Markets extend losses ahead of key inflation data tomorrow

Dow declined 638 with very heavy selling in the last hour, decliners ahead of advancers 4-1 & NAZ pulled back 332.  The MLP index stayed in the 226s (but still a more than 2 year high) & the REIT index dropped another 9+ to the 421s.  Junk bond funds continued weak & Treasuries saw a little selling.  Oil slid back to the 121s & gold was off 4 to 1852 (more on gold below).

AMJ (Alerian MLP Index tracking fund)

Free Apple Analysis!

Bring Your Portfolio Into The 21st Century

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

Many economic prognosticators & stock pickers have made it clear where they stand on inflation & the Federal Reserve policy response: the economy & markets will get worse before they get better.  Many chief financial officers at top companies agree with them, according to the results from the latest CNBC CFO Council survey.  Over 40% of chief financial officers cite inflation as the #1 external risk to their business, & going deeper into the results from the Q2 survey, the links between geopolitics & food & energy prices, & inflation, are clear from the C-suite ranking of the external factors that are weighing on their current outlook.  Almost 23% of CFOs cite Federal Reserve policy as the biggest risk factor, & as the Biden administration struggles for ways to increase oil supply & Russian ships sail with seized Ukrainian wheat amid concerns about a severe global food insecurity crisis, additional CFOs cited supply chain disruptions (14%) & the Russia-Ukraine war specifically as their #1 business risk.  CFOs are not uniformly of the view that the Fed won't ultimately be able to control inflation.  A little over ½ (54%) express confidence in the central bank, but that's still not enough to alter their view of where current economic conditions & policy decisions are heading: into a recession.  A majority (68%) of CFOs responding to the survey, a recession will occur during H1-2023.  No CFO forecast a recession any later than H2 of next year & no CFO thinks the economy will avoid a recession.  The CNBC CFO Council Q2 survey is a sample of the current outlook among top financial officers.  It was conducted among 22 CFOs at major organizations May 12-Jun 6.

The recession will hit in the first half of 2023 and the Dow is headed lower: CNBC CFO survey

For many Americans, the pandemic-induced slowdown offered a rare opportunity to better their financial standing.  Gov stimulus checks & fewer opportunities for spending drove the personal savings rate to a level not seen since World War II, with many consumers using the extra cash to pay down debt — primarily their credit card balances, which have the highest interest rates, averaging more than 16%.  Altogether, consumers paid off a record $83B in credit card debt during the pandemic, but the recent spike in prices for gas, groceries & housing, among other necessities, is causing people to return to running up high balances on their cards. The Federal Reserve's monthly credit report found that revolving credit, which mostly includes credit card balances, jumped nearly 20% in Apr from the previous month to $1.103T, breaking the pre-pandemic record of $1.1T.  Meanwhile, credit card balances are also up year over year, reaching $841B in the first 3 months of 2022, & are expected to keep heading higher, according to a separate report from the Federal Reserve Bank of New York.  The rise in credit card borrowing, together with auto loans, student debt & mortgages, has now propelled total household debt to a record $15.8T.  The downside for consumers is that credit cards are one of the most expensive ways to borrow money.  And as the Federal Reserve raises interest rates to tame inflation, which is running at its fastest pace in more than 40 years, carrying a balance month after month will soon cost even more than it does now.  Since most credit cards have a variable rate, there's a direct connection to the Fed's benchmark.  As the federal funds rate rises, the prime rate does as well, & credit card rates follow suit.  Cardholders usually see the impact within a billing cycle or 2.  Annual percentage rates are currently at 16.6%, on average, but may be closer to 19% by the end of the year, which would be an all-time record.  The current record is 17.8%, set in Apr 2019.

Consumer credit card debt jumps back to a record after stimulus-fueled retreat 

Intel (INTC), a Dow stock, is pulling back the reins on hiring for a key company division, according to a memo.  The company is freezing hiring in the unit responsible for PC desktop & laptop chips, as part of a series of cost-cutting measures.  Other cost-cutting measures include canceling some travel for the group immediately, cutting back on industry conferences & instructions to hold group meetings virtually when possible.  The memo said that some hiring could resume in as little as 2 weeks.  INTC is "pausing all hiring and placing all job requisitions on hold" in its client computing group.  "We believe we are at the beginning of a long-term growth cycle across the semiconductor industry and we have the right strategy in place," INTC added.  "Increased focus and prioritization in our spending will help us weather macroeconomic uncertainty, execute on our strategy and meet our commitments to customers,  shareholders, and  employees."  The chipmaker forecast Q2 revenue & profit below expectations on worries of weak demand in its largest market, PCs, & increased supply-chain uncertainty due to COVID-19 lockdowns in China.  The company expects current-qtr adjusted EPS of 70¢ on revenue of about $18B, below the estimate of 83¢ on $18.4B.  Its client computing group is the largest by sales, generating $9.3B of its $18.4B in revenue in Q1.  The hiring freeze does not affect all of the company.  Earlier this week, CEO Pat Gelsinger said in a memo, the company would "slow" its hiring & would onboard 23K recently hired employees over the next 90 days.  The stock fell 1.22.
If you would like to learn more about INTC, click on this link:
club.ino.com/trend/analysis/stock/INTC?a_aid=CD3289&a_bid=6ae5b6f7

Intel freezes hiring in a key division for at least two weeks

Gold prices fell following back-to-back gains after the ECB said it would raise interest rates in Jul for the first time in more than a decade, while also putting a larger ½-point increase on the map for Sep, unless high inflation in Europe starts to recede.  Trading in the US remained lackluster ahead of May inflation data due out tomorrow.  Gold futures for Aug fell $3, to settle at $1852.  A strong $ has weighed on gold prices as traders increasingly worry about the threat of persistently high inflation globally & slower growth, despite the retreat of easy-monetary policies.

Gold futures end lower after ECB spells out path to higher rates, dollar climbs

The sellers were in command in the PM.  Dow dropped a massive 600 in the last 3 hours.  Inflation data will be reported tomorrow & traders are afraid to look at it.  In addition the wholesale price index, which signals what is expected to be in the coming weeks, is due on Tues.  Forecasts are typically gloomy.

Dow Jones Industrials