Wednesday, May 22, 2013

Higher markets on Bernanke comments

Dow jumped 58, advancers ahead of decliners 2-1 & NAZ was up 7.  The MLP index rose 2+ to the 469s, another record, & the REIT index was up 1 to the 316s.  Junk bond funds were mixed & Treasuries sold off.  Oil fell after a gov report showed US inventories fell less than expected last week.  Gold topped 1400, then pulled back.

AMJ (Alerian MLP Index tracking funde)

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Treasury yields:

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U.S. 2-year


U.S. 10-year


CLN13.NYM...Crude Oil Jul 13....95.08 Down .....1.10  (1.1%)

GCK13.CMX...Gold May 13...1,395.00 Up ...17.20 (1.3%)

Big Ben told Congress that the US job market remains weak & that it is too soon for the Federal Reserve (FED) to end its extraordinary stimulus programs.  Bernanke noted that the economy is growing moderately this year & unemployment has fallen to a 4-year low of 7.5%.  Still, unemployment remains well above levels consistent with healthy economies.  He added that higher taxes & deep federal spending cuts are expected to slow economic growth this year.  Reducing the Fed's efforts to keep borrowing rates low would "carry a substantial risk of slowing or ending the economic recovery," Bernanke said.  The FED said after its last meeting that it could increase or decrease the pace depending on how the job market & inflation fare.

Bernanke Says Premature Tightening Would Endanger Recovery

Lowe's Q1 net income rose 3%, but results fell short of expectations as rainy weather hurt spring gardening sales.  "Cooler than normal temperatures and greater precipitation resulted in a delayed spring selling season which impacted our results in exterior categories," CEO Robert Niblock said.  EPS was 49¢ versus 43¢ a year ago.  Analysts expected higher earnings of 51¢.  Revenue dipped to $13.09B from $13.1B & below the expected rise to $13.45B.  Revenue at stores open at least a year fell 0.7%.  This figure excludes results from stores recently opened or closed.  Niblock said overall results were weak in Mar but that there was significant improvement in Apr, which has carried over into the first few weeks of May.  It has also revamped its pricing structure, offering what it says are permanent low prices on many items across the store instead of fleeting discounts.  Additionally, it has also focused on hiring more workers & improving its inventory.  The company still expects fiscal 2013 EPS of about $2.05, with revenue up approximately 4%, implying revenue of $52.5B.  Analysts are forecasting EPS of $2.09 on revenue of $52.4B. The stock advanced 59¢.

Lowe’s Profit Trails Estimates as Weather Damps Sales of Garden Supplies

Lowe's (LOW)

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Sales of Previously Owned U.S. Homes Rise to Three-Year High

Photo:   Bloomberg

Sales of previously owned US homes rose in Apr to the highest level in more than 3 years as housing continued to gain momentum.  Purchases of existing houses increased 0.6% to an annual rate of 4.97M, the most since Nov 2009, the National Association of Realtors reported.  The forecast called for a pickup to a 4.99M pace.  The median price of an existing home climbed 11% to $192K from $173K a year earlier.  Last month’s median price was the highest since Aug 2008 (just prior to the Lehman collapse).  The number of properties on the market climbed 11.9% to 2.16M (still about 14% lower than a year earlier).  Foreclosures & other distressed sales accounted for 18% of the total, the lowest share going back to Oct 2008.

Sales of Previously Owned U.S. Homes Rise to Three-Year High

Markets continue to fly toward heaven, with nothing standing in their way.  Big Ben said what was expected by buyers.  So they are buying more.  Dow is up a dazzling 28% since last Jun & the bulls see nothing but clear sky ahead.  Meanwhile earnings are coming in just "good enough" as revenue growth has been sluggish.  That disconnect will not last.  Keep in mind that, Bernanke just said that growth is expected to slow (from a drab rate) this year.

Dow Jones Industrials
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