Dow shot up 535 (near session highs), advancers over decliners 5-1 & NAZ gained 360. The MLP index rose 3+ to 210 & the REIT index was up 4+ to the 444s. Junk bond funds were bid higher along with stocks & Treasuries saw very little buying. Oil went up 1+ to the 91s & gold inched up 1 to 1813 (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)
Former Kansas City Federal Reserve Pres & CEO Thomas Hoenig
warned that inflation will continue to be a "major issue" for some time. Hoenig provided the insight following the release of data from the Labor Dept
showing that the pace of inflation slowed in Jul for the first time in
months as prices remained near the highest level in 4 decades. The former Fed pres also forecasted what the Federal Reserve will do next following the latest inflation data. The Labor Dept said that the consumer price index rose 8.5% in
Jul from a year ago, below the 9.1% year-over-year surge recorded in
Jun. Prices were unchanged in the one-month period from Those
figures were both lower than the 8.7% headline figure & 0.2% monthly
gain forecast by Refinitiv economists, likely a welcoming sign for the Federal Reserve as it seeks to cool price gains & tame consumer demand. core prices, which strip out the more volatile measurements of food
and energy, climbed 5.9% from the previous year, below the 6.1% forecast, but matching the reading from Jul. Core prices also
rose less than expected, rising 0.3% on a monthly basis – a smaller
increase than in Apr, May & Jun, an encouraging sign that inflation is starting to loosen its stranglehold on the economy. Still,
experts cautioned that while the Jul slowdown is a step in the right
direction, inflation remains painfully high & could be slow to return
to the Fed's preferred target of 2%. "When I
look at these numbers, people say it’s coming down, but core
inflation stays up, that is still high," Hoenig said, adding that "wages
have gone up," which he called "a rising cost of production" & added
it's going to "cause prices to continue [going] up." "We are in a situation where demand destruction is part of the issue
because excess demand was created so substantially in 2021 by the Fed
that now they have to make a rather harsh adjustment if they are going
to get inflation back down anywhere close to the 2% level," he continued.
Inflation to be 'major issue' for some time, Former Kansas City Fed president warns
Mortgage rates have whipsawed of late, falling for a couple of weeks in concert with moves in the bond market caused by the Federal Reserve hiking interest rates, but jumping again in the past week. "The purchase market continues to experience a slowdown, despite the strong job market," said Joel Kan, associate VP of economic and industry forecasting at the Mortgage Banker's Association (MBA). "Activity has now fallen in five of the last six weeks, as buyers remain on the sidelines due to still-challenging affordability conditions and doubts about the strength of the economy." The seasonally adjusted Purchase Index decreased 1% from one week earlier. Overall, demand for mortgage applications rose 0.2% from a week earlier, according to the weekly survey from the MBA. The Refinance Index increased 4% from the previous week. "Refinance applications increased over three percent but remained more than 80% lower than a year ago in this higher rate environment," added Kan. The Jul jobs report could force the Federal Reserve to continue raising interest rates at the fastest pace since 1994 as it tries to crush inflation & cool the labor market. US employers unexpectedly added 528K jobs in Jul, the Labor Dept said last week, a surprisingly strong gain that defied fears of a slowdown in labor markets.
Homebuyers dial back amid affordability issues, shaky economy
Fox Corp's (FOXA) sales rose 5% in the recently ended qtr as the advertising market showed signs of strength despite macroeconomic worries. The company posted revenue of $3.03B for the three months ended
Jun 30, below expectations for revenue of $3.05. Revenue was $2.9B a year ago. The company said advertising revenue rose about 7%, primarily due to
stronger pricing & higher ratings at Fox News Media, higher political
advertising revenue at the Fox Television Stations & continued growth
at its ad-supported streaming service Tubi. Cable network programming business, revenue rose 4%, boosted
by advertising strength at Fox News Media, which was partially offset
by the impact of higher pre-emptions associated with breaking news
coverage, due to fewer ads as the network covered the war in Ukraine,
for instance. Affiliate revenue rose 2%, mostly due to contractual price
increases. The segment's earnings fell as higher revenue was more
than offset by surging costs tied to increased digital investment &
higher costs at Fox News Media, including those associated with breaking
news coverage. Its television business posted 5% growth in revenue as affiliate
fee revenue rose 7%, boosted by higher average rates at owned &
operated TV stations & higher fees from 3rd-party Fox affiliates. Advertising revenue rose 4%, mostly due to higher political advertising
revenues at the Fox Television Stations, growth at Tubi & the addition
of the US Football League at Fox Sports, partially offset by
lower ratings at Fox Entertainment. Earnings for the segment surged 53% as expenses remained largely unchanged. The stock rose 1.14.
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Fox posts higher revenue on ad sales strength
Gold prices book slight gains, holding above the key $1800 level, after the soaring pace of rising US consumer prices slightly eases. Gold prices finished higher yesterday, holding above the $1800 level, after US consumer inflation data for Jul surprised at a slower 8.5% annual advance than was anticipated. Gold futures expiring in Dec rose $1 to settle at $1813 an ounce, following a gain of $7 to $1812 yesterday, the highest level for the most-active contract since Jun 29. Gold prices clung to a gain after US consumer price inflation data slowed to an 8.5% yearly rate in Jul from 9.1% a month ago, potentially giving some breathing to the Federal Reserve around the size of its next interest rate hike. Gold for Dec, the most-active contract, touched an intraday low of $1803, but also touched a $1824 intraday high.
Gold prices post modest gains Wednesday after U.S. inflation surge slightly slows in July
Minneapolis Federal Reserve Bank Pres Neel Kashkari said that he continues to believe that the central bank will need to raise its policy rate to 3.9% by year-end and to 4.4% by the end of 2023 to fight inflation. Though the cooling in price pressures evident in a government report released earlier today was "welcome," Kashkari said that the Fed is "far, far away from declaring victory" & needs to raise rates much higher than its current 2.25%-2.5% range. Markets are also "not realistic" in expecting rate cuts early next year, he said. The Fed won't do so "until we get convinced that inflation is well on its way" to the Fed's 2% target, he added.
Fed's Kashkari: Far from victory on inflation
Oil futures finished higher, erasing earlier losses after gov data showed a bigger-than-expected drop in US gasoline inventories & a jump in refinery utilization, though crude inventories jumped. West Texas Intermediate crude for Sep rose $1.43 per barrel (1.6%) to close at $91.93 a barrel. Oct Brent, the global benchmark, gained $1.09 (1.1%) to settle at $97.40 a barrel. The Energy Information Administration (EIA) said US crude inventories jumped 5M barrels last week, while gasoline supplies fell 5M barrels & distillate supplies rose 2.2M barrels. Analysts surveyed by S&P Global Commodity Insights had forecast a 600K barrel rise in crude inventories, a 1.2M barrel drop for gasoline & a 900K barrel fall for distillates. The EIA data also showed that refinery utilization surged to 94.3% versus expectations for 91.8%. Crude oil prices have seesawed this week, bouncing yesterday after the suspension of crude flows -- estimated at around 250K barrels a day -- along the southern portion of the Druzhba pipeline to Hungary, the Czech Republic & Slovakia. Transneft, Russia's pipeline monopoly, said Ukraine had suspended the flows because Western sanctions against Russia had prevented it from accepting transfer fees from Moscow. A report from Transneft subsequently said flows would resume after Ukraine confirmed it had received payment for crude flows to Hungary & Slovakia. Speculation around efforts to revive Iran's nuclear accord, which could see the eventual lifting of sanctions preventing exports from the major oil producer, were also seen weighing on crude prices. The EU on Mon presented what it described as its final text for restoring the 2015 nuclear accord with Iran, signaling it was up to Tehran to take or leave it. Iranian officials have said they delivered an initial response to the draft & would make further points at a later date.
Oil bounces, ending higher after drop in U.S. gasoline inventories
Buyers started the day giving the Dow about a 500 advance & kept it for the entire session. Dow is up a good 8% from its prior lows (see chart below). Tomorrow the Producer Price Index will give forward looking signals for inflation. Today's rise suggests investors are hoping for very good numbers.
Dow Jones Industrials
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