Dow was tumbled 550 (session low), decliners ahead of advancers 5-4 & NAZ fell 221. The MLP index slid back 1 to 210 & the REIT index was off 2+ to the 483s. Junk bond funds were bid higher & Treasuries continued in demand. Oil dropped 7+ to 100 after Biden announced the release of oil from resources over 6 months & gold gained 7 to 1946 (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 Biden administration will release 1M barrels of oil each day for the next 6 months from US reserves amid high gasoline prices. The
plan is an effort to relieve some inflation
associated with rising gasoline prices & combat other supply shortages
that partly stem from Russia's invasion of Ukraine. "This record
release will provide a historic amount of supply to serve as bridge
until the end of the year when domestic production ramps up," the White
House said. And Biden will also call for Congress to force oil companies pay fees
for unused leases, accusing energy producers of "hoarding without
producing." "Companies that are producing from their leased acres
and existing wells will not face higher fees," the White House added. "But companies that continue to sit on non-producing acres will have to
choose whether to start producing or pay a fee for each idled well and
unused acre." The oil & gas industry insists that obtaining a
lease is merely the first step in a process that includes permitting &
investigating whether there is actually any fossil fuel below the
ground to extract. The White House pressure on oil companies over "unused" leases is being echoed from Dems in Congress, who are pushing CEOs to testify next week.
Biden unveils plan to tackle high gas prices hitting Americans
The Treasury Dept announced sanctions on a global network of individuals & shell companies it says are helping the Russian military to evade the multilateral controls on exports of advanced technology to Moscow while the Kremlin wages war against Ukraine. At the center of the network is Serniya Engineering, a Moscow-based company that the Biden administration said operates under the direction of Russian intelligence services. From there, the sprawling group of companies extends outward to include defense procurement firms, middlemen & front companies located in the UK, Spain, Finland, Singapore, Malta & France. The US put export controls in place at the start of Russia's unprovoked invasion of Ukraine in late Feb. The restrictions work in concert with nearly identical export bans that are being enforced by the EU, Japan, Australia, Canada, New Zealand, Britain & South Korea. Treasury also announced fresh sanctions on 4 technology companies that supply the Russian military with microelectronics, navigation equipment & satellite imaging software. One of them, Mikron, is also Russia's largest chipmaker. The company is responsible for the debit card chips in Russia's domestic payment system, Mir, which was developed in response to previous Western sanctions. The US also identified 3 more sectors of the Russian economy — aerospace, marine & electronics — as potential targets for sanctions given their strategic importance to the country's defense industrial base.
U.S. sanctions global network of firms helping the Russian military evade export controls
Automakers will likely report sharp sales declines for Mar & Q1, industry analysts say, as an ongoing shortage of new vehicles has left car-shoppers with few – & often expensive – choices. US auto sales forecasts from Cox Automotive, Edmunds & JD Power/LMC Automotive say that Q1 sales of cars, pickup trucks & SUVs were likely below 3.3M, down more than 14% from Q1-2021. For some automakers, the declines may be even worse. Edmunds expects General Motors (GM), Honda, Nissan, & Volkswagen to report year-over-year sales declines of more than 20% for Q1, with Ford (F) faring only slightly better. But while sales are falling, prices are rising. TrueCar analysts said that the average selling price of a new vehicle in the US likely rose 15.4% in Mar from a year ago, to nearly $43,500. Consumer concerns about inflation – including higher gas & vehicle prices – likely played a role in the qtr's projected sales decline, which includes an expected drop of at least 24% in Mar. But the biggest factor is the thin supply of new vehicles amid a global shortage of semiconductor chips.
With few new cars on lots, U.S. auto sales likely fell sharply in the first quarter, analysts say
The average rate for a 30-year fixed-rate loan jumped to 4.67%, mortgage-finance giant Freddie Mac said, marking the weekly figure's highest reading since 2018. The 30-year fixed rate rose from 4.42% a week ago, continuing a steady rise that has pushed home-loan rates within sight of 5% for the first time in 4 years. This year's surge in mortgage rates was hardly unforeseen, given the record lows reached in the pandemic period & concerns about high US inflation readings, but it has unfolded faster than expected. At the beginning of the year, the average rate on America’s most popular home loan was 3.22%. Higher mortgage rates typically slow home buying activity, but the number of applications submitted by hopeful home buyers has risen for 3 of the past 4 weeks, according to the Mortgage Bankers Association, showing the US home boom is far from over. "It’s going to take a pretty healthy increase in rates to moderate the demand," said Phil Shoemaker, pres of originations at Homepoint Financial, a Michigan-based mortgage lender. Expectations that the Federal Reserve will raise interest rates several more times this year to control inflation are driving up mortgage rates. Before the central bank raised rates for the first time since 2018, the Fed's decision to unwind its purchases of mortgage-backed securities had started forcing rates upward. Home prices continue to push homeownership out of the question for many Americans. The median sales price of an existing home rose 15% in Feb from a year earlier. Rising rates are reducing refinances, which powered much of the mortgage market's boom in 2020 & 2021. About 4M Americans could lower their monthly mortgage payments thru a refinancing in Feb, down from close to 16M a year ago, according to mortgage-data firm Black Knight. Refinancings are expected to make up 33% of mortgage originations this year, down from 59% in 2021, according to the Mortgage Bankers Association.
Mortgage rates surge to highest since 2018
Gold futures finished higher, tallying gains for the month as well as the qtr as the Russia-Ukraine war continued to boost haven demand for the precious metal. Gold for Jun rose $15 (0.8%) to settle at $1954 an ounce. Gold, based on the most-actively traded futures contract, posted a a 2.8% monthly rise & a 6.9% gain for the qtr. Today, prices for gold had traded as low as $1923, with at least some of that weakness blamed on a sharp decline in oil. The US oil benchmark fell sharply after news reports said Pres Joe Biden was preparing to order the release of up to 1M barrels of oil a day from the reserve. Gold prices initially fell, then moved up after data showed that US consumer spending rose by a mild 0.2% in Feb. Rising prices due to high inflation played a big role & is weighing on the US economy. Russia issued a decree today, demanding payment for natural gas in rubles, but left a loophole to allow $ & € payments thru a designated bank.
Gold settles higher for the session, month and quarter
Oil prices settled sharply lower with the US announcing its largest-ever release from the nation's crude reserves & OPEC & its allies sticking to a previously agreed plan to raise output in May. West Texas Intermediate crude for May fell $7.54 (7%) to settle at $100.28 a barrel, the lowest finish since Mar 16. Based on the front month, prices rose 4.8% for the month & gained over 33% for the qtr. May Brent crude, the global benchmark, fell $5.54 (4.9%) to end at $107.91 a barrel. The contract expired at the end of the session, up nearly 6.9% for the month & up almost 39% for the qtr. The most-active Jun fell $6.73 (6%) at $104.71. Pres Biden said he's authorizing the release of 1M barrels of oil per day for the next 6 months from the Strategic Petroleum Reserve (SPR), more than 180M barrels in total. Meanwhile, OPEC+ held the line in its meeting, rubber-stamping a previously agreed plan that will lift its production target by 432K barrels a day in May. OPEC+ has resisted calls by the Biden administration & other energy-consuming countries to more rapidly boost output. Elsewhere, Russia is reportedly offering hefty discounts of its oil to India, amid sagging demand due to those sanctions. Yesterday, the EIA reported a 3.4M-barrel fall in last week's US crude inventories, but also showed increases in gasoline & distillate stockpiles.
The markets closed the qtr with heavy selling into the close. Releasing oil from the SPR will not solve problems. The big problem is that demand for oil presently exceeds supply & little is being done to increase supply by an administration that does not want to. Dow finished up about 800 in Mar, but down about 1700 YTD.Dow Jones Industrials
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