Thursday, August 8, 2013

Markets fluctuate on jobless data

Dow lost 28, advancers over decliners 3-2 & NAZ went up 12.  The MLP index was off 1+ to the 445s & the REIT index slid 1+ to the 273s.  Junk bond funds were lower & Treasuries gained.  Oil dropped again, down 5 in the last week, & gold charged ahead, going back over 1300.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLV13.NYM...Crude Oil Oct 13...102.64 Down .....1.27  (1.2%)

GCQ13.CMX...Gold Aug 13......1,304.60 Up ...18.50 (1.4%)

Jobless Claims in U.S. Fall

Photo:   Bloomberg

The number of Americans filing new claims for jobless benefits rose slightly last week but was still near its lowest level since before the 2007-09 recession.  Initial claims for unemployment benefits rose 5K last week to 333K, according to the Labor Dept.  The 4-week average of new claims fell to its lowest since Nov 2007, just before the calamitous recession.  Now it appears that a long cycle of aggressive layoffs is over.  The pull-back in layoffs has helped bring about a substantial fall in the jobless rate, & the trend in jobless claims could make the Federal Reserve (FED) more comfortable in unwinding the nation's last giant economic stimulus program.  While layoffs are roughly half their level in early 2009, the recovery in job creation has been more lackluster.  Analysts expected first-time applications to rise to 336K last week.  The claims report showed the number still receiving benefits under regular state programs rose 67K to 3.02M.

Jobless Claims in U.S. Fall Over Month to Lowest Since 2007

<p> FILE - In this Aug. 8, 2011, photo, the Fannie Mae headquarters is seen in Washington. Fannie Mae reports its earnings for the January-March quarter on Thursday Aug. 8, 2013. (AP Photo/Manuel Balce Ceneta, File)

Photo:   Yahoo

Fannie Mae earned $10.1B in Q2, aided by the recovery in the housing market.  The gov-controlled company has turned a profit in each of the past 6 qtrs.  Fannie will pay a div of $10.2B to the Treasury next month & made no request for additional federal aid.  The company said the rise in home prices during Q2 enabled it to reduce its reserves set aside for losses on mortgages, helping boost net income.  Q2 earnings compared with net income of $5.1B last year.  Fannie said it expects to remain profitable "for the foreseeable future."  Once the Q2 div is paid, Fannie will have repaid $105B of the roughly $116B it received from taxpayers.  The latest quarterly gain followed a record $58.7B net income in Q1, when Fannie capitalized on tax benefits it had saved from its losses on loans during the crisis.  It paid a Q1 div of $59.4B.  The housing recovery that began last year has made Fannie & Freddie profitable again. Together they will have paid back next month about $146B of their gov loans & those payments are helping make this year's federal budget deficit the smallest since 2009.  Fannie & Freddie own or guarantee about half of all US mortgages, worth about $5T.  Along with other federal agencies, they back roughly 90% of new mortgages.

Once again, there is very little going on in the markets.  The jobless claims data was bland.  Divs from Fannie & Freddie help reduce the federal deficit. but it would take take around 40 such divs to wipe out what is still an enormous deficit.  Yield sensitive stock, like MLPs & REITs, continue weak on expectations for the FED will taper its bond buying program.  Drab economic data is not bringing out buyers as in past recoveries.

Dow Jones Industrials

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