Friday, August 9, 2013

Markets could post worst week since June

Dow lost 30, advancers barely beat decliners & NAZ slid 2.  The MLP index went up 2+ to the 447s & the REIT index rebounded 2 to the 276s.  Junk bond funds were mixed & Treasuries were flat.  Oil bounced back after recent selling & gold was about even

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLU13.NYM...Crude Oil Sep 13...104.69 Up ...1.29 (1.3%)

GCQ13.CMX...Gold Aug 13.......1,310.00 Down ....0.70  (0.1%)

US wholesalers cut stockpiles for a 3rd straight month even as their sales rose.  That combination could set the stage for stronger economic growth in coming months.  The Commerce Dept says wholesale stockpiles fell 0.2% in Jun from May, following a 0.6% drop in May & a modest 0.1% decline in Apr.  The last time wholesalers shrank their stockpiles for 3 months was the Q3 in 2009, the first qtr after the recession ended.  Sales by wholesalers rose 0.4% following an even bigger 1.5% advance in May.  The steady sales gains support the view that businesses will start restocking again in coming months, boosting factory production.

Wholesale Inventories in U.S. Unexpectedly Fall for Third Month

China Credit Growth at 21-Month Low as Li Curbs Shadow Banking

Photo:   Bloomberg

China's broadest measure of new credit fell to a 21-month low as Premier Li Keqiang extended a campaign to curb a record expansion of lending that’s added risks to the financial system.  Aggregate financing was 809B yuan ($132B), according to the People's Bank of China, compared with the 925B yuan estimate.  New yuan loans exceeded forecasts & accounted for about 87% of the total, the most since Sep 2011.  M2 money supply growth unexpectedly accelerated to 14.5%.  Policy makers are persisting with a crackdown on shadow banking following a gov-engineered cash crunch in Jun even after a 2-qtr economic slowdown.  A report today showing faster gains in industrial output adds to evidence that growth is stabilizing after data yesterday showed exports rebounded more than estimated.  While reduced credit may make it tougher for Li to achieve this year’s 7.5% growth target, it would ease dangers of a financial crisis.  New loans were 700B yuan in Jul, compared with the 640B yuan estimate & 540B yuan a year earlier.   M2 growth compared with an estimate of 13.9% & 14% in Jun.

China’s Credit Expansion Slows as Li Curbs Shadow Banking

OPEC kept estimates for global oil demand growth in 2014 unchanged amid a stable outlook for the world economy.  World oil consumption will increase by 1M barrels a day (1.2%) next year to about 90.8M a day, OPEC said in its monthly market report today.  Increasing output from countries outside OPEC means demand for the organization’s crude will slide to 29.7M barrels a day (600K a day less than its 12 members pumped last month).  Brent crude futures have gained about 2.8% in the past 3 months, trading near $107 a barrel in London, amid signs the slowdown in China’s expansion has stabilized, US unemployment retreating & the recession in European economies is easing.   OPEC said group production fell 97K barrels a day to 30.3M last month amid declines in Libya & Iraq. The organization increased its 2014 forecast for oil supply from other nations by 20K barrels a day.  Non-OPEC producers, led by the US & Canada, will bolster production by 1.15M barrels a day in 2014 to 55.1M.

OPEC Maintains Estimate for Global Oil Demand Growth in 2014

Stocks took a breather this weak after a fairly consistent rise since last Jun.  Dow remains up a staggering 3.2K in the last 14 months.  It's hard to find a better period in history for the stock market.  Aug might be a quiet month with traders taking an extended holiday, as are the politicos in DC.  Next month could be a time to settle up after such a long period of inaction.

Dow Jones Industrials

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