Tuesday, December 31, 2013

Higher markets on consumer confidence data

Dow rose 33 to yet another record, advancers over decliners almost 3-2 & NAZ was up 13.  The MLP index, which has been strong in the last 2 weeks, rose 2+ to the 464s & the REIT index was up fractionally in the 262s.  Junk bond funds edged higher & Treasuries were soft, taking the yield on the 10 year Treasury near 3%.  Oil slipped back under 100 & gold is hanging in above 1200 which is becoming an important support level. 

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG14.NYM...Crude Oil Feb 14...98.56 Down ....0.73  (0.7%)

GCF14.CMX...Gold Jan 14......1,210.10 Up ...7.00 (0.6%)

Consumer confidence in the US climbed more than projected in Dec as Americans’ views of current economic conditions jumped to the highest level since Apr 2008.  The Conference Board index rose to 78.1 from a revised 72 a month earlier that was stronger than initially estimated. The projection called for a gain to 76.  Americans are growing upbeat about the economy as household finances improve on the heels of more hiring, rising property values & stock-market gains.  Increased optimism along with greater wealth will help underpin consumer spending that makes up almost 70% of the economy.  The Conference Board’s barometer of present conditions increased to 76.2 from 73.5 & consumers’ assessments of current labor-market conditions also improved.  The share of respondents who said positions were hard to get dropped to the lowest level since Sep 2008 (when Lehman collapsed).  A gauge of consumer expectations for the next 6 months jumped to 79.4, the highest since Sep, from 71.1 a month earlier.  The proportion of Americans who said jobs would become more plentiful in the next 6 months rose to a 4 month high of 17.1% from 13.1% in Nov.  The share of respondents who said they expected better business conditions in the next 6 months rose to 17.2% from 16.7%.

Consumer Confidence Index in U.S. Increased to 78.1 in December

China's President Xi Jinping
Photo:   Bloomberg

Xi Jinping, delivering his first New Year’s address as China's pres, said the country must press ahead with reforms in 2014 to improve livelihoods & make the country “rich and strong.”  “I firmly believe that new glories will be awaiting the Chinese people,” Xi said in a speech.  China enters 2014 facing slowing economic growth, rising environmental concerns & higher tensions with Japan over a territorial dispute that has damaged a $366B trade relationship.  “In 2014 we will make new strides along the path of reform,” Xi said.  A key task will be overseeing the broadest economic reforms since the 1990s which were spelled out at the Communist Party Central Committee’s Third Plenum in Nov.  Shifts include loosening the one-child policy, increasing property rights for farmers & encouraging private investment in more industries.  China’s equities have fallen this year amid concern slowing economic growth will curb corp profits.  China estimates that growth slowed to 7.6% this year & analysts see growth slowing to a 24-year low of 7.5% in 2014 & 7.2% in 2015.  People’s Bank of China (PBOC) in a separate New Year’s Eve statement said the nation will maintain a “prudent” monetary policy & promote financial reforms in 2014.  Policy makers will ensure financial stability, it said.

Stocks are having another good day, probably propelled by fund managers buying to make their holdings look even better.  As I've said many times, all stocks are not participating as shown by limited market breadth.  Consumer confidence is riding higher than it has been for some time but new taxes & fees, largely related to Obamacare, kick in tomorrow.

Dow Jones Industrials

stock chart

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