Dow soared 115 (closing at the highs), advancers over decliners 2-1 & NAZ gained a very big 69. The MLP index jumped 2 to the 454s & the REIT index went up 2 to just over 270. Junk bond funds were mixed & Treasuries settled back. Oil rose & gold slid back in late day trading.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Retail sales rose in Dec as frigid temps prodded Americans to buy discounted winter clothing & shop online for the holidays, capping what may have been the strongest qtr for consumer spending in 3 years. Purchases increased 0.2% after a 0.4% advance in Nov, according to the Commerce Dept. Excluding a drop in auto demand that vehicle makers also partly attributed to the bad weather, sales jumped by the most in almost a year. As consumers buy more, their confidence buoyed by lower unemployment & higher home values, they are turning to internet retailers to shop from home & avoid inclement conditions. The sales figures helped raise estimates for Q4 household spending, with some projections approaching gains of 4%, which would make it the best since Q4-2010. The retail sales report showed 7 of 13 major merchant categories posted gains, paced by a 2% jump at grocery & beverage stores (the biggest since Oct 2006). But gains weren’t distributed equally. Department stores & clothing chains piled on discounts to attract shoppers who are increasingly shopping online & have become trained to seek out deals. ShopperTrak said last week that holiday sales rose 2.7% among the mall-based sellers of general merchandise, apparel, furniture & electronics it tracks. That was smallest increase since 2009. Customer traffic in Nov & Dec declined 15%t from the same period a year earlier. The forecast called for a 0.1% gain in sales. For all of 2013, retail sales rose 4.2% from the prior year, following a 5.4% gain in 2012.
The Senate plans to vote today on whether to advance a Dem plan to restore emergency jobless benefits for 1.3M that expired Dec 28. A dispute over how to cover the cost of the benefits & how long they should continue, for 3 months or close to a year, has stalled progress on the measure since last week. With no deal in sight, today’s vote may scuttle action on the bill. Senate Rep Leader Mitch McConnell said he was frustrated that Majority Leader Harry Reid hadn’t allowed votes on Rep “common-sense proposals.” The expanded benefits program started in 2008, when the US jobless rate was 5.6%, & at one point provided as many as 99 weeks of benefits for the long-term unemployed. At the end of 2013 the maximum was 73 weeks, including 26 weeks of state-funded benefits. The national jobless rate today is 6.7%. Dems had proposed a 3-month extension of the jobless benefits, costing $6.4B, as emergency aid without offsetting the cost. 6 Reps joined Dems to keep the bill alive in a procedural vote last week. All are insisting, as a condition of their support today, on adding language to pay for the added benefits with budgetary reductions elsewhere. Dems, who control 55 seats, need the support of at least 5 Reps to advance the proposal. Reid said last week he would be open to covering the cost of the unemployment benefits measure only if the extension was for almost a year instead of 3 months. On the Senate floor today, he said he remained optimistic that an agreement could be reached before today’s vote. The ideas from the Dems is that the emergency jobless act is to be extended into its 6th year. That's a long emergency.
Jobless Benefits Near Senate Vote With No Deal in Sight
Wells Fargo, the largest home lender, posted record Q4 & full-year profit that was bolstered by expense cuts & one-time gains, raising concern about the quality of the earnings. EPS was $1, up from 91¢ a year earlier. The estimate, excluding some items, was 98¢. For the full year, profit rose 16% to $21.9B. CEO John Stumpf is trimming staff & expenses as rising interest rates curtail demand for home refinancings. While profit was enough to beat the forecast, mortgage applications plunged. Revenue slid 6% to $20.7B from a year earlier & 3% for the full year to $83.8B. Profit before taxes & provisions fell 5%. Net interest margin, a key metric that is the difference between what the bank makes on lending & pays for funds, fell to 3.26% from 3.38% in Q3. Deposits & loans both increased. Non-interest expense dropped 6% & the efficiency ratio, which measures costs as a percentage of revenue, improved to 58.5% from 59.1% in Q3 & 58.8% a year earlier. The stock slipped pennies.
Wells Fargo’s Net Income Rises 10% to Record as Home Lender Corrals Costs
Another good day for stocks is helping the Dow climb back into the black for 2014. However Dow is still down 200 in Jan. Market breadth was not impressive. The retail sales data was good for online merchants. But brick & mortar stores did not do so well & heavy discounting will bring lower margins. The earnings reports from the big banks today both showed both had blower revenue, not a good sign going forward. Mediocre earnings are getting a warm reception.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.03% | |
U.S. 2-year |
0.38% | |
U.S. 10-year |
2.87% |
Retail sales rose in Dec as frigid temps prodded Americans to buy discounted winter clothing & shop online for the holidays, capping what may have been the strongest qtr for consumer spending in 3 years. Purchases increased 0.2% after a 0.4% advance in Nov, according to the Commerce Dept. Excluding a drop in auto demand that vehicle makers also partly attributed to the bad weather, sales jumped by the most in almost a year. As consumers buy more, their confidence buoyed by lower unemployment & higher home values, they are turning to internet retailers to shop from home & avoid inclement conditions. The sales figures helped raise estimates for Q4 household spending, with some projections approaching gains of 4%, which would make it the best since Q4-2010. The retail sales report showed 7 of 13 major merchant categories posted gains, paced by a 2% jump at grocery & beverage stores (the biggest since Oct 2006). But gains weren’t distributed equally. Department stores & clothing chains piled on discounts to attract shoppers who are increasingly shopping online & have become trained to seek out deals. ShopperTrak said last week that holiday sales rose 2.7% among the mall-based sellers of general merchandise, apparel, furniture & electronics it tracks. That was smallest increase since 2009. Customer traffic in Nov & Dec declined 15%t from the same period a year earlier. The forecast called for a 0.1% gain in sales. For all of 2013, retail sales rose 4.2% from the prior year, following a 5.4% gain in 2012.
The Senate plans to vote today on whether to advance a Dem plan to restore emergency jobless benefits for 1.3M that expired Dec 28. A dispute over how to cover the cost of the benefits & how long they should continue, for 3 months or close to a year, has stalled progress on the measure since last week. With no deal in sight, today’s vote may scuttle action on the bill. Senate Rep Leader Mitch McConnell said he was frustrated that Majority Leader Harry Reid hadn’t allowed votes on Rep “common-sense proposals.” The expanded benefits program started in 2008, when the US jobless rate was 5.6%, & at one point provided as many as 99 weeks of benefits for the long-term unemployed. At the end of 2013 the maximum was 73 weeks, including 26 weeks of state-funded benefits. The national jobless rate today is 6.7%. Dems had proposed a 3-month extension of the jobless benefits, costing $6.4B, as emergency aid without offsetting the cost. 6 Reps joined Dems to keep the bill alive in a procedural vote last week. All are insisting, as a condition of their support today, on adding language to pay for the added benefits with budgetary reductions elsewhere. Dems, who control 55 seats, need the support of at least 5 Reps to advance the proposal. Reid said last week he would be open to covering the cost of the unemployment benefits measure only if the extension was for almost a year instead of 3 months. On the Senate floor today, he said he remained optimistic that an agreement could be reached before today’s vote. The ideas from the Dems is that the emergency jobless act is to be extended into its 6th year. That's a long emergency.
Jobless Benefits Near Senate Vote With No Deal in Sight
Wells Fargo, the largest home lender, posted record Q4 & full-year profit that was bolstered by expense cuts & one-time gains, raising concern about the quality of the earnings. EPS was $1, up from 91¢ a year earlier. The estimate, excluding some items, was 98¢. For the full year, profit rose 16% to $21.9B. CEO John Stumpf is trimming staff & expenses as rising interest rates curtail demand for home refinancings. While profit was enough to beat the forecast, mortgage applications plunged. Revenue slid 6% to $20.7B from a year earlier & 3% for the full year to $83.8B. Profit before taxes & provisions fell 5%. Net interest margin, a key metric that is the difference between what the bank makes on lending & pays for funds, fell to 3.26% from 3.38% in Q3. Deposits & loans both increased. Non-interest expense dropped 6% & the efficiency ratio, which measures costs as a percentage of revenue, improved to 58.5% from 59.1% in Q3 & 58.8% a year earlier. The stock slipped pennies.
Wells Fargo’s Net Income Rises 10% to Record as Home Lender Corrals Costs
Wells Fargo (WFC)
Another good day for stocks is helping the Dow climb back into the black for 2014. However Dow is still down 200 in Jan. Market breadth was not impressive. The retail sales data was good for online merchants. But brick & mortar stores did not do so well & heavy discounting will bring lower margins. The earnings reports from the big banks today both showed both had blower revenue, not a good sign going forward. Mediocre earnings are getting a warm reception.
Dow Jones Industrials
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