Markets slide after tough talk by a Fed official

Dow retreated 207, decliners over advancers 2-1 & NAZ fell 203.  The MLP index edged up 1+ to the 228s & the REIT index was off 2+ to the 404s.  Junk bond funds slipped lower & Treasuries saw limited buying which reduced yields.  Oil added 1+ to the 78s & gold went up 3 to 1888 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Free Apple Analysis!

Bring Your Portfolio Into The 21st Century

Four Days, Four Trades, +40% Average Returns
Learn to trade options with MarketClub!

Federal Reserve Governor Christopher Waller talked tough on inflation, warning that the fight is not over & could result in higher interest rates than markets are anticipating.  Waller said the Jan jobs report, showing nonfarm payroll growth of 517K, indicated that the employment market is “robust” & could fuel consumer spending that would maintain upward pressure on inflation.  Consequently, he said the Fed needs to maintain its current plan of action, which has seen 8 interest rate hikes since Mar 2022.  “We are seeing that effort begin to pay off, but we have farther to go,” Waller said.  “And, it might be a long fight, with interest rates higher for longer than some are currently expecting. But I will not hesitate to do what is needed to get my job done.”  The comments come a week after the rate-setting Federal Open Market Committee approved a qtr percentage point increase that took the benchmark borrowing rate to 4.5-4.75%, the highest since 2007.  Markets have been taking some encouragement off recent remarks from Fed Chair Jerome Powell, who has said that he is seeing disinflationary signs. Inflation hit a 41-year peak last summer, forcing the Fed off its insistence that the price increases were “transitory” & into the current tightening posture.  But Waller said he sees inflation still too high while he expects just moderate economic growth this year.  He did note that wage data is “moving in the right direction,” but not enough for the Fed to lower rates.  “Some believe that inflation will come down quite quickly this year,” he said.  “That would be a welcome outcome. But I’m not seeing signals of this quick decline in the economic data, and I am prepared for a longer fight to get inflation down to our target.”  Markets currently expect the Fed to approve 2 more rate increases — a qtr-point each at the Mar & May meetings.  They then expect a qtr-point cut by the end of the year as the economy slows & possibly drifts into recession.  Waller did not specify his view on where rates are headed, saying only he sees tight monetary policy lasting “for some time,” a phrase used repeatedly by Powell & other Fed officials.

Fed’s Waller warns that interest rates could go higher than expectations

Shares of Google's parent Alphabet (GOOG) tumbled after the company held an event that promoted its new artificial intelligence chatbot called Bard, one day after competitor Microsoft (MSFT), a Dow stock, held its own event to show off new AI technologies in its competing search engine, Bing.  Google officially announced Bard on Mon & the company said it will begin rolling out the technology in the coming weeks.  During the event, which was livestreamed from Paris, GOOG execs discussed some of Bard's capabilities.  The presentation showed how Bard can be used to display the pros & cons of buying an electric car, for example, or to plan a trip in Northern California.  Bard is powered by the company’s large language model LaMDA, or Language Model for Dialogue Applications.  GOOG will open up the conversation technology to “trusted testers” ahead of making it more widely available to the public, the company said.  The event also showed AI improvements to a number of other GOOG products, including Maps & Google Lens, which lets people search for images from their phone's camera.  GOOG stock dropped 8.04 (7%).
If you would like to learn more about GOOG, click on this link:
club.ino.com/trend/analysis/stock/GOOG_aid=CD3289&a_bid=6ae5b6f7

Alphabet shares fall 7% following Google’s A.I. event

Fox Corp posted higher revenue for last qtr, as advertising sales got a boost from soccer's World Cup & National Football League games.  Revenue rose 4% to $4.61B for the 3 months ended Dec 31, topping expectations of $4.58B.  Advertising revenue also rose about 4%, lifted by the World Cup, the NFL season, higher political advertising leading up to the midterms & continued growth at its ad-supported streaming service Tubi.  Those gains offset lost advertising revenue from the absence of the media rights to the NFL's Thursday Night Football.  FOX also authorized a new $3B stock buyback plan & said it would move quickly to buy $1B worth of shares.  The company also declared a 25¢ semiannual div.  In its cable network programming business, which houses the Fox Business Network & Fox Sports 1 channel as well as Fox News, revenue fell less than 1% as advertising revenue declined modestly.  Affiliate revenue also fell slightly, as contractual price increases nearly offset subscriber losses from cord-cutting.  The segment's earnings fell, weighed down by higher costs tied to the broadcasting of the World Cup, as well as legal fees & increased digital investments in Fox News.  Overall for the fiscal Q2, Fox posted EPS of 58¢, compared with a loss of 15¢ a year earlier.  Adjusted EPS was 48¢, matching expectations.  FOX stock rose 1.41 (4%).
If you would like to learn more about FOX, click on this link:
club.ino.com/trend/analysis/stock/FOX_aid=CD3289&a_bid=6ae5b6f7

Fox quarterly revenue up 4% as earnings are boosted by World Cup, NFL

Gold futures ended at their highest in nearly a week, up a 3rd straight session.  Prices for the precious metal have continued to edge off the lows not seen since the end of last week as a slightly softer US $ prompts a squeeze back towards $1895.  The continued references to disinflation by Federal Reserve policymakers are helping to create this squeeze.  However, evidence that inflation may not come down as quickly as expected could act to limit the upside in this rebound.  Gold for Apr rose $5 to settle at $1890 an ounce, the highest most-active contract finish since Feb 2.

Gold futures end at their highest in nearly a week

Oil futures settled higher for a 3rd session in a row. The Energy Information Administration reported weekly increases in US crude, gasoline & distillate supplies.  The data, however, also showed some evidence of improving consumer demand for refined products with the 4-week moving average of gasoline supplied up by just over 200K barrels a day to 8.3M barrels a day.  The EIA also reported a 2.2% jump in the US refinery utilization rate which suggest refinery operators are anticipating an uptick in consumer demand.  US benchmark West Texas Intermediate crude for Mar rose $1.33 (1.7%) to settle at $78.47 a barrel.  Front-month contract prices settled at their highest since Jan 31.

Oil futures up a third consecutive session on expectations for higher demand

Dow continues its longer term sideways trend (see below).  Thoughts of higher interest rates & a recession are out there (somewhere), are not encouraging for the bulls.

Dow Jones Industrials