Friday, February 7, 2014

Markets fly after January jobs report

Dow climbed 165 to close at the highs, advancers over decliners better than 3-1 & NAZ advanced 68.  The MLP index surged 5 to the 464s & the REIT index added 1+ to 275.  Junk bond funds rose & Treasuries had a strong rally.  Oil is nearing $100 again & gold rose for a 3rd straight day, capping the biggest weekly advance in a month after US payrolls increased less than economists expected.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLH14.NYM....Crude Oil Mar 14....99.54 Up ...1.70 (1.7%)

Live 24 hours gold chart [Kitco Inc.]

Apple shot up after saying it bought back $14B in stock in the 2 weeks since reporting iPhone sales that fell short of estimates.  CEO Tim Cook said that the company was “surprised” by the 8% stock drop on Jan 28.  IPhone sales over the holiday season & revenue forecast for the current qtr were lower than expected last month.  Activist investor Carl Icahn last month called for a $50B repurchase in fiscal 2014 after he said Jan 28 that he added $500M to his $3.6B stake in AAPL.  AAPL bought $12B of its shares in an “accelerated” program & $2B on the open market, Cook said.  With those latest repurchases, the company has purchased more than $40B of its shares over the past 12 months indicating the company is “really confident” in its plans.  AAPL stock surged $7 today.
If you want to learn more about AAPL, click on this link:

Apple Gains on Report It Bought $14 Billion of Its Own Stock in Two Weeks

Apple (AAPL)

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US consumer borrowing increased more than forecast in Dec as consumers made holiday purchases with credit cards & took out loans for cars & schooling.  The $18.8B gain exceeded the highest estimate & followed a revised $12.4B advance the previous month, according to the Federal Reserve (FED).  The forecast called for a $12B increase.  For all of 2013, consumer credit increased 6.2% after rising 6.1% a year earlier.  Gains in household wealth tied to higher stock & property values are giving Americans the wherewithal to carry bigger credit-card balances as the job market struggles to pick up.  The report doesn’t measure debt secured by real estate, such as mortgages & home-equity lines of credit.  Revolving credit, which includes credit-card purchases, rose $5B, the most in 7 months.  Non-revolving debt, such as that for college loans & the purchase of vehicles & mobile homes, climbed $13.8B after an $11.9B increase in Nov.  Auto lending increased $7B in Q4 above the Q3 level.  Americans have been borrowing to replace older cars.  US auto sales increased to 15.6M in 2013, the industry’s best year since 2007, according to researcher Autodata.  The improvement came even as Dec sales slumped after cold weather kept some buyers from dealerships.  Lending to consumers by the federal gov, mainly for student loans, rose $5.6B before after rising $6.1B in Nov.  In Q4, student-loan debt rose $12.6B.  Household purchases grew 3.3% in Q4, the biggest gain since the end of 2010, according to the Commerce Dept.

Consumer Credit in U.S. Increased More Than Forecast in December

Investors shifted record amounts from US stock funds to bonds, while withdrawing money from emerging-market equities for a 15th straight week, according to Citigroup.  US equity funds had $24B of outflows in the week to Feb 5, according to a report from the research unit of Citi.  Withdrawals from stock funds worldwide totaled $28.3B, citing data from EPFR Global, a fund research.  Money managers plowed $13B into US bond funds, accounting for most of the $14.8B that flowed into debt worldwide.  All the figures for the period are record highs.  Bonds beat stocks last month for the first time since Aug as a slowdown in US jobs growth & turmoil in emerging markets from China to Argentina drove demand for the safest securities.  The FED decision to taper its bond purchases in Jan & again in Feb did more to temper the appeal of high-risk assets than reduce demand for US debt.  Investors pulled $6.4B out of emerging-market equity funds in the period, the biggest outflow since Aug 2010, according to the report said.

Numerous advances by the markets today don't square with each other.  When stocks make big gains, traditionally Treasuries & gold retreat because of increased selling.  Not today.  All markets gave a mixed message.  Sluggish job growth along with mediocre supporting the decline in the unemployment rate usually does not energize stock buyers.  Breadth was 2nd-rate given the advance in the Dow.  Maybe these differences will be sorted out on Mon.  Dow is still down 800 YTD, not a good year.

Dow Jones Industrials

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