Tuesday, May 6, 2014

Lower markets on growing tensions in Ukraine

Dow fell 81, decliners over advancers 3-2 & NAZ dropped 22.  The MLP index sank 5 to the 489s after surging in the last month & the REIT index lost 1+ to the 295s.  Junk bond funds inched higher & Treasuries did little.  Oil climbed a higher & gold held above the important 1300 support level. 

AMJ (Alerian MP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLM14.NYM...Crude Oil Jun 14...99.69 Up ...0.21 (0.2%)

GCK14.CMX...Gold May 14....1,309.40 Up ...0.40 (0.0%)

Photo:   Bloomberg

The biggest gain in US exports in 9 months helped narrow the trade deficit in Mar, pointing to a revival of global demand.  The gap shrank by 3.6% to $40.4B from the prior month’s $41.9B, according to the Commerce Dept.  The forecast called for a reduction to $40B.  Sales to foreign customers climbed 2.1% on growing demand for aircraft, autos & fuels.  A slowdown in trade helped depress economic growth in Q1, which was already held back by harsh winter weather that trimmed business investment.  The Mar improvement adds to a spate of data showing the US economy was gaining steam heading into Q2.  Exports increased to $193.9B  from $190B in Febr paced by record demand from Canada, South Korea, Central America & the Dominican Republic.  Shipments to Germany were the strongest since Oct 2008.  Excluding petroleum, exports were at an all-time high.  Imports climbed 1.1% to $234.3B from $231.8B in the prior month as Americans bought more foreign-made cellular phones, semiconductors & civilian aircraft, which points to a pickup in business investment.  Excluding petroleum, imports were also at a record.  After eliminating the influence of prices, which generates the numbers used to calculate GDP, the trade deficit was little changed at $49.4B compared with $49.8B in Feb.

Growing Exports Shrink U.S. Trade Gap as Global Demand Stirs

Ukraine should postpone a May 25 presidential election until it changes its constitution, Russia said, as the gov in Kiev continued a deadly military push to stamp out separatists in the country’s east & south.  Ukraine’s acting President Turchynov named a new commander of ground forces following fighting that killed 4 gov servicemen & more than 30 rebels.  Russian Foreign Minister Lavrov & EU officials discussed a new meeting following the unraveling of a deal aimed at solving the crisis agreed to in Geneva last month.  The US & EU have slapped sanctions on people & companies close to pres Putin & say he’s supporting separatism in Ukraine ahead of the presidential ballot.  French pres Hollande warned Putin that Europe would continue to pressure him to allow the vote happen, because thwarting it would produce “chaos and a risk of war.”  Efforts by the gov in Kiev to expel insurgents from the eastern regions are at risk of stalling less than 3 weeks before the ballot.  German Chancellor Merkel & pres Obama have set the vote as a deadline for Russia to reject the separatists’ actions & withdraw support or face deeper economic sanctions.

Ukraine Unrest Intensifies as Toll Rises From Offensive in Eastern Cities

Stocks are backing off on little significant news.  The Ukraine remains a tense situation with nobody knowing what to do next.  The west is mainly watching Putin, who is the new world leader.  Dow is off more than 100 from its recent record high & the market breadth (difference between advancers & decliners) is negative again.

Dow Jones Industrials

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