Thursday, May 22, 2014

Higher markets on consumer confidence data

Dow went up 14, advancers over decliners better than 2-1 & NAZ gained 15.  The MLP index rose 1+ to the 491s & the REITY index was flattish.  Junk bond funds advanced & Treasuries fluctuated.  Oil did little & gold climbed higher.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLN14.NYM...Crude Oil Jul 14...104.10 Up ...0.03 (0.0%)

GCK14.CMX...Gold May 14....1,294.20 Up ...6.20 (0.5%)

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Sales of previously owned US homes rose in Apr for the first time this year as the weather warmed, price increases slowed and more properties were put on the market.  Closings, which usually take place a month or 2 after a contract is signed, increased 1.3% to a 4.65M annual rate, according to the National Association of Realtors. The forecast called for a 4.69M pace.  The number of homes for sale jumped 16.8% in Apr.  Easier lending standards, faster job growth & historically low mortgage rates helped stabilize the industry at the start of the spring selling season.  A pickup in construction that boosts housing inventory & gains in property values would provide a further boost to the market.  The median price of an existing home rose 5.2% from Apr 2013 to $201K.  The year-over-year increase was the smallest in 2 years.  The number of previously owned homes on the market rose to 2.29M.  At the current sales pace, it would take 5.9 months to sell those houses, the highest since Aug 2012, compared with 5.1 months at the end of the prior month.  Less than a 5 months’ supply is considered a tight market.

Sales of Existing U.S. Homes Rise for First Time This Year

The index of US. leading indicators rose in Apr for the 4th straight month, showing the economy will strengthen after a slowdown earlier this year.  The Conference Board’s index, a gauge of the outlook for the next 3-6 months, rose 0.4% (matching the forecast) after a revised 1.0% gain in Mar (larger than previously reported).  The gain indicates Q1 slowdown was more the result of harsh weather than underlying weakness in the expansion.  Faster job growth that leads to a pickup in wages would help provide a further boost to consumer spending.. The revised gain for Mar matched Sep’s reading as the biggest advance in 3 years.  5 of the 10 indicators in the index contributed to the increase.  The index of coincident indicators, a gauge of current economic activity, rose 0.1% after a 0.3% gain the prior month.  “Despite a brutal winter which brought the economy to a halt, the overall trend in the leading economic index has remained positive,” the Conference Board said.  “If consumers continue to spend, and businesses pick up the pace of investment, the industrial core of the economy will benefit and GDP growth could move closer towards the 3 percent range.”  A measure of lagging indicators increased 0.2% after a 0.7% advance the previous month.

Gain in U.S. Leading Index Points to Second-Quarter Rebound

More Americans than projected filed applications for unemployment benefits last week, showing uneven progress in the labor market.  Jobless claims increased 28K to 326K after 298K filings a week earlier (higher than initially reported), according to the Labor Dept.  The forecast called for a rise to 310K.  Continuing claims fell to the lowest since Dec 2007.  A steady decline in layoffs is needed for employers to boost hiring & eventually raise wages.  The 4-week average of claims fell to 322K last week from 323K.  The Labor Dept revised the previous week’s figure from an initially reported 297K. The 4-week average was 312K during the comparable survey week in Apr.  The number continuing to receive jobless benefits dropped 13K to 2.65M in the latest week.  The unemployment rate among those eligible for benefits held at 2%.  Initial jobless claims reflect weekly firings & typically wane before job growth can accelerate.

Initial Jobless Claims in U.S. Rose More Than Forecast

Stocks extended yesterday's big gain on generally favorable news.  Filings for new claims is always tricky to analyze from one week to the next.  But the bigger picture for the US economy remains iffy.  Consumer confidence has varied & may continue to fluctuate.  Sadly the stock market pays more attention to every subtle move made by the Federal Reserve rather than macro economic events.  Dow is still down a smidgen YTD in what was supposed to be another great year.

Dow Jones Industrials

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