Tuesday, July 30, 2013

Higher markets on improved earnings

Dow rose 23, advancers over delcines 5-4 & NAZ shot up 28. The MLP index fell 4 to 450 & the REIT index was up 1+ to the 286s.  Junk bond funds were mixed & Treasuries did little.  Oil fell to the 93s & gold also pulled back.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


Consumer Confidence Index in U.S. Decreased to 80.3 in July

Photo:   Bloomberg

Confidence among US consumers declined more than forecast in Jul after reaching a 5-year high a month earlier as Americans grew more pessimistic about the outlook for the economy & employment.  The Conference Board index of sentiment decreased to a reading of 80.3 from a revised 82.1 the prior month (stronger than initially estimated).  The median forecast called for a reading of 81.3.  Consumers’ views of the economy dimmed as Americans paid more at the gas pump & as higher mortgage rates threatened to slow momentum in the housing market.  At the same time, increased wealth tied to higher property values & stock portfolios are helping sustain household spending.  The Conference Board’s measure of expectations for the next 6 months decreased to 84.7 from 91.1 & the gauge of present conditions improved to 73.6 from 68.7 in Jun.  The percent of respondents expecting more jobs to become available in the next 6 months declined to 16.5 from 19.7 in the previous month & the share expecting incomes to increase fell to 15.3 from 15.9.  At the same time, more Americans said jobs were currently plentiful, 12.2% in Jul compared with 11.3% a month earlier.  Buying plans also improved with more people indicating they intended to purchase homes, cars & appliances in the next six months.

Consumer Confidence Index in U.S. Fell to 80.3 in July

A customer looks over produce at the Phoenix Public Market in Phoenix, Arizona August 23, 2011. REUTERS/Joshua Lott

Photo:   Yahoo

Economic growth probably slowed sharply in Q2, but its pace is unlikely to change views that the Federal Reserve will start trimming bond purchases later this year.  GDP probably grew at a 1.0% annual rate after expanding at a 1.8% pace in Q1 because gov austerity & weak global demand weighed on the economy, according to a recent poll.  But there is a risk that growth undershoots expectations, with forecasts as low as a 0.4% rate.  That would mark a 3rd straight qtr of GDP growth below 2%, a pace that normally would be too soft to bring down unemployment.  The slowdown is expected to be temporary, with an acceleration in output forecast for the rest of 2013 as the drag from higher taxes & deep budget cuts wanes.  Financial markets have already priced in a weak Q2 GDP report.  Attention will be on comprehensive revisions to GDP data.

Second-Quarter U.S. GDP to Slow Sharply on Tax Burden

Stocks are having another good day, but short of spectacular as traders wait for word from the FOMC about plans to taper bond purchases.  That is coming in the next few months & the only question is how much & how soon.  Until an announcement is made about QE3, traders will be biting their fingernails.

Dow Jones Industrials

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