Tuesday, November 5, 2013

Markets fluctuate with no positive economic data

Dow lost 20 after being in the red all day, decliners over advancers 2-1 & NAZ crawled up 3. The MLP index fell 3+ to 454 & the REIT index lost 4+ to the 276s.  The MLP index is back to where it was at the start of  Apr (while the popular averages have been rising).  Junk bond funds slipped lower & Treasuries continued their AM weakness.  Oil slid below 94 & gold ended pretty much even.

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....93.38 Down ...1.24  (1.3%)

Live 24 hours gold chart [Kitco Inc.]

Federal Reserve Bank of Richmond President Jeffrey Lacker said income inequality has increased in recent years because of the rising importance of a college degree & advanced skills for US employers.  “The rich are increasingly likely to remain rich, and the poor are increasingly likely to remain poor,” Lacker said.  “The disparity in outcomes between those who have acquired skills, often in the form of college education, and those who have not likely plays a large role.”  Lacker, who didn’t comment on the economic outlook or monetary policy in his prepared remarks, said the labor market remains “weak,” with unemployment at 7.2%.  Employers have difficulty filling jobs that demand highly-skilled workers, Lacker told a group of college students & faculty at Johnson C. Smith University in Charlotte.  About 8% of high school students drop out, which Lacker said amounts to an “economic death sentence” & may be “unacceptably high.”  The unemployment rate among workers with college degrees is just 3.7%, he added. 

Fed’s Lacker Says Widening U.S. Inequality Caused by Skills Gap

Walgreen's, Dividend Aristocrat, revenue from established stores climbed 5.8% last month, higher than expected, as the drugstore chain doled out more flu shots & absorbed a smaller revenue hit from generic drugs.  The company said that pharmacy revenue from stores open at least a year jumped 7.9%, while revenue from the front end, or rest of the store, rose 2.3%.  Analysts expected an overall increase of 4.8%, a pharmacy gain of 5.6% & a bigger front-end increase of 2.8%.  Revenue from stores open at least a year is a key indicator of a retailer's health, because it excludes the potentially distorting impact of recently opened or closed stores.  WAG operated 8131 drugstores last month, 101 more than a year ago.  The pharmacies & clinics have administered more than 4.9M flu shots so far this season, compared to 3.6M at the same point last year.  Pharmacy sales took a 1% hit last month from generic drugs, a smaller impact than in the prior year.  Top-selling brand-name drugs like the cholesterol fighter Lipitor have lost US patent protection from cheaper generic drugs in recent years, & that hurts monthly sales for drugstore chains.  But it also helps bottom lines, because generics are more profitable for drugstores.  The company's revenue also was hurt last year because it had to temporarily close hundreds of stores the last week of Oct when Superstorm Sandy hit the East Coast.  That, in turn, helped the comparison with Oct 2013.  The stock rose 15¢.

Key Walgreen revenue metric climbs 5.8 pct in Oct Associated Press

Walgreen (WAG)

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Louisiana-Pacific Q3 revenue fell short of expectations as prices for wood products used in home construction fell.  Louisiana-Pacific makes siding as well as oriented strand board, sold in sheets made from pressed wood chips used for flooring & other surfaces in homes.  The company said prices for oriented strand board continued to decline & profits from that unit fell to $30M, from $49M a year ago.  EPS was 26¢, up from its year-ago EPS of 22¢.  Adjusted EPS would have been 13¢.  Revenue rose almost 10% to $507M from $462M a year earlier.  Analysts had been expecting EPS of 11¢ on revenue of $519M.  "We saw the pace of improvement in the housing market slow over the summer," CEO Curt Stevens said.  "However, the pace of permit activity, builder confidence and a slightly better economy should allow housing starts to grow in coming quarters."  The stock fell 1.11.

Louisiana-Pacific 3Q adjusted profit misses Associated Press

Louisiana-Pacific (LPX)

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The stock market had another lackluster day with an absence of important news.  The jobs report on Fri is looming big although there should not be major surprises.  Job growth will probably be given a mediocre grade which is good enough for the bulls.  The growth should show the economic recovery is limping along, but not enough to prompt a reduction in the bond buying program by the Federal Reserve.  The recovery from the recession lows over 4 years ago is the weakest in history.  With Obamacare kicking in, the recovery will not accelerate.  Make no mistake that will hurt the economy.  At some point, the poor record will bring on sellers.  Dow has been flattish for for 2 weeks because even the bulls aren't sure what to do.  

Dow Jones Industrials

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