Monday, February 28, 2011

Higher markets on merger Monday

Stocks are in a rebound mode after last week, decline.  Dow rose 93, advancers ahead of decliners 3-1 & NAZ gained 10.  Bank stocks are also higher.


Value 227.06 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change    1.33  (0.6%)

Rising stock markets took the MLP index to another record high, up 1 to the 381s.  The REIT index rose 3½ to the 239s, on merger news, to a new post Sep 2008 high.  Junk bond funds rose & Treasuries were a tad higher.  The yield on the 10 year Treasury bond fell 1+ basis point to 3.41%.


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

Alerian MLP Index   ---   2 weeks

Dow Jones REIT Index   ---   2 weeks

10-Year Treasury Yield Index   ---   2 weeks

Oil continues near $100 on the unrest in Libya & the rest of the Mideast while the same news is driving investors into gold.

CLJ11.NYM....Crude Oil Apr 11...97.35 ...Down 0.53 (0.5%)

GCH11.CMX...Gold Mar 11.....1,413.00 ...Up 4.30  (0.3%)

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Consumer Spending in U.S. Rose Less Than Forecast

Photo:   Bloomberg

The tax cut that began last month gave consumers the biggest jump in incomes in nearly 2 years, but spending was boosted only slightly, a sign that many are being cautious even as the economy improves.  Consumers increased spending 0.2% in Jan, the smallest gain since Jun, according to, the Commerce Dept. Personal incomes jumped 1%, reflecting the 2 percentage point reduction from the Social Security tax cut.  The small spending gain pushed total spending to an annual rate of $10.59T, up 7.4% from the recession low hit in Dec 2008. Poor weather may have played a role in slowing spending growth in Jan.  The modest 0.2% rise in spending was even weaker when inflation was taken into account. After adjusting for price changes, particularly a steep rise in energy costs, spending dipped 0.1% in Jan, the poorest showing since inflation-adjusted spending had fallen 0.8% in Sep 2009.  For Jan, spending was boosted on durable & nondurable goods while spending on services was trimmed.

Consumer Spending in U.S. Rose Less Than Forecast in January

Pending Sales of U.S. Existing Homes Fell 2.8% in January

Photo:  Bloomberg

Fewer Americans signed contracts to buy homes in Jan, evidence the housing market is still struggling.  The National Association of Realtors said its index of sales agreements for previously occupied homes fell 2.8% last month to a reading of 88.9, the 2nd straight monthly decline.  The reading was higher than the 75.9 reading from the Jun low point, but remains below 100, which is considered a healthy level. Sales of previously owned homes fell last year to the lowest level in 13 years.

Pending Sales of U.S. Existing Homes Fell 2.8% in January

Ventas (VTR) will buy Nationwide Health Properties (NHP) for $5.8B in stock, creating the nation's largest health care REIT.  The purchase solidifies VTR position as a leading owner of senior housing communities & makes the company more diverse, combining health care facilities with  senior housing & long-term care facilities.  The company will have more than 1,300 assets in 47 states & 2 Canadian provinces. As is typical in buyout deals, NHP rose 3 to 42 while VTR, the acquirer, dropped 2½.

Ventas Agrees to Acquire Nationwide Health in $5.7 Billion Deal

Nationwide Health Properties  --  YTD

Ventas   ---   YTD

The markets look like they want to recover the losses from last week.  The market news was not that great, but a major buyout can bring out more buyers.  The sharp increase in gas prices at the pump is starting to be felt by consumers, not reflected in prior spending data.  Meanwhile, the unrest in Libya & the rest of the Mideast is unsettling to say the least.  The Libya situation may drag on for days, if not weeks. 

Dow Jones Industrials   ---   2 weeks

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