Friday, March 2, 2012

Lower markets on global growth concerns

Dow was under water all day, but not by much.  Buying in the PM limited its loss to only 2, decliners were ahead of advancers 2-1 & NAZ fell 12 (24 below the 3K level it cracked on Wed).  The Financial Index was off a fraction to 200, still below where it was a year ago at 225).

The MLP index fell 2 to the 408s while the REIT index was flat.  Junk bond funds did little but Treasuries rose.  Oil & gold fell on profit taking.  Iran, a big driver of recent rises in the price of oil, remains a threat as western powers watch its work on a nuclear program.

JPMorgan Chase Capital XVI (AMJ)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLJ12.NYMCrude Oil Apr 12106.66 Down 2.18 (2.0%)

Live 24 hours gold chart [Kitco Inc.]

The biggest 6-month increase in worker pay in almost 5 years may be a signal for a pickup in consumer spending.  Wages & salaries in H2 2010 grew $197B, the most since the 6 months ended Mar 2007 according to the Commerce Dept.  The report also showed the economy grew faster in Q4 than previously estimated & more was saved.  Rising incomes suggest the improving labor market will provide households income this year to increase their purchases & the wage gains may help consumers withstand higher gas prices.  Ben Bernanke said, “We have seen some positive developments in the labor market.”  He added that a recent rise in gasoline prices “is likely to push up inflation temporarily while reducing consumers’ purchasing power.”  Wages grew 0.4% in Jan for a 2nd month.  Personal spending adjusted for price changes was unchanged for a 3rd month, restrained by outlays for services like utilities that may have been tied to warm winter weather.   Purchases of durable goods, like vehicles, rose the most in 3 months.

Big U.S. Wage Gains Signal Boost to Spending

Gas at the pump is now $3.74 with indications of higher prices ahead.

National Unleaded Average
Regular Mid Premium Diesel 85 **E85
Current Avg. $3.741 $3.886 $4.019 $4.064 $3.204 $4.216
Yesterday Avg. $3.738 $3.882 $4.015 $4.060 $3.201 $4.213
Week Ago Avg. $3.647 $3.780 $3.914 $3.986 $3.139 $4.131
Month Ago Avg. $3.450 $3.576 $3.713 $3.875 $3.082 $4.056
Year Ago Avg. $3.427 $3.540 $3.676 $3.776 $2.870 $3.777

12onth Average
State's Graph
Source:   AAA

Housing Lays Foundation for Rebound as Buyers Coaxed Back

Photo:   Bloomberg

After several false starts, housing is flashing the strongest signals yet of a rebound.  While foreclosures continue to depress prices, buyers are wading back into the market, lured by rising employment & record-low mortgage rates.  6 years into the biggest real estate collapse since the Great Depression, housing may become a net contributor to the US economy for the first time since 2005.  The Beige Book of the Federal Reserve, issued yesterday, said the housing market has “improved somewhat in most districts” with “several reports of increased home sales and some reports of increased construction.” Among the 12 district banks, “Boston, Cleveland, Richmond, Atlanta, Kansas City & Dallas reported growth in home sales,” & “Philadelphia reported strong residential real estate activity.”  But early signs of a recovery haven’t revived prices, which have continued to fall as distressed real estate sales depress values.  Short sales, when owners sell for less than the amount owed, & foreclosures accounted for 35% of Jan transactions.

Housing in U.S. Lays Foundation for Recovery as Economy Coaxes Buyers Back

Dow spent the week fluctuating between 12.9K & 13K.  That's sideways trading.  Easing concerns about the European debt crisis & improved economic data in the US should have brought out buyers in droves.  Not so.  Bailout II is still kind of iffy & many are not sure exactly which problems it solved.  Individual countries have to sign off on the bailout & that may go slowly.  There are growing worries high priced gas will pinch the US economy.  Dow is back to where it was on Feb 23 & just above where it was a week earlier.  The bulls will try to reassert command next week.

Dow Industrials

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