Markets struggle while gold soars to $2126 a barrel for a new record

Dow was off 97 with selling into the close, decliners ahead of of advancers about 5-4 & NAZ fell 67.  The MLP index stayed in the 275s & the REIT index went up 3+ to the 389s.  Junk bond funds were mixed & Treasuries saw more selling which raised yields.  Oil fell 1+ to the 78s & gold surged 30 to 2126 for a new record (more on both below).

AMJ (Alerian MLP Index tracking fund)

Ford (F) US sales jumped 10.5% last month compared with Feb 2023, led by increases in its hybrid & all-electric vehicles sales.  Sales were 174K cars & trucks for Feb.  The results included an 81% jump in EV sales & roughly 32% uptick in hybrid models.  Sales of traditional internal combustion engines also increased, up 7.5% from the same month a year earlier.  The spike in hybrid sales is part of Ford's plan to double down on the technology.  Hybrid sales totaled 12K, including 6K units of its small Maverick Hybrid pickup.  Sales of EVs for Ford have fluctuated month to month based on demand & pricing.  Sales of Ford's all-electric vehicles last month were up across the board, including a 64% increase in its Mustang Mach-E crossover & a nearly doubling in sales of the all-electric F-150 Lightning pickup.  Despite the increases in hybrids & EVs, 89% of Ford’s sales last month were traditional cars & trucks.  Sales of the highly profitable F-Series pickups fell by 5.8% last month to 51K units.  Shipments of new 2024 models of the pickup were delayed due to an undisclosed quality issue, Automotive News reported last month.  Amid quality & warranty issues, CEO Jim Farley has instituted more stringent testing & quality checks during new vehicle launches.  Total YTD sales were 311K units, a 6.6% increase compared with the same time period a year earlier.  The stock rose 27¢.

Ford sales jump 10.5% in February, led by gains in hybrids and EVs

American Airlines (AAL) said that 80% of its revenue this year will come from loyalty program members & passengers who buy more expensive tickets, up from a 70% share in 2017.  AAL & other carriers have poured Bs of $s into new cabins, lounges & onboard upgrades to cater to high-spending travelers.  AAL said that it was ordering 260 new Boeing (BA), Airbus & Embraer planes to revamp its fleet & that it would retrofit older Airbus planes to increase the size of their first-class cabins.  AALs revenue forecast considers “premium content” tickets that cost more than the cheapest offering.  The airline expects to grow pretax margins in the coming years & chip away at its debt load.  Analysts are projecting 2024 EPS of $2.56 & revenue of $55B.  The stock fell 85¢.

American says loyalty program, more expensive tickets will drive 2024 revenue

Americans are having a harder time getting approved for loans & other financial products nearly 2 years after the Federal Reserve began aggressively hiking interest rates.  A new survey published by Bankrate found that 50% of loans or financial product applicants have been denied since the Fed started raising rates in Mar 2022.  Credit card applications have been rejected the most frequently, with 14% of Americans reporting that banks denied them a new credit card while another 6% were refused a balance transfer card.  Others were denied a credit limit increase on their existing credit card (11%), a personal loan (10%), car loan or car lease (9%), insurance (8%) & a mortgage loan (5%).  Banks are tightening their lending standards in response to higher interest rates.  Fed policymakers have raised interest rates sharply over the past 2 years, approving 11 rate increases in the hopes of crushing inflation & cooling the economy.   In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.  Hiking interest rates tends to create higher rates on consumer & business loans, which then slows the economy by forcing employers to cut back on spending.  Higher rates have helped push the average rate on 30-year mortgages above 8% for the first time in decades.  Borrowing costs for everything from home equity lines of credit, auto loans & credit cards have also spiked.  The share of Americans who have been denied a loan or financial product is "substantially" higher for those with lower credit scores.  For instance, about 73% of individuals with a "poor" credit score, ranging from 300-579, have been denied a loan or financial product, compared to 63% with "fair" credit, ranging from 580-669, & 55% with "good" credit, ranging from 670-739.

Americans are struggling to get a loan since the Fed started raising rates

Gold prices closed at a new record high early today even as treasury yields rose.  Gold for Apr closed up $30 at $2126 per ounce, the highest ever after topping the prior peak set on Fri.  The price of the metal is being supported by expectations lower interest rates are on the way as inflation cools in the US & elsewhere.  Gold closed at a record high on Fri after a softer $ & Treasury yields triggered a strong technical buying reaction, thereby strengthening the yellow metal's buy-on-dip credentials following a month that should have seen it trade lower amid lower rate cut expectations, dollar & yield strength.  The $ was mostly steady early, with the ICE dollar index last seen down 0.04 points to 103.82.  Treasury yields rose, bearish for gold since it offers no interest.  The 2-year note was last seen up 7.4 basis points to 4.616%, while the 10-year note was paying 4.225%, up 4.0 basis points.

Gold Climbs to a New Record High Even as Treasury Yields are on the Rise

Crude futures settle lower after a choppy start as some view the extension of OPEC+ output cuts as a sign the group could be rethinking its above-consensus demand views.  The extension, including additional output & export curbs by Russia, likely highlights some bearishness in global demand expectations by the group. Chinese demand, in particular, may have led to a desire to avoid a situation in which the market is oversupplied.  The challenge for OPEC+ has been balancing non-OPEC+ supply growth alongside stagnating global demand.  WTI for Apr settles down 1.5% at $78.74 a barrel & May Brent falls 0.9% to $82.80 a barrel.

Oil Futures Fall As OPEC Extension Raises Demand Concerns

Stock averages are essentially at record levels while gold soared to record highs even though interest rates were on the rise.  Powell's comments this week along with new economic data will be drivers for the overbought stock market.  The gold bugs are happy!

Dow Jones Industrials