Monday, December 3, 2012

Markets waver after weak US manufacturing data

Dow lost 15, decliners slightly ahead of advancers & NAZ added 6.  The Financial Index was flat in the 211s.  The MLP index was up a fraction to 398 & the REIT index gained 1+ to the 261s.  Junk bond funds slid lower & Treasuries pulled back.  But oil & gold rose. 

AMJ (Alerian MLP Index tracking fund)

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CLF13.NYM...Crude Oil Jan 13...90.13 .....Up 1.22 (1.4%)

CZ12.CMX.....Gold Dec 12.....1,721.80 ...Up 10.90 (0.6%)

ISM Index of U.S. Manufacturing Decreased to 49.5 in November

Photo:   Bloomberg

US manufacturing shrank in Nov to its weakest level since Jul 2009.  The Institute for Supply Management’s (ISM) factory index decreased to 49.5 from 51.7 in Oct.  The projection was for a decrease to 51.4.  The impact of Superstorm Sandy & worries about automatic tax increases that could take effect in Jan combined to reduce factory orders & manufacturing jobs.  Less corp investment in equipment as the debate over the national budget, weaker orders from overseas & disturbances related to the biggest Atlantic storm in history are converging to slow manufacturing.  The data highlight an industry that’s contributing less to the economy than it had early in the expansion that began in 2009.  Additionally, manufacturing output in the euro zone shrank for a 16th month, with a gauge of manufacturing rising to 46.2 from 45.4 in Oct.  But in China the Purchasing Managers’ Index climbed 50.6 & in Russia it expanded for a 14th month.  The ISM’s index of new orders dropped to a 3-month low of 50.3 from 54..  The gauge of export orders dropped to 47 from 48 & the employment index decreased to 48.4, the lowest since Sep 2009, from 52.1 in the prior month.  The measure of orders waiting to be filled was little changed at 41 after 41.5. The inventory index decreased to 45 from 50, while a gauge of customer stockpiles slumped to 42.5 from 49.  Not encouraging news.

ISM Index of U.S. Manufacturing Decreased to 49.5 in November

Greece Offers 10 Billion-Euro Debt Buyback

Photo:   Bloomberg

Greece plans to spend up to €10B ($13B) in a bond buyback program that it hopes will help stabilize its mountainous debt.  The buyback is part of efforts to reform Greece's economy & reduce its debt to sustainable levels, & is among steps the country is taking to secure the disbursement of vital intl rescue loans.  If implemented on time, the new measures "are positive developments, which create plausible expectations of a recovery of the Greek economy," the Bank of Greece said.  "This outcome, however, hinges upon a consistent implementation of all the measures legislated, together with policies that will speed up the onset of recovery, including a broader program of structural reforms," it warned.  "Any delays will push the recovery back, with consequences that will be far more severe than anything that has so far happened."  The bond buyback was agreed in a meeting of eurozone finance ministers in Brussels last week, which also approved the release of a critical €44B ($57B) installment of rescue loans from the IMF & the EU.  It is hoped the buyback will shave €20B ($26B) off the country's debt.  Under the buyback program, private holders of Greek bonds have until Fri to register their interest in participating.  The sale will be conducted by a Dutch auction, in which prices start high and then decline.  The buyback should be completed by Dec 17.  The scheme is expected to be of particular interest to investors who bought the bonds on the secondary market at far cheaper prices than their original value.

Greece Offers 10 Billion-Euro Debt Buyback to Unlock Aid

  • A Jeep Wrangler (R) is shown at the Criswell Chrysler-Dodge-Jeep-Fiat dealership in Gaithersburg, Maryland October 2, 2012. REUTERS/Gary Cameron
Photo:   Yahoo

Chrysler & Hyundai reported strong US new-vehicle sales in Nov as the industry rebounded from a storm-ravaged Oct while also benefiting from pent-up demand.  Auto sales are an early indicator each month of US consumer demand.  "We are expecting a strong December as the industry continues to recover from the East Coast hurricane," Chrysler US sales chief Reid Bigland said.  Superstorm Sandy hurt the last few days of sales in Oct, when results finished below expectations. In addition, the average age of cars on the road has risen to just above 11 years old, & industry officials say that will continue to drive demand.  Chrysler sales rose 14% to 122K cars & trucks, its strongest result since 2007.  Hyundai sales increased 8% to 53K vehicles, an all-time high for the month.  "The Black Friday sales period once again provided a strong boost," Dave Zuchowski, executive vice president of sales, said.  "We were also very encouraged by the strong sales recovery experienced in those northeastern regions that were ravaged by superstorm Sandy and expect continued momentum there for the balance of the year," he added.

Chrysler November Sales Gain 14% as Sandy Spurs Demand

Stocks continue to mark time awaiting developments out of DC.  US manufacturing has been fairly strong this year, but as lost its way recently.  Uncertainties about the fiscal cliff negotiations are weighing heavily on execs.  The Greek bond buyback program gives the gov a chance to buy debt at a fraction of what its worth.  It's difficult to tell if it will make a significant difference on resolving the debt mess.  The Nov jobs report will be out on Fri & that will get more attention at mid week.  Dow keeps stumblilng but has been able to barely remain above 13K.

Dow Jones Industrials

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