Dow finished up 224 (near session highs & a new record), advancers over decliners better than 2-1 & NAZ gained 172. The MLP index stayed was up 1+ to the 266s (prior close) & the REIT index added 1+ to the 381s. Junk bond funds rose along with the stock market & Treasuries buyers were buying Treasuries which reduced yields. Oil was off 1 to 77 & gold was up 14 to 2031 (more on both below).
AMJ (Alerian MLP Index tracking fund)
The Federal Reserve is expected to announce it will leave rates unchanged at the end of its 2-day meeting this week, after recent reports showed the economy grew at a much more rapid pace than expected & inflation eased. “In many ways, we already have a soft landing,” said Columbia Business School economics professor Brett House. “The Fed has threaded the needle of the economy very artfully with a kind of ’Goldilocks’ scenario.” GDP grew at a much faster-than-expected 3.3% pace in the 4 qtr, fueled by a solid job market& strong consumer spending. However, inflation is still above the central bank's 2% target, and that also opens the door to a “no-landing scenario,” according to Alejandra Grindal, chief economist at Ned Davis Research. “No landing means above-trend growth, and also above-trend inflation,” Grindal said, describing an economy that is “overheating.” Inflation has been a persistent problem since the Covid pandemic, when price increases spiked to their highest levels since the early 1980s. The Fed responded with a series of interest rate hikes that took its benchmark rate to its highest in more than 22 years. As of the latest reading, the current annual inflation rate is 3.4%, still above the 2% target that the central bank considers a healthy annual rate. The combination of higher rates & inflation have hit consumers particularly hard. A “no landing” scenario also means more strain on household budgets & those with variable-rate debt, such as credit cards. While still elevated, inflation is continuing to make progress lower, possibly giving the Fed a green light to start cutting interest rates later this year. “That looks like the soft landing has been more or less achieved and is likely to be sustained,” House said.
Starbucks (SBUX) is launching its olive oil-infused drinks in all US stores. The
beverages, named Oleato, debuted in Italy in Feb 2023 after former
CEO Howard Schultz visited the country & noticed locals drinking
olive oil daily. The line of olive oil-infused coffee drinks launched next month in select US stores & met negative early reviews. Oleato means “with oil” in Italian & the line includes a latte & an iced espresso drink. It
also features the Oleato Golden Foam, which is a
vanilla sweet cream infused with Partanna extra virgin olive oil that
can be added to any SBUX drink. 4 recommended customizations for
the foam will also be available in the app. The launch comes on the same day SBUX will report 4th-qtr earnings. The company is trying to sustain sales growth in its North America unit. The stock rose 1.00.
Starbucks olive oil-infused Oleato drinks to launch across the U.S.
Several media outlets have announced layoffs in Jan 2024 as economic challenges take a toll on the industry. Business Insider, the Los Angeles Times, TIME & Sports Illustrated are among the publications that have downsized their editorial operations as they restructure & reorient their business models to suit the changing media landscape. The latest cuts come as the media industry struggled to restore advertising revenue to pre-pandemic levels & faces rising competition from social media platforms for readers' attention. Business Insider, owned by multinational media conglomerate Axel Springer SE, announced that it would lay off about 8% of its staff last week as it restructures its business. "We closed out last year with a plan in place, a clear target audience, and a vision. This year is about making it happen and focusing our company and efforts towards this future," Business Insider CEO Barbara Peng wrote on Thurs. "We have already begun to refocus teams and invest in areas that drive outsize value for our core audience. Unfortunately, this also means we need to scale back in some areas of our organization." "As part of this new direction, today we are announcing we are reducing the size of our team – a change that impacts about 8% of our people," Peng added. "We’re committed to building an enduring and sustainable Business Insider for the coming years and beyond." The Los Angeles Times announced last week that it would be laying off at least 115 people (more than 20% of the paper's newsroom) in response to ongoing losses that owner Dr Patrick Soon-Shiong were $30-40M per year. "Today’s decision is painful for all, but it is imperative that we act urgently and take steps to build a sustainable and thriving paper for the next generation. We are committed to doing so," Soon-Shiong said. Sports Illustrated which is owned by Authentic Brands Group & was published under license by the Arena Group, announced significant layoffs after Authentic Brands revoked the license after Arena Group missed payments as it looks to cut costs & address its debt burden. As a result, Arena announced "a significant reduction in its workforce of over 100 employees." Authentic Brands Group said that "The Arena Group’s license to serve as the publisher of Sports Illustrated was terminated as a result of the company’s failure to pay its quarterly license fee despite being given a notice of breach and an opportunity to cure the breach." "Authentic is here to ensure that the brand of Sports Illustrated, which includes its editorial arm, continues to thrive as it has for the past nearly 70 years," it continued. "We are confident that going forward the brand will continue to evolve and grow in a way that serves sports news readers, sports fans, and consumers. We are committed to ensuring that the traditional ad-supported Sports Illustrated media pillar has best in class stewardship to preserve the complete integrity of the brand’s legacy."
LA Times, Sports Illustrated among media outlets announcing layoffs to start 2024
Gold futures rose even as the $ moved higher as investors seek the safety of the precious metal amid concerns the US will be drawn into a Middle East war after Iran-backed militants on the weekend launched a drone attack on a US military base in Jordan that killed 3. Gold for Apr closed up $8 to settle at $2044 per ounce. The rise comes as Middle East tensions increase as Pres Biden said he will "hold all those responsible to account" after a deadly weekend drone attack on a US base in Jordan by Iranian-backed militants. The deaths follow attacks on US bases in Iraq & missile & drone attacks on Red Sea shipping by Iran-backed Houthi militants in Yemen. The death of 3 US service members in Jordan marks a critical inflection point in the ongoing conflict in the Middle East & raises a specter of a more substantial US involvement in the war. The Biden administration has become more deeply enmeshed in the conflict in recent weeks because the Iran-backed militias have become more brazen in targeting US personnel & commercials interests. Gold's rise comes despite a higher $. The ICE dollar index was last seen up 0.25 points to 103.68. Treasury yields narrowed. The 2-year note was last seen paying 4.316%, down 2.0 basis points & the yield on the 10-year note was down 4.5 basis points to 4.098%.
Gold Closes Higher Even as The Dollar Strengthens as Middle East Tensions Heighten
West Texas Intermediate (WTI) crude oil closed with a loss following 3 days of gains despite rising tensions in the Middle East after 3 US soldiers were killed in a drone attack on a base in Jordan as worries over the health of China's economy heightened after a Hong Kong court ordered the liquidation of Evergrande, the country's largest real-estate developer, after it defaulted on $330B on debt. WTI crude oil for Mar closed down $1.23 to settle at $76.78 per barrel, while Mar Brent crude, the global benchmark, was last seen down $1.31 to $82.24. The drop comes as worries over the economic health of the world's #1 importer rise amid a debt crisis for China's real-estate sector as a court ordered the liquidation of Evergrande after more than a year of attempted debt restructuring. The sector accounts for about a 5th of China's GDP & the court's decision comes as the country's growth falls to the lowest in 3 decades. Chinese economic struggles are well publicized & economic potentates are cognizant that without fiscal &/or monetary support the economy will struggle to gain traction.
WTI Closes Down on Concerns over the Health of China's Economy as Middle East Tensions Rise
Tensions are running very high in the MidEast & in DC, but that is not bothering investors. They are betting heavily on rate cuts by the FED & expect to learn more on Wed after their meeting concludes. Gold & Treasuries continue to be popular with nervous investors.Dow Jones Industrials
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