Friday, April 30, 2010

Markets drift lower following a GDP growth rate of 3.2% in Q1

Dow is off 11, decliners over advancers 3-2 & NAZ dropped 13. GDP growth & another set of consumer confidence data did little for stocks. Banks were lower, but the Financial Index is still near its recent highs in the 226s.


% Change

The Alerian MLP Index dropped another 2½ to 310. Selling could be prompted by the oil spill in the Gulf, although few MLPs should be hurt by it (other than the psychological effect). The REIT index dropped 2 to the 216s after yesterday's enormous gain. Junk bond funds were a tad lower, nothing serious. The yield on the Treasury 10-year bond fell another 3 basis points to 3.70%, with bond buying coming from worried European investors.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

Oil is drifting although bulls are happy to see it remain above 85. The charts show gold has been doing very well in the last 2 months & is within 50 of its record high reached in Dec.

CLM10.NYM...Crude Oil Jun 10...85.32 ...Up 0.10

GCK10.CMX...Gold May 10...1,179.20 ...Up 10.80

Gold Super Cycle Link!
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GLD (ETF) --- 2 months

The economy (measured by GDP) grew at a solid 3.2% annual rate in Q1 as consumers boosted spending by the most in 3 years. This was the 3rd straight quarterly gain as the US heals from the longest & deepest recession since the 1930s. Still, growth was weaker than in Q4 of last year, when the economy grew at a 5.6% rate. Consumers powered growth in Q1, increasing spending at a 3.6% pace, the strongest showing since early 2007 (before the economy tipped into a recession). That marked a big improvement from Q4 when consumer spending grew at a lackluster 1.6% rate. Consumers spent more on home furnishings & household appliances, recreational goods & vehicles, clothing, & going out to bars & restaurants. But there is a belief consumers will be wary of stepping up spending much further with the unemployment rate at 9.7% & expected to stay elevated for much of 2010 (at a minimum).

U.S. Economy Grew at a 3.2% Pace in First Quarter as Consumers Spent More

Consumer confidence declined in Apr from Mar according to a Reuters/University of Mich report. The final index of consumer sentiment dropped to 72.2 (projected to fall to 71) from 73.6 in Mar. This figure contrasts with Conference Board survey showing sentiment in Apr increased to the highest level since Sep 2008. Go figgah! Consumer confidence is recovering, but gradually.

Consumer Sentiment Index for U.S. Drops to 72.2 After 73.6 March Reading

Consumer sentiment - 1 year

Chevron (CVX), a Dow stock. reported increased Q1 profits from higher oil prices. CVX had income of $2.27 per share, up from 92¢ last year. Excluding charges associated with employee reductions in its refining, marketing & chemicals business, CVX would have earned $2.36 a share. Revenue increased 33% to $48.18B. Analysts had been looking for $1.94 per share on revenue of $53.25B. Results were boosted by a surge in profits from its exploration & production operation. Oil prices more than doubled, from a low of around $33 a barrel in Q1 2009, to more than $80 a barrel in Q1 2010. The company increased production of oil equivalents, including natural gas, by 4.5% to 2.78M barrels per day. However, the refining business continued to struggle to pass higher crude costs along to customers. Sales of refined products fell 8.6%. The stock rose 36¢ after having a nice run in the last 2 months (up 8).

Chevron First-Quarter Profit Increases as Energy Demand Rises

Chevron --- 2 years

Enbridge Energy (EEP) raised its distribution to $1.0025 ($4.01 annualized) after reporting strong earnings in Q1. The North Dakota system- Phase VI expansion was placed in service Jan 1, 2010 & is running at capacity while the Alberta Clipper came on stream Apr 1. However EEP units were pretty much flat at $51.

Enbridge Energy Partners Reports Strong Earnings for First Quarter 2010 and Declares Higher Cash DistributionMarketwire

Enbridge Partners --- 2 years

Goldman Sachs (GS) execs will have to spread their wealth on legal fees defending against criminal charges. And the Greek drama plays on with no end in sight. Dow is up 3% in Apr. With buying in the PM, it will extend its weekly winning streak to 9.

Dow Jones Industrials --- 2 weeks

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