Markets climb as optimism for rate cuts remain high

Dow gained 138 taking it just over 38K, advancers over decliners better than 3-1 & NAZ was up 49.  The MLP index remained up 4+ to the 258s & the REIT index added 2+ to the 385s.  Junk bond funds edged higher & Treasuries continued to see limited buying, reducing yields.  Oil remained up 1+ to the 75s & gold slid back 7 to 2022 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Even though Ford's (F) F-150 Lightning truck sits shiny & pretty on the Celebrity of Toms River dealership floor, that’s apparently the only place the car is going.  "It's a really beautiful truck, but we're having some trouble getting it off of our lot," Veronica Maoli, America's youngest female Ford dealer, said.  "There's a lot of charging concerns. A lot of commercial companies don't really want to have to spend the time to charge," she continued.  "And they add weight to the back of the truck. It's a little bit of a struggle right now."  Maoli claimed the sales for the electric version of Ford's iconic F-150 truck have been dismal at her New Jersey dealership.  Her comments come just days after the automaker announced it would dial back production of the electric truck as demand wanes.  The company said it will reduce the number of shifts at the Rouge Electric Vehicle Center, where it builds the EV pickups, to 1, in Apr.  The move will affect 1400 workers, including 700 who will move to the company's Michigan Assembly Plant.  Some employees will be placed in roles at the Rouge complex or other Ford facilities in southeast Michigan & others can "take advantage of the Special Retirement Incentive Program agreed to in the 2023 Ford-UAW contract," Ford said.  "I think that we all know, and we all talk about how… the infrastructure is not there yet for EVs," Maoli added.   "And I think that they're trying to move a little bit too fast."  The stock was off a penny.

Ford dealership details 'struggle' with EV truck as 'concerns' mount

Arkhouse Management & partner Brigade Capital Management, which already has a significant stake in Macy's thru Arkhouse-managed funds, issued an unsolicited proposal in Dec to acquire all the outstanding shares of the 165-year-old department store chain for $21 per share in cash.  Macy's said its board "conducted a careful review of the proposal" with independent legal, financial & real estate advisors & ultimately determined that the offer "failed to provide evidence of a viable financing plan."  "In light of the Board’s concerns, as well as the lack of compelling value in their non-binding proposal, the Board has determined not to enter into a non-disclosure agreement or provide any due diligence information to Arkhouse and Brigade," Macy's said.  Macy's CEO Jeff Gennette said that the company is still "open to opportunities that are in the best interest of the company and all of our shareholders."  Arkhouse said in an earlier statement that the real estate investment firm & Brigade engaged privately with Macy's regarding a potential acquisition in recent weeks.  To push the deal thru, it even offered to potentially give "a meaningful increase to our original proposal if we are granted access to the necessary due diligence."  The stock rose 62¢.

Macy's rejects $5.8B takeover bid to go private

Many Americans who turned to buy now, pay later to fund their holiday shopping last year to avoid credit card debt but are now having trouble paying off those bills.  In an era where persistent inflation & record-high interest rates are shaping financial decisions for many shoppers, services helped fuel a boom in overall online spending that topped out at $222B from Nov 1 thr the end of Dec.  During the season, buy now, pay later usage hit an all-time high, rising a staggering 14% from the prior year & contributing $16.6B to online spending.  On Cyber Monday alone, buy now, pay later use spiked nearly 43%, Adobe said.  “Sales, especially online sales, were probably juiced to some extent because of buy now, pay later usage,” said Ted Rossman, senior analyst at Bankrate.  “A lot of people are drawn to this financing method as an alternative to something like a credit card where the average interest rate is a record high 20.74%. I would caution that you can still get into trouble with buy now, pay later … it can still encourage you to overspend and kind of trick yourself.”  The surge in use of buy now, pay later comes as credit card debt hits a record high & delinquency rates have nearly doubled over the past 2 years.  While delinquencies were at historic lows during the Covid-19 pandemic, the rate of people who've gone more than 30 days without paying their credit card bill recently topped pre-pandemic levels, according to the Federal Reserve.  It's tough to say how buy now, pay later fits into the country's overall debt picture.  Providers that offer the service don't typically disclose how often those bills go unpaid, & the debts aren't reported to credit bureaus.

The buy now, pay later holiday debt hangover has arrived

Gold closed lower as the $ steadied & treasury yields were mixed.  Gold for Apr closed down $7 to settle at $2041 per ounce.  The price of the metal has steadied in recent weeks after rising to a record in late Dec & remains firmly above the $2000 mark ahead of expected, but unconfirmed, cuts to US interest rates this year.  Gold remains stuck with traders adjusting positions to reflect a potential delay in the timing of the first US rate cut.  The $ was steady, with little key economic data expected until Thurs's release of preliminary 4th-qtr GDP data.  The ICE dollar index was last seen up 0.02 points to 103.31.  Treasury yields narrowed, with the 2-year note last seen paying 4.381%, up 0.4 basis points, while the yield on the 10-year note was down 2.0 basis points to 4.111%.

Gold Closes Lower on a Steady Dollar and Mixed Treasuries

West Texas Intermediate (WTI) crude oil prices rose as Ukraine claimed responsibility for a drone attack on a Russian port in the Baltic Sea, raising concerns oil exports from the country's Western ports could be blocked, while prices were checked as Libya restarted production from a major oil field.  West Texas Intermediate crude for Feb was last seen up $1.78 to $75.19 per barrel, while Mar Brent crude, the global benchmark, closed up $1.50 to settle at $80.06.   A weekend attack on a port in the Baltic Sea that left a gas-condensate terminal with damage is raising concerns Ukraine will be able to open a new front in the war & be able to interdict tankers carrying Russian crude.  Libya restarted production from its 300K barrel per day Sharara oil field, according to reports, 3 weeks after it was shuttered due to protests.  The additional supply is easing some worries that war in the Middle East would expand to the Persian Gulf & threaten exports from key producing countries.  Still, demand remains soft on seasonal factors & slowing economies, while rising output from non-OPEC+ countries is offsetting some production cuts from the cartel & its allies.  The price of the commodity has been locked in a tight range for weeks as the supply & demand factors play off against each other.

WTI Crude Oil Rises Following Weekend Drone Attacks on a Russian Baltic Port; Libya Restarts a Major Oil Field

The bulls remain optimistic on the stock market, which is to be expected.  But optimism is their job.  However, comments from the oil market keep saying demand is soft which has kept the price flattish for several months despite a major war in the Mideast (a key source of oil).  The current estimate for GDPnow from the Atlanta Fed is:

Latest estimate: 2.4 percent -- January 19, 2024

Dow Jones Industrials