Dow dropped 464 (session lows), decliners over advancers better than 5-2 & NAZ sank 344. Junk bond funds was off 1 to the 195s & the REIT index fell 6+ to 440 (hurt by prospects of higher interest rates). Junk bond funds fluctuated & Treasuries continued to be sold, bringing higher yields. Oil was little changed in the high 91s & gold crawled up 2 to 1909 (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)
The White House says Americans should expect higher energy prices as a result of Russian Pres Vladimir Putin's invasion of Ukraine & sanctions levied against Moscow. Asked whether Americans "should expect higher gasoline prices," White House press secretary Jen Psaki said, "Yeah, energy prices, exactly." "That's what we want the American public to be aware is a possibility," she added. Speaking from the White House, deputy national security adviser for Intl Economics Daleep Singh expressed optimism that gasoline prices will decline over time. "There are actions [energy consuming nations] can take with their strategic reserves, there are actions energy producers can take in terms of their spare capacity," Singh told reporters. "I'm not going to give you a timeline, but the collective power of those actions, and all the other tools and authorities at our disposal … will be effective in bringing down the price of gas and the price of oil." Pres Biden announced new sanctions against Russia, pointing to "the beginning of a Russian invasion of Ukraine." He authorized additional US forces to the region but maintained that the US has "no intention" of fighting Russia.
White House says Americans should expect higher energy prices as result of Russia-Ukraine tensions
Small businesses continue to struggle financially & many are facing greater challenges with managing supply chain challenges & hiring enough workers, according to a survey released by the Federal Reserve. While some small businesses have seen their revenues increase, the recovery has been uneven, with smaller firms & those owned by racial minorities seeing fewer gains. "Many small businesses have not recovered to prepandemic levels, with the effects of the pandemic hitting disproportionately hard among firms in the leisure and hospitality sector, smaller firms, and firms owned by people of color," Fed researchers said. The survey, which was conducted Sep-Nov, found that 63% of firms still had revenues below pre-pandemic levels,& 43% of businesses had lower employment. The Fed polled nearly 11K small employers across the country that have less than 500 workers. Businesses are having a hard time finding enough workers & resolving supply-chain issues, the survey found, with 60% of firms naming hiring issues & 60% listing supply-chain issues as a top operational challenge faced over the past 12 months. The report, done in collaboration with the 12 regional Fed banks, found that many small businesses are still in rough financial shape because of the pandemic. More than ½ (59%,)of firms surveyed said they were in "fair" or "poor" financial shape, nearly unchanged from 57% a year earlier, according to the report. Those outcomes continued to vary by race. Some 55% of white-owned businesses described their financial condition as "fair" or "poor." But that rose to 81% of Asian-owned businesses, to 76% for Black-owned firms & to 74% for Hispanic-owned businesses, similar to last year.
Small businesses still struggling financially, Fed survey finds
The Federal Reserve is expected to start raising interest rates next month & not slow down until well into 2023, though the slope of the increases might be a bit gentler. Events over the past week, including statements from multiple Fed officials &, to a lesser extent, geopolitical turmoil, have convinced markets that the first rate move will be just a ¼ percentage point. That change came after traders had been pricing a move double that size at the Mar 15-16 Federal Open Market Committee meeting. Central bankers have been dousing the idea of needing to go up 50 basis points at the meeting, with New York Fed Pres John Williams saying last week that the case was “no compelling argument” for the move. Still, it hasn't made investors any less nervous about what the path ahead will look like. Markets have been volatile in 2022 as inflation has run rampant & pushed the Fed into a position where it is essentially being forced to tighten policy. Consumer prices are up 7.5% over the past year, well ahead of the 2% level that the Fed considers healthy for inflation. Markets have been playing a guessing game this year, trying to figure out just how far the Fed will go. Current expectations are a certainty for a Mar increase & a slightly better than 50% probability that the Fed will enact 7 hikes this year, which would translate into a raise at each of its remaining meetings. The Russia-Ukraine conflict has added another wrinkle for the Fed. Prices for some commodities such as energy & grains have surged higher as the prospect of a full-blown Russian invasion has intensified. Fed officials will have to weigh the merits of hiking rates to fight inflation against any potential economic slowdown the matter could cause. One big data point comes Fri, when the Commerce Dept releases its personal income & outlays report for Jan that will include the personal consumption expenditures price index, the Fed’s preferred inflation gauge. Policymakers will be focused on the core PCE data, which excludes food & energy & is expected to show a 5.1% year-over-year increase including a 0.5% jump for the month. If that estimate proves accurate, it will be the fastest one-year acceleration since 1983.
The market has adjusted its views of how the Federal Reserve will raise interest rates
Gold futures climbed, amid the Russia-Ukraine crisis, which lifted values to the highest finish in more than a year. Bullion has been enjoying an upswing amid intensifying tensions between Moscow & the West over troop deployments into Donbas regions of Ukraine & growing fears of a full-scale invasion of Kyiv. Against that backdrop, Apr gold climbed $3 to settle at $1910 an ounce. Prices logged the highest most-active contract settlement since Jan 7, 2021. Meanwhile, the Federal Reserve seems determined to lift interest rates aggressively, as early as next month, to combat a surge in inflation. Such monetary policy moves usually serve as a bearish factor for precious metals.
Gold marks highest finish in more than a year on Russia-Ukraine strife
Oil futures gave up early losses to trade solidly higher, as traders weighed risks to global crude supplies amid sanctions on Russia & the potential for a full invasion of Ukraine. West Texas Intermediate crude for Apr rose $1.31 (1.4%) to $93.22 a barrel. Apr Brent crude, the global benchmark, was up $1.30 (1.3%) at $98.14 a barrel after trading as high as $98.71. Prices were on track for another front-month contract finish at the highest since 2014. Crude rose on yesterday as investors reacted to Russian Pres Vladimir Putin’s decision to deploy troops to separatist regions of Ukraine, fanning fears of a full-scale invasion & the announcement of sanctions by the US & its allies against Moscow. Pres Biden yesterday said the US was sanctioning 2 Russian banks as well as the country's sovereign debt, as he blamed Moscow for what he called the beginning of an invasion of Ukraine. Germany halted the certification of the Nord Stream 2 pipeline, which was slated to boost flows of natural gas from Russia to Western Europe. A senior State Dept official said the sanctions announced yesterday & in the near future wouldn't target oil & gas flows.
U.S. oil prices end higher as traders weigh supply risks from the Russia-Ukraine conflict
This was another dreary day for investors as the Russian-Ukraine conflict drags on with no resolution in sight. Dow is down about 4K(10%) since its record high near the start of 2022, a very bearish sign.
Dow Jones Industrials
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