Dow tumbled 705, decliners over advancers better than 4-1 & NAZ sank 317. The MLP index was off 3+ to the 213s & the REIT index pulled back 6+ to the 382s. Junk bond funds declined along with stocks & Treasuries were purchased (but not heavily), reducing yields. Oil slid back to the 76s & gold dropped 30 to 1788.
AMJ (Alerian MLP index tracking fund)
Consumers spent less in Nov on retail & food services as the sector continues to recover from the COVID-19 pandemic & inflation-related pressures. The Census Bureau reported American shoppers spent $689B last month as sales for retail & food services slipped 0.6%, after moving 1.2% higher month over month in Oct. Despite the drop in monthly sales, on an annual basis sales climbed 6.5%. Also in Nov, retail trade sales fell 0.8% from the prior month, but increased 5.4% year over year. Meanwhile, gasoline stations were up 16.2% from Nov 2021, as food services & drinking places moved 14.1% higher from the same period last year.
Retail sales slow as consumers spend less in November
The central banks of the UK, eurozone & Switzerland increased interest rates by 0.5 percentage point, following the Federal Reserve in slowing the pace of increases as inflation edges lower across advanced economies. The ECB said it would raise its key rate to 2% from 1.5%, the highest level since 2009 & added it "expects to raise [rates] significantly further, because inflation remains far too high and is projected to stay above the target for too long." The bank also said it would reduce its multitrillion-dollar bondholdings starting in Mar, by €15B a month on average at first. ECB policy makers are wrestling with stubbornly high inflation, which is likely to linger for longer in Europe than in the US European policy makers are spending heavily to support embattled consumers & businesses, while contending with prolonged high energy prices, fueled by Russia's war in neighboring Ukraine & accelerating wage growth. All that is likely to keep inflation high. Investors will now turn to ECB Pres Christine Lagarde's news conference for clues as to how high eurozone rates could rise & how much the ECB might trim its bond portfolio. Unloading that debt will likely put pressure on highly indebted govs in Southern Europe by pushing up their borrowing costs. The Fed has been unloading bonds since Jun. Investors expect Europe's major central banks to increase rates by more than the Fed over the next 12 months, as inflation proves stickier in Europe. While inflation is starting to decline in both regions, it fell by 1.5 percentage points in the US since Jun, to 7.7% in Oct. In the eurozone, inflation edged down to 10% in Nov from a record-high 10.6% in Oct. In the UK, inflation eased to 10.7% in Nov from a 4-decade high of 11.1% in Oct.
ECB, BOE raise rates by half a percentage point
Russia warned the US that if it sends Patriot missile systems to Ukraine it will consider the move a provocation that could lead to “unpredictable consequences.” The Biden administration is finalizing plans to send a Patriot missile system to Ukraine, 3 defense officials said earlier this week. The surface-to-air defense system would help Ukraine repel Russian aerial attacks. The Russian embassy in DC said that sending the Patriot missile system would be considered “provocative.” In his nightly address yesterday, Ukrainian Pres Volodymyr Zelenskyy said Russian forces were destroying “everything in front of them.” He added that “city after city” in Donbas in eastern Ukraine was being destroyed. “There is no calm on the front line. There is nothing easy & simple. Every day & every meter is fought for extremely hard,” Zelenskyy said. A senior UN official voiced optimism that there would be a breakthrough in negotiations to ease exports of Russian fertilizers to avoid food shortages next year. Russia has complained its concerns about fertilizer exports had not been addressed when a deal for extending a Black Sea grain export agreement was agreed in Nov. Low Russian fertilizer exports remained a “major concern” to avoid food shortages next year, said the Secretary-General of the UN Conference on Trade & Development, Rebeca Grynspan, a key UN negotiator. “I am cautiously optimistic that we can have important progress soon,” she said. “We will spare no effort in trying to make this happen as we really think it is essential for avoiding a food security crisis in the world.”
Russia warns U.S. of 'unpredictable consequences' if it sends Patriot missile systems to Ukraine
Just another dreary day for stocks. The retail sales data was not welcomed by investors. As has been the case recently, interest rate hikes in the US are followed by euro central banks. Then there is the war in Ukraine which must be watched by everybody!!
Dow Jones Industrials
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