Friday, April 4, 2014

Markets tumble after March job report

Dow sank 159 closing near the lows, decliners over advancers 2-1 & NAZ fell an enormous 110 as pharmaceuticals continue to sell off.  The MLP index hardly budged in the 473s & the REIT index was up pocket change in the 286s.  Junk bond funds remained strong & Treasuries also did well as stocks pulled back.  Oil gained & gold jumped the most in 3 weeks after a gov report showing US job growth was less than expected triggered economic concerns, boosting demand for the metal as a store of value.

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...101.05 Up ...0.76 (0.8%)

Live 24 hours gold chart [Kitco Inc.]

In Mar, Russian inflation was the fastest in 9 months, driven by the ruble’s weakening amid the country’s standoff against the US & EU.  Consumer prices rose 6.9% from a year earlier after a 6.2% advance in Feb, the Federal Statistics Service said.  The estimate was 6.8%.  Prices rose 1% on the month, compared with a forecast of 0.9%.  The ruble weakened as tensions over Ukraine led to escalating sanctions from the US & its allies.  The currency’s losses make it more difficult for Russia’s central bank to meet its goal of keeping inflation at no more than 5%.  Food prices rose 8.4% from a year earlier, compared with 6.9% in Feb, the statistics office said.  The cost of non-food products increased 4.6% after a 4.3% advance in Feb.  Policy makers left their benchmark rate unchanged at a Mar 14 meeting after a surprise increase to 7% from 5.5% the previous week.  They called the tightening a temporary measure to counter market turmoil sparked by the events in Ukraine.  Russia is on the brink of a technical recession this qtr after gauges of manufacturing & services showed that output probably shrank in Q1 for the first time since 2010.

Russian Inflation Accelerates to Nine-Month High on Ruble

General Motors, which counts China as its largest market, said deliveries there rose 7.8% last month, helped by demand for Buick & Cadillac vehicles.  Sales increased to 313K units in Mar.  Deliveries of Buick vehicles rose 12% from a year earlier to 79K, while Cadillac surged 44%.  GM, is banking on 19 new or refreshed models this year to boost sales 10%, according to GM China President Matthew Tsien.  The largest US automaker has said it plans to invest $11B thru 2016 in China to boost its products & manufacturing capacity.  Chevrolet deliveries gained 5.7% to 56K units.  Of the new models it will bring to China this year, 6 will be Chevrolets.  The upscale Cadillac brand sales climbed to 5K units in Mar & the company has set a target to sell more than 100K vehicles by the end of next year, from 50K last year.  Deliveries rose 67% in China in 2013.  Sales of Wuling mini-commercial vehicles, which account for about half of GM deliveries, increased 7.9K to 160K units.  The low-cost Baojun brand fell to 5K units from 7K vehicles last year.  The stock fell 62¢.  If you would like to learn about GM, click on this link for Trend Analysis:

GM’s China Sales Gain 7.8% in March on Buick and Cadillac Demand

General Motors (GM)

Sherwin-Williams, a Dividend Aristocrat, terminated its agreement to acquire the Mexican operations of Consorcio Comex after antitrust regulators blocked the deal.  Comex, the country’s largest paint maker, on Tues said SHW had breached the agreement.  CEO Christopher M. Connor was seeking to double sales in Latin America when he agreed in 2012 to buy Comex for $2.3B, including the assumption of debt.  Mexican regulators repeatedly blocked the sale of the local unit & SHW in Sep acquired the US & Canada operations for $165M.  It has been estimated that the acquisition would have boosted EPS by at least $1.50.  But terminating the deal ends months of uncertainty & allows the company to buy back more treasury shares & pursue other deals.  The stock fell 6.55 (3%).  If you would like to learn about SHW, click on this link for Trend Analysis:

Sherwin-Williams Cancels Bid for Comex Mexico Unit

Sherwin-Williams (SHW)

2nd thoughts about the jobs report were negative & the bulls threw in the towel.  Maybe they just wanted to cash in profits.  Either way, the popular averages may take some time for before they want to take the popular averages to new records.   Selling began about an hour after the jobs report was released & selling did let up.  Dow failed to eke out a gain in Q1 for a new record & is down 45 so far in Q2.  Next week, earnings season begins & it looks like the stock market is already nervous.  The sell-off for NAZ has to be worrisome for the bulls. 

Dow Jones Indsutrials

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