks, but we really do anticipate that within a few weeks, we’ll have things back to normal." Pressure has been building in recent weeks for the Biden administration to take action as out-of-stock rates for baby formula climbed nationwide, leaving parents panicked over empty store shelves.
FDA moves to allow formulas from other countries to boost US supply
Gold futures rose, ending a 2-session slid, as the $'s
surge took a breather & Treasury yields pulled back from a recent
peak. Gold for Jun advanced $5 to settle at $1814 an once,
bouncing after the yellow metal briefly traded below the $1800
threshold. On Fri, it recorded its biggest weekly decline in 11
months. The ICE US Dollar Index was 0.2% lower today after trading near a 20-year high on
Fri. A stronger $ can be a negative for commodities priced in
the unit, making them more expensive to users of other currencies. The
10-year Treasury rate was down 5 basis points to 2.88% to start the
week. Higher Treasury yields also can be negative for gold & other
nonyielding assets.
Gold finishes up 0.3% Monday, snaps 2-session skid
China reported a drop in retail sales & industrial production in Apr — far worse than expected. Retail sales fell by 11.1% in Apr from a year ago, more than the 6.1% decline predicted. Industrial production dropped by 2.9% in Apr from a year ago, in contrast with expectations for an increase of 0.4%. The output of mining & utilities businesses grew. But manufacturing fell by 4.6%, mostly dragged down by a slump in the auto sector & equipment manufacturing, said Statistics Bureau the spokesperson. In addition to Covid, industrial production faces pressure from insufficient market demand, rising costs & other factors. Last month, the persistent spread of Covid & resulting stay-home orders — primarily in Shanghai — forced factories to close or operate at limited capacity. The “increasingly grim and complex international environment and greater shock of [the] Covid-19 pandemic at home obviously exceeded expectation, new downward pressure on the economy continued to grow,” the statistics bureau reported. The bureau said the impact of Covid is temporary & that the economy “is expected to stabilize and recover.” Auto sales dropped by 31.6% in Apr from a year ago, the statistics bureau data showed. That was better than the peak of the decline in early 2020 — down 37% year-on-year in Jan & Feby that year — but worse than the 0% year-on-year change recorded for Apr 2020.
China's economic data disappoint in April as Covid
Oil futures erased early losses, ending strongly higher as tight supplies allowed gasoline to continue a push into record territory. Investors also weighed a loosening of COVID-19 restrictions in Shanghai versus economic data that underlined demand fears tied to the nation's lockdown policies. West Texas Intermediate crude for Jun rose $3.71 (3.4%) to close at $114.20 a barrel. Jul Brent crude, the global benchmark, gained $2.69 (2.4%), settling at $114.24 a barrel. Oil futures surged over 4% on Fri to turn positive for the week. The push higher by the petroleum complex was led by gasoline futures, which ended at a record. Gasoline extended its push into record territory today. Earlier weakness was tied to the economic data out of China. The National Bureau of Statistics said that retail sales fell 11.1% on year in Apr, widening from a drop of 3.5% in Mar. The forecast had looked for a 5.4% decline. China's industrial production also unexpectedly dropped, falling 2.9% from a year earlier in Apr, after a 5% on-year increase in Mar, coming in well below the 1% growth anticipated. Concerns around China & its consumption levels have served as a partial counterweight to supply worries that have been amplified by Russia's invasion of Ukraine. Meanwhile, Shanghai allowed supermarkets, malls & restaurants to reopen in limited capacity today.
Oil ends higher as gasoline futures soar to another all-time high
In early trading the Dow was in the red. The buyers returned in the PM. But sellers in the last hour took the index lower, limiting the gain. More dreary news dominated investing thinking today. Retail sales data is coming & that could be underwhelming.
Dow Jones Industrials
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