Dow was up 31, advancers over decliners 5-4 & NAZ gained 26. The MLP index was off 1+ to the 223s & the REIT index slid back 2+ to the 375s. Junk bond funds fluctuated & Treasuries was sold, bringing higher yields. Oil crawled up to 75 & gold added 2 to 1879.
AMJ (Alerian MLP index tracking fund)
Federal Reserve Chair Jerome Powell stressed that central bank policymakers remain committed to
wrestling high inflation under control, even though the methods to do so
can prove to be politically unpopular. "Price stability is the
bedrock of a healthy economy and provides the public with immeasurable
benefits over time," Powell said. "But restoring
price stability when inflation is high can require measures that are not
popular in the short term as we raise interest rates to slow the
economy." The Fed's structure – in which it makes decisions free
of oversight by elected officials – allows it to take "these necessary
measures without considering short-term political factors," he added. In
his speech, Powell largely stuck to the topic of central bank
independence & did not comment on where monetary policy may be headed
in coming months. Policymakers last year voted to raise interest rates 7 straight times to 4.25-4.5%, well into restrictive
territory. In speeches since then, officials have signaled that
additional hikes are coming – & that they intend to hold rates at
elevated levels for some time. Although Powell received broad bipartisan support last year for another 4 years at the helm of the Fed, he has also faced backlash from
members of both political parties over the central bank's role in the
inflation crisis. Dems have warned the rapid rate hikes could lead to "widespread" job losses, while Reps have accused the Fed of gross oversight for the spike in consumer prices.
Powell warns Fed's inflation fight could spark political opposition
Optimism among small business owners declined in Dec amid the ongoing struggle with inflation & concerns about the economy slipping into recession, according to the latest report by the National Federation of Independent Business (NFIB). The NFIB's Small Business Optimism Index fell to 89.8 in Dec – its lowest level since last Jun & remained below the 49-year average of 98 for the 12th consecutive month. Pessimism about economic conditions, rising prices & hiring difficulties contributed to the decline. "Overall, small business owners are not optimistic about 2023 as sales and business conditions are expected to deteriorate," NFIB Chief Economist Bill Dunkelberg said. "Owners are managing several economic uncertainties and persistent inflation and they continue to make business and operational changes to compensate." Hiring difficulties remained a persistent problem for small business owners as 55% of owners reported trying to hire in Dec, but 93% of those looking to add to their workforce reported having few or no qualified candidates to fill those positions. Although a majority of small businesses were hiring, 41% reported they had job openings they weren't able to fill in December. While that was the lowest level of 2022& represented a 3-percentage-point decline compared to Nov, the metric remains historically high relative to monthly surveys in the years before the COVID-19 pandemic. The net percentage of business owners raising prices declined by eight percentage points to its lowest level of 2022 in Dec but continued to be at a high level relative to historical results, as a net 43% of small businesses reported that they raised their average selling prices. When asked about the single most important facing their business, 32% of small business owners cited inflation – up from 22% a year ago. Higher prices facing small businesses & their consumers contributed to a dip in sales expectations over the next3 months, which came in at a net negative 10%, a decline of 2 percentage points compared to Nov. The level of optimism about the next six months among small business owners surveyed worsened by 8 percentage points relative to Nov to a net negative 51%. That dim outlook was reflected in just 5% of small business owners indicating that the next 3 months are a "good time to expand" – a figure that was largely unchanged over the last several months of the survey. The most important reason cited by small business owners for their outlook was economic conditions, as 42% said it wasn't a good time, 15% said they were uncertain & just 1% said it was a good time. The political climate was the 2nd-most common reason listed, with 9% citing it as the reason it's not a good time to expand & 5% saying it has created uncertainty.
Small business optimism dipped in December: NFIB
The price of Russia's flagship Urals crude oil took a hit following strict intl bans & sold below $50 a barrel, well below the global benchmark set by Brent Crude, which sold for $80 a barrel. In the months following Russia’s invasion of Ukraine in 2022, Urals & Brent prices were bought for roughly the same cost with prices per barrel hovering around $95 on Feb 21 – one day before Moscow's launched its "special military operation." Russia's top export & income earner financing its war in Ukraine initially took a hit in Mar, dropping from $101 a barrel on Mar 7 to $76 a barrel by Mar 15, according to data by OilPrice.com. Urals crude oil has steadily fallen since Aug, when it saw its last high of $78.79 a barrel on Aug 29. The price for Brent Crude has also steadily dropped below last year's prices, though it remains relatively consistent with the Organization of the Petroleum Exporting Countries (OPEC) Basket prices – which measures the average price per barrel from OPEC member nations. Russia is likely seeing the implications of a smaller trading market after Europe – which received 40% of this energy needs from Moscow in the lead up to its invasion – cut its dependence from Russian energy supplies. India & China are Russia’s top importers of Urals crude oil, with Russian oil selling well below the $60 a barrel price cap set by the EU & G7 last year, India is expected to continue to take full advantage of the cheaper energy supplies.
Russia's crude oil price drops 60% below global benchmark
Powell did not deliver inspiring words & small business owners continue to struggle in an economy that is not robust. Inflation data is coming this week.
Dow Jones Industrials
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