Dow finished ahead 550 & close to session highs, advancers over decliners 5-1 & NAZ charged ahead 354. The MLP index rose 3+ to the 213s & the REIT index remained in demand, closing up 12+ to the 352s. Junk bond funds continued higher & Treasuries had a little buying keeping the yield on the 10 year Treasury just over 4%. Oil was off a tad in the 85s & gold added 8 to 1657 (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)
Consumers are financially resilient, despite high inflation & concerns the US is nearing a recession, according to Bank of America CEO Brian Moynihan. “Analysts might wonder whether the talk of inflation, recession and other factors could [result] in a slower spending growth,” Moynihan added. “We just don’t see [that] here at Bank of America.” The bank's customers continue to spend freely, using their credit cards & other payment methods for 10% more transaction volumes in Sep & the first ½ of Oct than a year earlier, Moynihan continued. While price inflation accounts for some of that, the number of transactions also rose 6%, he said. Customers' account balances remain higher than before the coronavirus pandemic struck in early 2020, Moynihan said, indicating they were in a good position to continue spending. That is especially true for those who had the smallest balances, which were about 5 times higher than before the pandemic. Finally, consumer credit remains pristine, with late-payment metrics still well below pre-2020 averages, Moynihan said, indicating that so far, customers had little difficulty keeping up with their debt. “We’re just now seeing [a] gradual move off these lows in early stage delinquencies; late-stage delinquencies are still 40% below pre-pandemic,” Moynihan noted.
Bank of America CEO says latest spending, savings data shows consumer is healthy
Treasury Secretary Janet Yellen walked back speculation that G7 nations are considering a $60 per barrel price cap on Russian oil & stressed that no decision has been made. Earlier this week, Yellen suggested that Russia could still profit from oil sales at $60 per barrel by saying a price in that range would let Russia "profitably produce and sell oil." But on Fri, she said her comment then was not meant to suggest the G7 has decided on a price in that range. "I did not say that under consideration is a price in the $60s," Yellen said. "What I meant to say is there are several benchmarks that are relevant in deciding what a price should be." One benchmark is Russia's marginal cost of producing oil. She indicated that the cap, which the G7 will impose in Dec in an effort to limit Russian oil profits that help fund its war against Ukraine, will need to be above Russia’s cost-per-barrel. "To charge a price less than that would certainly cause Russia to want to shut in the oil," she said. "They don’t want to sell oil at a loss." Yellen added that once the cap it set, it can be adjusted over time to reflect changing economic circumstances. Another factor is historical prices of Russian oil, which the G7 will examine as it sets a precise cap level. "We’re looking historically at what have oil prices been that Russia has earned, and it was in that context that I mentioned a specific number," she said, referring to her comment earlier in the week. "But no decision has been made, and I did not say that [those are] the prices… under contemplation. No decision has been made."
Yellen walks back $60 price cap for Russian oil
Consumers may be forced to collectively shell out over $14B more on electricity & heating costs this winter compared to a year ago, according to a new report from the Consumer Energy Alliance (CEA). It
comes at a trying time for the country as consumers grapple with
painfully high inflation, which just accelerated in Sep, jumping
8.2% from a year ago. That marked its fastest pace in 4 decades. The rise in heating costs this winter will only exacerbate the pressure
on households, according to the CEA. To bolster its point, the advocacy
group cited recent data from the Energy Information Administration (EIA)
estimating how energy prices will increase across the board. "Forecasting months-long weather and energy trends is not an exact
science, but it’s highly likely that global dynamics affecting energy
commodities will lead to higher U.S. prices for heat this winter," EIA
Administrator Joe DeCarolis said. Households
that rely on natural gas as their primary heating source are estimated
to spend about $930 this winter, due to higher expected prices &
consumption, which is a 28% increase over last year, according to the
EIA. Meanwhile,
consumers are estimated to spend $2354 on heating oil, up 27% from
2021, according to the EIA. Additionally, electricity is estimated to
rise 10% this winter, costing consumers roughly $1359. The EIA also
estimated that consumers will spend $1668 on propane, a 5% increase
from last year. Companies such as Consolidated Edison (ED), which provides energy for
roughly 10M people who live in New York City & Westchester
County, have already started "urging customers to take actions now that
can help them manage costs this winter as market prices for electricity and natural gas are expected to be substantially higher." The CEA said "bad policy decisions" by the administration were driving
the price increases, although other experts, including the EIA, argued
that there are a number of global factors affecting energy commodity prices.
Energy bill surge: Consumers could shell out $14B more this winter
Oil futures finished modestly lower,
extending the sharp loss seen last week. The backdrop of sticky high
inflation resulting in increasingly more hawkish Fed policy expectations
for the foreseeable future & the subsequent rise in recession fears
will likely keep a lid on WTI in the low to mid $90s. There is also solid support based on OPEC+s more
price-defensive actions this month. US benchmark West
Texas Intermediate crude for Nov fell 15¢ to settle at $85.46 a barrel.
Prices have now posted declines in 5 out of the last 6 trading
sessions.
Oil futures settle slightly lower, extending last week's sharp loss
Gold prices settled higher to recoup part of last week's steep losses, finding support from a pull back in the $. Gold futures for Dec added $15 ( 0.9%) to settle at $1664 per ounce. On Fri, the Dec contract settled at $1648 an ounce, the lowest end-of-day level for a most-active contract since Sep 27. Even as gold prices rebounded, hopes for a durable rebound for the yellow metal — &, increasingly, other commodities as well — dimmed as investors anticipate the Federal Reserve will continue hiking interest rates into Q1-2023, potentially exacerbating an expected global economic slowdown. The factor that influences the price of gold the most is the $ index. It is pretty much clear that the Fed will continue to increase its interest rate & there are no signs of them slowing down their monetary policy any time soon. In Mon trading, however, the ICE US Dollar index was down 1.1% at 112.056, & Treasury yields also eased back, after the New York Fed's Empire State business conditions index revealed a fall of 7.6 points to negative 9.1 in Oct.
Gold, silver settle lower after last week’s steep losses
Dow Jones Industrials
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