Thursday, March 7, 2013

Dow rises to another record high as unemployment claims decline

Dow gained 33, advancers ahead of decliners 4-3 & NAZ rose 9   The Financial Index added 1+ to the 244s, a mult year high.  The MLP index jumped 3+ to 433 & the REIT index lost 1+ to the 282s.  Junk bond funds were mixed to higher & Treasuries saw selling.  Oil advanced after US unemployment benefit applications dropped to a 6-week low, bolstering optimism about the country’s economy & the dollar weakened against the €.  Gold was flattish.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLJ13.NYM...Crude Oil Apr 13....91.48 ...Up 1.05 (1.2%)

Live 24 hours gold chart [Kitco Inc.]

Household Worth in U.S. Rises by $1.17 Trillion on Housing

Photo:    Bloomberg

Household wealth in the US climbed in Q4 to the highest level in 5 years, propelled by a gain in home prices that is helping repair family finances.  Net worth for households & non-profit groups increased by $1.17T from Oct thru Dec, up 1.8% from the previous 3 months, to $66T, according to the Federal Reserve.  It was the highest since Q4 of 2007.  Household wealth is approaching its pre-recession level as the recovery in home values helps Americans overcome higher taxes put in place this year.  The Federal Reserve plans to keep lending rates low may continue to shore up finances, giving consumers the confidence to keep buying big- ticket items including cars & homes.  Household net worth is still $1.3T below its pre-recession peak of $67.4T reached in Q3- 2007.  The value of financial assets owned by American households, including stocks & pension-fund holdings, increased $784B in Q4.  The gain in Q1 may be even bigger as investors have taken tax increases & federal gov budget cuts in stride.  The value of US equities has now increased $1.4T since the end of 2012.  Household real-estate net worth climbed $479B in Q4, a 6th consecutive gain & the biggest since 2006.  Owners’ equity as a share of total household real-estate holdings increased to 46.6% in Q4 from 45.2% in Q3.  This helps explains why consumers have taken the tax hikes so well (at least so far).

The € strengthened the most in 8 weeks after ECB President Mario Draghi said data suggest the region’s economy will stabilize this year.  The ¥ fell to lowest level since Aug 2009 versus the dollar after Bank of Japan's Masaaki Shirakawa’s final meeting amid speculation his successor will expand monetary stimulus & debase the currency.  The € advanced for a 2nd day versus the ¥ as ECB policy makers refrained from cutting their benchmark interest rate & Spanish borrowing costs declined at a bond auction.  The dollar declined versus most major peers before a report tomorrow forecast to show increased jobs gains in Feb.  The € rose 1.1% to just over $1.31.

Euro Up Most in 8 Weeks on Draghi Views; Yen Weakens to 2009 Low

Google, has passed Apple to become the most-owned stock by the 50 biggest actively managed US mutual funds.  Among hedge funds, GOOG was also the top holding at the end of Q4 for the largest funds by asset size.  GOOG shares are now trading at about 25 times profit, compared with a P/E ratio of less than 10 for AAPL, the widest gap since June 2005, 2 years before competition between the 2 companies in mobile devices began to intensify.  Under CEO Larry Page, GOOG has extended a lead in Web search, boosting its share to 67%, & in smartphone software, where it commands 70% of the market.  The 2 charts below tell the story.

Google Overtakes Apple as Largest Holding in U.S. Mutual Funds

Google (GOOG)

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Apple (AAPL)

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Buyers continue to come out for stocks.  Hostile language from DC has cooled down & European concerns eased after the ECB meeting.   The politicos in DC still face enormous challenges concerning reducing expenditures (that means really cutting expenditures, not just lowering the growth rate) & raising the debt ceiling.  Tomorrow is the big jobs report & it will probably be good enough for the stock market.  For the time being, Dow is moving ahead one step at a time.

Dow Jones Industrials

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