Friday, December 20, 2013

Markets rise on stronger thn expected economic data

Dow advanced 42 to another record, advancers ahead of decliners 3-1 & NAZ jumped 46.  The MLP index soared 5+ to the 445s (although it has been trending sideways for 9 months) & the REIT index went up 1+ to 265.  Junk bond funds were higher, tagging along with the rise in the stock market, & Treasuries inched higher.  Oil climbed to a 2 month high after a report showed GDP expanded in Q3 at a faster rate than previously estimated while gold went back over 1200.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG14.NYM....Crude Oil Feb 14....99.16 Up ...0.12 (0.1%)

Live 24 hours gold chart [Kitco Inc.]

A report from GfK SE showed a gauge of consumer confidence in Germany will climb to 7.6 in Jan, the highest reading since Aug 2007, from 7.4 this month.  Producer prices dropped 0.8% from a year ago in Nov, compared with a 0.7% decline in the previous month, a separate report from the Federal Statistics Office showed.  Benchmark 10-year bunds fell yesterday after the Fed’s decision to cut its monthly purchases of Treasuries & mortgage-backed securities fueled speculation it would continue to taper acquisitions as the US economy improves.

German 10-Year Yields Rise to 2-Month High as Confidence Surges

Nike posted FY Q2 profit that topped estimates as higher-priced shoes boosted sales.  EPS was 59¢, up from 42¢ a year earlier & just ahead of the 58¢ estimate.  CEO Mark Parker has been introducing premium products that sell for higher prices, such as $160 Flyknit running shoes & $225 Hypervenom soccer cleats, while bolstering the company’s online business.  Gross margin expanded 1.4 percentage points to 43.9%.  Sales rose 8% to $6.43, pretty much matching the projection of $6.44B.  Orders for branded goods for Dec-Apr rose 13%, excluding the effects of foreign-currency exchange-rate fluctuations.  Analysts estimated a 9.6% gain.  The stock has had a good run this year, but pulled back 99¢ on the news.

Nike Profit Beats Analysts’ Estimates as Higher-Priced Shoes Boost Sales

Nike (NKE)

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Textron rose the most in almost 2 years after it was reported that the company was near a $1.4B purchase of planemaker Beechcraft.  The deal may be announced later today.  Adding Beechcraft would expand Cessna’s lineup of piston-engine & turboprop planes, a less-competitive field than private jets.  Formerly known as Hawker Beechcraft, the company left bankruptcy protection in Feb & stopped making business jets to focus on propeller-driven models such as military trainers & the twin-engine King Air.  Slumping demand for private jets & curbs on US defense spending led Hawker Beechcraft to file for bankruptcy in May 2012.  Negotiations to sell it for almost $1.8B to a Chinese buyer collapsed months later.  TXT CEO Scott Donnelly expressed interest in Beechcraft in Jul 2012l after the Chinese bid for planemaker was made public.  The stock jumped 4.71 (14%).

Textron Rallies on Report of $1.4 Billion Beechcraft Deal

Textron (TXT)

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This was another one of those up days for the stock market that is priced to perfection.  Dow rose more than 3.1K (24%) YTD.  But the euphoria behind this rise has more to do with easy money from the Fed, not so much on good economic news.  However economic data has been looking better in Q4.  But the new year will bring a greater awareness of the Obamacare disaster & the suffering it has brought to many.  That's not good for consumer spending.  After Janet gets her promotion in a couple of weeks, dysfunctional DC will have to get serious about raising the debt ceiling.  There is plenty of uncertainty out there which is getting little attention in the final days of 2013.

Dow Jones Industrials

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