Dow declined 291, but advancers over decliners 2-1 & NAZ was off 24. The MLP index went up 1+ to the 229s & the REIT index fell 2+ to the 292s. Junk bond funds were purchased & Treasuries had buying, reducing the yield in the 10 year Treasury by a big 12 basis points to 3.41%. Oil rose again, up 1+ to the 81s, & gold recovered 6 to the 1916.
AMJ (Alerian MLP Index tracking fund)
Inflation at the wholesale level declined more than expected in Dec, the latest sign that painfully high consumer prices are finally beginning to loosen their stranglehold on the US economy. The Labor Dept reported that its producer price index, which measures inflation at the wholesale level before it reaches consumers, declined 0.5% in Dec from the previous month. On an annual basis, prices are up 6.2%. Those figures were both lower than the 6.8% headline figure & 0.1% monthly decline forecast, a welcoming sign for the Federal Reserve as it seeks to cool price gains & tame consumer demand with the most aggressive interest rate hike campaign since the 1980s. Excluding food & energy, core inflation increased 0.1% for the month – matching the estimate. The sharp decline in the headline number stemmed from a big drop in energy prices, which plunged 7.9% over the course of the month. Within the category, gas prices tumbled 13.4%, accounting for ½ of the total drop in goods last month. The final demand food index also fell 1.2%, although the cost of certain categories like eggs & turkeys marched higher in Dec. Still, there are some signs that inflationary pressures in the economy could remain sticky in coming months: The cost of gasoline, for instance, is up about 21¢ from one month ago (roughly 7%). The cost of diesel is also increasing, with the average price of a gallon up about 1.6% so far in Jan.
Wholesale inflation fell faster than expected in December
United
Airlines (UAL) reported Q4 & outlook for early 2023 topped estimates thanks to strong travel demand & high fares. Consumers'
appetite for air travel & willingness to pay higher fares has helped
airlines return to profitability despite higher costs for fuel, labor & other expenses tied to ramping their networks back up. Meanwhile,
aircraft delivery delays & training backlogs have constrained
airlines' growth, keeping fares high. UAL
reported an $843M profit for the last 3 months of 2022, a
31% increase compared with 3 years earlier, on revenue of $12.4B. That revenue was almost 14% higher than the same period in
2019, before the pandemic, despite flying 9% less, helping it post a
profit despite a 21% increase in unit costs from 3 years earlier. For Q1-2023, UAL expects to generate
revenue 50% higher than the same period of 2022 & expects Q1 EPS to be 50¢ - $1, above the forecast of 25¢. UAL expects to expand flying 20% in Q1 from a year ago. It
forecast capacity growth in the high teens for the full year over 2022. UAL also said that staffing issues, plane shortages & outdated tech would restrict industry capacity this year. CEO Scott Kirby said that the airline's pilots union is working on electing a new leader
after its last head resigned, which should be finalized later this
month. Once the new leader has been selected, Kirby expects negotiations
to resume, which he estimated to be by Feb 7. UAL said that it expects new contracts
with pilots, flight attendants, technicians & airport employees to
keep its non-fuel costs steady over 2022. The stock dropped 1.
If you would like to learn more about UAL, click on this link:
club.ino.com/trend/analysis/stock/UAL_aid=CD3289&a_bid=6ae5b6f7
United results top estimates as demand remains resilient despite high fares
Builder sentiment in the single-family housing market posted an unexpected gain in Jan, rising for the first time in 12 straight months. The forecast was for a slight decline. Sentiment rose 4 points to 35 on the National Association of Home Builders/Wells Fargo Housing Market Index. Anything below 50 is still considered negative sentiment. The metric stood at 83 in Jan 2022. "It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales," said Jerry Konter, NAHB chair. "The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023." All 3 of the index's components posted gains in Jan. Current sales conditions rose 4 points to 40, sales expectations in the next 6 months increased 2 points to 37 & buyer traffic rose 3 points to 23. Both builders & consumers are likely responding to the recent drop in mortgage rates. The average contract interest rate on the 30-year fixed mortgage last peaked at 7.37% at the end of Oct according to Mortgage News Daily. It then fell throughout Dec & stood at 6.17% as of yesterday. "While NAHB is forecasting a decline for single-family starts this year compared to 2022, it appears a turning point for housing lies ahead," said Robert Dietz, NAHB's chief economist. "In the coming quarters, single-family home building will rise off of cycle lows as mortgage rates are expected to trend lower and boost housing affordability." Dietz noted that the nation still has a structural housing deficit of 1.5M units & added that improved affordability should increase demand.
Homebuilder sentiment rises in January for the first time in a year
Traders are looking thru corp financial updates for signs of an earnings recession that many analysts have warned about. Today Microsoft (MSFT), a Dow stock, announced it was laying off 10K. The economy is sort of recovering, but there are still mixed signals being sent. And gold remains a hot investment for nervous investsors.Dow Jones Industrials
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