Dow dropped 162, decliners over advancers 5-2 & NAZ retreated 159.  The MLP index was off 3+ to the 211s & the REIT index fell 4+ to the 368s as yields rose sharply.  Junk bond funds were sold today & Treasuries continued to be sold, raising yields substantially.  Oil rose 1 to the 75s & gold slid back 4 to 1796 (more on both below).

AMJ (Alerian MLP Index tracking fund)

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Lawmakers & groups worried about the economic costs of an exploding federal budget are warning Dems not to make the situation worse with an expensive, last-minute bill that "must" be passed in order to avoid a partial gov shutdown.  Today Dems are expected to announce just that – the details of a massive bill funding the gov for the rest of the fiscal year that piles on more spending.  In addition to a hefty increase for defense & non-defense spending, the bill could include any number of expensive items such as funding for Ukraine, a costly Medicare bailout, extended tax breaks & even more money for COVID.  Depending on what's in there, it could mean another $500B in borrowing over the course of the year tacked onto the $31.3T national debt.  And while Dems are running the show, Sen Rand Paul, noted last week that Senate Rep leaders seem to have accepted the spending outline agreed last week, even though 41 GOP senators voting "no" could stop the bill.  "This brings upon us the lie that Republicans really are fiscally conservative," Paul said.  "We have completely and totally abdicated the power of the purse," he said.  "Republicans are emasculated, they have no power and they are unwilling to gain that power back."  While the situation looks bleak for supporters of a fiscally responsible gov, groups that support that goal have nonetheless been urging lawmakers to show restraint.  "The current Congress should not pass an omnibus spending bill just weeks away from the beginning of a new Congress. National Taxpayers Union (NTU) opposes omnibus spending increases that will increase federal deficits and debt in the long run, and could even contribute to inflation in the short run," Nicholas Johns, NTU's public policy & gov affairs manager, wrote to congressional leaders last week.  Johns warned that the speed of this last-minute spending bill, coupled with the expectation that lawmakers will return home for the holidays, makes for bad public policy & is a system that is "fraught with risks for taxpayers."  "While it would be appropriate to address some expired or expiring tax policies to ensure there are no significant disruptions to a recovering economy, this bill should not become a ‘Christmas tree’ full of an assortment of unrelated policies that have not gone through the regular legislative process," he added.

Deficit hawks brace for year-end spending blowout

Gold closed with small loss, retreating back under $1800 even as the $ moved lower, though bond yields rose.  Gold for Feb closed down $2 to $1797 per ounce.  The drop comes as the metal continues to hang around the $1800 mark as the $ weakened following lower than expected US inflation last month, while it attracts safe haven buying as interest rates rise.  Since the current run up in gold started in early Nov, the price has not dipped below its 21-day moving average, today at $1775.  Speculators increased bullish gold bets by 50% in the week to Dec 13 when prices briefly spiked in response to a softer $ & CPI reading.  The subsequent setback following Wed''s hawkish FOMC, however, was not big enough to rattle recent established longs.  The $ weakened today, making gold more affordable for intl buyers.  The ICE dollar index was down 0.13 points to 104.57.  However bond yields rose, bearish for gold since it offers no interest.  The US 10-year note was last seen paying 3.58%, up 12.7 basis points.

Gold Edges Down, Retreats Back Under US$1,800 Despite a Weaker Dollar

Oil futures finished higher, finding support as investors assessed the longer-term outlook for Chinese demand as the country relaxes its COVID-19 curbs.  West Texas Intermediate crude for Jan rose 90¢ (1.2%) to end at $75.19 a barrel.  Feb Brent crude, the global benchmark, gained 76¢ (1%) to settle at $79.80 a barrel.  Crude was back on higher ground today.  Prices rose last week, but fell significantly on Fri after rate rises by major central banks & indications that rates will remain elevated in 2023 stoked fears of a global economic downturn.  There is no doubt that demand is being adversely influenced & this is mainly because traders do not like the fact that central banks are dealing with their monetary policy.  However, not everything is so negative as China has vowed to fight all pessimism about its economy & it will do what it takes to boost economic growth.  China's strict COVID policies have undercut demand for crude from one of the world's largest energy-consuming countries.  The relaxation of COVID restrictions is seen as a long-term positive, but a wave of infections has sparked concerns about the near-term outlook.  Going forward, it seems more likely that there will be further support from the PBOC (People’s Bank of China) to support economic growth in China, & Beijing is likely to ease off all the policies around COVID,

Oil ends higher on China demand hopes, while natural gas tumbles 11%

Stocks extended a 2 week rout with little news to inspire investors.  In the PM, Dems talked about passing a bloated spending bill this week to fund the gov thru Sep 30.  The Dow sank, but losses were trimmed in the last hour with modest buying.

Dow Jones Industrials