Every week I share recaps of “news you can use”: a handful of short blurbs from major sources of financial news, so you can be caught up in less than a minute.
I post these every Saturday. Use the comments below to tell me what you think!
Here are some headlines and quotes from select money stories for the week ending Feb. 5, 2022. At the end, you’ll find my take on the news.
Oil Set for Strongest January in Decades as Market Tightens (Jan. 30, Bloomberg):
Oil markets opened the week higher and were heading for the biggest January gain in at least 30 years as robust demand outpaced fresh supply.
The global crude benchmark rose 0.8%, paring earlier gains, but remains on track for a 17% gain this month. West Texas Intermediate futures traded above $87 a barrel.
“You don’t send close to 100,000 troops and as many people in reserves to prove a point — Russia has raised the stakes so high for me at this stage that it seems improbable it will just simply back down unless it gets something in return.”
Coffee Prices Climb, Pushed Up by Bad Weather and Supply-Chain Woes (Feb. 1, The Wall Street Journal):
While analysts say the aftereffects of 2021’s weather are their principal concern, they are also watching for a La Niña weather pattern this year to see how long drought conditions in Brazil will persist.
Though coffee’s price rise can be mostly attributed to weather, higher shipping and freight costs have also helped fuel the rally.
Little of the Paycheck Protection Program’s $800 Billion Protected Paychecks (Feb. 1, The New York Times):
One new analysis found that only about a quarter of the money spent by the program paid wages that would have otherwise been lost, partly because the government steadily loosened the rules for how businesses could use the money as the pandemic dragged on.
And because many businesses remained healthy enough to survive without the program, another analysis found, the looser rules meant the Paycheck Protection Program ended up subsidizing business owners more than their workers.
Euro-Zone Inflation Unexpectedly Hits Record, Boosting Rate Bets (Feb. 2, Bloomberg):
Euro-area inflation unexpectedly accelerated to a record, overshooting expectations by the most in at least two decades and fueling bets the European Central Bank could raise interest rates earlier than expected. Consumer prices jumped 5.1% from a year ago in January, up from 5% in December.
Consumers Are Pivoting Spending to Services Like Dining and Travel (Feb. 2, The Wall Street Journal):
Americans responded to the pandemic with a dramatic shift in spending to goods from services. That now appears to be reversing and should gather steam as the Omicron wave of Covid-19 ebbs, economists say.
Consumers shopped more online in the pandemic, and changed what they bought. Unable to eat out or travel, and with both school and work going remote, they splurged more on things for the home such as furniture and computers. Several rounds of federal stimulus amplified that spending spree.
OPEC, Allies Agree to Pump More Oil Amid Supply Concerns (Feb. 2, The Wall Street Journal):
The Organization of the Petroleum Exporting Countries and a coalition of Russia-led oil producers said they agreed to raise their collective production by another 400,000 barrels a day in March. The boost is in line with what the cartel, called OPEC+, agreed to last year as part of a plan to raise output to pre-pandemic levels.
Evercore’s Ross Has Bought ‘Every Dip’ for Two Years but Not Now (Feb. 3, Bloomberg):
U.S. stocks could drop another 17% as big tech shares falter, commodities soar and credit spreads break out, according to Evercore ISI. …
“I have bought every dip for almost two years and 2,000 S&P points, but on Jan. 21 I stopped buying them,” Ross wrote in a note Wednesday. “I’ll be back at 3,800 (or 4,800).” The index ended Wednesday’s session at 4,589.38, just 4.3% below its Jan. 3 record close of 4,796.56.”
The U.S. added a robust 467,000 jobs in January, and hiring was much stronger at the end of 2021 than originally reported … Hourly wages shot up 23 cents, or 0.7%, to $31.63 in January. Over the past year wages have jumped 5.7% — the biggest increase in decades.
Treasury yields spike across the board after January jobs gain of 467,000 beats expectations (Feb. 4, MarketWatch):
The 10-year Treasury yield briefly broke above 1.9% early Friday after January’s nonfarm payroll report showed a stronger-than-expected gain of 467,000 along with big upward revisions for the prior two months.
My take on the week
Stock volatility continues with historic price swings. I’m not selling, but I’m not buying (although I may take a small position on Ford, which fell 10% Friday morning).
The tight labor market and rising prices virtually ensure the Federal Reserve will raise rates next month. If it makes sense to refinance your home or car, and you haven’t done it yet, you’re running out of time.
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