Thursday, March 20, 2014

Markets rise on economic data

Dow climbed 108, decliners just ahead of advancers & NAZ added 11.  The MLP index went up 1+ to over 460 & the REIT index rose 1+ to over 280.  Junk bond funds were mixed & Treasuries did little.  Oil fell & gold capped the biggest 4-day drop since Nov after the Federal Reserve stoked the outlook for higher interest rates, underscoring a forecast that the 2014 rally would reverse.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLJ14.NYM....Crude Oil Apr 14....99.60 Down ...0.77 (0.8%)

Live 24 hours gold chart [Kitco Inc.]

Obama Orders New Sanctions on Russian Officials to Press Putin
Photo:   Bloomberg

The pres ordered financial sanctions on a wider swath of Russian officials & a Russian bank as he authorized potential future penalties that would directly target sectors of the Russian economy.  “We’re imposing sanctions on more senior officials of the Russian government,” Obama said.  “In addition, we are today sanctioning a number of other individuals with substantial resources & influence who provide material support to the Russian leadership, as well as a bank that provides material support to these individuals.”  Obama will talk next week with EU officials about coordinated action to pressure Russia after EU leaders met today to try to formulate a unified position.  The meetings took on urgency as Ukraine moved to fortify its eastern frontier in response to Russia massing troops.  Obama said Russia’s incursion into Ukraine & continuing military movements carry “dangerous risks of escalation” & must be met by unified global opposition.  The US action against 20 individuals, including members of the Russian gov & allies of pres Putin, adds to the 7 Russian officials & 4 people from Ukraine who already were subjected to sanctions.  It also includes Bank Rossiya in St Petersburg, which is said to have $10B in assets & is the 17th largest bank in Russia.

Obama Puts New Sanctions on Russian Officials to Press Putin

Lennar reported fiscal Q1 profit that beat estimates as the company sold more homes at increased prices.  EPS climbed to 35¢, in the qtr thru Feb, from 26¢ a year earlier.  Analysts expected EPS of 28¢.  Builders have been increasing prices to take advantage of a tight supply of new & existing homes while using their economies of scale to reduce costs & widen profit margins.  Orders by volume climbed 10% to 4465 homes & increased 26% by value to $1.5B.  Revenue rose to $1.36B from $990M, while the number of houses delivered increased to 3609 from 3186 last year & the average sale price increased to $316K from $269K.  “Although it is still too early to predict the strength of the spring selling season, we are optimistic that the housing market is continuing to recover, and that the fundamental drivers of that recovery remain intact,” CEO Stuart Miller said.  “We were encouraged with the progression in our first quarter as we saw sequential monthly improvement in both traffic and new orders.”  LEN builds homes for first-time & move-up buyers, retirees & multiple-generation households in 18 states.  It also invests in apartments, master-planned communities, mortgage financing & distressed real estate assets.  The stock fell 1.02.  If you would like to learn more about LEN, click on the link for Trend Analysis:

Lennar Profit Beats Estimates as Homebuilder Raises Prices

Lennar (LEN)

China will speed up construction projects & other measures to support the economy after a slowdown in industrial-output & investment growth boosted risks of missing this year’s expansion target.  The nation will “seize the moment to roll out already-determined measures in expanding domestic demand and stabilizing growth,” the State Council said in a statement.  China will “accelerate preliminary work & construction on key investment projects with timely assignment of budgeted funds,” it said.  The statement suggests the depth of the slowdown is testing Premier Li Keqiang’s tolerance for growth below what he says is a flexible target of “about” 7.5%.  Chinese stocks sold off after Goldman Sachs projected a 5% annualized pace of expansion in Q1.  More targeted fiscal support  “including tax relief and subsidies is needed to manage the downside risks of the economy and support consumption,” economists wrote in the report.  More analysts are forecasting that China will loosen monetary to counter the slowdown. 

China to Accelerate Measures to Stabilize Growth Amid Slowdown

Stocks bounced back after yesterday's selling.  Markets continue to ignore the goings on in eastern Europe, but this situation could get more serious very quickly.  It's interesting that Janet Yellen's words yesterday got more attention than a few weeks of negative news from the Ukraine.  Today's rally was underwhelming, but the bulls will take.  Up is up & they aren't worried about details (lack of breadth).  There are only 7 trading days left in the qtr & it looks it will close in the red.  That's down on the first day, first week, first month & first qtr, making for an unsatisfactory start in 2014.

Dow Jones Industrials

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