Monday, December 9, 2013

Markets little changed, waiting for the Federal Resere meeting next week

Dow went up 5, but decliners were slightly ahead of advancers & NAZ gained 6.  The MLP index dropped 1+ to the 442s (continuing sideways trend since late Mar) & the REIT index was up 1 to 268.  Junk bond funds inched higher & Treasuries remained about even with relatively lofty yields.  Oil slid back pennies & gold found bargain hunters to bid up the price.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF14.NYM....Crude Oil Jan 14...97.46 Down ...0.19  (0.2%)

Live 24 hours gold chart [Kitco Inc.]

  • St. Louis Fed President James Bullard

    Photo:   Bloomberg

Federal Reserve Bank (FED) of St. Louis President James Bullard said the odds of tapering bond purchases have risen along with gains in the labor market & any reduction should be modest to account for low inflation.  “A small taper might recognize labor-market improvement while still providing the committee the opportunity to carefully monitor inflation during the first half of 2014,” Bullard, a supporter of record stimulus, said.  “Should inflation not return toward target, the committee could pause tapering at subsequent meetings.”  With the U.S. labor market showing signs of strengthening, the FMOC may start dialing down $85B in monthly bond buying at a Dec 17-18 meeting rather than wait until Jan, according to 34% of economists polled last Fri (up from 17% last month).  “Based on labor-market data alone, the probability of a reduction in the pace of asset purchases has increased,” Bullard said.  “To the extent that key labor market indicators continue to show cumulative improvement, the likelihood of tapering asset purchases will continue to rise,” Bullard added.  “The Committee’s 2012 criterion of substantial improvement in labor markets gets easier and easier to satisfy on a cumulative basis as labor markets continue to heal.”  Bullard, noting inflation is well below the FED’s target, has in the past urged the FED to hold off on reducing its asset purchases or raising interest rates.  Instead, he has proposed that the FED pledge not to raise the benchmark interest rate if inflation is below 1.5%.

US household wealth increased in Q3 as improvement in the home & equity markets boosted balance sheets.  New worth for households & non-profit groups rose $1.9T in Q3 from Q2, to $77.3T, according to the FED.  Consumers have been cleaning up balance sheets for more than 4 years with the help of gains in employment, stock prices & home values.  Further improvement in the labor market will be needed to bolster confidence & boost spending following its weakest gain in almost 4 years as households continue to repair finances.  The value of financial assets, including stocks & pension fund holdings, held by American households increased by $1.5T in Q3.  Purchases by upper-income households who feel more confident as their wealth improves can lead to gains in hiring & boost the buying-power of more Americans.  A recovering housing market is also helping improve household wealth.  Household net worth is $8.2T above its pre-recession peak of $69T reached in Q3-2007.  It was $75.3T in Q3-2013.

U.S. Household Worth Rose by $1.92 Trillion in Third Quarter

Sysco, a Dividend Aristocrat,  agreed to acquire closely held US Foods for $3.5B, adding brands from Cattleman’s meat to Devonshire desserts, in the largest food-distribution deal in 8 years in North America.  SYY will pay $3B in stock & $500M in cash.  The bonds of US Foods soared to a record.  The deal bolsters its position as North America’s largest distributor of food to restaurants, expanding its geographical reach & creating supply chain cost savings.  The combined business, with about $65B in annual sales, will be led by SYY CEO Bill DeLaney & the acquisition is expected to be completed late next year.  SYY has about 18% of the US market & the new business would have about a quarter of it.  The stock jumped 3.31 (9%+).

Sysco to Acquire US Foods for $3.5 Billion

Sysco (SYY)

stock chart

Stocks had another sleepy day.  DC is not getting much attention as it is assumed that it will muddle by the current fiscal mess & raising the debt ceiling will take care of itself in Jan.  Yield securities have not participated in the market rise since May.  That's an ominous sign which the Dow has been ignoring, so far.  Dow is still down 60 in Dec & up a spectacular 3K YTD.   16086

Dow Jones Industrials

stock chart

I’m a huge fan of INO & from what I have seen so far, their service Marketclub!  This isn’t a stripped down version, everything in MarketClub is available to you.  I don’t want to give everything away, but you’ll have unlimited access to my favorite 3 tools: Trade Triangles, Smart Scan & Alerts!
The best part is that the MarketClub customer support team will be providing UNLIMITED support!
You can call or email for an instant response to any question, comment or concern.

Here’s that link:

I’d recommend you jump on this now.

No comments: