Wednesday, October 30, 2013

Markets fluctuate as US companies add fewer workers

Dow went up 5, decliners just ahead of advancers & NAZ inched up pocket change.  The MLP index was off 1+ to the 446s & the REIT index slipped 1+ to the 282s.  Junk bond funds went up & Treasuries were flattish. Oil pulled back & gold advanced for the first time in 3 days as the smallest gain in US inflation in 5 months bolstered expectations that the Federal Reserve (FED) will delay curbing stimulus measures.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLZ13.NYM....Crude Oil Dec 13...97.30 Down .....0.90  (0.9%)

GCX13.CMX...Gold Nov 13.....1,355.80 Up ...10.60 (0.8%)

  • A man holds a pamphlet handed out by a recruiter while attending a job fair in New York, June 11, 2013. REUTERS/Lucas Jackson
Photo:   Yahoo

US private-sector employers hired the fewest number of workers in 6 months in Oct while tepid domestic demand kept inflation benign last month, suggesting the economy was still in need of stimulus from the FED.  Employers in the private sector added 130K new jobs this month, the ADP National Employment Report showed, the lowest reading since Apr & was below expectations for a gain of 150K.  Private payrolls gains for Sep were revised down to 145K from the previously reported 166K jobs.  The report suggested that the gov shutdown early in the month had weighed on an already struggling labor market.  Private jobs growth slowed for the 4th month in a row this month, according to ADP data.  Average monthly jobs growth has fallen below 150K, which if sustained would make it difficult for the unemployment rate to fall further.

Companies in U.S. Added Fewer Workers Than Forecast

  • A woman shops with her daughter at a Walmart Supercenter in Rogers, Arkansas June 6, 2013. REUTERS/Rick Wilking
Photo:   Yahoo

US consumer prices rose modestly in Sep but there was little sign of underlying inflation in the economy.  The Labor Dept said the Consumer Price Index (CPI) increased 0.2% last month as energy prices rebounded, after edging up 0.1% in Aug.  In the 12 months through Sep, the CPI increased 1.2%, the smallest gain since Apr.  It had advanced 1.5% in Aug.  Expectations for consumer prices to rise 0.2% last month & increase 1.2% from a year ago.  The benign inflation environment should allow the FED to stay the course on its monthly bond purchases as it tries to stimulate the economy thru low interest rates.  Stripping out the volatile energy & food components, CPI nudged up 0.1%, rising by the same margin for a 2nd consecutive month.  That took the increase over the past 12 months to 1.7% after rising 1.8% in Aug.  This measure touched a 2-year low of 1.6% in Jun & the slowdown last month could catch the attention of some FED officials who are concerned about inflation being too low.  Last month, inflation was lifted by a 0.8% rise in energy which accounted for about half of the rise in the CPI.  Energy prices had dropped 0.3% in Aug.

Consumer Prices in U.S. Rise as Forecast on Gain in Fuel

Up Close With the 2014 Corvette Stingray

Photo:   Bloomberg

General Motors posted a better-than-expected Q3 profit as the the new lineup of pickup trucks & other revamped models boosted North American results,  Revenue rose in Europe for the first time in 2 years.  The strong showing in North & South America & improvement in Europe offset the decline in Asian markets outside China, including India & Southeast Asia.  CFO Dan Ammann said the European unit remains on track to achieve its target of breaking even in the next year or so after losing money in Europe for 13 straight years.  "The story in Europe overall is really consistent with the plan we laid out," he said.  "Our overall objective of getting to break-even by mid-decade, clearly we're well on track toward that."  GM recently said it would shift the reporting of its profitable Russian market to the European unit from the intl operations, but Ammann said that does not change the break-even timetable.  Excluding one-time items related to the repurchase of preferred stock & tax expenses, EPS was 96¢, 2¢ above the estimate.  GM's European results continued a trend from the Q2, when its loss in the region was almost 1/3 smaller than expected.  GM has set a goal of hitting 10% profit margins in North America.  In Q3, the margin in the region jumped to 9.3%, the highest in 2 years & up from 7.7% last year.  Revenue rose 3.7% from last year to $38.98B, short of the $39.49B estimate.  The stock rose 96¢.

GM’s New Pickups Help Third-Quarter Profit Beat Estimates

General Motors (GM)

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Everbody is waiting for Big Ben to speak.  That will come shortly.  No changes are expected, but the language of what he says will give clues about when the bond buying program will be reduced.  It's a sad commentary when the strength in the stock market is so tied to the FED & is moves.  Meanwhile the Obamacare fiasco is hurting the economy.  The most glaring way is that attention in DC is diverted from the need to fund the gov for the balance of its fiscal year & raise the debt ceilng.  These problems have not gone away but are getting less attention with the focus on the Obamacare debacle.

Dow Jones Industrials

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