Tuesday, September 17, 2013

Higher markets on homebuilders confidence data

Dow rose 38, advancers over decliners almost 2-1 & NAZ added 16.  The MLP index continued drifting lower, down 1+ to 431, & the REIT index was up fractionally , going above 271.  Junk bond funds were  mixed to lower & Treasuries edged higher.  Oil slid for a 3rd day as a US agreement with Russia to eliminate Syria’s chemical weapons reduced supply risk & on speculation that the Federal Reserve (FED) will start tapering stimulus measures.  Gold pulled back, as its getting used to the low 1300s.

AMJ (Alerian MLP Index tracking fund)

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CLV13.NYM....Crude Oil Oct 13...105.82 Down ...0.77  (0.7%)

GCU13.CMX...Gold Sep 13.......1,312.00 Down ...5.90  (0.5%)

Workers build a new single-family home in San Marcos, California, January 30, 2013. REUTERS/Mike Blake

Photo:   Yahoo

US homebuilder sentiment was unchanged in Sep after 4 straight months of gains, according to the National Association of Home Builders as the NAHB/Wells Fargo Housing Market Index remained flat at 58.  The Aug reading was initially reported at 59 but was revised slightly lower to 58.  The forecast predicted the index would notch up to 59.  Readings below 50 mean more builders view market conditions as poor than favorable.  The pause in sentiment comes as borrowing costs for home buyers have jumped recently.  Rates for 30-year mortgages have risen well over 100 basis points since May, to 4.8% in the latest week, on speculation the FED will soon taper its $85B-per-month in buying Treasuries & mortgage-backed securities.  FED policymakers kick off a 2-day meeting today to consider such a pullback, with a statement expected tomorrow.  "Home buyers are adjusting to the fact that, while mortgage rates are still quite favorable on a historic basis, the record lows are probably a thing of the past," said NAHB Chairman Rick Judson.  The survey's index on homebuilders' views on current sales conditions held unchanged at 62.  The gauge of expectations for single-family home sales for the next 6 months slipped to 65 from 68.  The component on prospective buyer traffic rose to 47, marking the highest since Oct 2005, from an upwardly revised 46 in Aug.

Homebuilder Confidence in U.S. Holds at Highest Level Since 2005

Foreign investors were net buyers of US long-term portfolio assets in Jul as China & Japan boosted their holdings of Treasuries.  The net long-term portfolio investment inflow was $31B after a revised $67B outflow in Jun, according to the Treasury.  Net purchasing of long-term Treasuries by private foreign investors was $49.8B compared with selling of a net $40B the prior month.  Including short-term securities such as Treasury bills & stock swaps, the total cross-border inflow was $56.7B in Jul, compared with a $19.7B outflow the previous month.  Official foreign investors were net sellers of $15.9B of Treasury notes & bonds in Jul.  Official net purchases of US agency debt were $20B after buying of $4B in Jun & private investors were net sellers of corp debt & equities.  China stayed the biggest foreign owner of Treasuries as its holdings rose $1.5B to $1.28T.  Japan, the 2nd-largest holder, increased its share by $52B to $1.14T.

U.S. Net Inflow of Long-Term Securities Rises to $31.1 Billio

  • Getty Images
Photo:   Yahoo

Microsoft, a Dow stock, announced a $40B stock buyback, as well as a 22% div increase.  Ahead of a meeting with financial analysts on Thurs, the board approved the new stock repurchase program to replace the previous buyback program, which was set to expire at the end of this month.  The new share repurchase program has no expiration date.   The quarterly div was increased to 28¢, which is 5¢ increase over the previous qtr.  The company has been paying a regular quarterly dividend since 2004 & the last div increase was an increase of 3¢.  These moves come at a time when MSFT is undergoing some major changes.  The company announced earlier this summer that it would be launching a major reorganization, which would shift the company's focus to tablets & smartphones.  Then last month, MSFT announced its long-time CEO Steve Ballmer would be leaving the company during the next 12 months.  Earlier this month, the company announced it was purchasing Nokia's mobile business for $7B in an attempt to compete with other smartphone makers.  The stock went up 13¢.

Microsoft Plans $40 Billion Buyback, Boosts Dividend

Microsoft (MSFT)

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Stocks are moving higher on on a lack of significant economic news.  Obama declared war on the Reps yesterday over the budget for the new year & then raising the debt ceiling.  But all that has been put on hold with attention on the killings in DC yesterday.  The FOMC meeting will also be watched by traders.  A reduction in bond buying by the FED is baked into the markets.  Raising their interest still looks like a next year event.  Until Big Ben speaks, the markets should do little.

Dow Jones Industrials

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