Tuesday, January 8, 2013

Markets are weak before earnings season starts

Dow dropped 55, decliners slightly ahead of advancers & NAZ lost 7.  The Financial Index pulled back 1 to the 228s.  The MLP index slipped on profit taking, down fractionally to the 406s, & the REIT index slid a fraction in the 272s (still within 4 of its multi year highs).  Junk bonds funds were mixed & Treasuries had modest gains.  Oil was steady & gold gained the most a week as demand increased in China, the world’s 2nd-biggest buyer.

AMJ (Alerian MLP Index tracking fund)

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CLG13.NYM...Crude Oil Feb 13....93.09...Down 0.10  (0.1%)

Live 24 hours gold chart [Kitco Inc.]

The US Energy Dept increased crude-oil price projections for 2013 & forecast that global consumption will climb to a record.  West Texas Intermediate (WTI) oil will average over $89 a barrel this year, up 1.3% from the Dec projection of $88.  The US benchmark grade averaged $94.12 in 2012, less than the Dec estimate of $94.26.  Brent, the benchmark grade for more than half the world’s crude, will average $105 a barrel in 2013, up 1.4% from last month’s forecast.  The average cost of domestic & imported grades used by US refiners will be $94.27 a barrel in 2013, up 1.2% from the Dec projection of $93.11.  WTI will climb to an average $91 a barrel next year, while Brent will slip to $99.25 according to the report.  The spread between Brent & WTI, which will average $15.63 a barrel this year, will narrow to $8.25 in 2014.  The Brent premium will shrink because increasing pipeline capacity will lower the cost of shipping oil from the central US to refineries on the Gulf Coast (i.e. more MLP pipelines).  The dept increased the forecast for global oil consumption this year to 90.1M barrels a day from 90M estimated last month.  Demand will be 1.1% higher than last year’s average of 89.2M & global consumption will climb to 91.5M in 2014.

U.S. Energy Department Raises 2013 Oil Forecast

Americans borrowed more to buy cars & attend school in Nov, gains that pushed consumer debt to an all-time high.  The Federal Reserve said consumers increased their borrowing $16B in Nov compared with Oct.  Total borrowing rose to a record $2.77T.  Borrowing in the category that covers autos & student loans increased $15.2B & credit cart debt rose just $817M.  Consumer spending rebounding in Nov, helped by lower gas prices & solid job growth that carried over into Dec.  Employers added 155K jobs in Dec & 161K in Nov.  More evidence that consumers are buying a lot fo cars.

US consumer debt rises on more car, school loans AP

AT&T Sold 10 Million Smartphones Last Quarter, Setting Record

Photo:   Bloomberg

AT&T, a Dow stock & the 2-largest US wireless carrier, sold more than 10M smartphones in Q4, setting a record, after demand for the iPhone & Android devices spurred holiday sales.  The results topped the previous record-high sales of 9.4M in the year-earlier period.  The carrier is trying to bounce back from Q3, when it added just 151K contract subscribers.  That compared with 1.5M net additions at its biggest rival, Verizon Wireless.  AT&T is playing catch-up with Verizon in rolling out a network using a technology called long-term evolution, which allows for faster downloads.  Gaining smartphone customers is key to its strategy because they use more data, with have higher bills, than subscribers who buy regular phones.  Smartphone subscribers generate twice as much revenue on average as other customers.  The stock fell 60¢ in a weak market.

AT&T Posts Record Holiday Smartphone Sales After Slowdown in Third Quarter

AT&T (T)

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Little happened again as traders await Q4 earnings reports.  Selling indicates that there are doubts.  MLPs were hit with a little profit taking, although that was to be expected after the index shot up a startling 28 in a week.  Those who just bought on the hopes that tax reform ignored them should keep their fingers crossed.  There will be more votes in DC about how to reduce the $1T annual deficits which have become routine.  That means, nothing is scared.

Dow Jones Industrials

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