Dow finished up 39 in choppy trading, decliners over advancers roughly 2-1 while NAZ sank 166. The MLP index was up 1+ to the 248s & the REIT index slid back fractionally to the 337s. Junk bond funds continued in demand & Treasuries saw heavy buying which reduced yields. Oil surged 4+ to the 97s on the Mid East war & gold zoomed 59 to 1941 (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)
Persistently high inflation took a toll on Americans’ attitudes this month as many began to pay back student loans following a 3-year hiatus. The University of Michigan's consumer sentiment index fell 7% in Oct from the prior month, according to a preliminary reading. Sentiment in Oct was gloomy by historical standards, but well above the all-time low recorded in Jun 2022 when inflation was at a 4-decade high. “Nearly all demographic groups posted setbacks in sentiment, reflecting the continued weight of high prices,” said Joanne Hsu, director of the university's Surveys of Consumers. Americans' moods toward the economy are influenced by current events, including the recently unfolding war between Israel & Hamas, a spike in bond yields & the stalled selection of a new congressional leader. “There are lots of other headlines that might be worrying consumers,” wrote Bill Adams, chief economist at Comerica Bank. “The impasse over the next House Speaker could be adding to fears of a government shutdown in November; the UAW strike; the restart of student loan payments; and the recent uptick in long-term interest rates could be affecting sentiment, too.” Investors are currently pricing in some geopolitical risk, focusing on how tensions between Israel & its arch-enemy Iran play out. If a clear link to Iran emerges, analysts say, some kind of an intervention by the US cannot be ruled out. That would likely entail tighter enforcement of existing sanctions on Iran's oil exports, which could compromise current flows to the global oil market.
Americans are becoming more worried about inflation
Citigroup (C) reported 3rd-qtr results, with solid growth in both institutional clients &
personal banking fueling higher-than-expected revenue & EPS. EPS was $1.63, $1.52 when excluding the impact of
divestitures, vs an expected $1.21. At this time, it is unclear if
analysts included that divestitures item in their estimates. Revenue came in at $20.1B vs expected $19.3B. Revenue & net income rose by 9% & 2%, respectively, year over year. Citi's
institutional clients unit reported $10.6B in revenue, up 12%
year over year & 2% from the 2nd qtr. The bank said it was the
best 3rd qtr in the past decade for rates & currencies revenue. Meanwhile,
the personal banking & wealth management division generated $6.8B in revenue, up roughly 10% year over year & 6% from the 2nd
qtr. “Despite the headwinds, our five core, interconnected
businesses each posted revenue growth resulting in overall growth of
9%,” CEO Jane Fraser said. The stock fell 3¢.
If you would like to learn more about Citi, click on this link:
club.ino.com/trend/analysis/stock/C_aid=CD3289&a_bid=6aeoso5b6f7
Citigroup stock rises slightly on better-than-expected revenue for the third quarter
Wells Fargo (WFC) beat estimates
for 3rd-qtr profit as it benefited from customers paying more
interest & raised its annual forecast for future income from interest
payments. The
lender now expects 2023 net interest income (NII), the difference
between what the bank earns on loans & pays out on deposits, to be
about 16% higher than a year earlier after an earlier forecast of a 14%
increase. The
swiftest tightening of US monetary policy in 40 years aimed at
reining in sticky inflation has buoyed banks' interest income. NII climbed 8% to $13.1B in the 3rd qtr. EPS was $1.48 in the 3rd qtr, beating expectations of $1.24. "While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly," CEO Charlie Scharf said. The bank posted a decline in total deposits to $1.34T from
$1.41T a year earlier. As interest rates rose, some customers
have moved their cash into money market funds in search of higher
yields. Deposits have also been in focus after customers
precipitated the collapse of 3 regional lenders by rushing to pull
out their money. WFC, which is working to fix a 6-year-old scandal over sales
practices, said provision for credit losses in the qtr included a
$333M increase in the allowance for credit losses primarily for commercial real estate office loans. Revenue of $20.8B also comfortably topped expectations of $20.1B in the qtr. The stock rose 1.23.
If you would like to learn more about WFC, click on this link:
club.ino.com/trend/analysis/stock/WFC_aid=CD3289&a_bid=6aeoso5b6f7
Wells Fargo raises interest income forecast as third-quarter profit beats estimates
The yellow metal climbed over 3%, the biggest daily percentage gain of the year so far. Gold prices climbed back above $1900 an ounce to settle at their highest in 3 weeks, as Israel ordered over a M people to evacuate Gaza, lifting safe-haven demand for the precious metal. The Israeli military told more than 1 M Palestinians, almost ½ of the population to evacuate northern Gaza, raising expectations that a ground invasion is imminent against the ruling Hamas militant group. Against that backdrop, the Dec gold contract climbed an eye popping $58 (3.1%) to settle at $1941 an ounce, up 5.2% for the week. That was the highest most-active contract settlement since Sep 22 & biggest daily percentage gain since early Dec. Gold prices had already moved up in recent days, with yesterday's decline marking the first in 5 trading sessions. Gold futures traded as low as $1823 last Fri, the lowest intraday level since Mar, then traded mostly higher in the wake of last Sat's Hamas attack on Israel.
Gold prices rally to 3-week high, as Israel-Gaza conflict sparks rush to havens
Prices for US benchmark oil futures settled nearly 6% higher, leading front-month prices to post a solid gain for the week. Concerns that events in the Middle East could spiral out of control after Iran warned Israel of the consequences of a ground invasion into Gaza raising concerns that there might be disruptions in the Straits of Hormuz, a key oil chokepoint. Nov West Texas Intermediate crude rose $4.78 (5.8%) to settle at $87.69 a barrel, the highest front-month contract finish since Oct 3 & prices rose 5.9% for the week.
U.S. oil futures gain nearly 6% for the week as Israel-Gaza war intensifies
Commodities had a big day, but stocks were just floundering. The negative report on consumer confidence hit stocks very hard & the Dow stayed near breakeven for the rest of the session. Of course with a gov shutdown looming next month, sticky inflation not going away & a war in the Mid East, there is not much reason for investors to buy stocks. The Dow finished the week with a modest gain of 265.Dow Jones Industrials
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