Wednesday, June 26, 2013

Markets rise after revision of weaker GDP growth in Q1

Dow climbed another 149, advancers ahead of decliners 7-2 & NAZ added 28.  The MLP index shot up 9 to the 449s (an amazing 17 in just 2 days) & the REIT index was up 3+ to the 274s.  Junk bond funds had a strong rebound, up 2-3%, while Treasuries gained, pushing 10-year yields down the most in almost 2 weeks.  Data showed the US economy grew less than previously estimated, easing concern the Federal Reserve is moving closer to slowing its bond buying.  Oil edged higher while gold continued to sell off (see below).

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

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U.S. 2-year


U.S. 10-year


CLQ13.NYM...Crude Oil Aug 13....95.03 Down ...0.29  (0.3%)

Live 24 hours gold chart [Kitco Inc.]

Gold Heads for Worst Quarter Since at Least 1968 as Demand Ebbs

Photo:   Bloomberg

Gold plunged to a 34-month low, set for a record quarterly drop, as improving US economic data strengthened the case for the Federal Reserve (FED) to reduce stimulus.  Gold has dropped 23% in Q2, heading for its biggest loss since at least 1920.  Big Ben said last week the central bank may slow its asset-purchase program this year if the economy continues to improve.  US durable-goods orders rose more than expected, home sales advanced to the highest in almost 5 years & consumer confidence climbed, reported yesterday.  About $60B was wiped from the value of precious metals exchange-traded product holdings this year as investors lost faith in gold as a store of value & speculation grew that the FED will taper debt-buying that helped gold cap a 12-year bull run last year.  Gold entered a bear market in Apr, extending the retreat from its all-time high of $1,921 in Sep 2011.

<p> FILE - In this Thursday, Aug. 23, 2012 file photo, the Microsoft Corp. logo, left, is seen on an exterior wall of a new Microsoft store inside the Prudential Center mall, in Boston. Microsoft will use its annual developers conference to release a preview of Windows 8.1, a free update that promises to address some of the gripes people have with the latest version of the company’s flagship operating system. The Build conference, which starts Wednesday, June 26, 2013, in San Francisco, will give Microsoft’s partners and other technology developers a chance to try out the new system before it becomes available to the general public later in the year. (AP Photo/Steven Senne, File)

Photo:   Yahoo

Microsoft, a Dow stock, released a preview version of an update to Windows 8, aiming to address some of the complaints with the Windows operating system.  CEO Steve Ballmer acknowledged that the company pushed hard to get people to adopt a radical new tile-based "Modern" user interface in Windows 8 & is now back-pedaling, making it easier to reach and use the older "desktop" interface.  "Let's make it easier to start applications the way we're used to," Ballmer told the audience of software developers. "What we will show you today is a refined blend of our Desktop experience and our Modern experience."  MSFT made the preview of Windows 8.1 available for free as a download.  Windows 8.1 will allow people to boot up in desktop mode where there is a button that resembles the old Start button.  It won't take users to the old Start menu, but to the new "Modern" Windows 8 start screen.  Still, the re-introduction of the familiar button may make it easier for longtime Windows users to get accustomed to the changes.  A common complaint about Windows 8 is that it hides features & functions, & replaces buttons with gestures & invisible click zones that have to be memorized.  Other new features of Windows 8.1 include more options to use multiple apps.  Users will be able to determine how much of the screen each app takes while showing up to 4 different programs, rather than just 2.  The update will also offer more integrated search results, showing users previews of websites, apps & documents that are on the device, all at once.  In addition, Facebook (FB) is building an application for Windows 8, adding one of the most popular programs missing from the operating system designed to help MSFT gain tablet customers.  MSFT rose 68¢.

Microsoft Gets Facebook App for Windows 8

Microsoft (MSFT)

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Barnes & Noble’s Loss Wider Than Estimated as Nook Sales Plunge

Photo:   Bloomberg

The decision by Barnes & Noble to stop competing in the tablet business potentially will accelerate a break-up of the largest US bookstore chain.  With its Nook Media digital unit racking up more losses in its fiscal Q4, the company said that to cut costs & limit inventory risk it will stop making tablets & partner with electronics manufacturers.  Since BKS got into the tablet business in 2010, there were questions about how it would maintain its initial success because the amount of investment to churn out devices to compete against the competition.  This decision removes those hurdles, which could help make the Nook more viable on its own or as an acquisition target.  The company has been exploring ways to increase its value for more than 2 years as management has said that investors weren’t properly assessing its accomplishments with the Nook.  The company started the digital content & mobile device division in 2009 to help navigate readers’ shift away from paper books.  The stock went up 85¢.

Barnes & Noble’s Tablet Exit May Accelerate Nook Media Spinoff

Barnes & Noble (BKS)

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Stock buyers were happy to see slower growth in Q1.  That is only history & it is hoped it will restrain the FED from slowing its bond buying program.  Of course, better numbers yesterday will discourage more bond buying.  But Dow is up 265 in the last 2 days.  It looks like money money managers are buying, sort of painting the tape to make their Q2 performance look better.  Weaker GDP performance in Q1 which will probably lead to a mediocre data for Q2 is only extending a drawn out, weak recovery.  Money managers will probably continue buying as Q2 closes.

Dow Jones Industrials

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