Dow and S&P 500 close Q1 at record highs

Dow was up 51 (closing near its high), advancers over decliners 2-1 & NAZ added 11.  The Financial Index gained a fraction to 245.  The Alerian MLP index surged 4+ to a new record over 454 (up 69 in Q1) & the REIT index was up 1+ to the 286s (up 20 in Q1).  Junk bond funds were mixed to lower & Treasuries closed the qtr about even.  Oil is pushing towards $100 while gold fell, capping the longest run of quarterly declines since 2001, as banks in Cyprus reopened, easing concern that Europe’s debt crisis will worsen & curbing demand for haven assets.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month	0.074%
U.S. 2-year	0.244%
U.S. 10-year	1.850%

CLK13.NYM

...Crude Oil May 13

....97.20

...0.62

(0.6%)

The pres will release his federal budget outline on Apr 10, 2 months late.  Under the law, the pres was supposed to submit a budget on Feb 4, but aides said deliberations over spending in the past few months delayed the release of Obama's blueprint.  Huh??  What happened to late is late?  Many of the proposals contained in last year’s $3.8T administration budget, never adopted by Congress, are likely to be recycled.  With automatic budget cuts in place, the White House may be forced to look for savings to pay for increases in its priorities, such as education, clean-energy research & an initial $50B in new spending on public works like improved roads & bridges.  The Rep controlled House & Dem controlled Senate have passed rival budgets in the past week.  The Senate budget embraces nearly $1T in tax increases over the coming decade & shelters the domestic programs House Reps want to cut.  The GOP version would balance the budget over the next decade without raising taxes. 

Obama Will Send Fiscal 2014 Budget to Congress April 10


EBay  expects to have marketplace volume of $110B by 2015 as its active user base expands to 200M, aided by emerging markets.  By the end of 2015, 25% of users will be in developing regions.  CEO John Donahoe is adding features, including a local-shopping tool unveiled, to bolster a turnaround effort that has helped boost shares 75% since he took the helm in 2008.  Under Donahoe, EBAY has pushed beyond its auction roots to expand with businesses such as instant sales & mobile payments.  It’s building social features to help users find items for sale in a local neighborhood, part of an effort to fend off competition from Facebook (FB).  “Online commerce will not devour offline retail, but it will transform how we shop,” Donahoe said.  “Smart retailers are innovating. They’re reinventing and reimagining the store and what it means to shop.”  The local retail tracker comes as stores are increasingly turning to social-networking services to promote brands & sell merchandise.  Last year, the homepage was redesigned, adding a feature to show users products based on their personal information & purchasing history.  More of those purchases are happening on mobile devices.  About 25% of users on PayPal (owned by EBAY) service are accessing the product via mobile devices & payment volume for PayPal can double over the next 3 years.  The stock was up $2.15 today.

EBay Expects $110 Billion in Marketplace Volume by 2015

eBay (EBAY)

Apr gasoline fell as prices dropped below technical support levels.  Futures slipped as refineries returned from maintenance, boosting operating rates last week to a 2-month high.  Gasoline has added 9.3% YTD, the smallest advance in 5 years.  Gasoline demand over the past 4 weeks was 0.2% below a year ago.  The motor fuel has gained 5.4% in Mar.  Futures have fallen 4.6% in Q1 & 2.3% this month.  The more actively traded May contract was $3.0277 a gallon.  Gasoline at the pump averaged nationwide was $3.64, AAA said.  Prices have dropped for the past 8 days & are 26.6¢ below a year ago.  Price last year peaked on Apr 4 & 5 at $3.93.  With crude heading for $100, prices will be climbing next month.

Gasoline Heads for Smallest First-Quarter Advance Since 2008


Q1 closed on an up note as the bears went home early.  MLPs had a record quarterly gain & REITs did well.  Many of the Dividend Aristocrats did well & junk bond funds are near multi year highs.  The message from this performance is "What can go wrong?"  The answer is "plenty."  The euro zone just got by another bank mess.  The US had sluggish growth last qtr & Q1 will be nothing to write home about.  Then there is the fiscal mess in divided DC with no solutions in sight.  The yield on the 10 year Treasury (considered a safe haven investment) is near its LOW for Q1.  Enjoy your holiday weekend,

Dow Jones Industrials

Markets waver as Dow & S&P 500 set new records

Dow rose 43, advancers ahead of decliners 3-2 & NAZ inched up 3. The Financial Index did little in the 244s.  The MLP index jumped 3 to 453, yet another record, & the REIT index was up fractionally to 286 (a post recession high).  Junk bond funds rose & Treasuries were pretty much even.  Oil was flattish & gold slid below 1600.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month	0.079%
U.S. 2-year	0.244%
U.S. 10-year	1.843%

CLK13.NYM

...Crude Oil May 13

...96.75

....0.17

(0.2%)

GCJ13.CMX

....Gold Apr 13

.......1,596.80

....9.40

(0.6%)

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Cypriots lined up at banks as they reopened under tight controls imposed on transactions, but there was no sign of a run on deposits that had been feared after the gov was forced to accept a stringent EU rescue package.  Banks were shut almost 2 weeks ago as the gov negotiated a €10B intl bailout to avert bankruptcy, the first in Europe's single currency zone to impose losses on bank depositors.  Figures published by the Central Bank of Cyprus showed that savers from other euro zone countries withdrew 18% of their deposits in Feb, as talk of a tax on bank accounts gained ground.  Overall private sector bank deposits in Cyprus fell by 2.2% to €46.4B last month, after a similar drop in Jan. Authorities say the emergency rules imposed to limit withdrawals & prevent a bank run will be temporary, initially for 7 days, but it is believed they will be difficult to lift as long as the economy is in crisis.  The IMF defended the agreement to bail out Cyprus, saying it had the support of all parties involved & will help the country develop a healthier economy over the long term.  “The adjustment that the plan will entail as the financial sector downsizes and the economy adjusts accordingly will be a difficult process for the Cypriot people over some period of time -- we are mindful of that,” Gerry Rice, the IMF’s director of external affairs, said.  “But it will ultimately result in an economic model that is more sustainable and growth promoting.”

IMF Defends Cyprus Deal as Country Faces ‘Difficult’ Period




Photo:   Yahoo

The number seeking unemployment benefits jumped 16K last week, the 2nd straight weekly increase, but the longer-term trend in layoffs remained consistent with an improved job market.  Applications increased to 357K, according to the Labor Dept, up from 341K the previous week (which was revised slightly higher).  The 4-week average rose 2K to 343K.  Even with the gain, the average is only slightly higher than the previous week's 5-year low of 341K.  First-time applications are a proxy for layoffs. They have been declining steadily since Nov.  At the same time, hiring has accelerated, lowering the unemployment rate in Feb to a 4-year low of 7.7%.  The number receiving some kind of unemployment aid is down sharply from the recession peak.  Nearly 5.5M were receiving aid, up roughly 87K from than the previous week but still well below the 7.2M from a year earlier.

Jobless Claims in U.S. Increase More Than Forecast




Photo:   Yahoo

The US economy grew at a slightly faster but still anemic rate at the end of last year.  There is hope that growth accelerated in early 2013 despite higher taxes & cuts in gov spending.  The economy grew at an annual rate of 0.4% in Q4, according to the Commerce Dept, slightly better than the previous estimate of 0.1% growth.  The revision reflected stronger business investment & export sales.  The forecast for Q1 growth is around 2.5%.  Steady hiring has kept consumers spending this year.  And a rebound in company stockpiling, further gains in housing & more business spending also likely drove faster growth in Q1.  But the 0.4% growth rate for the GDP was the weakest quarterly performance in almost 2 years & followed a 3.1% increase in Q3.  Q4 results were hurt by the sharpest fall in defense spending in 40 years.  For 2012, the economy grew just 2.2% after a 1.8% increase in 2011 & a 2.4% advance in 2010.  Since the recession ended in mid-2009, the economy has been expanding at sub-par rates as a string of problems from higher gas prices to Europe's debt crisis have acted as a drag.  The CBO is predicting just 1.5% growth for 2013.

US economy expands at 0.4 percent rate AP


It looks like the popular averages will close Q1 at record levels.  However the gains come without a lot of conviction.  Italy is still struggling with a new, temporary gov trying to fix its mess.  But Italian yields fell today as the Cyprus situation stabilized.  There is not a lot going on in the markets & volume is low.  Many traders will leave early today to get a start on a long weekend with the markets closed tomorrow.  Next week should bring excitement.

Dow Jones Industrials

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