Dow went up 37, decliners over advancers 5-4 & NAZ gave back 144. The MLP index inched higher in the 216s & the REIT index was off fractionally in the 371s. Junk bond funds declined & Treasuries were heavily sold, bringing sharply higher yields. Oil was little changed in the 79s & gold jumped 18 to 1822 (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)
IBM (IBM) isn’t often described as a hot company. But in a year that saw
investors abandon all major tech stocks, Big Blue was in the green. The Nasdaq is closing out its worst year since 2008. High gas prices, soaring inflation & the Federal
Reserve's steady pace of rate increases have punished growth stocks &
favored more mature, less volatile names that are viewed as more
recession-resistant. Tech names that thrived during the Covid days suffered the most as the economy reopened & consumers returned to many of their old habits. Among
US tech companies valued at $50B or more, IBM is one of only 2 to generate positive returns so far in 2022. As of Fri's close,
the stock was up 6% for the year. While tech companies have been pummeled, investors turned to 111-year-old IBM, betting on its stable earnings. Nobody will mistake IBM for a growth stock. Expansion is consistently in the single digits, & last year the company spun off Kyndryl, its managed infrastructure services business, into a separate publicly traded entity. That cut head count by about 90K. But
IBM generated $752M in free cash flow in the latest qtr, up
25% from a year earlier, & paid out $1.5M in divs. Q3 earnings & revenue both topped estimates & the company raised its forecast for the full year. The stock rose 75¢.
If you would like to learn more about IBM, click on this link:
club.ino.com/trend/analysis/stock/IBM_aid=CD3289&a_bid=6ae5b6f7
IBM beat all its large-cap tech peers in 2022 as investors shunned growth for safety
The death toll from the historic blizzard across the US climbed to 64, as record snowfall blocked roads, hindering rescue operations, officials said. Confirming seven additional fatalities in Buffalo, Mayor Byron Brown said that the storm was “probably worse than anything that this city has seen in over 50 years.” Later, the mayor said another body had been recovered, bringing the total number of deaths in Buffalo to 28. Despite a driving ban in force in parts of the Buffalo area, “we still are finding a lot of people out and about just hampering our efforts as first responders,” the city’s Public Works Commissioner Nathan Marton said, adding that the dept was trying to clear at least one lane for emergency vehicles. “We need people to continue to stay patient, stay off the roads today, and as soon as we can, we will lift the driving ban in the city of Buffalo,” said Brown. The blinding snowstorm has particularly targeted Erie County, New York, which accounted for almost ½ the death toll at 33, including the deaths in Buffalo. Wind gusts of 20-30 mph could rapidly deteriorate visibility, the National Weather Service said, adding that parts of storm-weary New York were experiencing snowfall of 1-2 inches per hour. “The snow will accumulate so rapidly that it will be extremely difficult for the road crews to keep the roads clear,” the weather service said later in the morning.
More than 60 killed in blizzard wreaking havoc across U.S.
The latest round of Western sanctions against Russia over its invasion of Ukraine are beginning to pinch the country's economy. Russian Finance Minister Anton Siluanov reportedly told journalists that an oil price cap imposed by the G-7 (Group of Seven) major economies, as well as the EU & Australia, is squeezing Russian export income & will potentially push Moscow's budget deficit higher than the expected 2% next year. Price caps on Russia’s crude & refined oil exports could force the Kremlin to cut output by 5-7% next year, the RIA news agency cited Deputy Prime Minister Alexander Novak as saying. However, Moscow should be able to finance the shortfall thru domestic bond issuance & its rainy day fund, officials have suggested. The 27 countries of the EU also agreed in Jun to ban the purchase of Russian crude oil from Dec 5. “It’s still too early to fully assess the impact of the G7 oil price cap and the EU’s ban on Russian crude imports which came into effect on 5th December, but initial signs suggest that Russia’s economy is starting to feel the pinch,” said Nicholas Farr, emerging Europe economist at Capital Economics. “High-frequency data show that Russian oil exports have fallen since the sanctions were introduced and the spread between Brent crude oil prices over Urals oil prices widened to a six-month high [last] week.” Farr suggested that this will compound the hit to Russia's energy revenue from falls in global prices in recent months. Intl benchmark Brent crude fell from a peak of around $98 per barrel in Oct to around $77 earlier this month, recovering to around $84.50/barrel today. Meanwhile, the Russian ruble fell by almost 10% against the $ last week, making it by far the worst-performing EM currency after defying expectations for much of the year. Farr suggested a key consequence of a weakening ruble will be upward pressure on inflation due to higher import costs. The Bank of Russia (CBR) ended its run of interest rate cuts in Oct & upon keeping its monetary policy unchanged in Dec, warned that inflationary risks “prevail” over disinflationary ones. If the ruble continues to fall in 2023, Farr suggested that the CBR may be forced to look at reintroducing rate hikes in order to keep inflation under control & Capital Economics believes the erosion of Russian resilience to Western sanctions will emerge as a key theme of 2023.
New sanctions starting to bite Russia’s economy as Moscow admits deficit impact
Gold rallied, reaching the highest intraday levels in 6 months as the $ slipped. Gold for Feb rose $24 (1.4%) to $1828 per ounce. Gold prices had traded as high as $1838 in early dealings today, the highest intraday level for a most-active contract since Jun 22. The ICE US Dollar Index a gauge of the $'s strength against a basket of major currencies, was off 0.2% at 104.07. It has fallen 7% since the start of Q4. Gold remains poised just under multi-month highs & if the contrarian idea of a weaker $ in 2023 comes to fruition (& there's reason to believe it will) then gold will have a positive catalyst behind it in the new year. Meanwhile, a top advisor to the People's Bank of China called for strengthening of real estate polic in light of sluggish economic growth over the past 3 years as China had pursued its zero-COVID policy.
Gold prices settle higher as U.S. dollar weakens after China’s decision to ease COVID curbs
The US oil benchmark ended near unchanged as US refineries temporarily closed last week by a brutal winter storm came back online. Oil was lifted earlier in the session on optimism about Chinese demand as the country said it would drop quarantine requirements for incoming travelers & after a brutal US winter storm forced the temporary closure of several Texas refineries. Also, Russia banned the sale of oil & oil products to countries that participate in a price cap on the country's crude exports. West Texas Intermediate crude for Feb fell 3¢ to end at $79.53 a barrel. Feb Brent crude, the global benchmark, rose 41¢ (0.5%) to settle at $84.33 a barrel. Mar Brent, the most actively traded contract, rose 18¢ to $84.68 a barrel. Winter weather affected facilities responsible for refining more than 3M barrels a day of crude on the US Gulf Coast Fri, but facilities were beginning to come back online today. Some, however, may see shutdowns last into Jan as a result of damage from freezing temperatures. Crude was buoyed in early trade as Russian Pres Vladimir Putin announced a ban on the sale of oil which would allow exports to countries imposing a price cap only in the case of a special exemption from the Kremlin.
U.S. oil ends near unchanged as refineries restart after winter storm
Once again, little was decided in today's trading. The Dow chart below for 2022 looks dreary. With a looming recession out there, the outlook does look to be encouraging for the new year.
Dow Jones Industrials
Dow Jones Industrials
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