Tuesday, March 18, 2014

Markets rise after Putin comments

Dow gained 88, advancers over decliner better than 2-1 & NAZ added 33.  The MLP index went up 1 to the 463s & the REIT index was fractionally higher to the 285s.  Junk bond funds inched higher & Treasuries did little.  Oil were flattish & gold retreated after a good run this year.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF15.NYM....Crude Oil Jan 15...91.84 Down .....0.01  (0.0%)

GCH14.CMX...Gold Mar 14....1,353.40 Down ...19.50  (1.4%)

Consumer confidence in the US unexpectedly dropped in Mar to a 4-month low, indicating household spending may be slow to pick up from a weather-related setback earlier this year.  The Thomson Reuters/University of Michigan preliminary index of sentiment fell to 79.9 from 81.6 in Feb.  The estimate called for the measure to increase to 82.  Consumers surveyed were more pessimistic about the outlook for the economy, indicating bigger payroll gains that lead to faster wage growth are needed to propel spending.  At the same time, fewer job cuts, higher home values & stocks close to a record will help keep sentiment from faltering.  The Michigan sentiment survey’s index of expectations 6 months from now decreased to 69.4, the lowest since Nov, from 72.7 last month.  The gauge of current conditions, which measures Americans’ view of their personal finances, rose to 96.1 in March from 95.4 a month earlier.

Consumer Sentiment in U.S. Unexpectedly Fell in March on Outlook

Wholesale Prices in U.S. Unexpectedly Drop on Services

Photo:   Bloomberg

Producer prices in the US unexpectedly dropped in Feb, held back by the biggest decrease in the cost of services in almost a year.  The 0.1% decrease in the producer-price index (PPI) followed a 0.2% rise the prior month, according to the Labor Dept.  None of the economists surveyed projected a decrease.  Over the past 12 months, wholesale prices rose 0.9%, the smallest year-to-year gain since May.  Clothing retailers, airlines & residential real-estate brokers were among service providers using discounts to lure customers as harsh winter weather curbed demand.  Weak inflation gives Federal Reserve policy makers next week room to maintain low borrowing costs.  Today’s PPI report is the 2nd using a revamped index that encompasses 75% of the economy, up from 1/3 of all production for the old gauge, which reflected the costs of goods alone.  The estimate called for a 0.2%.  Wholesale prices excluding food & energy dropped 0.2% compared with a projected 0.1 percent advance.  They climbed 0.2% the prior month.  The year-to-year advance in total wholesale prices in Feb was 0.9%, down from a 1.2% gain in the 12 months to Jan.  Excluding food & energy, the index increased 1.1% in the 12 months ended in Feb, following a 1.3% year-to-year gain in Jan.  The cost of services dropped 0.3%, the most since May, reflecting record decreases for clothing & real-estate broker commissions.  Airline & train fares also decreased.  Prices for goods climbed 0.4% & were up 0.6% since Feb 2013.  Energy costs climbed 0.5% after a 0.3% increase in Jan.  Producer prices related to consumer spending declined 0.2% in Feb after increasing 0.3% a month earlier.

Pres Putin said that Russia won’t further split up Ukraine & blamed Western encroachment for forcing him to annex Crimea in a move that’s sparked the worst diplomatic crisis since the Cold War.  He called on Russia to ratify a treaty to absorb the Black Sea peninsula after a Mar 16 referendum there supported its secession from Ukraine.  He addressed lawmakers & regional leaders in Moscow, telling them Crimea was an “inalienable” part of Russia, which felt “robbed” when the province stayed with Ukraine after the collapse of the Soviet Union.  Don’t believe those who scare you with Russia, who yell that Crimea will be followed by other regions,” Putin said in a speech at the Kremlin.  “Crimea is our historic legacy. It should be part of a strong and stable sovereignty, which today can only be Russian.”  Putin’s call to annex Ukraine’s Black Sea peninsula defied sanctions imposed yesterday by the US & EU aimed at dissuading him.  Putin also underscored Russia’s right to defend Russian speakers in Ukraine’s east, where the country’s prime minister, Arseniy Yatsenyuk, said today the Kremlin is behind “aggressive” demonstrations among Russian-speakers who want to follow Crimea in secession.  Putin’s said Yatsenyuk’s gov “isn’t in control of anything” & was being led by nationalist, anti-semitic, & Russophobe “radicals.”

Putin Says Russia Doesn’t Want Ukraine Split After Crimea

Even though stocks don;t know what to do, buyers have the upper hand today.  The Ukraine situation remains fluid to say the least & it's difficult to see how Putin's comments are bringing out buyers for stocks.  But higher yield securities continue to do well in 2014 while Dow is still struggling to break into the black YTD.  The consumer confidence survey is one more reminder that the US economy is not as healthy as the bulls make it out to be.  Dow is still down more than 200 YTD.

Dow Jones Industrials

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