Tuesday, July 2, 2013

Markets rise on strong factory orders

Dow went up 71, advancers ahead of decliners 2-1 & NAZ rose 15.  The MLP index slipped 2+ to 260, but the REIT index was up 3+ to 280.  Junk bond funds were higher & Treasuries did little.  Oil continued climbing but gold sold off again.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


Orders to U.S. Factories Rise on Demand for Machinery, Computers

Photo:  Bloomberg

Orders placed with US factories rose in May, reflecting broad-based gains that signal manufacturing is stabilizing.  The 2.1% gain in bookings followed a revised 1.3% advance the prior month, according to the Commerce Dept.  The forecast called for a 2% increase.  Demand for capital equipment increased more than estimated last week.  Sales of motor vehicles, gains in residential construction, & a boom in domestic energy production are helping make up for weakness in the export markets.  A pickup in business investment in new equipment & improving consumer demand would help bolster manufacturing & the expansion in H2.  Factory orders excluding the volatile transportation component climbed 0.6% after a 0.2% increase in the prior month.  Bookings for commercial aircraft jumped 51% after climbing 18% in Apr.  Bookings for durable goods, which make up more than half of total factory demand, rose 3.7%.

Orders to U.S. Factories Rise on Demand for Machinery, Computers

Chinese Malls Waive Rents as Vacancies of 30% Loom

Photo:   Bloomberg

Chinese landlords are forgoing rent & paying to outfit stores for mass-market fashion brand to blunt the impact of a boom in shopping-mall construction that threatens to push up vacancies.  Preferential leasing terms were reserved until recently for luxury brands, which are coveted because they bring shoppers into malls.  Now moderately priced labels are being enticed with offers as landlords work harder to fill shops.  Consumer demand is cooling as China's economy slows & President Xi Jinping reins in lavish spending by officials.  Big mall operators can withstand the slowdown at the expense of smaller ones.  Landlords focused on lower-tier markets will be under more pressure as smaller cities add retail space at a faster rate than larger ones.  Chinese developers built more malls & expanded into smaller cities as consumer spending & incomes grew, elevating China's economy to the 2nd largest in the world.  Half of the 32M square meters (344M square feet) of shopping centers under construction around the world are in China.  The Chinese economy has big problems & that impacts the global economy.

Chinese Malls Waive Rents as Vacancies Loom: Real Estate

Real estate for sale and Housing and Urban Development (HUD) signs are displayed outside a home in Chandler Heights, Arizona June 2, 2011. REUTERS/Joshua Lott

Photo:   Yahoo

Home prices had their biggest annual gain in more than 7 years in May, with more increases expected through the summer months as the sector continues to mend, data analysis firm CoreLogic said.  Prices rose 2.6% from April & were up 12.2% compared to May last year, the biggest year-over-year increase since Feb 2006.  Excluding distressed sales, prices were up 11.6% on a yearly basis.  Distressed sales include properties that have been seized by lenders & short sales, where the struggling homeowner is allowed to sell the property for less than the outstanding mortgage.  The recovery in the housing sector has gained momentum this year, with tight inventory pushing prices higher.  Still, prices nationally remain cheap compared to during the housing boom, which has spurred demand from investors and homeowners.  The acceleration in prices compared to a year ago was in line with the closely watched S&P-Case/Shiller report which showed prices rose more than 12% on an annual basis in Apr

Home Prices Rise by Most in Seven Years in May: CoreLogic

Stocks are having another good day.  Economic data is coming in OK & auto sales seem to have done well in Jun.  Traders are awaiting comments from Federal Reserve officials which will probably keep their intentions muddy but good enough to keep traders happy.

Dow Jones Industrials

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