Friday, January 4, 2013

Markets waver after December payroll data

Dow lost 4, advancers ahead of decliners 2-1 & NAZ slipped 2.  The Financial Index rose 1 to the 228s.  The MLP index continues on its winning ways, up 1+ to the 404s, & the REIT index added a fraction to 272.  Junk bond funds also gained & Treasuries retreated again, taking the yield on the 10 year Treasury yield closer to 2%.  Oil fluctuated & gold remains weak.

AMJ (Alerian MLP Index tracking fund)

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CLG13.NYM...Crude Oil Feb 13...92.67..... Down 0.25  (0.3%)

GCF13.CMX...Gold Jan 13......1,650.70 ...Down 23.00  (1.4%)

<p>               In this Wednesday, Dec. 12 2012 photo, Taneshia Wright, of Manhattan, fills out a job application during a job fair in New York. U.S. employers added 155,000 jobs in December, a steady gain that shows hiring held up during the tense negotiations to resolve the fiscal cliff.  The solid job growth wasn’t enough to push down the unemployment rate, which remained 7.8 percent last month, the Labor Department said Friday, Jan. 4, 2013. The rate for November was revised up from an initially reported 7.7 percent.  (AP Photo/Mary Altaffer)

Photo:   Yahoo

US employers added 155K jobs in Dec, a steady gain that shows hiring held up during the tense negotiations to resolve the fiscal cliff.  But the solid job growth wasn't enough to push down the unemployment rate, which remained at 7.8%, according to the Labor Dept.  The rate for Nov was revised up from an initially reported 7.7%.  Hiring was stronger in the previous month than first thought.  Nov job gains were revised up 15K to 161K.  But the Oct increase was nearly unchanged at 137K.  Robust hiring in manufacturing & construction fueled the Dec job gains.  Construction firms added 30K, the most in 15 month, likely reflected hiring needed to rebuild after Superstorm Sandy & gains in home building that have contributed to a housing recovery.  Manufacturers added 25K jobs, the most in 9 months.  Financial services added 9K, health care 55K.  All job gains last month came from private employers.  Govs shed 13K jobs, mostly in local school systems.  Hiring still isn't strong enough to quickly reduce still-high unemployment.  For 2012, employers added 1.8M jobs, an average of 153K jobs a month, roughly matching the job totals for 2011.  Today's report pointed to some weakness in the job market.  For example, the number of unemployed actually rose 164K to 12.2M.  Approximately 192K entered the work force last month, but most of them didn't find jobs.  A broader category that includes not only the unemployed but also part-time workers who want full-time jobs & those who have given up looking for work was unchanged in Dec at 22.7M.

Payrolls in U.S. Climb 155,000 as Jobless Rate Holds at 7.8%

US companies boosted their orders in Nov for manufactured goods that reflect investment plans even though total orders were unchanged for the month.  Factory orders were flat in Nov, compared with Oct when orders rose 0.8%, according to the Commerce Dept.  Durable goods, everything from autos to steel, rose 0.8% while nondurable goods fell 0.6%, reflecting falling petroleum prices.  Orders for core capital goods, a category considered a proxy for business investment plans increased a solid 2.6% after a 3% rise in Oct which had been the strongest gain in 10 months.  Factories appear to be recovering slowly from a slump earlier in the year although there are still concerns given a weak global economy that is restraining exports.  The back-to-back increases in core capital goods followed a period of weakness that had raised concerns about business investment, a driving force in the economic rebound.

Orders to U.S. Factories Unchanged as Non-Durables Decrease

Lilly Forecasts Full-Year Profit Higher Than Analyst Estimates

Photo:    Bloomberg

Eli Lilly forecasts its 2013 earnings will grow more than estimates even though it will lose US patent protection for 2 more key products in the new year.  It is guiding 2013 adjusted EPS of $3.75-$3.90 on $22.6-$23.4B in revenue.  Analysts are expecting EPS of $3.72 on $22.8B in revenue.  Revenue slipped last year after it lost US patent protection for its all-time best selling drug, Zyprexa.  That exposed a drug that once topped $5B in annual revenue to cheaper generic competition.  This year, LLY loses patent protection for its best-selling insulin, Humalog in May, & the antidepressant Cymbalta in Dec.  LLY will counter the revenue loss from the patent expirations by developing new drugs, cutting costs & depending on sales in foreign markets & developing countries.  The company reiterated that it expects at least $3B in net income & revenue of at least $20 billion thru 2014.  It also expects to keep paying shareholders a div & to complete a $1.5B share repurchase program this year.  The stock rose 1.89.

Lilly Forecasts Full-Year Profit Higher Than Estimates

Eli Lilly (LLY)

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The jobs report provided little new information for the markets.  While mildly encouraging, unemployment conitnues at unsatisfactory levels with no sign of significant improvement.  Fallout from the new tax bill just signed makes the outlook unsettled.  The MLP index is up an amazing 25 this shortened week as investors are relieved the tax advantaged status for MLPs remained unchanged.  In 2 weeks the Q1 distributions will be announced & they should be welcomed as usual.  Meanwhile Dow is near its 4+ yearly highs made in Oct.  Dealing with raising the debt ceiling will not be touched until next month.  Sloppy, last minute solutions to deal with complex financial problems is becoming a way of life in DC & stocks don't mind.

Dow Jones Industrials

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