Friday, December 7, 2012

A lower unemployment rate did not bring out stock buyers

Dow was up 18, decliners barely ahead of advancers & NAZ fell 13 led bv a decline at Apple (AAPL).  The Financial Index added a fraction to 214.  The MLP index conitinued its slide, down 1 to the 383s, & the REIT index was up pocket change in the 262s.  Junk bond funds were soft & Treasuries pulled back after recent gains.  Oil & gold were marginally higher as gold went back over $1700.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF13.NYM...Crude Oil Jan 13...86.41 ...Up 0.15 (0.2%)

GCZ12.CMX...Gold Dec 12....1,703.20 ....Up 2.90 (0.2%)

  • <p>               In this Friday, Nov. 30, 2012 photo, a person fills out an application at the Fort Lauderdale Career Fair, in Dania Beach, Fla. The U.S. economy added a solid 146,000 jobs in November and the unemployment rate fell to 7.7 percent, the lowest since December 2008, the Labor Department announced Friday, Dec. 7, 2012. The government said Superstorm Sandy had only a minimal effect on the figures. (AP Photo/J Pat Carter)

Photo:   Yahoo

Payrolls rose more than anticipated & the jobless rate fell to an almost 4-year low in Nov, indicating superstorm Sandy’s effect on the labor market was limited.  Employment climbed 146K following a revised 138K gain in Oct (less than initially estimated) according to the Labor Dept.  The estimate called for a gain of 85K.  Sandy “did not substantively impact” the data, the agency said.  The unemployment rate fell to 7.7%, the lowest since Dec 2008, as size of the labor force shrank.  The poll of households, used to calculate the jobless rate, showed that 369K were not at work because of bad weather during the survey week.  The average of the last 10 Novembers was 70K.  The Labor Dept said that the rates of responses to its surveys “were within normal ranges” after Sandy made landfall.  Private payrolls, which exclude gov agencies, rose 147K.  They were projected to rise 90K.  The participation rate, which indicates the share of working-age people in the labor force, fell to 63.6%, from the prior month’s 63.8%.  Factory payrolls decreased 7K as job losses in food manufacturing & chemicals more than offset gains at automakers.  Employment at private service-providers increased 169K & payrolls at construction companies dropped 20K workers.  This is only a so-so report, not enough jobs are being added to bring down unemployment rate in a meaningful manner.

Payrolls in U.S. Increase More-Than-Forecast 146,000

Michigan Consumer Sentiment Index Decreased to 74.5 in December

Photo:   Bloomberg

Confidence among consumers fell more than forecast in Dec as expectations slumped to a one-year low.  The Thomson Reuters/University of Michigan preliminary consumer sentiment index decreased to 74.5, the weakest in 4 months, from 82.7 in Nov.  The projection was for a reading of 82.  Concern may be growing that lawmakers will fail to avert higher taxes & gov spending cutbacks set for 2013.  At the same time, job growth, rising home values, lower gas prices & stock market gains may provide some support to the spending.  Estimates for the confidence measure were 80-88.  The index averaged 64.2 during the last recession & 89 in the 5 years leading up to the 18-month economic slump that ended in Jun 2009.

Michigan Consumer Sentiment Index Decreased to 74.5 in December

ECB President Mario Draghi

Photo:   Bloomberg

A majority of ECB policy makers were open to cutting the benchmark rate yesterday & there is a possibility of a reduction early next year if the economy doesn’t pick up.  Rates were kept on hold because of concerns about the negative signal a cut might send in conjunction with the significant downward revisions to the ECB’s growth & inflation forecasts.  ECB President Mario Draghi said that while there was a “wide discussion” about interest rates, “the prevailing consensus was to leave the rates unchanged” with the benchmark at a record low of 0.75% & kept the deposit rate at zero.  The sovereign debt crisis, which has pushed at least 6 of the 17 euro nations into recession, is now curbing growth in its largest economies. The Bundesbank just slashed its forecast for German expansion next year to 0.4% from 1.6%.  The news from Europe is not good.

Markets continue in their meandering ways.  AAPL with the largest market cap in the world is not inspiring confidence.  Its stock is down about 25% from its Sep highs.  Euro stocks are doing well, but the € continues sideways near $1.30.for 3 months.  The biggest factor for US stocks is uncertainty regarding the fiscal debate.  DC is deeply divided & I bet that will be the case 2 weeks from now.  Dow continues to trudge along near 13K.

Dow Jones Industrials

stock chart

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