Mixed markets as consumer sentiment slides

Dow rose 20, decliners barely ahead of advancers & NAZ added 13.  The MLP index continued on its winning ways, up a fraction in the 462s & the REIT index was flattish in the 284s.  Junk bond funds were higher & Treasuries di very little.  There was bargain hunting in oil while gold slid back. 

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month	0.03%
U.S. 2-year	0.30%
U.S. 10-year	2.51%

CLZ13.NYM

...Crude Oil Dec 13

...97.25

...0.14

(0.1%)

GCV13.CMX

...Gold Oct 13

.....1,346.60

...3.60

(0.3%)

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Photo:   Yahoo

US business investment plans fell sharply in Sep, a possible sign companies shut their wallets out of concern a budget battle brewing in DC would damage the economy.  New orders of non-military capital goods other than aircraft, an indicator of business spending plans, fell 1.1%, according to the Commerce Dept.  But a surge in volatile aircraft orders helped push overall orders of long-lasting factory goods to rise a more-than-expected 3.7%.  Orders for durable goods, which include everything from toasters to tanks, fell 0.1% when factoring out transportation equipment.  The data suggests businesses may have scaled back investment plans as a political impasse in DC threatened to lead the gov to miss interest payments, although firms also could be trimming these plans over more general doubts regarding the economy's strength.  While the economy was already struggling before the gov shutdown, it is estimated the shutdown will shave as much as 0.6 percentage point off annualized Q4 GDP thru reduced gov output & damage to both consumer & business confidence.

Capital Goods Orders in U.S. Unexpectedly Declined in September




Photo:  Bloomberg

Consumer  confidence in the US dropped in Oct to a 10-month low, showing the reopening of the federal gov failed to reassure households.  The Thomson Reuters/University of Michigan final consumer sentiment index decreased to 73.2, the weakest this year, from 77.5 in Sep.  The estimate called for a decline to 75 compared with a preliminary reading of 75.2.  The gov partial closing prompted Americans to turn more pessimistic about the economy, whose recovery continues to be uneven.  At the same time, record stock prices & rising property values may enhance some households’ ability to spend as the holiday-shopping season approaches.  The Michigan sentiment survey’s current conditions gauge, which measures Americans’ view of their personal finances, decreased to 89.9 from 92.6 last month.  The barometer of expectations 6 months from now dropped to 62.5, the weakest in almost 2 years, from 67.8 in Sep.

Consumer Sentiment in U.S. Fell to 10-Month Low in October

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Photo:   Yahoo

Procter & Gamble, a Dow stock & Dividend Aristocrat, is coming along with its turnaround, posting a quarterly profit that met expectations & holding to its annual forecasts as it  gets a lift from cost cuts & a lower tax rate.  The company is trying to reinvigorate itself under CEO A.G. Lafley, who returned in late May.  Lafley has previously said the current fiscal 2014 would be a "transition" year, after the "stepping stone" year that ended in Jun.  He has already split PG into 4 businesses, hoping the new structure will boost efficiency.  PG still expected 5-7% growth in EPS this fiscal year, excluding restructuring charges & it still expects organic sales, which strip out the impact of currency changes, acquisitions & divestitures, to rise 3-4% this fiscal year.  PG held or increased market share in businesses that represent about 2/3 of sales during the qtr, CFO Jon Moeller said.  Still, the company has to execute better, more consistently and more reliably, he added.  In North America overall, the PG share of the volume of goods that were sold on promotions was down 7% from a year earlier.  EPS was $1.04, in its Q1, up from 96¢ a year earlier.  Core EPS, which exclude restructuring charges, fell 1% to $1.05 & met expectations.  Sales rose 2.2% to $21.21B, topping the forecast of $21.04B.  Organic sales rose 4%.  Such sales were up in every category except healthcare, where they were flat, due in part to a pet food recall.  The stock fell 80¢.

Procter & Gamble Profit Rises 7.6% as Sales of Home-Care Products Increase

Procter & Gamble (PG)

Stocks are meandering again.  Strength at NAZ is after earnings from Amazon (AMZN) & Microsoft (MSFT & a Dow stock) were well received.   Dow is up about 150 this week & the S&P 500 has been setting new record highs even though the news has been uneven.  The disastrous roll-out of Obamacare will be adding uncertainty to business leaders who have to make planning decisions.  GDP in Q3 is going to be drab & the outlook for Q4 is not much better.  But the Dow & S&P 500 remained unconcerned.

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