Markets end lower while oil goes back over $100 a barrel

Dow fell 215 to session lows, advancers slightly ahead of decliners & NAZ slid back 92.  The MLP index added added 4+ to the 196s & the REIT index was off 3 to the 405s.  Junk bond funds fluctuated & Treasuries continued to be sold.  Oil rebounded 5+ to the 102s & gold added 3 to 1706 (more on both below).

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The reality of inflation & the specter of a recession appear to be weighing heavily on middle-class households.  Among those whose income falls in the $30-100K range, 75% say their earnings are falling behind the cost of living & 77% think the US will be in a recession by the end of 2022, according to a recent survey from Primerica.  There's also been a general uptick in financial worries in the last 6 months, with 39% of those surveyed expecting to be worse off financially in a year, up from 32% in Mar & 28% in Dec 2021.  In Dec 2020, that share was 17%.  “There’s a higher level of concern financially among middle-income families than there was even at [the height] of the pandemic,” said Glenn Williams, CEO of Primerica.  The Jun survey of nearly 1400 adults was done as part of Primerica's quarterly check-in on the financial security of middle-income families.  Inflation has taken a toll on households, rising 9.1% in Jun from a year earlier, marking the fastest pace since 1981 & affecting items ranging from groceries & gas to clothes & cars.  “When you see rising prices in staples like gas, rent, things you can’t avoid ... it comes down to tougher decisions around priorities,” Williams said.  Income also isn’t keeping up:  The latest reading of hourly wages showed a 5.1% increase in Jun from a year earlier, which means inflation has generally wiped out the boost in income.  “Inflation always hurts those who make less money because the portion of their income that goes to necessities is much higher than that of wealthier people,” said Kathryn Hauer, a certified financial planner with Wilson David Investment Advisors in Aiken, South Carolina.

75% of middle-income households say income is falling behind cost of living

Delta (DAL) placed an order to add 100 of Boeing's (BA), a Dow stock, 737 Max 10 planes to its fleet with an option to add up to 30 more.  "The Boeing 737-10 will be an important addition to DAL's fleet as we shape a more sustainable future for air travel, with an elevated customer experience, improved fuel efficiency and best-in-class performance," DAL CEO Ed Bastian said.  The 737 Max 10 is 20-30% more fuel efficient than the planes they are replacing and will have 182 seats, with 20 customers in first class, 33 in Delta Comfort+ & 129 in standard economy.  DAL currently operates a fleet of more than 850 mainline aircraft, including more than 450 BA jets.  The order will grow the size of DAL's 737 family to more than 300 aircraft by the end of the decade, making it the airline's 2nd-largest fleet family behind the Airbus A320.  Deliveries of the Max 10 will begin in 2025.  The Max 10 is currently awaiting final certification from the Federal Aviation Administration, which is expected in 2023.  In the event of a delay, the agreement provides adequate protection, including allowing DAL to shift to another model of the Max family if necessary.  DAL stock went up 1.03.
If you would like to learn more about DAL, click on this link:
club.ino.com/trend/analysis/stock/DAL?a_aid=CD3289&a_bid=6ae5b6f7 

BA stock inched up 2¢.
If you would like to learn more about BA, click on this link:
club.ino.com/trend/analysis/stock/BA?a_aid=CD3289&a_bid=6ae5b6f7

Delta places order for 100 Boeing 737 Max planes

Jared Bernstein, a member of the White House Council of Economic Advisers, admitted that inflation is "unacceptably high," while also stressing that Pres Biden would not back down on climate change spending initiatives & does not see the country as headed toward a recession.  But Pres Biden said that no serious economist thought that the US would enter a period of unchecked inflation.  His remarks came when the US had at 5.4% inflation, while the US is at 9.1% as of this week.  When asked, "How did the White House get this so wrong?" Bream repsonded, "Well that actually was the dominant forecast at the time, and we were very much citing forecasts across the board, including those at the Federal Reserve,"  He noted "some unforeseen things that occurred," namely the war in Ukraine.  "Ukraine and Russia are both breadbaskets and energy baskets for the world," he said.  "Those have put considerable upward pressure on prices. For example, for inflation, which is unacceptably high – let’s get that clear right out of the gate. Went up 1.3% in June. Again, an unacceptably high increase."  "Half of that is the increase in energy prices alone," Bernstein continued, noting that since then, the price of gas has come down 50¢ per gallon, with now 20K gas stations with gas below $4 per gallon.  "Still too high," he said, "but that's moving in the right direction, giving Americans some much-needed breathing room. They need more, and we’re working on it, but that is a move in the right direction."  Bernstein claimed that Dems are united on lowering the cost of prescription drugs & health insurance premiums under the Affordable Care Act & added that Sen Joe Manchin in opposing some of the administration's big spending packages, might have inadvertently done the White House a favor when it comes to inflation.  Yet, despite hesitancy from Manchin & others about more spending, especially regarding the White House's climate change initiatives.  Bernstein said Biden recognizes the "urgency of taking action against climate change and building up our clean energy industries, which are so important for good American jobs going forward." 

WH admits high inflation, denies recession as Biden looks to spend

Oil futures climbed, with US benchmark crude prices ending back above $100 a barrel for the first time in a week.  US prices rebounded back above the key level after Pres Biden came away from with Saudi Arabia empty handed, as he urged the Saudis to increase output to combat higher prices.  Still, it shouldn't have been too much of a surprise that his pleas would fall on deaf ears given that oil prices have fallen for 5 weeks in a row.  West Texas Intermediate crude for Aug rose $5.01 (5.1%) to settle at $102.60 a barrel.  That was the first front-month contract settlement above $100 & the highest price finish, since Jul 11

U.S. oil prices settle back above $100 for the first time in a week

Gold futures ended higher, with the yellow metal finding its footing after a 5th straight weekly decline as a fierce $ rally relented.  Gold for Aug rose $6 to settle at $1710 an ounce.  Gold has suffered as the $ has gone on a rampage in 2022, with the ICE US Dollar, a measure of the currency against a basket of major rivals, hitting a 20-year high last week as the € dipped below parity & the Japanese ¥ slumped to its weakest since 1998.  The $ respite today came as Federal Reserve officials cooled speculation that the Fed would move to raise interest rates by 100 basis points, or a full percentage point, when they meet next week, signaling they would likely move rates up by 75 basis points for the 2nd straight meeting.  A strong $ can be a headwind for commodities priced in the currency, making them more expensive to users of other currencies. 

Gold ends higher after 5th straight weekly decline, buoyed by a pullback in the dollar

Dow began the day with a strong opening, but enthusiasm did not last.  Sellers arrived & the bulls went home.  Selling intensified into the close & Dow closed more than 500 below its highs at the start of trading.  There was no encouraging word today & Dow does not stray far from 31K (look below).  With the strong rally in oil, there was no reason for bulls to return.

Dow Jones Industrials