Friday, March 8, 2013

Markets rise as jobs growth exceeds estimates

Dow added 67 to yesterday's record close (finishing near the highs), advancers over decliners 2-1 & NAZ was up 12.  The Financial Index gained a fraction in the 245s.  The MLP index jumped another 3+ to the 336s, another record, while the REIT index was up pocket change to the 283s.  Junk bond funds were higher & Treasuries sold off, taking the yield on the 10-year Treasury to an 11 month.  Oil & gold had modest gains. 

MLP (Alerian MLP Index tracking fund)

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CLJ13.NYMCrude Oil Apr 1391.93 Up 0.37 (0.4%)

Live 24 hours gold chart [Kitco Inc.]

<p>               In this Tuesday, Jan. 8, 2013 photo, shipping containers are stacked at the Port of Miami. U.S. wholesalers boosted their stockpiles in January by the largest amount in 13 months, even though their sales dropped sharply. (AP Photo/Wilfredo Lee)
 Photo:   Bloomberg

US wholesalers boosted stockpiles in Jan by the largest amount in 13 months even though their sales dropped sharply.  Inventories at the wholesale level rose 1.2% compared with Dec when inventories had edged up a slight 0.1%, according to the Commerce Dept.  This was the biggest gain since a similar increase in Dec 2011.  But sales at the wholesale level dropped 0.8% after being flat in Dec.  Sluggish growth in stockpiles was a key reason the economy barely grew in Q4.  But stronger job growth & other signs of an economic rebound could spur businesses to restock in Q1.  Increased stockpiling supports economic growth by triggering greater factory production & faster inventory building in the current qtr might help lift growth in Q1.  The rise in stockpiles was led by a 3.4% gain in lumber inventories, a sign that building supply stores are boosting stockpiles in response to the rebound in home construction that has been occurring.  Stockpiles of furniture, another industry that thrives when the housing market is gaining, rose 0.9%.  Farm inventories, however, fell 1.5% after an even larger 5.5% drop in Dec.  These declines likely reflected the impact of a severe drought last year which cut production.  These changes left wholesale inventories at $504B, 6.5% above the level of a year earlier.

Wholesale Inventories in U.S. Increase More Than Forecast

Bill Gross, whose Pacific Investment Management coined the phrase “new normal” in 2009 to describe an era of subpar growth & a diminishing role for developed economies, sees the US outlook brightening, at least for 2013.  Gross, co-chief investment officer of Pimco, doubled his forecast for growth in GDP to 3% for this year, up from the Dec forecast of 1.25-1.75% in 2013.  The US is “moving towards a 3 percent real GDP growth rate” in 2013, in part because of housing, & a nominal growth rate of 5%, Gross said.  The acceleration in growth comes almost 4 years after Pimco unveiled its vision of a “new normal,” a 5-year forecast of lower returns, heightened gov regulation, shrinking US clout in the world economy & bigger role for developing nations.  That outlook, issued in May 2009, proved prescient as the US economy has grown at an average annual rate of 0.6% over the past 4 years.

Gross Raises U.S. Economic Growth Forecast to 3% in 2013

Wells Fargo, the largest mortgage lender, climbed to a 4-year high, increasing the value of Berkshire Hathaway (BRK.A)'s stake to more than $ 16B.  Warren Buffett has praised WFC managers & business as he amassed the holding in the bank over more than 2 decades.  The lender is among his company’s "big-4" stock investments, a group that Berkshire will probably continue to build over time, he said last week.  “Mae West had it right: ‘Too much of a good thing can be wonderful,’” Buffett wrote in his annual letter to Berkshire shareholders Mar 1.  The 3 other stocks in Buffett’s “big 4” are International Business Machines (IBM), Coca Cola (KO) & American Express (AXP).  WFC posted record profit of $18.9B last year, helped by a boom in home-loan refinancing.  Last year, it bought back more than $3.8M of shares & increased its quarterly div to 22¢ from 12¢.  The bank raised its div again in Jan to 25¢.  “It’s very important in this environment to continue to increase the amount of capital distribution that we are providing to our shareholders,” CFO Timothy J. Sloan said at a month ago.  Berkshire has increased its stake in the lender in 9 of the past 10 qtrs.  The stock was up 8¢ today.

Wells Fargo Hits 4-Year High as Buffett Stake Tops $16 Billion

Wells Fargo (WFC)

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Dow closed Feb at 14054 & has risen every day this month, up an amazing 340 in 6 trading days.  That's called amazing & clearly puts it in an overbought position.  But it feels good when looking at portfolio values.  During the end of this week there was no significant negative news, but there are an abundance of challenges facing the politicos in DC, Mario Draghi in Europe & Apple (AAPL) managers.  Enjoy your weekend when looking at updated net worth
Dow Jones Industrials

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1 comment:


Most of the jobs being created are low wage.