Dow climbed 76, advancers overr decliners 3-2 & NAZ lost 3. The MLP index slid a fraction to the 467s & the REIT index climbed 2 to the 284s. Junk bond funds went up as did Treasuries. Oil rose
for a 2nd day on speculation that inventories at Cushing, OK, dropped for a 3rd week. Gold fell from a 3-month high as
investors weighed the outlook for US stimulus before the
Federal Reserve releases minutes of its last meeting.
AMJ (Alerian MLP Index tracking fund)
Photo: Bloomberg
The pace of home construction in the US declined more than forecast in Jan, indicating an unusually harsh winter probably played a role in slowing projects. Housing starts fell 16% to an 880K annualized rate following a revised 1.05M rate for Dec, according to the Commerce Dept. The decrease was the biggest since Feb 2011 & the estimate called for 950K. Permits for future projects showed a smaller drop, a sign activity may stabilize as the weather improves. The coldest Jan in 2 decades probably limited groundbreaking for homebuilders as construction dropped to a record low in the Midwest. The housing report showed applications for building permits declined 5.4% to a 937K pace in Jan, less than the projected 975K. For all of 2013, builders began work on 927K homes, up the most since 2007’s 1.36M. Work on single-family houses dropped 15.9% to a 573K rate, the fewest since Aug 2012, from 681K the prior month. Construction of multifamily projects declined 16.3% to an annual rate of 307K, a 3-month low. 3 of 4 regions showed declines in groundbreaking, led by a record 67.7% plunge in the Midwest to a 50K annualized pace, the fewest in data going back to 1959. Starts dropped 12.5% in the South. The total drop may not be fully attributed to bad weather as the West, where temperatures were higher than normal, also showed a 17.4% decrease, the biggest since Nov 2012. Inclement weather has weighed on the economy so far this year, holding back builders & preventing customers from visiting car dealers & retailers.
Warren Buffett warned last year at the annual meeting for Coca-Cola, a Dow stock & Dividend Aristocrat, that the beverage giant shouldn’t get complacent about success. KO, facing sluggish growth overseas & concerns about the healthiness of its product at home, just posted its 4th straight qtr of declining sales. The slowdown has raised concerns about the long-term plan of CEO Muhtar Kent, who has promised big revenue gains by 2020. Q4 sales fell 3.6% to $11B, missing the estimate & EPS was 38¢, down from 41¢. Kent responded to the slump by pledging to cut $1B in annual costs by 2016. With soft-drink sales slowing in markets such as the US & Mexico, savings from the new cost-cutting program will be plowed into marketing its brands directly to consumers. Buffett has advised Kent to stay ahead of competitors by being proactive. At last year’s annual meeting, the executives shared the stage to help sell the company’s message. “I like to study failure,” the billionaire investor said. “We want to see what has caused businesses to go bad, and the biggest thing that kills them is complacency. You want a restlessness -- a feeling that somebody’s always after you, but you’re going to stay ahead.” KO stock lost a dime today & is near its low for the last 12 months. If you would like to learn more about KO, click on this link:
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.05% | |
U.S. 2-year |
0.29% | |
U.S. 10-year |
2.69% |
| CLH14.NYM | ...Crude Oil Mar 14 | ...102.88 |  ...0.45 | (0.4%) |
| GCH14.CMX | ...Gold Mar 14 | ..,,,,.1,320.90 | ...3.70 | (0.3%) |
Photo: Bloomberg
The pace of home construction in the US declined more than forecast in Jan, indicating an unusually harsh winter probably played a role in slowing projects. Housing starts fell 16% to an 880K annualized rate following a revised 1.05M rate for Dec, according to the Commerce Dept. The decrease was the biggest since Feb 2011 & the estimate called for 950K. Permits for future projects showed a smaller drop, a sign activity may stabilize as the weather improves. The coldest Jan in 2 decades probably limited groundbreaking for homebuilders as construction dropped to a record low in the Midwest. The housing report showed applications for building permits declined 5.4% to a 937K pace in Jan, less than the projected 975K. For all of 2013, builders began work on 927K homes, up the most since 2007’s 1.36M. Work on single-family houses dropped 15.9% to a 573K rate, the fewest since Aug 2012, from 681K the prior month. Construction of multifamily projects declined 16.3% to an annual rate of 307K, a 3-month low. 3 of 4 regions showed declines in groundbreaking, led by a record 67.7% plunge in the Midwest to a 50K annualized pace, the fewest in data going back to 1959. Starts dropped 12.5% in the South. The total drop may not be fully attributed to bad weather as the West, where temperatures were higher than normal, also showed a 17.4% decrease, the biggest since Nov 2012. Inclement weather has weighed on the economy so far this year, holding back builders & preventing customers from visiting car dealers & retailers.
Warren Buffett warned last year at the annual meeting for Coca-Cola, a Dow stock & Dividend Aristocrat, that the beverage giant shouldn’t get complacent about success. KO, facing sluggish growth overseas & concerns about the healthiness of its product at home, just posted its 4th straight qtr of declining sales. The slowdown has raised concerns about the long-term plan of CEO Muhtar Kent, who has promised big revenue gains by 2020. Q4 sales fell 3.6% to $11B, missing the estimate & EPS was 38¢, down from 41¢. Kent responded to the slump by pledging to cut $1B in annual costs by 2016. With soft-drink sales slowing in markets such as the US & Mexico, savings from the new cost-cutting program will be plowed into marketing its brands directly to consumers. Buffett has advised Kent to stay ahead of competitors by being proactive. At last year’s annual meeting, the executives shared the stage to help sell the company’s message. “I like to study failure,” the billionaire investor said. “We want to see what has caused businesses to go bad, and the biggest thing that kills them is complacency. You want a restlessness -- a feeling that somebody’s always after you, but you’re going to stay ahead.” KO stock lost a dime today & is near its low for the last 12 months. If you would like to learn more about KO, click on this link:
Buffett’s Coca-Cola Complacency Warning Foretells Troubled Year
Coca-Cola (KO)
Ukrainian bonds suffered the worst selloff on record & stocks dropped as Poland warned its eastern neighbor is on the brink of a civil war after clashes in Kiev killed at least 25 people. The yield on the gov’s $1B of notes maturing in Jun increased 11.35 percentage points to 34.27%, an all-time high, & the rate on bonds due in 2023 rose 93 basis points to 11.45%. The stock index lost 2.8% & the hryvnia, which is managed by the central bank, weakened 1% to 8.95 per dollar. Investors are ditching assets after the pres’s regime yesterday banned protests, vowing to use “all means” necessary to restore order. Ukraine, which is grappling with a record current-account deficit & foreign reserves at the lowest level since 2006, has $17B of liabilities coming due, excluding interest, thru the end of 2015. The yield on the 2014 note traded a record 23 percentage points above the rate on the debt maturing in Apr 2023. Lawmakers in the Lviv region declared independence while protesters evicted the appointed governor & seized the local security service’s headquarters. This is beginning to look like civil war, something stock markets around the world don't like to see.
Ukraine Bonds Slump With Stocks as Violence Escalates Threat of Civil War
Only 4 of the Dow stocks are lower & those declines are modest while the NAZ is slightly in the red. The Ukraine is the biggest story today & that has the potential to become ugly quickly. But buyers have the upper hand so far, ahead off the minutes from the FOMC's last meeting in the PM. Bad weather across much of the US is being ignored even though it has the potential to reduce the GDP growth rate in Q1 by half a percentage point.
Dow Jones Industrials
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