Friday, May 23, 2014

Higher markets on housing data

Dow climbed 50, advancers over decliners 2-1 & NAZ rose 12.  The MP index was flattish near 493 (its record level) & the REIT index went up 1 to 297.  Junk bond funds did little & Treasuries rose.  Oil advanced as violence flared ahead of Ukraine's May 25 presidential election & gold slid back.

AMJ (Alerian MLP Index tracking fund)

CLN14.NYM...Crude Oil Jul 14...104.02 Up ...0.28 (0.3%)

GCK14.CMX...Gold May 14....1,293.40 Down ....1.50  (0.1%)

New Homes in Los Angeles

Photo:   Bloomberg

Purchases of new homes in the US rose in Apr by the most in 6 months as buyers took advantage of falling mortgage rates.  The 6.4% increase to a 433K annualized rate followed a revised 407K in Mar that was larger than initially estimated, according to the Commerce Dept.  The forecast called for the rate to accelerate to 425K.  The Apr gain reflected a surge in Midwest sales.  Declining borrowing costs & greater employment opportunities raise the prospects for an industry that has struggled to build on gains made earlier last year.  A pickup in construction that puts more properties on the market & slows price gains would help improve affordability & attract buyers.  Today’s report showed the median sales price of a new house declined 1.3% from Apr 2013 to $275,K.  There were 192K new houses on the market, representing 5.3 months of supply at the current sales pace after 5.6 months in Mar.  Housing began to cool in the middle of 2013, with residential investment becoming a drag on the economy during the last 2 qtrs, its worst 6-month performance since the first half of 2009.

German business confidence declined more than forecast amid signs that growth in the euro area’s largest economy will slow in Q2.  The Ifo institute’s business climate index fell to 110.4 in May from 111.2 the prior month.  The forecast predicted a drop to 110.9.  Germany is key to the recovery in the 18-nation euro area, which is struggling to pick up pace amid near-record unemployment & subdued pricing power.  Data today showed German economic growth was driven exclusively by domestic demand in Q1, & the Bundesbank has said the expansion will cool in Q2.  A measure of current conditions unexpectedly declined, dropping to 114.8 in May from 115.3 the prior month & a gauge of expectations slid to 106.2, the lowest reading since Oct.  The German economy expanded 0.8% in Q1 as a mild winter boosted construction & private spending picked up, the Federal Statistics Office said today.  Net intl trade dragged on growth as imports outpaced exports.  The Bundesbank has said any slowdown in Q2 as the effect of the mild winter recedes “should not be interpreted as a decline in the basic speed of the economy.”

German Business Confidence Declines as Economy Seen Slowing

Hewlett-Packard Laptops

Photo:   Bloomberg

Hewlett-Packard CEO Meg Whitman is opting for more job cuts, a move that boosted shares the most in 6 months.  After reporting an 11th straight qtr of declining sales, Whitman is propping up profit by paring as many as 16K more employees, on top of 34K already announced.  While she has stabilized HPQ after years of management upheaval & presided over a 39% share climb since taking over in 2011, the company is facing its 3rd straight drop in annual revenue.  Consumers are buying fewer PCs & printers as as they embrace smartphones & tablets, & companies are opting to use more software via the internet or build their own machines.  EPS excluding certain costs was 88¢ & revenue fell 1% to $27.3B.  Analysts had predicted EPS of 88¢ & sales of $27.4B.  EPS rose to 66¢ from 55¢ a year earlier.  “We want to become a growth company -- this is the second quarter of basically flat revenue,” Whitman said.  “While you may say that’s not very exciting, it’s way more exciting that the historical declines we’ve had for the last eight quarters. The fact that we’re stabilizing revenue is encouraging and positions us well for the future.”  For fiscal Q3, HPQ forecast that EPS, excluding amortization, restructuring charges & other costs, will be 86-90¢.  That compares with the an estimate of 90¢ by the analysts.  Q2 revenue in the PC unit rose 7.4% to $8.18B, boosted by sales of business computers.  Printing-division sales fell 4.3% to $5.83B.  The enterprise-computing unit, which includes servers, had sales of $6.66B.  The enterprise-services division posted a 7% decline in sales to $5.7B.  The stock jumped 2.14.  If you would like to learn more about HPQ,
Click here for a FREE analysis of HPQ and be sure to notice the intermediate time frame

Hewlett-Packard (HPQ)

Stocks are  going up because it is the path of least resistance.  The elections in the Ukraine are Sun & that outcome will weigh heavily when the US markets reopen on Tues.  Today's movements in the markets mean less than usual as traders are squaring positions going into a long weekend.  Dow is barely in the black YTD.

Dow Jones Industrials

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