Tuesday, April 1, 2014

Higher markets on rising March auto sales

Dow went up 74, advancers over decliners 2-1 & NAZ shot up 69 (over 1½%).  The MLP index soared 7 to the 472s, finally a new record, & the REIT index was up a fraction to the 286s.  Junk bond funds advanced & Treasuries saw selling.  Oil dropped as the US & Russia agreed to the need for a diplomatic solution to tensions over Ukraine.  Gold posted the longest slump in more than 4 months as US stocks rose to a record, crimping demand for the precious metal as a haven asset.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

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U.S. 2-year


U.S. 10-year


CLK14.NYM...Crude Oil May 14...99.71 Down ...1.87  (1.8%)

Live 24 hours gold chart [Kitco Inc.]

Chinese President Xi Jinping urged more market access between China & the EU to make them “the twin engines for global economic growth.”  For China & the EU, which have recently settled several trade disputes, “the potential has not been fully tapped,” Xi said in Belgium.  The EU is China’s largest trading partner, while the Asian nation is Europe’s 2nd-biggest after the US.  Xi reiterated China’s goal to reach $1T in annual bilateral trade with the EU by 2020.  That target represents a 52% increase from €477B ($658B) last year.  Europe & China “need to build a bridge of growth and prosperity,” Xi said.  The 2 sides are negotiating an EU-China Investment Agreement, & contemplate a free-trade accord in the longer term.  In a sign of decreasing trade tensions between Europe & China, the 2 sides have resolved several import disagreements in recent months.  In Mar, they reached a deal on European wine imports into China & the EU dropped an anti-dumping probe of Chinese telecom-equipment makers, though an investigation continues into possible gov subsidies to the manufacturers.  Those developments follow an agreement last year to curb imports of Chinese solar panels into Europe.  Xi spoke a day after Antwerp World Diamond Centre & the Shanghai Diamond Exchange signed a cooperation agreement to boost trade in the gems between Belgium & China by at least 10% annually over 3 years.  Antwerp exported $3.7B of diamonds to China last year, while its imports from the Asian country totaled $3.4B.

Chinese President Xi Urges More Market Openness With EU

A Jeep Cherokee Vehicle Sits on the Production Line
Photo:   Bloomberg

Nissan, Ford (F), General Motors & Chrysler Group topped analysts’ estimates as a thaw in the weather began to bring buyers back to showrooms.  Ford forecast a sales pace of about 16.5M, including medium-duty & heavy trucks, which typically account for at least 200K sales annually.  Chrysler projected a pace of 16.2M vehicles, including medium-duty & heavy trucks.  Analysts had projected a 15.8M selling rate, up from 15.3M a year earlier.  GM sales rose 4.1%, topping estimates for a 0.8% rise.  The better-than-estimated results come after automakers endured 2 months of quiet dealerships as blizzards & frigid temperatures kept tire-kickers homebound.  Light-vehicle sales thru Feb fell 1.4%, according to researcher Autodata.  Dealers began noticing more traffic on their lots in the 2nd half of Mar, as the weather finally broke & snow began melting in many heavily populated regions of the country.  Ford deliveries rose 3.3% to 243K.  Ford’s F-Series pickups gained 5.1% to 71K, while Fusion sales rose 8.8% to 33K.  The company topped the projected gain of 1.1%.  Toyota (TM) deliveries rose 4.9% to 215K.  Nissan sales jumped 8.3K to 149K vehicles, a monthly record.  Those results beat projections of a 1.3% gain for TM & unchanged sales for Nissan.  Honda sales slipped 2%, slightly wider than the 1.8% decline predicted.  Chrysler deliveries rose 13% to 194K for a 48th straight monthly gain.  The 3rd-largest US automaker beat the estimate of 10%.  Ram pickup sales rose 26% to 43K, Fiat sales gained 24% to 4.7K & Chrysler’s Jeep brand increased 47.  The US automaker finished the month with 71 days supply of inventory, down from 85 days at the end of Feb.  Volkswagen said its VW brand sales, excluding Audi, fell 2.6% in Mar to 37K cars & light trucks.  While its Jetta sedan deliveries rose 6.3% to 14K, sales of its Tiguan small SUV plunged 30% to 2.3K.  The projection is for industrywide sales in Mar to rise 2.1% to 1.48M light vehicles.

Toyota Joins Chrysler in Topping U.S. Sales Estimates Amid Milder Weather

Goldman Sachs Group Booth at the NYSE
Photo:   Bloomberg

Goldman Sachs is seeking a buyer for its NYSE designated market-making business acquired thru the 2000 purchase of Spear, Leeds & Kellogg.  The bank is in the early stages of the process & has held talks with potential buyers.  The Financial Times (FT) reported on the planned sale earlier today.  GS, which reaps most of its revenue from equities trading among banks globally, paid about $5.4B in stock & cash for Spear Leeds (the biggest in the history of the firm).  The business for sale is now valued at about $30M, the FT reported.  Last year, GS agreed to sell a majority stake in its Redi trading-technology unit that was based on software acquired when it bought Spear Leeds.  The NYSE, purchased in Nov by IntercontinentalExchange Group, relies on traders known as designated market markers, or DMMs, to facilitate buying & selling.  The firms help run the opening & closing auctions of NYSE-listed stocks.  They used to be known as specialists, & there were dozens of them, but reduced profits from equity trading dwindled their ranks during the past decade.  Even if GS gives up its spot on the NYSE floor, that doesn’t mean it will stop making markets in US stocks.  Almost all American equity trading is done electronically, & banks are among those that provide liquidity on computerized platforms such as NYSE Arca, the Nasdaq Stock Market & the 4 exchanges owned by Bats Global Markets.  GS stock rose 2.08.  If you would like to learn more about GS, click on this link for Trend Analysis:

Goldman Said to Pursue Sale of NYSE Market-Making Unit

Goldman Sachs (GS)

The early economic news for Mar was favorable, so stocks rose.  But Dow could not gain enough for a new record (only inches away).  Maybe tomorrow.  Tensions with Russia are calming down, for the moment.  Europe is still trying to dig out from its recession with a small degree of success & China is looking for ways to jump-start its economy without aggravating inflation.  Early earnings reports are due next week & they will give a glimpse of how badly the harsh winter weather affected the economy.

Dow Jones Industrials

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