Monday, March 17, 2014

Markets rise on optimism about the economy

Dow gained 181, advancers over decliners 5-2 & NAZ added 34.  The MLP index rose 3 to the 462s & the REIT index was up fractionally in the 284s.  Junk bond funds were mixed & Treasuries retreated.  Oil tumbled to a 5 week low on speculation that US & EU sanctions against Russia are unlikely to disrupt oil shipments.  Gold declined from a 6 month after US industrial production increased more than expected, curbing demand for the metal as an alternative investment.

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....98.05 Down ...0.84  (0.9%)

Live 24 hours gold chart [Kitco Inc.]

The pres imposed sanctions on 7 top Russian gov officials & 4 others from Ukraine & warned Russia will face more penalties if it doesn’t pull back from Crimea.  “Continued Russian military intervention in Ukraine will only deepen Russia’s diplomatic isolation and exact a greater toll on the Russian economy,” Obama said.  The US can “calibrate our response” based on whether Russia chooses “to escalate or to de-escalate the situation.”  The US action, the latest in the most serious confrontation between Russia & the west since the end of the Cold War, were made in concert with the EU, which imposed its own set of penalties.  The US also included a ban on travel visas.  Obama left the door open for diplomacy, saying Russia must pull its forces back to their bases in Crimea, accept intl monitors & open discussions with the gov in Kiev.  America acted after a referendum in Crimea yesterday set in motion the process for the Black Sea Peninsula to leave Ukraine & join Russia.  Obama told Russian President Putin in a call yesterday that the US would never recognize the vote.  Administration officials said there was evidence of fraud including ballots that were pre-marked in some locations.

Obama Says Putin Must Pull Back on Crimea Annexation

Payrolls decreased in 27 states in Jan, showing a slowdown in job growth extended throughout much of the country.  California led the nation with a 31K drop in payrolls for the month, followed by Illinois with a loss of 28K jobs, according to the Labor Dept.  At the same time, the unemployment rate fell throughout the country as 43 states posted decreases.  A report from the Labor Dept this month showed hiring accelerated in Feb as the US began to emerge from the winter chill that had curbed growth earlier in the year.  Federal Reserve policy makers, who meet in in DC this week, are projected to trim their monthly bond buying to $55B from $65B with the employment situation on the mend.  State & local employment data are derived independently from the national statistics.  The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the Bureau of Labor Statistics.  The number of states losing jobs in Jan was up from 16 in Dec & the most since Jul 2012.  The combined state figures showed total payrolls dropped by 77K in the first month, the worst reading since Sep 2010. 

Employment Decreased in Majority of U.S. States in January

Alibaba kicked off the process for what may be the biggest IPO in 2 years in the US after struggling to persuade Hong Kong regulators to approve its proposed governance structure.  Investment banks value Alibaba, founded by former English teacher Jack Ma, at up to $200B, which would make it the 2nd biggest internet company behind Google (GOOG) based on market capitalization.  Alibaba has decided to start the process for an IPO in the US, & a future listing in China may be considered “should circumstances permit,” the company said.  The company proposed that its partners nominate a majority of the board of directors, a system that isn’t allowed under Hong Kong rules.  The IPO is a blow to Hong Kong, which hasn’t hosted an IPO of more than $4B since Oct 2010.  Alibaba hasn’t decided when to file for the listing, which exchange to list on, how much to raise or how large a stake to sell.  “This will make us a more global company and enhance the company’s transparency,” Alibaba said in the statement.  “Should circumstances permit in the future, we will be constructive toward extending our public status in the China capital market.”  Alibaba bought back a 20% stake from Yahoo! in 2012 in a deal that valued the Chinese company at $35B.  But YHOO still owns 24% of Alibaba while Japan’s SoftBank owns about 37%.  YHOO climbed 1.51 on the news.  If you would like to learn more about YHOO, click on this link:

Alibaba Starts U.S. IPO Process as Hong Kong Snubbed Over Director Dispute

Yahoo! (YHOO)

The breadth in the market narrowed in the PM, but this was still an excellent day for stocks.  Maybe there was relief than the Ukraine situation did not escalate into war.  But the situation remains tense & nobody knows where it will lead.  Russia is the largest source of oil & on that score alone, there is a lot riding on the outcome of this mess.  Meanwhile there was unrest in Venezuela.  Bulls were not deterred although Dow remains in the red YTD.

Dow Jones Industrials

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