Wednesday, June 5, 2013

Markets tumble on weakening economic data

Dow lost 216, decliners over advancers 4-1 & NAZ fell 43.  The MLP index dropped another 6 to below 436 the REIT index fell 2+ to below 281.  The MLP index is down a huge 32 since May 22.  Junk bond funds were lower but Treasuries rallied.  Oil advanced to a one-week high after a gov report showed that US crude inventories tumbled as refineries increased production.  Gold was able to climb back over 1400, barely.

AMJ (Alerian MLP Index tracking fund)

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CLN13.NYM...Crude Oil Jul 13....94.01 Up ...0.70 (0.8%)

Live 24 hours gold chart [Kitco Inc.]

Fed’s Beige Book Shows ‘Modest to Moderate’ Growth Across U.S.

Photo:    Bloomberg

A Federal Reserve (FED) survey says economic growth increased throughout the US from Apr thru mid-May, fueled by home construction, consumer spending & steady hiring.  11 of the FED's districts reported "modest to moderate" economic growth, according to the Beige Book survey.  The 12th, in Dallas, reported strong growth.  The survey is based on anecdotal reports.  The mostly favorable results of the latest survey suggest that the economy & the job market are improving despite tax increases & gov spending cuts that took effect this year.  But modest or moderate improvement reported for most regions appears to fall short of the strong & sustained growth that the FED has said is needed before it starts tapering its bond purchases which have helped keep interest rates at record lows.  The information from the Beige Book will discussed along with other economic data at the next policy meeting on Jun 18-19.

Fed’s Beige Book Shows ‘Modest to Moderate’ Growth in U.S.

<p> Microsoft Corporation's Chief Financial Officer of its Windows department Tami Reller describes new products during the Computex Taipei 2013, one of the world's largest IT exhibitions, in Taipei, Taiwan, Wednesday, June 5, 2013. During Wednesday's event, Microsoft unveiled its operating system upgrade 8.1. (AP Photo/Wally Santana)

Photo:   Yahoo

Microsoft, a Dow stock,  will add its Outlook email program to more tablets running on a lightweight version of its Windows operating system as part of a free software update this year.  The Outlook 2013 app will be given to owners of the Surface tablet & similar devices running Windows RT (a slimmed down version of Windows 8), a radical overhaul of the ubiquitous operating system used on most personal computers.  It's preparing to modify Windows 8 in response to consumer complaints about the redesigned system released last Oct.  But a release date still hasn't been set for the upcoming update, Windows 8.1.  Windows RT's omission of Outlook was among the grievances by consumers.  The Outlook announcement came as MSFT showcased previously announced features of Windows 8.1 at the Computex show in Taiwan.  Tami Relle, CFO & marketing officer of the company's Windows Division, said the 8.1 update took into account input from consumers on the Windows 8 system.  The stock fell 22¢.

Microsoft to add Outlook to Windows RT tablets AP

Microsoft (MSFT)

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U.S. Treasury Says It Aims to Sell 30 Million More GM Shares

Photo:   Bloomberg

The Treasury announced plans to sell 30M shares of General Motors stock as part of its ongoing effort to wind down the gov stake.  The Treasury will sell the shares in a public offering in conjunction with the company's inclusion to the Standard & Poor's 500 index tomorrow, which should help spur demand for the stock.  The offering will take place along with the sale of 20M shares of GM stock held by the UAW Retiree Medical Benefits Trust, bringing the total size of the offering to 50M shares.  The exit of Treasury also will eliminate the stigma of gov ownership that GM executives said has hurt sales.  The gov, which initially took a 60.8% stake in the automaker as part of its $49.5B bailout, had said it planned to sell its remaining shares by Apr 2014.  Some suggest the Treasury could even unwind its position by year end.  The Treasury has recovered $31.7B in bailout funds so far, with $17.7B still outstanding.  After accounting for the expected proceeds from this latest sale, Treasury would need to sell its remaining shares for an average of more than $78 a share to break even.  At today's price, Treasury's sale would net more than $1B & the gov will own less than 200M shares after the public offering is completed.  The stock fell 85¢.

U.S. Treasury Plans to Sell 30 Million More GM Shares

 General Motors (GM)

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After having an outstanding year, stocks have slipped back in recent weeks.  Dow is down 500 from its intra day highs on May 24.  There is a growing realization that the economic data is dreary.  Q1 GDP growth was not impressive & Q2 could report slower growth.  Stock market selling has been led by the higher income sectors.  These will probably feel the effects of higher interest rates, at least to some extent, even though the fans are quick to point out that there is no connection.  Dow finished below 15K (near the lows of the day), an important line of support which did not hold.  Not good for the bulls.

Dow Jones Industrials

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