Friday, February 15, 2013

Markets mark time as manufacturing production cools

Dow climbed 25, advancers & decliners were about equal & NAZ was 3 higher. The Financial Index was about even at 240.  The MLP index rose another 1 to the 435s & the REIT index increased a fraction to 280.  Junk bond funds were mixed & Treasuries   Oil fell back & gold took a nasty spill, taking it close to $1600, a 7 month low.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLH13.NYM...Crude Oil Mar 13...95.85 .....Down 1.46  (1.5%)

GCG13.CMX...Gold Feb 13......1,610.80 ...Down 23.90  (1.5%)

File photo of Chevrolet Cruze chassis moving along the assembly line at the General Motors Cruze assembly plant in Lordstown, Ohio July 22, 2011. REUTERS/Aaron Josefczyk

Photo:   Yahoo

Manufacturing got off to a weak start this year as motor vehicle assembly tumbled, but a rebound in factory activity in New York state suggested the decline could be temporary.  Manufacturing output fell 0.4% in Jan after rising 1.1% in Dec, the Federal Reserve said.  It followed 2 months of solid gains & largely reflected a drop in auto production.  The rebound was driven by new orders, where the index was at its highest since May 2011.  The pick-up in activity likely reflected recovery from Superstorm Sandy, which struck the East Coast in late Oct.  Factory activity has cooled in recent months, but there is no sign that the sector, which carried the economy's recovery from the 2007-09 recession, is heading for a hard landing.  The weakness in manufacturing last month helped to push overall industrial production down 0.1% after increasing 0.4% in Dec.  Production at the nation's mines fell 1.0%.  With industrial output weak, the amount of capacity in use fell to 79.1% from 79.3% in Dec.  Industrial capacity utilization - a measure of how fully firms are using their resources - was 1.1 percentage points below its long-run average.

Production Unexpectedly Decreases as U.S. Factories Cool

Intl purchases of US stocks, bonds & other financial asstes rose more than forecast in Dec as investors sought shelter from slowing global growth.  Net buying of long-term financial assets totaled $64B during the month, up from net purchases of $52B in Nov, according to the Treasury Dept.  The forecast called for net buying of $35B.  China remained the biggest foreign owner of Treasuries after its holdings rose $19.7B to $1.2T.  Japan, the 2nd-largest holder, rose $2.5B to $1.12T.  Foreigners bought a net $29.9B of Treasuries in Dec, up from $26.4B the month before.

International Demand for U.S. Assets Rises on Global Slowdown

U.S. Michigan Consumer Sentiment Index Rose to 76.3 in February

Photo:   Bloomberg

US consumer confidence rose in Feb to a 3-month high, which may help to preserve recent gains in household spending.  The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 76.3 this month from 73.8 in Jan.  It was projected to rise to 74.8.  Increased property values, a strengthening job market & stocks at 5-year highs are providing a boost to consumers’ balance sheets.  A pickup in wealth could help make up for recent gains in gas prices & the loss in take-home pay from a 2 percentage-point increase in the payroll tax.  The index of current conditions, which assesses how Americans perceive their financial situation & whether they think it is a good time to buy expensive items like cars, rose to 88 from a 6-month low of 85 in Jan.  The index of consumer expectations for 6 months from now, which more closely projects the direction of consumer spending, advanced to 68.7 from 66.6 last month.

U.S. Michigan Consumer Sentiment Index Rises to Three-Month High

Stocks continue their sideways trading as has been the case since the end of last month.  Dow got close to 14K, very near a new record, but has stalled.  The news, while not the best, has generally been supportive.  But buyers have been cautious.  Dark clouds from the looming federal budget cuts are getting closer & the need the raise the federal debt ceiling is another whopper size problem that will have to be dealt with in the next month.  Bulls will say the markets are taking uncertainty very well.  I don't now about that.

Dow Jones Industrials

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