Tuesday, May 7, 2013

Markets rise after gains in Europe

Dow climbed 35, advancers over decliners 3-2 & NAZ lost 5.  The MLP index was up 1+ to the 452s & the REIT index gained fractionally to 307.  Junk bond funds were higher & Treasuries eased back.  Oil & gold sold off.

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...95.74 Down .....0.42  (0.4%)

GCK13.CMX...Gold May 13....1,444.40 Down ...23.70  (1.6%)

German Factory Orders Unexpectedly Jump in Sign of Recovery

Photo:   Bloomberg

German factory orders unexpectedly jumped for a 2nd month in Mar, suggesting the largest economy in Europe is starting to grow again.  Orders increased 2.2% from Feb, when they also advanced 2.2%.  The forecast called for a 0.5%.  In the year, workday- adjusted orders fell 0.4%.  The € gained farctionally on the news.  Orders for German exports rose 2.7%, with those from the euro area surging 4.2%.  Domestic sales gained 1.8%.  While consumer goods orders fell 0.7%, those for intermediate goods increased 3.6% & orders of investment goods climbed 2.  Bulk orders were “significantly above average” in Mar, helping to drive a 0.4% gain in Q1.  The European Commission last week cut its projections for the euro area, Germany's biggest export market, predicting the economy will shrink 0.4% this year after a 0.6% contraction in 2012.  “The risks surrounding the economic outlook for the euro area continue to be on the downside,” Mario Draghi said last week after the ECB lowered its benchmark interest rate to a record low of 0.5%.

German Factory Orders Rose in March in Sign of Recovery

Employers in the US posted fewer job openings in Mar compared with Feb & slowed overall hiring, underscoring a weak month of job growth.  The Labor Dept says job openings fell 1.4% to 3.8M jobs & total hiring declined 4.3% to 4.3M.  The Fri jobs showed employers added just 138K net jobs in Mar, well below 332K in Feb.  This report shows that the slowdown occurred because gross hiring fell & layoffs increased!!  The unemployed faced heavy competition in Mar.  There were 3.1 unemployed, on average, for each job opening.  That's above the ratio of 2-1 that is typical in a healthy economy.  Job growth picked up in Apr when the economy added 165K net jobs, & the unemployment rate fell to 7.5%.

US job postings fell in March; hiring slowed AP

Senate Passage of Online Sales Levy Imperils Tax-Free Shopping

Photo:   Bloomberg

The Senate voted to let states collect taxes on out-of-state internet & catalog sales & sent the proposal to the House where the issue is dividing Reps.  The measure, passed yesterday on a 69-27 bipartisan vote, would end the era of tax-free internet shopping.  It is backed by major retailers that say it’s unfair that out-of-state sellers don’t have to collect sales taxes on purchases.  States lose an estimated $23B annually in forgone revenue from uncollected sales taxes.  The measure exempts businesses with less than $1M a year in out-of-state sales.  Republicans were almost evenly divided in favor of the measure.  The Rep controlled House probably won’t act quickly or pass a measure in the same form as the Senate.  Some anti-tax House members oppose the bill & others support it.  To pass a measure, House leaders may need to rely on Dem votes & overcome objections from many of their own members.  Rep Bob Goodlatte from Virginia & chairman of the Judiciary Committee, said after the vote that House consideration will be “more thoughtful” than in the Senate, which bypassed a committee vote.  House Speaker John Boehner & Majority Leader Eric Cantor haven’t taken positions on the legislation.  There is a lot riding on the outcome for all retailers.

Senate Passage of Online Sales Levy Imperils Tax-Free Shopping

Stocks continue to wander aimlessly with little outside news to stimulate buyers or sellers.  The US economy seems to have absorbed the federal budget cuts fairly well, at least so far.  But unemployment remains at troubling high levels, even higher when those who are working at low paying jobs (or 2 jobs) are included.  Despite improved economic data from Germany, Europe is in a recession & the weaker countries in the south will feel its effects more deeply.  Dow is priced to perfection & as long as that attitude is maintained, stocks should fly even higher.

Dow Jones Industrials

stock chart

No comments: