Higher markets on favorable auto sales for August

Dow rose 64, advancers over decliners 2-1 & NAZ went up 25.  The MLP index slipped another 1+ to the 433s & the REIT index added 1+ to the 259s.  Junk bond funds slid lower & Treasuries were a tad lower.  Oil fell for the 3rd time in 4 days as the US debated a military strike on Syria & Russia raised objections to intervention, clouding the prospects for an attack.  Gold fell the most in 8 weeks as the US faced opposition from Russia on a military strike against Syria, eroding demand for a haven.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month	0.02%
U.S. 2-year	0.43%
U.S. 10-year	2.86%

CLV13.NYM

....Crude Oil Oct 13

...107.26

....1.28

(1.2%)

GCU13.CMX

....Gold Sep 13

......1,391.70

...20.30

(1.4%)

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The US trade deficit widened slightly more than expected in Jul as exports dipped, but a rebound in imports pointed to some firming in underlying domestic demand early in Q3.  The Commerce Dept said the trade gap increased 13.3% to $39.1B.  The shortfall for Jun on the trade balance was revised to $34.5B from the previously reported $34.2B.  Economists expected the trade deficit to widen to $38.7B.  When adjusted for inflation, the trade gap expanded to $47.7B from $43.8B in Jun.  This measure goes into the calculation of GDP.  Trade's contribution to GDP growth in Q2 was neutral.  It's expect it to add to growth in Q3 but the rise in the real trade deficit is probably not enough to change that view.  The increase in imports in Jul, which reflected rises in industrial supplies, automobiles & consumer goods, suggested some strengthening in domestic demand.  Imports of goods and services rose 1.6% to $228.6B.  Imports of autos, parts & engines were the highest on record.  Exports dipped 0.6% to $189.4B.  However, exports of petroleum products hit a record high.  Imports from China jumped 8.3% in Jul, lifting the contentious US trade deficit with China to a record $30B.

Trade Gap in U.S. Widened in July From Almost Four-Year Low

Photo:   Yahoo

Chrysler reported a 12% gain in US Aug auto sales & predicted that the industry will continue on its hot streak as it heads into the fall selling season, when new models are introduced.  Chrysler said that it expects a sales rate for Aug of 16.1M vehicles, including medium & heavy trucks.  This overall sales rate would be in line with the 15.8M forecast.  Industry estimates exclude medium & heavy trucks, which typically account for 300K in annual sales.  Chrysler, a unit of Italy's Fiat, said it sold 166K vehicles in Aug, which matched expectations.  It was the 41st consecutive month that the company reported year-on-year US sales gains.

Chrysler U.S. Sales Climb as Marchionne Weans From Fleets




Photo:   Bloomberg

General Motors (GM), Toyota (TM) & Ford (F) reported U.S sales gains for Aug that exceeded estimates & analysts projected the best month for industry demand in 6 years.  Sales of cars & light trucks rose 15 % for GM, 23% for TM & 12% for Ford.  The results compared with average estimates for gains of 11% by GM, 15% for Toyota & 10% for Ford.  Car companies have closed unneeded factories & rolled out better cars that are drawing demand from both retail & fleet buyers, lifting the average prices paid for new vehicles to record highs.  Today’s industry is much healthier than 6 years ago, the last time automakers sold as many cars & trucks as in Jul. 

GM to Ford Sales Climb in Best Month for U.S. Since 2007


Good news on auto sales is no great surprise.  Customers are  replacing worn out cars & the outlook for this industry looks good, a least for the near term.  But more mundane businesses are not doing so well.  Then there is the gov & those guys have a lot on their plates.  Yield related stocks continue to have a tough time finding buyers because investors want higher yields.

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