Monday, May 13, 2013

Markets drift lower on retail sales

Dow fell 27, decliners over advancers 2-1 & NAZ inched up 2.  The MLP index was off a fraction to below 461 & the REIT index fell fractionally to 307.  Junk bond funds dropped & Treasuries did little.  Oil fell for a 3rd day as China's crude processing reached the lowest level in 8 months in Apr & OPEC boosted output.  Gold slid lower in what is turning out to be its first yearly decline in 12 years.

AMJ (Alerian MLP Index tracking fund

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM13.NYM...Crude Oil Jun 13...95.34 Down ...0.70  (0.7%)

GCK13.CMX...Gold May 13...1,432.00 Down ...4.80  (0.3%)

Breakfast cereal is shown for sale at a Ralphs grocery store in Del Mar, California, March 6, 2013. REUTERS/Mike Blake

Photo:   Yahoo

US retail sales unexpectedly rose in Apr as households bought automobiles, building materials & a range of other goods, pointing to underlying strength in the economy.  The Commerce Dept said  retail sales edged up 0.1% after a revised 0.5% decline in Mar.  Expectations was for a 0.3% drop after a previously reported 0.4% decline in Mar.  Core sales, which strip out automobiles, gasoline & building materials & correspond most closely with the consumer spending component of GDP, increased 0.5% after nudging up 0.1% in Mar.  The increase in core sales, coming on the heels of relatively strong job growth over the last 3 months, may help to ally fears of an abrupt slowdown in the economy early in Q2 even as gov austerity is starting to put a strain on manufacturing.  The tone of the retail sales report was mostly firm.  Receipts at auto dealerships rose 1.0% after falling 0.6% in Mar.  Excluding autos, sales dipped 0.1% after falling 0.4% in Mar.  Though falling gasoline prices pushed down receipts at gasoline stations, sales excluding gasoline recorded their largest increase since Dec.  Stripping out gasoline & autos, sales rose 0.6%.

Retail Sales in U.S. Unexpectedly Rise on Broad-Based Gains

Businesses in the US left their stockpiles unchanged in Mar for a 2nd month while their sales fell sharply.  The Commerce Dept says business stockpiles showed no increase in Mar on a seasonally adjusted basis after there was no restocking in Feb.  Sales fell 1.1% in Mar compared with Feb when sales had risen 1%.  A lack of inventory building could slow economic growth because it means businesses are ordering fewer factory-made goods.  But increased restocking at a time when sales are falling can also signal trouble for the economy, if businesses react by suddenly cutting back their stockpiles.

US business stockpiles flat in March, sales fall AP

Euro Recession Seen Longest in Single Currency Era

Photo:   Bloomberg

Euro-area data this week will probably reveal economic scars of the sovereign debt crisis confirming that the region is now suffering the longest recession since the single currency’s creation.  Its GDP is expected to fall 0.1% in Q1, for a 6th straight quarterly decline, exceeding the 15-month contraction in 2008-2009 during the financial crisis.  The data to be released on Wed follow a series of national GDP reports that day showing the legacy of the sentiment shock & austerity measures since the crisis began.  While a ECB pledge to backstop the € has eased financial-market tensions, economic confidence at a 4-month low & record unemployment highlight the risk that the slump will persist.  Euro-zone finance ministers are gathering in Brussels today to discuss the economic situation in the region after the European Commission revised its forecast for 2013 down to a 0.4% contraction.  They are reviewing bailout programs in Cyprus & Spain, & may sign off on aid to Greece.

Euro Recession Seen Longest in Single Currency Era

This is another quiet day for stocks with little news in the background.  Dow & S&P 500 are essentially at record highs while NAZ has a long way to go before topping levels reached in the heady days of the internet boom.  The MLP index is at its record & the REIT index is back to where it was in 2007.  Junk bonds, stocks with high yields, are also at multi year highs with near record low yields.  The bulls remain in command even if they are slow to return from their holiday weekends.

Dow Jones Industrials

stock chart

No comments: