Tuesday, June 4, 2013

Markets drift while hoping for the Federal Reserve to extend bond buying

Dow inched up 1, advancers ahead of decliners 5-4 & NAZ added 6.  The MLP index was up fractionally in the 444s & the REIT slipped a fraction to the 286s.  Junk bond funds were mixed to higher after recent selling & Treasuries slid back.  Oil & gold were lower, taking gold back below1400.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN13.NYM...Crude Oil Jul 13...92.86 Down .....0.59  (0.6%)

GCM13.CMX...Gold Jun 13....1,397.80 Down ...13.90  (1.0%)

IBM, a Dow stock, is buying cloud computing company SoftLayer Technologies to expand its online software business.  Financial terms were not disclosed, but the deal's value is believed to be about $2B.  SoftLayer is a privately held company based in Dallas with 13 data centers in the US, Asia & Europe.  Software stored & accessed on the internet is increasingly popular with businesses because it lets workers in from any internet-connected device.  IBM, anticipates hitting $7B annually in cloud revenue by 2015.  The acquisition is expected to close in Q3.  IBM stock lost pocket change.

IBM to Buy Cloud-Computing Provider SoftLayer Technologies

International Business Machines (IBM)

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<p> In this Tuesday, April 9, 2013 photo, an "Under Contract" sign is posted outside a home in Carmel, Ind. U.S. home prices soared 12.1 percent in April from a year earlier, the biggest gain since February 2006, as more buyers competed for fewer homes, real estate data provider CoreLogic reports, Tuesday, June 4, 2013. (AP Photo/Michael Conroy)

Photo:   Yahoo

US home prices soared 12.1% in Apr from a year earlier, the biggest gain since Feb 2006, as more buyers competed for fewer homes.  CoreLogic says prices rose in Apr from the previous Apr in 48 states.  Prices also rose 3.2% in Apr from Mar, much better than the previous month-to-month gain of 1.9%.  More people are looking to purchase homes.  But the number of homes for sale is 14% lower than it was a year ago & the supply shortage has contributed to the price increases.  Rising home prices can help sustain the housing recovery.  They encourage more homeowners to sell & they spur would-be homeowners to buy before prices increase further.  Home sales & prices began to recover last year, 6 years after the housing bust.  They have been buoyed by steady job gains & low mortgage rates.  The limited supply of homes has also made builders more willing to ramp up construction, creating more construction jobs.  Applications for building permits rose in Apr to the highest level in nearly 5 years.  Despite the large gains, home prices are more than 22% below their Apr 2006 peak.

US home prices jumped in April by most in 7 years AP

Trade Deficit in U.S. Widened in April From Three-Year Low

Photo:   Bloomberg

The US trade deficit widened in Apr from a more than 3 year low, reflecting a rebound in imports of consumer goods & business equipment that eases concern about the degree of slowing in economic growth.  The gap grew 8.5% to $40.3B from a $37.1B in Mar shortfall that was smaller than previously estimated, according to the Commerce Dept.  The forecast called for the deficit to grow to $41.1B.  Imports climbed 2.4%, twice the gain in exports.  American demand for foreign-made mobile phones, automobiles & computers accelerated, pointing to gains in household & business spending that will help the US whether gov cutbacks.  Record exports of autos & parts, & consumer goods also indicate global growth is stabilizing.  Imports grew to $227B from $222B in Mar.  Purchases of foreign-made autos and parts climbed  $1.28B, while demand for mobile phones rose $816M.  In addition, American purchases of computers shot up by $429M & $330M for telecommunications gear.  The import total would have been even larger excluding a pullback in oil demand as petroleum purchases from abroad of $29.6B were the lowest since Nov 2010.  Excluding petroleum, the trade shortfall grew to $20.6B from $16.7B in Mar.  Exports increased 1.2% to $187B, the 2nd highest on record, boosted by a $586M gain in sales of autos & parts & a $1.96B advance in consumer goods, including jewelry & diamonds.  The trade gap with China jumped 34.8% to $24B from $18B.

Stocks are stumbling, looking for direction.  The bulls keep talking up reasons for more bond buying by the Federal Reserve & that encourages stock buying (especially from those who have been left behind in the enormous rally over the last year).  The high yield sector (MLPs, REITs & junk bond funds) continue under selling pressure, signally that all is not well in the economy, &, by extension, with the stock market even though Dow is close to its record high.

Dow Jones Industrials

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