Dow jumped 417, advancers over decliners 3-2 & NAZ added 92. The MLP index was off 1+ to the 219s & the REIT index was flat. Junk bond funds did little & Treasuries had limited selling today, Oil remained lower, sliding into the 84s, & gold was off 2 to 1653 (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)
Fighting record-high inflation remains a top priority for the Biden
administration, Treasury Secretary Janet Yellen said,
addressing a growing concern about the state of the US economy ahead
of the pivotal midterm elections. "Let me be very clear: inflation in the United States remains far too
high," Yellen said. "Our
Administration’s top economic priority is to rein it in. We recognize
that the Federal Reserve bears the primary responsibility, but we are
taking a broad range of complementary actions to lower costs." Her
comments come just 2 weeks before the midterms, in which Dems
are widely expected to lose their razor-thin majority in the House &
possibly the Senate too as a result of painfully high inflation. Inflation, & the broader economy, remain the top issues for a majority of voters.
A separate poll showed that most registered voters (42%)
think that Reps will be more successful in getting inflation
under control than Dems (27%). The White House has been accused of grossly misjudging the inflation
problem, with Pres Biden & other top officials insisting that
high inflation was "transitory," – a byproduct of COVID-induced
disruptions in the global economy – even when it became clear the spike
would last longer than expected. In recent weeks, the White House
has dispatched Yellen to sell Biden's economic agenda & tout the
post-pandemic recovery, despite soaring inflation. Today, she
stressed that despite "serious global headwinds" – including the
Russian war in Ukraine, rising energy prices & lingering effects from
the pandemic – the US economy retains "significant strength." "Our economic plan will bolster our resilience to global shocks," she added.
Yellen says inflation remains Biden's No. 1 priority as Dems face election onslaught
An overwhelming majority of business economists believe the US economy is either already in a recession, or is very likely to tip into one next year, according to a new survey published by the National Association for Business Economics, which shows that more than ½ of the group's members view a recession as more probable than not. Another 11% think the economy has already entered a downturn. The survey highlighted areas of concern for the economists, including a slowdown in demand, an easing in labor market tightness & a slight moderation in price pressures. It's the latest in a series of grim predictions as the Federal Reserve embarks on one of the fastest courses in history to raise borrowing costs, slow the economy & crush inflation that is still running near a 40-year high. About 33% of respondents reported higher employment at their firms over the past 3 months, a slight decline from the 38% reading in Jul. Hiring plans also slowed down: Just 22% of respondents anticipate increasing payroll over the next 3 months – a marked drop from 50% at the start of the year. On top of that, the gap between the percentage of respondents reporting rising sales in the last 3 months & those reporting falling sales fell 8 percentage points to the lowest level since mid-2020. The economists anticipate that profit margins will continue to contract over the next qtr. There is a growing expectation that the Fed will trigger an economic downturn as it raises interest rates at the fastest pace in 3 decades to catch up with runaway inflation. Officials in Sep approved a 3d consecutive 75-basis-point rate hike, lifting the federal funds rate to 3-3.25% – near restrictive levels – & indicated that more super-sized increases are coming. Economic growth already contracted in the first 2 qtrs of the year, with GDP – the broadest measure of goods & services produced in a nation – contracting by 1.6% in the winter & 0.6% in the spring. Fed Chair Jerome Powell has all but conceded the central bank will tip the economy into a recession with its rapid rate hikes, warning that higher rates will cause economic "pain." "The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer," Powell said in Sep. "Nonetheless, we’re committed to getting inflation back down to 2%. We think a failure to restore price stability would mean far greater pain."
US already in recession, or will likely be next year, most NABE economists say
As rising prices continue to outpace wage gains, families are finding less cushion in their monthly budget. As of Sep, 63% of Americans were living paycheck to paycheck, according to a recent LendingClub report — near the 64% historic high hit in Mar. A year ago, the number of adults who felt strained was closer to 57%. “Consumers are not able to keep up with the pace that inflation is increasing,” said Anuj Nayar, LendingClub's financial health officer. “Being employed is no longer enough for the everyday American,” Nayar added. “Wage growth has been inadequate, leaving more consumers than ever with little to nothing left over after managing monthly expenses.” Inflation has steadily caused real wages to decline. The consumer price index, which measures the average change in prices for consumer goods & services, was up 8.2% year over year in the latest reading, still hovering near the highest levels since the early 1980s. Real average hourly earnings fell 0.1% for the month and are down 3% from a year ago, according to the Bureau of Labor Statistics. A separate report by Salary Finance found that 2/3 of working adults said they are worse off financially than they were a year ago. Even high-income earners are stretched too thin, LendingClub said. Of those earning more than 6 figures, 49% reported living paycheck to paycheck, a jump from the previous year’s 38%. As a result, many Americans have dipped into their cash reserves or gone into debt. At this rate, financial distress could reach an all-time high by the end of 2022, according to Nayar. “With inflationary pressures not expected to subside anytime soon, living paycheck to paycheck has become the norm,” he said. For its part, the Federal Reserve hiked its target federal funds rate by 0.75 percentage points for the 3rd time in a row to calm runaway inflation. The central bank has indicated even more increases are coming until inflation shows clear signs of a pullback.
63% of Americans now live paycheck to paycheck as inflation outpaces wages
Gold finished with a modest loss, following a wild ride in the final session of last week that saw prices for the precious metal briefly dip to their lowest in 2½ years. Gold futures for Dec fell $2 to settle at $1654 per ounce. Prices had finished 1.2% higher for Fri's session, to gain 0.5% for the week. Gold wasn't on stable ground to begin the week, as the bears have been able to pull the rope a little harder. The big question which is very much influencing the price of the precious metal is if the Federal Reserve is going to slow down the pace of its interest rate hikes. The market expects the central bank to increase interest rates by 75 basis points during their next meeting — pushing the US Dollar index higher. The strength of the US Dollar index is keeping checks on the yellow metal's price. The ICE Dollar Index traded modestly higher today, while Treasury yields were mixed. Each is impacting precious metals prices, along with shifting expectations about where the Fed funds target rate will be at the end of the year. There has been an inverse correlation between the gold price & US 10-year bond yield since the COVID pandemic began & the inverse correlation will continue.
Gold futures finish lower after Friday’s wild ride
Oil futures settled, pressured by expectations for a decline in energy demand from China after a round of lackluster import data & the conclusion of the Communist Party's national congress. Natural-gas futures, meanwhile, finished higher, recouping a portion of last week’s steep losses which came on the heels of warmer-than-usual US weather forecasts. West Texas Intermediate (WTI) crude for Dec delivery fell 47¢ (0.6%) to settle at $84.58 a barrel. Oil rose last week, based on front-month contracts, with WTI up 0.5%, after the Biden administration released another 15M barrels of crude from the Strategic Petroleum Reserve. The administration also said it would begin replenishing the reserve when prices dipped toward $70 a barrel, helping to establish a floor that would give domestic producers confidence to boost production. Data today, a week behind schedule, showed that China's Sep crude imports were down 2% from a year earlier as independent refiners slowed throughput. Meanwhile, the Communist Party's national congress awarded China Pres Xi Jinping a 3rd 5-year term as the party's general secretary, doing away with a custom that has limited past leaders to 10 years in the top spot. The congress was seen consolidating Xi's grip on power. The congress saw no change announced in China's zero-COVID policy, which has resulted in large shutdowns in an effort to control the spread of the virus and has been blamed for crimping crude demand. Hong Kong stocks saw their worst single-day performance since the 2008 financial crisis, with the Hang Seng Index HSI dropping more than 6% to a new 13-year low. Concerns are primarily centered around the composition of Pres Xi's new Standing Committee, which commentators describe as being made up of ‘loyalists’,” he wrote. The lineup has fueled speculation that tackling COVID & maintaining national security are being prioritized above economic considerations, which is depressing the oil demand outlook in the world's 2nd highest consuming nation. Meanwhile, a rising $ along with uncertainty over global demand continues to weigh on commodity prices.
Oil ends lower on China demand worries; natural-gas recoups some of its losses
The first estimate for Q3 GDP should be released this week & it is expected to show weak growth for the US at the best. It also seems that about every day another company is announcing layoffs. Not good. But today investors were buying.
Dow Jones Industrials
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