Friday, March 25, 2011

HIgher markets on stronger GDP growth in Q4

Dow rose 72, advancers ahead of decliners almost 3-1 & NAZ was up 21 on encouraging news about the economic recovery in the US.. Banks stocks were also higher.

S&P 500 FINANCIALS INDEX

Value	220.79
Change	1.20 (0.5%)

The MLP index rose 1+ to the 378s, closing in on its record high of 383, while the REIT index gained 2 to the 231s. Junk bond funds hardly budged & Treasuries were little changed. Oil fell for a 2nd day as crude failed to breach technical resistance at its 30- month high. Gold fluctuated after rising to a record yesterday on continued turmoil in Libya.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.07%
U.S. 2-year		0.68%
U.S. 10-year		3.41%

CLK11.NYM

...Crude Oil May 11

...105.14

...

0.46

(0.4%)

Consumer Sentiment in U.S. Fell More Than Forecast in March

Photo: Bloomberg

Consumer sentiment in Mar fell to its lowest level in more than a year as gasoline & food prices rose. The index was slightly lower than the preliminary reading for Mar, while inflation expectations remained elevated. Even so, the latest consumer survey from Thomson Reuters & the University of Michigan said there was no decline in buying plans. "While the data clearly indicates that the rate of real consumer spending will diminish, the data does not indicate a renewed downturn is now on the horizon," the report said. The final Mar reading on consumer sentiment came in at 67.5, down from 77.5 in Feb, the lowest level since Nov 2009 & below the median forecast of 68.0. The preliminary March figure was 68.2. The survey's gauge of consumer expectations saw its 5th largest monthly decline, tumbling to 57.9 from 71.6, its lowest level in 2 years. The barometer of current economic conditions fell to 82.5 from 86.9 & was below a forecast of 83.2. Inflation concerns remained high with the one-year inflation expectation at 4.6%, the same as the preliminary figure & up from 3.4% in Feb. The survey's 5-10-year inflation outlook was up to 3.2% from 2.9%.

U.S. Consumer Sentiment Falls More Than Forecast Amid Rising Fuel Prices

U.S. Economy Grew 3.1% in Fourth Quarter

Photo: Bloomberg

The economy grew more quickly than previously estimated in Q4 as businesses restocked shelves to meet rising demand & maintained fairly solid spending. GDP growth in Q4 2010 was revised up to an annualized rate of 3.1%, according to the Commerce Dept, & was close to its initial estimate of 3.2% published 2 months ago. For all of 2010, the economy grew 2.9%, while corp profits grew 20.4%, from a depressed level in the prior year & the most since 2004. Data so far this year suggests the economy is maintaining this growth pace in Q1, but there are concerns that rising oil prices could crimp consumer spending & slow the recovery. The growth pace is still not strong enough to reduce high unemployment significantly.

Q4 growth estimates were raised to reflect stronger business spending & inventory accumulation than previously forecast. Business investment rose at a 7.7% rate instead of 5.3%, lifted by spending on equipment & software, as well as on structures. Business spending on software & equipment increased at a 7.7% rate instead of 5.5%. Business inventories increased $16.2 billion instead of the $7.1 billion estimated last month. The rise in inventories still marked a sharp slowdown from $121.4B in Q3. Excluding inventories, the economy expanded at an unrevised 6.7% pace, the fastest increase since 1998.

U.S. Economy Grew 3.1% in Fourth Quarter, Revised From 2.8%

Apple Begins Global Sales of IPad 2 as Competition Increases

Photo: Bloomberg

Apple (AAPL) began selling the iPad 2 to queues of consumers in a 25 country release including: the UK, France, Switzerland & Germany, as the company tries to defend its dominance in tablet computers amid mounting competition. Lines of hundreds of consumers were waiting to buy the new tablets. The proportion of AAPL sales outside of the Americas rose to 62% in the last fiscal year, the highest in at least 7 years, amid the growing popularity of iPhones in China & Asia. The stock has been flattish for more than a month, but is up nicely YTD. Today it gained 6 to 351.

Apple Begins Global Sales of New IPad 2 Tablet as Competition Intensifies

Apple Inc. (AAPL)

Markets continue strong after last week's tumble. Dow is up 375 this week & nearly 700 YTD. Strong stock markets are good for MLPS, The index has its eyes on setting new records with yields below 6%. The GDP news was what the bulls like to hear, but that's backward looking. High oil prices & resulting higher prices at the pumps are today & the future which have the potential to slow the recovery.