Markets remained lower on increased tensions in the Ukraine

Dow was off 232 with selling into the close ahead of a long weekend, decliners over advancers 3-2 & NAZ declined 168.  The MLP index fell 2+ to the 198s & the REIT index fell 2+ to the 448s.  Junk bond funds were mixed & Treasuries remained in strong demand, reducing yields.  Oil dipped lower in the 91s & gold retreated 4 to 1897 (more on both below).

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There may be plenty of reasons to confirm Pres Biden's nominees to the Federal Reserve, but economists say concern that the central bank won't act to rein in inflation shouldn't be among them.  It is virtually guaranteed that the Fed will hike interest rates next month to combat rising prices even if Sarah Bloom Raskin, Lisa Cook & Philip Jefferson are yet to be confirmed by the Senate, according to 3 economists.  The White House & top Dems have in recent days raised concerns that without a fully staffed Fed board of governors, the central bank will lose its edge on rising prices.  But economists suggested the urgency behind that messaging is politically motivated & that the Fed's chances to quell inflation aren't tied to this confirmation process.  Dems on the Senate Banking Committee are frustrated with an ongoing Rep boycott that is preventing them from advancing all 5 of the Fed nominees, including current board members Chair Jerome Powell & Lael Brainard.  The GOP says the main reason behind their blockade is concern over Raskin, her views on climate policy & her prior work for fintech company Reserve Trust.  But economists who are tracking the inflation outlook say the Fed is equipped to curb inflation even if the politics stays messy.  The Fed, the globe’s most powerful central bank, is tasked by Congress to maximize employment & keep inflation in check thru adjustments to interest rates.  It tends to raise borrowing costs when it feels the economy may be overheating & it cuts rates in times of economic duress.  Investors say there's a 71% chance the Fed raises the overnight lending by 25 basis points at its Mar meeting, while 29% are betting they go big with a 50-basis-point jump.  But with Reps holding up the confirmation of the nominees, some Dems have suggested in recent days that the Fed could be left without sufficient firepower to curb the steep inflation.

Fed will hike rates regardless if Biden’s nominees are confirmed, economists say

Dr Scott Gottlieb said that his children “won’t be wearing a mask” when their local school district's Covid face-covering mandate lifts later this month.  “If it becomes optional, I think most kids won’t. Some will, and we need to respect that. Some parents are going to continue to wear masks,” he said.  Connecticut, where Gottlieb lives, will be lifting its mask statewide mandate on Feb 28, allowing schools to decide for themselves whether to continue to require masks.  He said, “My local school district lifted its mask ordinance” in line with state guidance.  Gottlieb's comments came as both states & local communities are starting to allow people to go maskless as the omicron variant wave dies down & daily Covid cases continue to decline.  The latest US 7-day average of 118K new infections per day dropped 44% from a week ago, according to data compiled by Johns Hopkins University.  Recognizing that improving case count situation, the Centers for Disease Control & Prevention (CDC) said Wed it wants to give people a break from mask-wearing.  The CDC is reviewing the agency's guidance, focusing on Covid hospitalizations, which are also on the decline, as a key metric for deciding on safety protocols.

Dr. Scott Gottlieb: My kids won’t wear Covid masks in school when mandate lifts

Nervous investors spooked by a Russian-Ukraine conflict, barreled into gold yesterday, driving the price to a level not seen since Jun.  $1900 & upward momentum may continue.  With a Russian invasion of Ukraine possible in a matter of days, according to Pres, investors dumped stocks, sending the Dow down 623 points, the worst session of the year, while the S&P 500 & NAZ fell over 2%.  Even before Russian Pres Vladimir Putin rattled world leaders, the yellow metal was benefiting from red hot inflation, which, at the producer level is running at a record 9.7%, while consumer prices are at a 40-year-high up 7.5%.  Forthcoming rate hikes by the Federal Reserve, with the first possible in Mar, may be followed by as many as 6 more this year.  That would cool demand for gold if it's enough to quell inflation.  Gold last hit a record $2051 in Aug 2020 as the COVID-19 pandemic raged.

Gold spikes to nine-month high on Russia, Ukraine

Gold futures ended lower on, easing back a day after the crisis in Ukraine helped lift the commodity to its highest finish in 8 months, but prices still marked the sharpest weekly gain in 9 months.  Today, the most-active contract touched the highest intraday level so far this year at around $1905 an ounce before retreating.  Gold for Apr lost $2 to settle at $1899 an ounce, after surging 1.6% yesterday, carving out the highest settlement for the most-active contract since Jun 2, 2021.  For the week, the precious metal rose 3.1% — steepest weekly rise since May of 2021.  Conflict between Russia & Ukraine intensified today, with reports of shelling along the front line in eastern Ukraine's Donetsk & Luhansk regions, with Kyiv saying its troops have been issued orders to exercise restraint in responding to artillery fire.  Investors in precious metals also have been closely monitoring monetary policy developments, with the Federal Reserve expected to raise interest rates to combat high inflation.  The minutes released Wed from the Fed's Jan policy meeting didn't imply that the central bank was adopting a more hawkish stance than investors have already anticipated, which had helped support further buying in nonyielding gold.

Gold futures finish lower Friday, but post steepest weekly rise in 9 months

Oil futures fel, on track to break a string of 8 consecutive weekly gains, as prospects for restoring the Iran nuclear deal outweighed fears of supply disruptions should Russia invade Ukraine.  West Texas Intermediate crude for Mar fell $1.01 (1.1%) to $90.75 a barrel, putting the front-month US benchmark on track for a 2.6% weekly fall.  Apr Brent,, the global benchmark, lost 74¢ (0.8%) to $92.23 a barrel, heading for a 2.2% weekly decline.  The US is indirectly participating in intl negotiations with Iran in Vienna.  According to a report yesterday, a draft agreement laid out a series of mutual steps that would bring both sides back into full compliance but didn't include immediate waivers on oil sanctions.  Diplomatic efforts aimed at heading off a Russian invasion were being closely watched, with Biden expected to speak with European leaders today.  State Dept spokesman Ned Price said yesterday that Secretary of State, Antony Blinken, & Russian Foreign Minister Sergei Lavrov would meet late next week, “provided there is no further Russian invasion of Ukraine.”

Oil prices suffer first weekly loss of the year as hopes for Iran deal outweigh Ukraine worries

The Ukraine mess will drag over a long weekend & the future of the tense situation remains in limbo.  The Dow drifted lower for much of the day.  In the PM, a rally was attempted but the sellers returned in the last hour of trading.  The Dow fell 650 this week & is back to where it was in Apr (see below).

Dow Jones Industrials