Dow added 169, advancers modestly ahead of decliners & NAZ declined 71. The MLP index went up 3 to 230 & the REIT index was up 1+ to the 402s. Junk bond funds remained weak & Treasuries were sold, raising yields. Oil went up 1+ to the 79s & gold slid back 3 to 1875 (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)
US households are burning thru the savings buffer that they built up during the COVID-19 pandemic at an alarming pace as high inflation rages. Ms of Americans stashed away extra cash during the pandemic as a
result of multiple stimulus checks, boosted unemployment benefits &
limited spending options. But those savings are quickly dwindling. Americans have spent down about 35% of the extra money they accumulated
during the pandemic as of mid-Jan, according to one estimate from
Goldman Sachs. By the end of the year, the bank projected that
households will have spent roughly 65% of that money. The data comes as Americans continue to confront the hottest inflation since the 1980s. Although the consumer price index,
which measures a broad array of goods including gasoline, groceries &
rents, has slowly fallen from a high of 9.1% recorded over the summer,
it remains about 3 times higher than the pre-pandemic average. Consumers are increasingly relying on their savings & racking up credit card debt
in order to pay for necessities. The personal savings rate tumbled in
Dec to 3.4% from 7.5% one year ago as households pulled back on
spending amid a cloudy economic outlook, the Commerce Dept
reported. That compares to a savings rate of 33.8% in Apr
2020, at the height of the COVID-19 lockdowns & in the midst of the
first round of stimulus payments. In addition, household debt
rose during Q3 at the fastest clip since 2008, with
credit card balances jumping by 15%, Federal Reserve data showed. In Jan 2020, the personal saving rate of US citizens was 9.1%, according to data
from the Federal Reserve Bank of St Louis; that spiked to 33.8% in
Apr 2020 during the COVID-19 breakout. The rate declined to 13.8% by
year-end, only to jump to 26.3% in Mar 2021. On top of that, a record-breaking number of Americans are making emergency withdrawals from their 401(k) retirement plans in order to cover a financial emergency. About
2.8% of workers participating in employer-sponsored 401(k) plans made a "hardship" withdrawal in 2022, according to data from
Vanguard, which tracks about 5M accounts. That marks a major
increase from the 2% rate recorded before the pandemic began & is also
up from the 2.1% reading in 2021. Fiona Greig, global head of investor research and policy at Vanguard,
said the high number of withdrawals is "evidence that some families may
be feeling the pinch and drawing on their 401(k) balances to relieve
that financial stress." Hardship withdrawals allow workers to tap their 401(k) for an "immediate and heavy financial need."
Americans burn through pandemic savings as high inflation pinches
News Corp (NWSA) will cut about 1250 positions, or 5% of its workforce, in the
latest round of layoffs that have hit the media & tech industries in
recent months. Rupert Murdoch's media company, which owns such
names as The Wall Street Journal, the New York Post, Barron's &
HarperCollins, said the tough marcoeconomic environment & higher
interest rates have been hurting the company. The stock fell 1.76 (9%).
If you would like to learn more about NWSA, click on this link:
club.ino.com/trend/analysis/stock/NWSA_aid=CD3289&a_bid=6ae5b6f7
News Corp. announces it will cut 1,250 positions this year
The Health & Human Services Dept (HHS) laid out what will change & will remain the same when the 3-year-long Covid public health emergency ends in May. Health Secretary Xavier Becerra officially informed state governors that he is renewing the declaration a final time but plans to let the emergency expire on May 11. The White House had already informed Congress of these plans last week. HHS officials laid out what the the public can expect when the emergency ends.
- People with private health insurance may have to pay for Covid tests, both over the counter & lab, depending on their plan.
- Seniors with Medicare Part B will start paying for over-the-counter tests, though the program will cover lab tests.
- Hospitals will lose flexibility to expand capacity in response to surges.
- The federal gov can no longer require labs to report Covid test results to the Centers for Disease Control & Prevention.
- Covid vaccines & antivirals such as Paxlovid will remain free to everyone regardless of insurance status until the current federal stockpile runs out.
- Expanded telehealth through Medicare will also remain in place thru Dec 2024 under federal spending legislation passed in Dec. But it will end after that without congressional intervention.
The Food & Drug Administration will still have the authority to rapidly authorize Covid vaccines, tests & treatments through its separate emergency powers. Ms of people are also at risk of losing health insurance through Medicaid this year as federal protections that kept people covered during the pandemic come to an end. These protections were once tied to the public health emergency, but Congress then decided to phase them out separately.
The Covid emergency in U.S. ends May 11. HHS officials say here’s what to expect
Gold futures settled lower, leading prices to post a 2nd straight weekly loss. Gold struggled this week, largely due to some profit taking after the big run-up since early Nov, coupled with recent fears that the Federal Reserve is going to hike rates higher &/or longer than originally expected. All of this has spawned from the choppy economic news -- primarily jobs reports, private payrolls & unemployment numbers -- which all paint a mixed picture for investors, making it extremely difficult to predict what the next move will be from Fed Chair Jerome Powell's office. Gold for Apr fell $4 to settle at $1874 an ounce. Based on the most-active contract, prices fell a smidgen for the week.
Gold futures post a second straight weekly loss
Crude-oil prices jumped, contributing to a gain for the week, after Russia announced a retaliatory move against western price caps with a plan to reduce oil output by 500K barrels per day in Mar. West Texas Intermediate crude for Mar climbed $1.30 (1.7%) to $79.36 a barrel & prices for the front-month contract traded more than 8% higher for the week. Apr Brent crude, the global benchmark, climbed $1.55 (1.8%) to $86.05 a barrel, with prices poised for a weekly rise of 7.6%. Russian Deputy Prime Minister Alexander Novak said price ceilings that had been imposed by Western govs were “an interference in market relations and a continuation of the destructive energy policy of the countries of the collective West.” But the self-imposed cut isnt about Russia's inability to place its products in the market, but about shedding the price discount buyers are demanding. Russia has been able to sell every barrel it produces, but is annoyed by hefty discounts everyone is asking. By cutting back volumes, Russia wants to signal that it would rather forego volume than reduce its price. “As one of the steps to level the threat to the global oil market, Russia has introduced a ban on directly or indirectly using references to any illegitimate restrictions in oil supply contracts,” Russias Novak said. “To date, we are fully selling the entire volume of oil produced, however, as previously stated, we will not sell oil to those who directly or indirectly adhere to the principles of the price ceiling,” he added. OPEC + said it had no action planned after the Russian output cuts.
Oil prices settle higher after Russia announces production cut of 500,000 barrels per day in March
In Feb the Dow has stayed close to the 34K trend line (see below). There are more stories about layoffs, higher interest rates that are coming & recession worries won't go away. The Consumer Price Index for Jan will be released on Tues & the Wholesale Consumer Price Index for Jan will be released on Thurs. The data will probably show improvement, but consumers are still struggling as they cope with higher prices. For the week, Dow fell about 60 & is still going nowhere.
Dow Jones Industrials
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