Dow rose 112, advancers over decliners about 2-1 & NAZ gained 78. The MLP index stayed near 229 & the REIT index fell 2+ to the 394s. Junk bond funds fluctuated & Treasuries were sold in late day trading, raising yields. Oil continued 1+ higher to the 79s & gold soared 25 to 1924 (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)
The IMF may hold its global growth steady for 2023. The head of the IMF said that the global lender is unlikely to downgrade its forecast for 2.7% growth this year. Supporting that position is the fact that a feared oil price spike had failed to materialize & labor markets remained strong. IMF Managing Director Kristalina Georgieva still expected another "tough year" for the global economy with stubborn inflation. The IMF in Oct forecast that global growth would slow to 2.7% in 2023 after falling from 6.0% in 2021 to 3.2% in 2022. It had previously forecast growth of 2.9% for 2023, but she did not expect further cuts to the outlook. "Growth continues to slow down in 2023," she said. "The more positive piece of the picture is in the resilience of labor markets. As long as people are employed, even if prices are high, people spend and that has helped the performance." Georgieva said the IMF expected the slowdown in global growth to "bottom out" & "turn around towards the end of '23 & into '24." Georgieva said there was much hope that China - which previously contributed some 35% to 40% of global growth, but had "disappointing" results last year. But that depended on Beijing not changing course & sticking to its plans to reverse its zero-COVID policies, she added. She said the US, biggest economy in the world, was likely to see a soft landing & would suffer only a mild recession, if it did enter a technical recession. But Georgieva said great uncertainty remained, citing the risk of a significant climate event, a major cyberattack or the danger of escalation in Russia's war in Ukraine. She also mentioned global concerns such as growing social unrest in Brazil, Peru & other countries, & the impact of tightening financial conditions remained unclear.
IMF chief expects to keep 2023 global growth forecast steady
Treasury Secretary Janet Yellen
warned the US will hit its debt limit on Jan 19 & that
unless Congress takes swift action, the gov could be unable to
pay its bills as early as Jun. In
a letter addressed to the big 4 congressional leaders, Yellen said
the Treasury Dept will begin deploying extraordinary
measures to prevent the US from defaulting on its obligation. The
emergency moves should give Congress until at least early Jun to raise
or suspend the country's current $31.4T borrowing limit, she added. "I respectfully urge Congress to act promptly to protect
the full faith and credit of the United States," Yellen wrote in the
letter. "Failure to meet the government’s obligations would cause
irreparable harm to the U.S. economy, the livelihoods of all Americans
and global financial stability." "Extraordinary measures" the
Treasury takes include a range of items such as halting contributions to
certain gov pension funds, suspending state & local gov
series securities & borrowing from money set aside to manage exchange
rate fluctuations, according to the Committee for a Responsible Federal
Budget (CRFB). The debt ceiling is the legal limit on the total amount of debt that the federal gov can borrow on behalf of the public. If
the US failed to raise or suspend the debt limit, it would eventually
have to temporarily default on some of its obligations, which could
have serious & negative economic implications. Interest rates would
likely spike & demand for Treasuries would drop; even the threat of
default can cause borrowing costs to increase, according to the CRFB. While
the US has never defaulted on its debt before, it came close in 2011,
when House Reps refused to pass a debt-ceiling increase,
prompting rating agency Standard & Poor's to downgrade the US debt
rating one notch.
Yellen warns that US will hit debt limit next week
JPMorgan Chase (JPM), a Dow stock, posted Q4 profit & revenue that topped expectations as
interest income at the bank surged 48% on higher rates & loan growth. EPS jumped 6% from the year earlier period to
$3.57 & revenue rose 17% to $35.6B, fueled by the rise
in net interest income to $20.3B, topping the estimate by $1B, as the bank saw average loans rise 6%. But
the bank posted a $2.3B provision for credit losses in the
qtr, a 49% increase from Q3 that exceeded the $1.96B estimate, as it set aside money for expected
defaults. The move was driven by a
“modest deterioration in the Firm’s macroeconomic outlook, now
reflecting a mild recession in the central case” as well as loan growth
from customers using their Chase credit cards, the bank said. The
recession, in which US unemployment could reach 4.9%, is expected by
JPM economists to hit in Q4 of this year, CFO
Jeremy Barnum said. While CEO Jamie Dimon said that the US economy “currently remains strong” thanks to
well-financed consumers & businesses, he pointed to a series of risks
to that outlook. “We still do not know the ultimate effect of the
headwinds coming from geopolitical tensions including the war in
Ukraine, the vulnerable state of energy and food supplies, persistent
inflation that is eroding purchasing power and has pushed interest rates
higher, and the unprecedented quantitative tightening,” Dimon added. JPM, the biggest US bank by assets, is closely watched for clues
on how the industry is navigating an economy at a crossroads. The stock rose 3.45 (2%).
If you would like to learn more about JPM, click on this link:
club.ino.com/trend/analysis/stock/JPM_aid=CD3289&a_bid=6ae5b6f7
JPMorgan tops estimates for fourth-quarter revenue, but says mild recession is now ‘central case’
Gold futures reached a “golden cross,” with the most-active contract ending above $1900 an ounce for the first time since late Apr. A golden cross happens when a short-term moving price average crosses above a long-term moving average, potentially indicating a change in sentiment toward the metal. The 50-day moving average for most-active gold futures rose to $1789, topping the 200-day moving average of $1786. Gold has easily cleared the $1900 level & hitting these big numbers helps attract investors to a trend. Meanwhile, a golden cross for gold should attract more buying from technically-oriented traders. Gold for Feb rose $22 (1.2%) to settle at $1921 an ounce & prices ended 2.8% higher for the week
Gold Futures End Higher, Reach a ‘Golden Cross’
Oil futures marked their highest finish in 2 weeks,
with US prices posting a gain of more than 8% for the week. China's
economic reopening is the top mover for oil this week, but the good
inflation data is also making people more optimistic about the US
economy either heading for a soft landing or a mild recession. The weaker $ is a minor factor moving prices up. The
US benchmark WTI crude for Feb rose $1.47 (1.9%) to settle at $79.86 a barrel. Prices based on the front-month contract settled
at their highest since Dec 30 & climbed 8.3% for the week.
Oil futures rally by more than 8% for the week
Stocks started selling with a steep loss. Then buyers returned & kept the Dow in the black at modestly higher levels for the rest of the session. WTI oil is up around 10% from recent yearly lows which will be hitting inflation in the coming weeks. Dow was up 670 for the week.
Dow Jones Industrials
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