Dow gained 330 with buying into the close, advancers over decliners about 4-1 & NAZ rose 288. The MLP index was up 1+ to the 228s & the REIT index added 3+ to 391. Junk bond funds inched higher & Treasuries were heavily sold, driving yields higher after their recent decline. Oil went up 1+ to the 81s & gold rose 7 to 1931 (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)
Federal Reserve Governor Christopher Waller said he favors a qtr percentage point interest rate increase at the next meeting, as he waits for more evidence that inflation is heading in the right direction. Confirming market expectations, the central bank official said that the Fed can dial down on the size of its rate hikes. But he also said it's not time to declare victory on inflation, comparing monetary policy to an airplane that soared higher quickly and now is ready for a gradual descent. “And in keeping with this logic and based on the data in hand at this moment, there appears to be little turbulence ahead, so I currently favor a 25-basis point increase at the FOMC’s next meeting at the end of this month,” Waller said. “Beyond that, we still have a considerable way to go toward our 2 percent inflation goal, and I expect to support continued tightening of monetary policy.” Other officials, such as Philadelphia Fed Pres Patrick Harker, have pointed to a 0.25 percentage point increase at the Jan 31-Feb 1 FOMC meeting, but Waller is the highest-ranking member to be that explicit. While the market & the Fed appear to be on the same page with where rates go in the short term, there is divergence further out. Central bankers largely have said they see rates holding at a high level through the end of the year, while markets see a peak in the summer then a reduction shortly thereafter. Waller said the divergence is largely about perception for where inflation is going to go. “The market has a very optimistic view that inflation is just going to melt away. The immaculate disinflation is going to occur,” he added. “We have a different view. Inflation’s not just going to miraculously melt away. It’s going to be a slower, harder slog to get inflation down and therefore we have to keep rates higher for longer and not start cutting rates by the end of the year.” Waller was generally upbeat on the economy, noting that activity has slowed in some key areas such as manufacturing, wage growth & consumer spending. He emphasized the Fed's goal is not to “halt economic activity,” but rather to bring it back into balance so inflation can start to fall.
Fed Governor Waller backs quarter-point interest rate hike at next meeting
General Motors (GM) plans to invest nearly $1B in 4 US plants to support
production of components for electric vehicles as well as its next
generation of V-8 engines, signaling gas-powered trucks & performance
cars are here for the foreseeable future. The $918M investment is despite the automaker’s plans to exclusively offer all-electric consumer vehicles by 2035. It's the latest example of legacy automakers such as GM having to balance their current lineup of vehicles with emerging EVs. “Our
commitment is to an all-EV future, no doubt about it,” Gerald Johnson,
global head of GM's manufacturing said. “We know that has a horizon and between here and there,
there are a lot of internal combustion engine customers that we don’t
want to lose.” A majority of the investment, $579M, will
go toward preparing GM's Flint Engine Operations plant in Michigan for
the automaker's 6th-generation family of small-block V-8 gas engines. The
engines are used in some of the automaker's most highly profitable
products, such as its full-size pickup trucks & SUVs. They've also
been used in some Cadillac & Chevrolet performance cars. The stock fell 38¢.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM_aid=CD3289&a_bid=6ae5b6f7
GM to invest $918 million in new V-8 gas engines and EV components
Western forces agreed increases to their military support for Ukraine, but Germany wavered on further EU tank deliveries despite mounting calls from Kyiv & fellow allies. “Today, we can all not yet say when a decision will be made about Leopard and what this decision will look like,” German Defense Minister Boris Pistorius said at Germany's Ramstein Air Base held with several defense leaders from across the world, including Defense Secretary Lloyd Austin. He stressed that he intends for Berlin to be prepared if & when a decision is taken on Leopard 2 tanks. He added that he instructed an inspection of the German Leopard 2 inventories, both in military & in domestic industry stocks, ahead of a prospective decision. “We are not really hesitating we are just very carefully balancing all the pros and contra [cons] — we are not talking just about delivering anything to anybody, this is a new kind of measure we would choose, so we have to be careful because we have a duty to look carefully and intensively at what might be the consequences for anybody in that conflict,” he said. This is Pistorius' 2nd day in office, following the abrupt resignation of his predecessor Christine Lambrecht, who suffered intense domestic & intl scrutiny over her ability to lead Berlin's efforts in the war in Ukraine. Ukraine has repeatedly asked for battle tanks from its Western allies, with Germany’s Leopard 2 units being of particular interest. Ukrainian Pres Volodymyr Zelenskyy has insisted that receiving supplies of Western tanks must outpace another Russian attack. Officials in Berlin seem to fear that supplying the arms could escalate hostilities with Moscow, which has already accused the West of fighting a “proxy war” against Russia in Ukraine. In the hours before the meeting, the Kremlin said that Western tanks for Ukraine would “change nothing” & would not stop Russia from achieving its goals. Pistorius insisted that Germany is not alone in holding out on the tanks supply decision. “I must say there is very clearly no unanimous opinion. The impression that has occasionally been made that there is a closed coalition and Germany stands in the way of this is wrong. There are many allies who say we share the opinion that I explained here today again, there are good reasons for the delivery and there are good reasons against it,” he added.
Germany holds out on Ukraine tanks supply decision despite mounting calls
Gold futures rose to tally a 5th weekly climb in a row. This year, the hot money has run into gold, as well as Shanghai futures & options, betting that prices will keep surging on chatter over heavy central-bank demand, plus the strong household buying expected in China for the Lunar New Year holidays. However, a pullback in gold could very well come next week, when China's Spring Festival will shut both Shanghai's gold & its futures exchanges. That will remove a big chunk of physical demand as well as leveraged speculation from the market. Gold for Feb rose $4 to settle at $1928 an ounce. For the week, prices for the most-active contract rose 0.3%.
Gold Futures Post a 5th Straight Weekly Climb
Oil futures rose, with US prices posting a gain for a 2nd straight week. The Energy Information Administration reported an 8.4M-barrel weekly rise in US crude inventories, following an even larger 19M-barrel increase a week earlier. Nonetheless, the market managed to largely discount the move once again, signaling an expectation that refinery runs will pick up in the weeks ahead, as well as some longer-term confidence in Chinese demand growth and global economic conditions. On the contract’s expiration day, US benchmark WTI crude for Feb rose 98¢ (1.2%) to end at $81.31 a barrel, with prices for the contract up 1.8% for the week. The new front-month contract, Mar added $1.03 (1.3%) to settle at $81.64.
Oil futures end higher, with U.S. prices up a second week
There was buying into the close with mixed signals from Fed officials & economic data. Dow was down for the week, pretty much erasing the prior week's gain. YTD Dow is up a measly 225.Dow Jones Industrials
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