Dow jumped 121, advancers over decliners 2-1 & NAZ rose 33. The MLP index was up 2+ to the 458s & the REIT index added 1+ to over 312. Junk bond funds were mixed & Treasuries sold off as stocks rallied. Oil
advanced to a one-week high on signals that global economic
growth will accelerate, bolstering fuel consumption. Gold fell for a 7th day in a row, drawn down by a stronger US dollar & better economic news.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
The index of US leading indicators climbed in Apr, a rebound from Mar that suggests the economy will accelerate later in the year. The Conference Board’s gauge of the outlook for the next 3-6 climbed 0.6% after falling a revised 0.2% in Mar (steeper than previously reported). The forecast called for a 0.2% increase. Advancing stock prices & a recovering housing market may be propping up household spending, which accounts for about 70% of the economy. Still, slowing in manufacturing, automatic federal budget cuts & higher payrolls taxes threaten economic growth. 7 of the 10 indicators in the leading index contributed to the increase, including a jump in building permits, a drop in the number of jobless claims & the widening interest-rate spread between the federal funds rate & 10-year Treasury notes.
Photo: Bloomberg
Some Chinese investment projects, including those for airports, paper pulp factories & gas fields, will no longer need pre-approval from the nation’s economic planning agency. In all, 117 “approval items” can go ahead without authorization or be approved by local govs, according to a list published on May 15. Premier Li Keqiang pledged to reduce the gov role in the economy after a new leadership took over in Mar. He signaled authorities are reluctant to use stimulus to counter a slowdown, saying China must rely on market mechanisms to aid growth. The pace of investment gains unexpectedly decelerated last month, & industrial output trailed estimates. Investment in gas & wind power plants can be authorized by provincial-level authorities, along with rare-earth processing & intracity rail projects. According to the list, polyester projects with daily output of more than 300 tons & sugar plants with daily processing capacity of more than 1500 tons no longer need pre-approval from the National Development & Reform Commission. The changes intend to “seriously reduce administrative intervention in microeconomic activities” to “further unleash benefits from reform” & to “enhance growth momentum,” the gov said.
China Cuts Red Tape as Premier Li Shows Stimulus Reluctance
General Motors topped its $33 IPO price for the first time in more than 2 years as it prepares to introduce redesigned full-size pickups. Confidence in GM is growing as the Treasury sells down its stake, helping facilitate a return to the S&P 500. It also plans to introduce about 20 new vehicles in the US this year, including profitable Chevrolet Silverado & GMC Sierra pickups, as it seeks to rebound from an 88-year-low market share in 2012. The automaker has said it expects modest improvement this year compared with 2012, when it earned $6.2B, the 3rd profitable year since emerging from its 2009 US backed bankruptcy reorganization. The stock rose $1.09 to $33.48.
GM Recovers to $33 IPO Price on Truck-Sale Optimism After a Two-Year Slump
Stocks are having a stellar year while economic data has been nothing to write home about. Dow is up a staggering 3250 YTD with hardly a hiccup along the way. Under ordinary conditions, that would be a good advance over 2- 3 years. This week alone, it jumped 236 from last week's record high. I know how good it feels but keep wondering how long this euphoria will last. During the rally Treasuries have been sold & gold has entered an ugly bear market. 2 traditional safe havens are being abandoned for riskier stocks. Dow is vastly overbought & a correction will come at some point. But rapid gains without a correction are dangerous.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.03% | |
U.S. 2-year |
0.24% | |
U.S. 10-year |
1.95% |
Photo: Bloomberg
The index of US leading indicators climbed in Apr, a rebound from Mar that suggests the economy will accelerate later in the year. The Conference Board’s gauge of the outlook for the next 3-6 climbed 0.6% after falling a revised 0.2% in Mar (steeper than previously reported). The forecast called for a 0.2% increase. Advancing stock prices & a recovering housing market may be propping up household spending, which accounts for about 70% of the economy. Still, slowing in manufacturing, automatic federal budget cuts & higher payrolls taxes threaten economic growth. 7 of the 10 indicators in the leading index contributed to the increase, including a jump in building permits, a drop in the number of jobless claims & the widening interest-rate spread between the federal funds rate & 10-year Treasury notes.
Photo: Bloomberg
Some Chinese investment projects, including those for airports, paper pulp factories & gas fields, will no longer need pre-approval from the nation’s economic planning agency. In all, 117 “approval items” can go ahead without authorization or be approved by local govs, according to a list published on May 15. Premier Li Keqiang pledged to reduce the gov role in the economy after a new leadership took over in Mar. He signaled authorities are reluctant to use stimulus to counter a slowdown, saying China must rely on market mechanisms to aid growth. The pace of investment gains unexpectedly decelerated last month, & industrial output trailed estimates. Investment in gas & wind power plants can be authorized by provincial-level authorities, along with rare-earth processing & intracity rail projects. According to the list, polyester projects with daily output of more than 300 tons & sugar plants with daily processing capacity of more than 1500 tons no longer need pre-approval from the National Development & Reform Commission. The changes intend to “seriously reduce administrative intervention in microeconomic activities” to “further unleash benefits from reform” & to “enhance growth momentum,” the gov said.
China Cuts Red Tape as Premier Li Shows Stimulus Reluctance
General Motors topped its $33 IPO price for the first time in more than 2 years as it prepares to introduce redesigned full-size pickups. Confidence in GM is growing as the Treasury sells down its stake, helping facilitate a return to the S&P 500. It also plans to introduce about 20 new vehicles in the US this year, including profitable Chevrolet Silverado & GMC Sierra pickups, as it seeks to rebound from an 88-year-low market share in 2012. The automaker has said it expects modest improvement this year compared with 2012, when it earned $6.2B, the 3rd profitable year since emerging from its 2009 US backed bankruptcy reorganization. The stock rose $1.09 to $33.48.
GM Recovers to $33 IPO Price on Truck-Sale Optimism After a Two-Year Slump
General Motors (GM)
Stocks are having a stellar year while economic data has been nothing to write home about. Dow is up a staggering 3250 YTD with hardly a hiccup along the way. Under ordinary conditions, that would be a good advance over 2- 3 years. This week alone, it jumped 236 from last week's record high. I know how good it feels but keep wondering how long this euphoria will last. During the rally Treasuries have been sold & gold has entered an ugly bear market. 2 traditional safe havens are being abandoned for riskier stocks. Dow is vastly overbought & a correction will come at some point. But rapid gains without a correction are dangerous.
Dow Jones Industrials
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