Tuesday, September 25, 2012

HIgher markets on improved US consumer confience

Dow rose 53, advancers ahead of decliners 2-1 & NAZ added 14.  The Financial Index gained 1 to the 214s.  The MLP index fell 1+ to 404 & the REIT index was up a fraction in the 266s.  Junk bond funds edged lower but Treasuries saw limited buying.  Oil rose after falling 5 out of the past 6 days as US home prices climbed more than forecast in Jul, signaling that the US economy is rebounding.  Gold is pushing towards $1800 again.

AMJ (Alerian MLP Index tracking fund)

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CLX12.NYM...Crude Oil Nov 12...92.63 ....Up 0.70 (0.8%)

GCU12.CMX...Gold Sep 12......1,772.60 ...Up 10.50 (0.6%)

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French President Francois Hollande

President Hollande
Photo:   Bloomberg

French industrial confidence held near its lowest in more than 2 years in Sep as the economy stagnates & tax increases loom.  A measure of sentiment among factory executives was unchanged at 90, national statistics office Insee said, above the forecast of 89.  A gauge that includes retailers, builders & service industries GDP failed to grow for 3 straight qtrs & as President Hollande prepares €20B ($26B) in tax increases for the coming year.  Business sentiment in Germany unexpectedly fell to a 2½ year low this month, a report showed yesterday, as the sovereign debt crisis drives the euro area toward recession.  Insee’s reading for past production dropped to -18 from minus -9 in Aug, while the production outlook fell to -52 from -44.  The general outlook “is deteriorating strongly again, approaching the very low levels reached in 2009,” Insee said.  In neighboring Germany, Europe’s largest economy, market- research company GFK predicted its gauge of consumer confidence will hold steady in Oct as a less pessimistic economic outlook offsets falling income expectations.  The index will remain at 5.9 for a 2nd straight month, GfK said.  Italian consumer confidence remained near its lowest level in more than 15 years in Sep as the country’s deepening recession damped optimism.  The confidence index inched to 86.2 from a revised 86.1 in Aug, the national statistics office, Istat, said.  This data highlights the recession in Europe.

French Industrial Sentiment Holds Near Two-Year Low: Economy

  • Women carry shopping bags through Times Square in New York, July 27, 2012. U.S. economic growth slowed as expected in the second quarter as consumers spent at their slowest pace in a year, increasing pressure on policymakers to do more to bolster the recovery. REUTERS/Andrew Burton
Photo:   Yahoo

Consumer confidence is more optimistic in the US where it jumped to its highest level in 7 months in Sep as Americans were more optimistic about the job market & income prospects.  The Conference Board said its index of consumer attitudes rose to 70.3 from an upwardly revised 61.3 in Aug, the highest level since Feb & topped' expectations for 63.  Despite continuing economic uncertainty, consumers are slightly more optimistic than they have been in several months ," said Lynn Franco, director of The Conference Board Consumer Research Center said.  The expectation was for the index to climb to 83.7 from 71.1, while the present situation index gained to 50.2 from 46.5.  Consumers' labor market assessment improved.   The "jobs hard to get" index slipped to 39.9% from 40.6% the month before, while the "jobs plentiful" index rose to 8.3% from 7.2%.  Looking 6 months ahead, 16.3% expected income increases, up from 16%, while 14.1% anticipated decreases, down from 16.7%.  Consumers also felt better about price increases with expectations for inflation in the coming 12 months down to 5.8% from 6%.

Caterpillar Cuts 2015 Earnings Outlook as Mining Spending Falls

Photo:   Bloomberg

Caterpillar, a Dow stock, cut its 2015 earnings forecast, becoming the latest heavyweight in the US to sound alarms on the sluggish global economic recovery.  The world's largest maker of earth-moving equipment stopped short of forecasting a global recession, but warned of a bigger-than-expected fall-off in demand for its products over the next few years because of weaker commodity prices.  The deceleration will undermine its expansion in the mining sector, where demand for the company's mega trucks is expected to slow.  Equipment sales in Australia & China may also decline.  "We've seen a slowing in economic growth more than we expected," Caterpillar CEO Doug Oberhelman said.  "We expect fairly anemic and modest growth through 2015."  Oberhelman reduced the EPS forecast for 2015 to $12-$18, from $15-$20 previously announced.  The stock slumped $2.19.

Caterpillar Cuts 2015 Outlook as Mining Spending Falls

Caterpillar (CAT)

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Even though the averages are higher, markets are continuing their meandering ways for a 7th straight day.  There is not a lot of conviction in this rise & the news is more mixed than favorable.  Consumer confidence is US is looking good, hard to figure given the mediocre recovery which is not making progress in lowering unemployment.  Improvement in housing is tepid & warnings about a sluggish economy keep coming from corp giants.  But Dow is back to 13.6K where it has been for more than a week.

Dow Jones Industrials

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