Wednesday, May 15, 2013

Dow jumps to another record high

Dow added 60 for new record, advancers just ahead of advancers & NAZ was up 9.  The MLP index rose 1+ to go over 460 & the REIT index gained 2+ to the 312s, another high since 2007.  Junk bond funds slid lower & Treasuries were higher.  Oil cut its early AM losses.  Gold tumbled below $1400, extending the longest slump in almost 3 months, as the dollar’s rally eroded demand.

AMJ (Alerian MLP Index tracking fund)

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CLM13.NYM...Crude Oil Jun 13....94.06 Down ...0.15  (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Foreign demand for US Treasury securities rose to a record level in Mar, signaling further confidence in US debt.  The Treasury Dept said that total foreign holdings increased 0.7% in Mar from Feb to $5.76T & holdings have increased nearly 12% in the 12 months.  Demand increased even though the 2 largest buyers of US debt reduced their holdings slightly in Mar.  China trimmed its holdings 0.1% to $1.25T & Japan also cut its holdings 0.1% to $1.11T.  The 3rd-largest buyer, a group of 5 Caribbean nations that includes the Bahamas & the Cayman Islands, boosted holdings 3.9% to $291B.  Treasuries are in demand with foreign buyers just as the US gov financial picture is improving.  The CBO projected that the annual federal deficit will be just $643B when the budget year ends on Sep 30, $202B lower than the last estimate in Feb.  A narrower deficit is likely to push a debate over increasing the nation's $16.39T borrowing limit off until the fall.

Foreign Demand for U.S. Financial Assets Declined in March

<p> Sundar Pichai, senior vice president, Chrome and Apps at Google, speaks about the 900 million android users at Google I/O 2013 in San Francisco, Wednesday, May 15, 2013. (AP Photo/Jeff Chiu)

Photo:    Yahoo

Google's 6th annual conference for software developers opened today with a chance for the company to showcase its latest services.  Announcements include new features for online games, maps & search, a new music-streaming service & enhancements to its Google Plus social network, including tools for sharing & enhancing photos.  Android already has been activated on 900M devices made by Samsung Electronics, HTC & other manufacturers.  Android has helped GOOG make more money because its search engine & other services, including maps, are usually built into the devices.  That tie-in drives more visitors to GOOG, giving it more opportunities to sell ads.  Note, the 900M figure is enormous.  The stock shot up $28, to over $900 (a new record).

Google unveils maps, photo, music features AP

Google (GOOG)

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Deere Cuts Sales Forecast as Cold Weather Delays Crop Planting

Photo:   Bloomberg

Deere cut its full-year equipment sales forecast after cold, wet weather slowed demand for construction & turf-care machinery in North America.  The company said equipment revenue will rise by about 5% in the year thru Oct, down from a Feb forecast of 6%.  Global construction & forestry equipment sales will drop by about 5%, compared with a previous projection for a 3% increase.  It also said the effect of unfavorable foreign exchange will curb sales by about 1 percentage point.  But it maintained its full-year net income forecast of about $3.3B, lower than the $3.35B estimate from analysts.  Q2 EPS of $2.76 exceeded the $2.72 estimate.  The forecast is “tempered” by economic concerns holding back business confidence & growth in parts of the world, CEO Samuel Allen said.  Those headwinds may slow the company’s goal to reach $50B in revenue by 2018.  North America is its largest market where construction spending fell 1.7% in Mar, the 2nd drop in 3 months.  Net income rose to $1.08B in its Q2 (thru Apr), from $1.06B a year earlier & revenue rose 9% to $10.9B.  The global farm & turf equipment sales will rise about 7% for the full year on high commodity prices & farm incomes.  Industrywide farm machine sales will rise about 5% in the US & Canada & as much as 20% in South America while falling 5% in the EU.  The stock tumbled $4.13 (4%).

Deere Lowers Annual Sales Forecast After Cold Weather Slows Construction

Deere (DE)

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Dow continues on its flight to heaven even though the economic fundamentals behind the rise are not that great.  It seems nothing can stop that surge, always a dangerous sign.  Q1 earnings are largely in & got fairly good grades, even if that was delayed.  In the 2nd half of Apr, Dow stalled but has picked up steam in May when it rose over 400.  Overlooked in the earnings reports is that sales were on the sluggish side when earnings beat reduced estimates.  Scandals in DC are not of concern.  Buyers keep coming!

Dow Jones Industrials

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