Friday, March 28, 2014

Markets rise on consumer spending data

Dow climbed 123, advancers over decliners 5-1 & NAZ rose 45.  The MLP index was up 1 to the 461s & the REIT index rose to the 283 (both flattish for months).  Junk bond funds were mixed & Treasuries saw a little selling.  Oil reached a 2-week high as US consumer spending rose in Feb by the most in 3 months & supplies shrank at Cushing, Oklahoma.  Gold slid lower, under 1300.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLK14.NYM...Crude Oil May 14...102.01 Up ...0.73 (0.7%)

GCJ14.CMX....Gold Apr 14........1,292.10 Down ...2.60  (0.2%)

Consumer Spending in U.S. Increases by Most in Three Months
Photo:   Bloomberg

US consumer spending rose in Feb by the most in 3 months as incomes increased, a sign that economic momentum was returning as Americans recovered from an unusually harsh winter.  Household purchases climbed 0.3% after a 0.2% gain in Jan (smaller than previously estimated), according to the Commerce Dept.  The forecast called for a 0.3% gain.  Incomes also increased 0.3%.  Americans were shaking off the effects of the coldest winter in 4 years as they ventured out to shop, supported by a job market that’s also picking up speed.  Retailers are among companies that are waiting on warmer weather to gain clarity on the spending outlook.  The Jan reading was previously reported as an increase of 0.4%.  After adjusting consumer spending for inflation, which generates the figures used to calculate GDP, purchases increased 0.2%, also the best performance since Nov, after a 0.1% advance the previous month.  Spending on durable goods, including automobiles, increased 0.1% after adjusting for inflation following a 0.4% drop in Jan.  Purchases of non-durable goods, which include gasoline, gained 0.3%.  Household outlays on services climbed 0.2% after adjusting for inflation.  In addition to health care, the category also includes utilities, tourism, legal help & personal care items such as haircuts.

Consumer Spending in U.S. Increases by Most in Three Months

The Thomson Reuters/University of Michigan final index of sentiment fell to 80 from 81.6 in Feb.  The projection called for 80.5 after a preliminary Mar reading of 79.9.  Americans grew more pessimistic about the outlook for the economy as higher home-heating bills & gasoline prices strained budgets.  Stronger job & wage gains would help brighten outlooks & provide a bigger push for the consumer spending.  The index of expectations 6 months from now decreased to 70 from 72.7 last month.  The preliminary reading was 69.4.  The gauge of current conditions, which measures Americans’ view of their personal finances, rose to 95.7 from 95.4 a month earlier.  The initial figure was 96.1.

Michigan Sentiment Index Fell to a Four-Month Low in March

Russia dismissed a UN resolution on its takeover of Crimea as “counter-productive,” while the IMF moved forward with a bailout to help Ukraine avoid insolvency.  Russia’s Foreign Ministry said that abstentions & absences from UN General Assembly members showed yesterday’s non-binding resolution, which declared Crimea’s referendum on leaving Ukraine & joining Russia as “having no validity,” showed that not everyone supports that view.  The message is consistent with Putin’s rejection of condemnation & sanctions from the US & euro allies over his country’s annexation of Crimea.  Pres Obama said that Putin is “certainly misreading American foreign policy” & urged him to pull back troops from Ukraine’s border.  “You would have thought that after a couple decades that there’d be an awareness on the part of any Russian leader that the path forward is not to revert back,” Obama said.  Backed by coverage from Russian state-run news channels that depict Ukraine as spiraling into chaos, Putin’s gov argues the annexation of Crimea saved the region from being overrun by fascists who are in control in Kiev & are oppressing the country’s Russian-speaking minority.  Ukraine’s gov, which took over last month, rejects those allegations.  US officials have warned that a buildup of pro-Kremlin troops on Ukraine’s eastern border may pose a risk that Russia may seek to carve off more of Ukraine’s east & south.

Obama Envisions Russia Sanctions Limiting Global Impact

Consumer spending impressed the markets while consumer sentiment data was ignored.  Uncertainty in eastern Europe drones on with no resolution in sight.  Junk bond funds have doing well in Q1, typically up a good 5% while MLPs & REITs have been pretty much treading water.  Dow has narrowed its loss YTD to 170 & the bulls would like to take it to a new record on Mon.  That remains iffy.

Dow Jones Industrials

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