Monday, May 13, 2013

Markets fluctuate on slower growth in China

Dow slid 26, decliners over advancers almost 2-1 & NAZ added 2.  The MLP index lost a fraction to under 461 & the REIT index went up 1+ to the 308s.  Junk bond funds were mixed & Treasuries did little except for the 10 & 30 year bonds which fell.  Oil finished lower & gold fell, capping the longest slump in 5 weeks, as holdings in exchange-traded products backed by the metal extended a decline to the lowest since Jul 2011.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM13.NYMCrude Oil Jun 1395.47 Down 0.57 (0.6%)

Live 24 hours gold chart [Kitco Inc.]

General Motors will spend $100M to build a data center in Michigan as part of its overhaul of information technology operations  The new facility follows a $130M facility in another Detroit suburb, that opened last year.  Construction will begin this year with plans for it to open in Jul 2014.  “Today every single length of the automotive value chain is wired and connected and that means from design to the showroom floor,” CEO Dan Akerson said.  “You have to have a core competency in IT. You have to own it and you have to control it.”  The centers are part of a reorganization of GM’s IT work.  It had done about 10% of its IT work internally & Chief Information Officer Randy Mott plans to boost that to 90% by updating the computer & financial reporting systems.  The automaker started with 1½K in-house IT workers & ultimately wants to have 9K.  “When we started this journey we were the most outsourced and I think we’ll end on the side of being the least outsourced when we get to the 90 percent in-sourced,” Mott said.  The stock fell 42¢.

GM to Spend $100 Million to Build Michigan Data Center

General Motors (GM)

stock chart

China’s home sales transaction value fell 13% in Apr from the previous month as gov new property curbs started to take effect.  The value of homes sold declined to 494B yuan ($80B) from 569B yuan in Mar, according to the National Statistics Bureau data.  But the value of sales from Jan-Apr rose 65% to 1.69T yuan from a year earlier.  35 city govs issued details of property measures by Apr 1 in response to the central gov’s toughest property curbs in a year, imposed in Mar.  They include ordering the central bank to raise down-payment requirements & interest rates for 2nd mortgages in cities with excessive price gains & enforcing a property-sales tax.  Investments in homes, office buildings, malls & other real estate gained 21% to 1.9T yuan from Jan-Apr, compared with a 19% increase a year earlier, according to the statistics bureau.  New property construction rose 1.9% to 555M square meters (6B square feet).  Moody’s & S&P both said last week that the gov curbs will slow down property sales growth this year.

China April Home Sales Fall 13% as Property Curbs Take Toll

China’s April Industrial Output Rises 9.3% From Year Earlier

Photo:    Bloomberg

China’s fixed-asset investment unexpectedly decelerated last month while industrial output trailed estimates, adding to concerns that the economy will fail to show much of a recovery in Q2.  Fixed-asset investment excluding rural households in the first 4 months of the year increased 20.6%, according to the National Bureau of Statistics, compared with 20.9% in Q1.  Production grew 9.3% in Apr from a year earlier & retail sales climbed 12.8%.  The data may test the new leadership’s tolerance for slower economic expansion as President Xi Jinping & Premier Li Keqiang implement policy changes to improve the quality & efficiency of growth.  The central bank warned last week that while the foundation for stable growth isn’t yet solid, stimulus policies could trigger inflation.  The gain in industrial output compared with the 9.4% estimate & an 8.9% increase in Mar.  The projection for retail-sales growth was 12.8% after a 12.6% increase the previous month.  Another indication about slowdown in Chinese economic growth.

China’s Investment Slows as Production Trails Estimates: Economy

This was a sleepy day in the markets with very little going on.  However politicos are getting active in DC, making for excitement.  It looks like the 3 major economic centers are stumbling to some degree.  Europe is bogged down in a recession.  The US recovery is being pinched by federal budget cutbacks which show no sign of ending soon.  There is new leadership in China & it's trying to control inflation without hurting growth too much.  Meanwhile the popular averages are not greatly disturbed.

Dow Jones Industrials

stock chart

No comments: