Markets rise ahead of inflation data and Fed meeting

Dow climbed 157, advancers & decliners are essentially even & NAZ went up 28.  The MLP index was off 3+ to the 247s & the REIT index inched up to 374.  Junk bond funds fluctuated & Treasuries were pretty much even.  Oil inched up loose change in the low 71s & gold declined 18 to 1996 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Americans are feeling more optimistic about the odds that high inflation will continue to cool in the coming months, according to a key Federal Reserve Bank of New York survey.  The median  expectation is that the inflation rate will be up 3.4% one year from now, according to the New York Federal Reserve's Survey of Consumer Expectations, down from a high of 7.1% recorded in Jun 2022.  It marks the lowest reading since Apr 2021.  But consumers anticipate that it will take longer for price growth to slow in the longer term, according to the survey, projecting that inflation will hover around 3% 3 years from now and at 2.7% 5 years from now.  That remains above the Fed's 2% target, indicating that sticky inflation could be here to stay.  By comparison, central bank policymakers projected in their latest economic forecasts that inflation will fall to 2% by 2025.  "Median inflation uncertainty—or the uncertainty expressed regarding future inflation outcomes—fell at the one-year ahead horizon, increased slightly at the three-year ahead horizon, and remained unchanged at the five-year ahead horizon," the survey said.  Americans expect the cost of most items & services including homes, college tuition, rent, gasoline & food to fall over the next year.  The survey, which is based on a rotating panel of 1300 households, plays a critical role in determining how Fed policymakers respond to the inflation crisis.  That is because actual inflation depends, at least in part, on what consumers think it will be.  It is sort of a self-fulfilling prophecy, if everyone expects prices to rise by 3% in the year, that signals to businesses that they can increase prices by at least 3%.  Workers, in turn, will want a 3% pay raise to offset the rising costs. 

Americans' inflation expectations fall to lowest level in 2 years, survey shows

Patients who took Eli Lilly's (LLY) weight loss drug Zepbound regained around ½ the weight they shed after stopping the newly approved treatment for a year, according to new data.  The data, which represents the full results from an 88-week study funded by LLY, suggests that people have to stay on the weekly injection if they want to maintain significant weight loss.  The study on the treatment showed that 670 obese patients without diabetes lost around 20% of their body weight on average after taking Zepbound for 36 weeks.  ½ of those patients then continued the drug for another 52 weeks, while the other ½ switched to a placebo for the next year.  Patients who continued Zepbound lost an additional 6.7% of their weight on average from weeks 36 to 88, while those who stopped taking the drug regained 14.8% of their weight.  Still, those who discontinued Zepbound ended the 88-week study with 9.9% less weight than they started with, indicating that they only regained about ½ the weight they initially lost.  “If you look at the magnitude of the weight gain, they gain back about half the weight they had originally lost over a one-year period of time,” lead study author Dr Louis Aronne, an obesity medicine specialist & professor of metabolic research at Weill Cornell Medicine in New York City, said.  The stock sank 14 (2%).

Weight loss from Eli Lilly’s Zepbound reverses after patients stop drug

Microsoft (MSFT), a Dow stock,  Microsoft announced a partnership with a major labor group, which represents 60 unions & 12.5M workers, to create an open discussion on the future of artificial intelligence & quell fears that AI will replace jobs.  The partnership with the American Federation of Labor & Congress of Industrial Organizations comes as Microsoft & other AI providers face increased concern from labor groups & regulatory bodies over how AI will displace workers.  The alliance will include AI learning sessions for workers, “experiential workshops” focused on niche AI career opportunities between 2024 and 2026 as well as Microsoft-hosted labor summits to incorporate feedback from labor leaders & workers.  AI providers have increased their responses to public pressure and questioning on how their technologies may affect workers.  That may be partly due to increasing fears that new technologies could be used to perform jobs currently performed by humans.  A Sep Gallup poll showed that 1 in 5 college-educated workers worries tech could make their jobs obsolete, up seven percentage points from 2021.    The stock sank fell 2.93.

Microsoft partners with labor groups to quell concerns about AI taking jobs

Gold closed below $2000, falling back under mark for the first time in nearly a month even as the $ & yields were little changed ahead of US inflation data coming tomorrow & another Federal Reserve interest-rate decision coming Wed.  Gold for Feb closed down $20 to $1993 per ounce, the lowest since Nov 16.  The metal closed at a record $2089 on Dec 1.  The US will release Nov inflation data tomorrow, with the estimate expecting the report to show inflation falling to 3.0% annualized from 3.2%, while the core rate, excluding food & energy, to be steady at 4%.  As well, the Federal Reserve's policy committee will announce its latest interest-rate decision at the end of its 2-day meeting on Wed, with the market widely expecting no change to rates.  The $ rose ahead of the data, with the ICE dollar index last seen up 0.08 points to 104.09.  Treasury yields also fell back from session highs.  The yield on the 2-year note was last seen unchanged at 4.727%, while the 10-year note was paying 4.242%, up 1.1 basis points.

Gold Falls Back Below US$2,000 Ahead of US Inflation Data and a Fed Rate Decision Expected This Week

Oil futures finished higher after posting 7 consecutive weekly declines.  Gains for the session came from a combination of near-term oversold conditions in the futures market after West Texas Intermediate (WTI) crude tested critical 2023 support in the upper $60s last week.  Generally improving investor sentiment & risk-on money flows across other asset classes have also provided support to oil.  Jan WTI crude edged up by 9¢ to settle at $71.32 a barrel.

Oil futures end modestly higher after posting 7 consecutive weekly declines

Stocks tried to rally, but there was not enough strength for buying.  Everybody has to wait for the inflation data tomorrow & then results after the Fed meeting.  For what it's worth, after a spectacular Nov, Dow is currently about 454 in early Dec.

Dow Jones Industrials