Dow dropped 162, decliners over advancers 5-2 & NAZ retreated 159. The MLP index was off 3+ to the 211s & the REIT index fell 4+ to the 368s as yields rose sharply. Junk bond funds were sold today & Treasuries continued to be sold, raising yields substantially. Oil rose 1 to the 75s & gold slid back 4 to 1796 (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)
Chevron (CVX), a Dow stock & Dividend Aristocrat, CEO Mike Wirth detailed what the American producer is doing to make the domestic energy supply more "affordable, reliable and cleaner" & talked about Pres Biden's claim over unused oil permits. "The conversation about energy has become very polarized, and it's very difficult to find balance in the center. And I think we need a pragmatic conversation that recognizes there are three things that really matter when you talk about energy." He said those 3 key factors are affordability, reliability cleanliness & explained how bringing more US oil supply to market directly impacts America's economy & national security. "Energy needs to be affordable because it supports economic prosperity. Second, it needs to be reliable because energy security and national security are linked. And then third, it needs to be ever cleaner," Wirth said. "We need to respect the fact that people want to see the environment taken care of. And so we need to balance our approach to energy, certainly as a company and I think as a country." While Pres Biden has made a green energy future a priority & progressive states like California look to impose windfall taxes on oil companies producing excess margins, Wirth discussed those policies' impact on domestic energy investment. "These tax proposals would do nothing to bring more supply to market and lower prices. In fact, the risk is that they could do the exact opposite. We've seen this tried before. It didn't work in the 1970s and 1980s, and it wouldn't work today," Wirth said. "If you want more of something, if you want more supply of gasoline, you don't raise taxes on it and discourage people from investing in bringing more supplies to the market… That's why we need a balanced conversation and a pragmatic discussion about what really will bring more supplies to market in order to bring stable prices, which is what the economy would benefit from." Wirth criticized the Biden administration for claiming there's 9K active leases & "plenty of opportunities" for producers to drill more oil, while calling for federal reform. "I don't know anything about this 9,000 lease number. I don't know where it comes from. We don't have anything even approaching a fraction of that," he said. "These things can take a long time. They can be challenged in court, and it is a very bureaucratic process. The idea of permitting reform, which has received a lot of discussion lately, actually, for all types of energy infrastructure, is a good idea, and I think it would be good for our country in order to encourage investment in infrastructure of all types, to find a way to have a proper permitting process that does protect the environment and ensures work is done safely, but doesn't allow people to delay endlessly these kinds of investments."
Chevron CEO denies Biden oil lease claim, details practical energy policy
As Covid and flu hospitalizations have climbed in the weeks since Thanksgiving, White House’s Covid-19 coordinator Dr Ashish Jha said families will be safer at upcoming holiday gatherings if they get their updated vaccines. This year, hospitals are facing the simultaneous threat of Covid, flu & RSV for the first time. Circulation of flu & RSV was very low during the pandemic due to widespread masking & social distancing implemented in response to Covid, but as most people return to normal life, all 3 viruses are circulating widely. As of Dec 14, the 7-day average of weekly new Covid cases reached 65K, a 2.9% decrease from the previous week, according to data from the Centers for Disease Control & Prevention. “The good news here is that we can prevent those infections from turning into serious illness if people go out and get that updated bivalent vaccine,” Jha said. Public health officials have said many people are probably more vulnerable to flu & RSV this year because they weren't infected in the past 2 years, which means their immunity is lower. Around 23K patients were admitted to the hospital with influenza this week, the CDC reported, while RSV hospitalizations appear to have peaked in some states. Hospitalizations of people with Covid topped more than 5K per day on average. Former Food & Drug Administration Commissioner Dr Scott Gottlieb said it’s going to be a “difficult few weeks,” & he said that this year's respiratory pathogen season is the “worst in recent memory.” Gottlieb said it has been a historic year for the flu in particular. “80% of hospital beds right now are full. The hospitals haven’t been this full since the peak of the omicron wave last winter,” he said. “The difference is that last winter, 25% of those hospital beds were filled with Covid admissions. Right now, only 6% are filled with Covid admissions.”
White House’s Covid coordinator urges people to get vaccinated ahead of holidays
Lawmakers & groups worried about the economic costs of an exploding federal budget are warning Dems not to make the situation worse with an expensive, last-minute bill that "must" be passed in order to avoid a partial gov shutdown. Today Dems are expected to announce just that – the details of a massive bill funding the gov for the rest of the fiscal year that piles on more spending. In addition to a hefty increase for defense & non-defense spending, the bill could include any number of expensive items such as funding for Ukraine, a costly Medicare bailout, extended tax breaks & even more money for COVID. Depending on what's in there, it could mean another $500B in borrowing over the course of the year tacked onto the $31.3T national debt. And while Dems are running the show, Sen Rand Paul, noted last week that Senate Rep leaders seem to have accepted the spending outline agreed last week, even though 41 GOP senators voting "no" could stop the bill. "This brings upon us the lie that Republicans really are fiscally conservative," Paul said. "We have completely and totally abdicated the power of the purse," he said. "Republicans are emasculated, they have no power and they are unwilling to gain that power back." While the situation looks bleak for supporters of a fiscally responsible gov, groups that support that goal have nonetheless been urging lawmakers to show restraint. "The current Congress should not pass an omnibus spending bill just weeks away from the beginning of a new Congress. National Taxpayers Union (NTU) opposes omnibus spending increases that will increase federal deficits and debt in the long run, and could even contribute to inflation in the short run," Nicholas Johns, NTU's public policy & gov affairs manager, wrote to congressional leaders last week. Johns warned that the speed of this last-minute spending bill, coupled with the expectation that lawmakers will return home for the holidays, makes for bad public policy & is a system that is "fraught with risks for taxpayers." "While it would be appropriate to address some expired or expiring tax policies to ensure there are no significant disruptions to a recovering economy, this bill should not become a ‘Christmas tree’ full of an assortment of unrelated policies that have not gone through the regular legislative process," he added.
Deficit hawks brace for year-end spending blowout
Gold closed with small loss, retreating back under $1800 even as the $ moved lower, though bond yields rose. Gold for Feb closed down $2 to $1797 per ounce. The drop comes as the metal continues to hang around the $1800 mark as the $ weakened following lower than expected US inflation last month, while it attracts safe haven buying as interest rates rise. Since the current run up in gold started in early Nov, the price has not dipped below its 21-day moving average, today at $1775. Speculators increased bullish gold bets by 50% in the week to Dec 13 when prices briefly spiked in response to a softer $ & CPI reading. The subsequent setback following Wed''s hawkish FOMC, however, was not big enough to rattle recent established longs. The $ weakened today, making gold more affordable for intl buyers. The ICE dollar index was down 0.13 points to 104.57. However bond yields rose, bearish for gold since it offers no interest. The US 10-year note was last seen paying 3.58%, up 12.7 basis points.
Gold Edges Down, Retreats Back Under US$1,800 Despite a Weaker Dollar
Oil futures finished higher, finding support as investors assessed the longer-term outlook for Chinese demand as the country relaxes its COVID-19 curbs. West Texas Intermediate crude for Jan rose 90¢ (1.2%) to end at $75.19 a barrel. Feb Brent crude, the global benchmark, gained 76¢ (1%) to settle at $79.80 a barrel. Crude was back on higher ground today. Prices rose last week, but fell significantly on Fri after rate rises by major central banks & indications that rates will remain elevated in 2023 stoked fears of a global economic downturn. There is no doubt that demand is being adversely influenced & this is mainly because traders do not like the fact that central banks are dealing with their monetary policy. However, not everything is so negative as China has vowed to fight all pessimism about its economy & it will do what it takes to boost economic growth. China's strict COVID policies have undercut demand for crude from one of the world's largest energy-consuming countries. The relaxation of COVID restrictions is seen as a long-term positive, but a wave of infections has sparked concerns about the near-term outlook. Going forward, it seems more likely that there will be further support from the PBOC (People’s Bank of China) to support economic growth in China, & Beijing is likely to ease off all the policies around COVID,
Oil ends higher on China demand hopes, while natural gas tumbles 11%
Stocks extended a 2 week rout with little news to inspire investors. In the PM, Dems talked about passing a bloated spending bill this week to fund the gov thru Sep 30. The Dow sank, but losses were trimmed in the last hour with modest buying.
Dow Jones Industrials
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