Monday, June 3, 2013

Markets rise on hopes for more stimulus by the Federal Reserve

Dow shot up 138, but decliners were only a little ahead  of advancers & NAZ had a more moderate advance of 9.  Strong buying came in the last hour of trading  The MLP index recovered 1+ (from recent selling) to the the 444s & the REIT index bounced back 1+ to 287 from its losses in the last 2 weeks.  Junk bond fund continued selling off & Treasuries rose.  Oil had a good day & gold is back above 1400.

AMJ (Alerian MLP Index tracking fund)

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Treasury yiels:

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U.S. 10-year


CLN13.NYM...Crude Oil Jul 13....93.36 Up ...1.39  (1.5%)

Live 24 hours gold chart [Kitco Inc.]

May ISM Manufacturing Index Decreased to 49 from 50.7 in April

Photo:   Bloomberg

US manufacturing unexpectedly shrank in May at the fastest pace in 4 years, showing slowdowns in business & government spending are holding back the economy.  The Institute for Supply Management factory index fell to 49, the lowest reading since Jun 2009, from the prior month’s 50.7.  50 is the dividing line between growth & contraction.  The forecast called for 51.  Across-the-board federal budget cuts & overseas markets that are struggling to rebound will probably continue to curb manufacturing, which accounts for about 12% of the economy.  At the same time, demand for automobiles, gains in residential construction & lean inventories may spark a pickup in orders & production in H2.  The ISM index was pushed down by declines in orders & production & smaller gains in exports. The employment gauge was little changed at just above the break-even level of 50.   Other reports today showed most manufacturers globally were also struggling.  China data indicates small factories contracted at a faster pace in May even as larger counterparts improved.  But Euro-area manufacturing output shrank less than initially estimated last month.

GM’s Cadillac Posts Biggest Year-to-Date Surge Since Disco Era

Photo:   Bloomberg

The Cadillac brand, from General Motors, this year has had its biggest gain since 1976.  The luxury brand’s deliveries gained 40% in May to 13,808 vehicles on demand for new ATS & XTS sedans, which accounted for 41% of deliveries. That was the brand’s best May since 2007.  Thru May, Cadillac shipments increased 38% to 69K, the biggest year-to-date increase since 1976, when GM sold 135K Cadillacs.  “Think about that,” Kurt McNeil, GM’s VP of sales operations, said.  “We’re talking about the days of disco, when Cadillac was strictly a US brand back then, not one that’s directly challenging the German luxury brands and gearing up to triple its sales in China over the next couple of years.”  GM is counting on Cadillac to help increase profit with sales to higher-income buyers.  The company is positioning Cadillac & Chevrolet as the automaker’s 2 global brands, with Chevy for the mass market.  70% of ATS customers in the US are buying their first Cadillac while 50% are trading in a vehicle from another manufacturer, David Caldwell, a GM spokesman.  GM ranks 4th in US luxury-vehicle sales, behind Daimler's Mercedes-Benz, BMW & Toyota's (TM) Lexus.  GM stock was up 48¢.

GM’s Cadillac Posts Biggest 5-Month Gain Since Disco Era

General Motors (GM)

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US internet advertising is still growing at a robust clip as marketers pursue the growing online audience & data analysis helps to target their pitches at people most likely to buy their products & services.  A report from Interactive Advertising Bureau & PricewaterhouseCoopers says US advertisers poured $9.6B into their campaigns during Q1, up 16% from $8.3B at the same time last year.  For all of 2012, US online advertising grew 15%.  The steady rise in online advertising has been a boon to internet companies such as Google (GOOG) while hobbling other media outlets that relied on printed products.

Online advertising in US rises 16 pct in 1Q AP

Apple Fights U.S. E-Books Pricing Claims in Antitrust Trial

Photo:   Bloomberg

A US gov lawyer opened a civil trial today by portraying Apple as a corp bully that swaggered into the market for electronic books in 2010, forcing an end to price competition and costing consumers hundreds of millions of dollars.  The attorney said a dramatic price increase in e-books was "no accident or unforeseen outcome" but the result of a deliberate plan by AAPL & 5 book publishers to eliminate Amazon's (AMZN) $9.99 bargain price for popular e-books.  The gov is asking the judge to find that the computer company had violated anti-trust laws.  The lawyer AAPL sharply disputed the gov claims, saying the company had been waiting eagerly for its chance to show it had enhanced competition and improved the e-book industry.  "Apple is going to trial because it did nothing wrong," he said. "Apple did not conspire with any publisher individually, collectively or otherwise to raise industry prices."  He called the gov case bizarre, saying: "Even our government is fallible, and sometimes the government just gets it wrong."  The gov said the scheme to boost prices to $12.99 & $14.99 was encouraged by Steve Jobs.  The trial results from a lawsuit last year that accused the company of seeking to enter the market for e-books in 2010 in a way that would guarantee it 30% profits.  A separate court proceeding could be conducted to quantify harm to consumers.  The outcome of this trial could be VERY BIG!  AAPL stock was up pocket change.

Apple (AAPL)

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Dow soared today while the rest of the stock market took a breather.  Go figgah!!  Federal Reserve Bank of Atlanta President Dennis Lockhart said central bank officials are committed to record stimulus measures.  Since market breath was negative & NAZ had a limited advance, it's hard to take this rally seriously.  The high yield sector remains under pressure, another sign that all is not well in the stock market.  The jobs report on Fri could give signals that are difficult to understand.  If it's stronger than forecasted, that "good" news might suggest the FED could ease up on pumping money into the economy.  But Dow remains close to its recent record highs.

Dow Jones Inudstrials

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