Thursday, September 16, 2010

Mixed markets on muddy jobless claims data

Averages have been hugging break even today. Dow is down 22, decliners over advancers 3-2 & NAZ fell 8. Bank stocks as leaders were also lower, the Financial Index has failed to break 200.


Value 196.7 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change -1.50 (-0.8%)

The MLP index slipped ½ to the 328, continuing its sideways momentum near 330. The REIT index fell 1 to the 213s, again continuing sideways momentum. Junk bond funds inched up near their 2010 highs & the VIX was up ½ in the 22s. The € rose another penny to almost $1.31 & up from $1.27 last week. Treasuries were weak, the yield on the 10 year Treasury bond rose 4 basis points to 2.76% & near its interim high of $2.81% last week.

Treasury Securities

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

VIX --- 2 weeks

10-Year Treasury Yld Index --- 2 weeks

Oil is lower as the excitement over the oil spill in Ill restricting oil supplies has diminished. But gold continues strong shooting for 1300 as investors are looking for protection against turmoil in the global economy & financial markets.

CLV10.NYM...Crude Oil Oct 10...74.97 ...Down 1.05

GCU10.CMX...Gold Sep 10...1,274.80 ...Up 8.10

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New claims for unemployment benefits hit a 2-month low last week, hinting at some stability in the labor market. But factory activity in the Mid-Atlantic region contracted more slowly in Sep. Initial claims for unemployment benefits slipped 3K to 450K, the lowest since Jul 10 (a rise to 460K had been expected). The 4-week average of new claims dropped 13K to 465K. The 2nd straight week of declines pulled claims further away from a 9-month high of 504K in mid-Aug. The number continuing to receive jobless benefits fell 84K to 4.49M. Modestly encouraging but on balance still mixed.

Jobless Claims in U.S. Unexpectedly Fell Last Week to 450,000

Jobless claims - 1 year

One-Year Chart for Claims (INJCJC:IND)

# receiving benefits - 1 year

One-Year Chart for Unemployment SA (INJCSP:IND)

The Producer Price Index (PPI) rose 0.4% in Aug after increasing 0.2% in Jul. Excluding food & energy costs "core" producer prices were relatively flat, rising just 0.1% & up 1.3% in the last year. Energy costs increased the most since Jan as gasoline costs rose 7.5%. Home heating oil costs increased 7.0%. Those increases followed 4 straight monthly declines in energy prices, when prices fell 13.5%.

Producer Prices in U.S. Climbed in August for a Second Month

Producer Price index - 1 year

One-Year Chart for MoM% SA (PPI_CHNG:IND)

PPI excl: food& energy - 1 year

One-Year Chart for Monthly % Change (PXFECHNG:IND)

FedEx Forecast Trails Estimates; 1,700 Jobs to Be Cut

Photo: Bloomberg

FedEx (FDX) gave an indication that the global economic recovery remains uneven. It said strength in intl shipments are driving profits & also plans to cut 1.7K jobs in an attempt to fix its money-losing US trucking business. FDX raised its financial outlook after its Q1 net income doubled. But the projections for Q2 & full year fell shy of expectations. Growth in intl air shipments has been driving FDX results lately. FDX now expects to earn $1.15-1.35 per share for Q2 ending in Nov (below expectations of $1.36). For the full fiscal year ending May 2011, FDX expects EPS of $4.80-5.25, up from its estimate of $4.60-5.20 given in Jul. However, some analysts were forecasting as high as $5.60. FDX earned $1.20 per share in the fiscal Q1 compared 58¢ last year (slightly under the $1.21 expected). Revenue rose 18% to $9.46B. The stock fell 3.84.

FedEx Forecast Trails Estimates; 1,700 Jobs to Be Cut

FedEx --- 2 years

Not much to say again as Dow is not straying far from 10½K. Uncertainty about personal taxes in 2011 is not helping the bullish argument. The jobless claims data can only be rated as so-so & FedEx problems in the US indicates one more negative about the US recovery.

Dow Jones Industrials --- 2 weeks

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