Wednesday, January 4, 2012

Lower markets on European debt unrest

Dow slipped 26, decliners over advancers 2-1 & NAZ fell 9.  The Financial Index was down 2+ to the 177s, erasing half of yesterday's advance,

The MLP index continues on its winning ways, up 2 to 293 for a new record.  But the REIT index pulled back 3 to 230, junk bond funds were lower & Treasuries were pretty much even.  Oil is adjusting to yesterday's big gain, with threats by Iran encouraging more buyers.  Gold is doing well on growing uncertainties in the world.



Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG12.NYM...Crude Oil Feb 12...102.86 .....Down 0.10  (0.1%)

GCF12.CMX...Gold Jan 12........1,610.20 ...Up 10.50  (0.7%)

Get the latest market update below:

Factory Orders

Photo:   Bloomberg

New orders for factory goods rose solidly in Nov, but business spending on capital is cooling.  The Commerce Dept said orders for manufactured goods increased 1.8%, snapping 2 consecutive months of declines, as demand for transportation equipment surged.  This was the largest rise since Jul.  Oct orders were revised to show a much smaller 0.2% fall, which was initially reported as a 0.4% drop.  The forecasted increase was 1.7% for Nov.  Orders excluding transportation rose 0.3% in Nov after advancing 0.4% in the prior month.  Orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence & spending plans, fell 1.2% after declining 0.9% in Oct.  The closely tracked shipments for this category fell 0.8% after dropping 0.9% in Oct, indicating business appetite for capital spending may be waning & Nov marked the 3rd straight month of declines.  Business spending had risen sharply since the end of the 2007-09 recession & was one of the drivers of the recovery.  Unfilled orders of non-defense capital goods rose 0.9% after increasing 1.0%t in Oct.  Orders for transportation equipment jumped 14.7% in Nov as demand for civilian aircraft soared 73.9%.  This is a lukewarm report.

Demand for Factory Goods Rises Most in Four Months

The Greek prime minister discussed labor costs with unions & trade federations before a crucial visit by the country's debt inspectors.  Lucas Papademos' meetings come after a gov spokesman warned that Greece could have to leave the euro if the struggling country fails to finalize the details of its 2nd bailout, for €130B ($169B), & more tough austerity measures may be needed.  Debt inspectors from the IMF, ECB & European Commission are expected in mid-Jan. Collectively known as the troika, the inspectors have said Greece needs to reduce its labor costs as part of efforts to make the country more competitive.  But the head of the Hellenic Federation of Enterprises, said his federation would do "whatever it can" to ensure the minimum wage is not lowered.  Hmmm!  Greece has been kept solvent by an initial package of €110B ($142B) bailout loans.  In return, the gov imposed deeply resented austerity measures to contain a bloated budget deficit, including cutting salaries & pensions & introducing repeated tax hikes.  These measures have led to frequent & often violent demonstrations over the past 2 years.  This reality is sinking into the markets today.

Greek PM to meet with labor union, business reps AP

Retail Forecast for December Raised at ICSC on Discounts

Photo:   Bloomberg

Retail sales at stores open more than a year may have gained as much as 4.5% in Dec, more than previously estimated, as shoppers pursued holiday discounts.  Same-store sales in Dec were earlier projected to have advanced as much as 4% according to the Intl Council of Shopping Centers (ICSC).  New data shows that sales at retail chains last week rose 5.3% from a year earlier.  Sales in the last 2 weeks of Dec increased from a year earlier as retailers extended hours & benefited from Christmas Eve falling on a Sat, providing a strong end to a holiday season that already had exceeded some forecasts.  Major retailers also offered discounts on already marked-down merchandise in the week after Christmas.  “The last few weeks of December helped to lift the full- month performance above our earlier expectation,” said the ICSC.  The National Retail Federation last month raised its forecast for the holiday season after steeper discounts & earlier opening hours contributed to a record $52.4B in sales during the Thanksgiving weekend.  It said sales may increase 3.8% to a record $469B in Nov & Dec, up from a previous projection for a 2.8% gain.  Such an increase would be higher than the 10 year average of 2.6% growth but slower than last year’s 5.2% increase.  Fairly good news, but margins should be hurt by markdowns.

Retail Estimate for December Raised, Discounts Heavy

The markets calmed down after the big move yesterday.  There was selling in the last hour & that's continuing today.  Economic news is reasonably good against a background of many intl financial problems & DC politicos returning next week.  MLPs are on fire again with the index moving up from 320 to over 390 in 3 months. 

Dow Industrials

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