Thursday, May 8, 2014

Markets retreat led by tech selling

Dow rose 32 (nearer its lows than highs), decliners ahead of advancers 4-3 & NAZ was off 16 after gaining in the AM.  The MLP index sank 7+ to the 485s & the REIT index was flattish at 299.  Junk bond funds rose & Treasuries were weak.  Oil dropped with supplies at a seasonal record high amid weak demand & as the € slipped against the dollar.  Gold fluctuated near 1290.

AMJ (Alerian MLP Index tracking fund)

CLM14.NYM....Crude Oil Jun 14....100.08 Down ...0.69  (0.7%)

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Live 24 hours gold chart [Kitco Inc.]

German industrial output unexpectedly fell for the first time in 5 months in a sign that expansion in Europe's largest economy is slowing.  Production, adjusted for seasonal swings, declined 0.5% from Feb, when it gained a revised 0.6%, the Federal Statistics Office said.  The prediction was an increase of 0.2%.  Production rose 3% in Mar from the previous year when adjusted for working days.  Factory orders in Mar fell the most since Nov 2012 & the Bundesbank has warned that expansion will slow “noticeably” after a very strong Q1.  While the country benefits from ultra-low interest rates as it leads the euro-area recovery from its longest recession, growth is threatened by risks including a slowdown in China & rising tension with Russia.  Manufacturing declined 0.4%, while consumer-goods output rose 0.5%, & intermediate goods production slowed 0.9%.  Construction output retreated 2.2% while energy output increased 1.8%.  ECB pres Draghi has said the central bank is ready to use all possible tools, including large-scale asset purchases, to head off the threat of deflation in the euro region.  The German economy grew 0.4% in Q4-2013.

German Industrial Output Unexpectedly Falls as Growth Slo

US retailers posted a 6% comparable-stores sales gain in Apr, the biggest increase since Sep 2011, as better weather & the late Easter as well as aggressive promotions attracted shoppers.  The jump in sales at stores open at least a year handily beat the 3.9% gain estimate.  Combined Mar & Apr sales rose 4.8% from a year earlier.  But retailers may not entirely be in the clear yet.  Positive sales results would need to follow in May to confirm the trend, & discounts of as much as 50% may hurt Q1 earnings.  “We need to carry through with solid Mother’s Day and Memorial Day weekend sales leading to a solid May result before we would feel more comfortable the consumer is back,”  researcher Retail Metrics said.  The bulk of the more than 100 publicly held retailers tracked report only quarterly comparable-store sales.  Those are estimated to rise 1% in Q1.  Retailers remained aggressive, with numerous apparel chains offering 30-40% off the entire store & a handful discounting by 50%.  Chains are sitting on inventories unsold after the cold winter & prolonged weak store traffic.  Analysts have reduced their estimates to reflect that overhang.  When the year started, analysts estimated Q1 earnings would grow more than 13%, Retail Metrics said.  That average had dropped to 7.5% on Mar 1 &, before today’s sales reports, stood at 2.1%.

U.S. Retailers Report Biggest Monthly Sales Increase Since 2011

A Dish Network Corp. Field Service Specialist Prepares for Work
Photo:   Bloomberg

Dish Network found a way to hold on to more TV subscribers, while CEO Charlie Ergen looks for a more dramatic turnaround.  Q1 sales rose 6.5% from a year earlier to $3.59B, just above the $3.57B estimate.  DISH added about 40K subscribers, compared a projection of 31K new users.  US pay-TV growth has peaked as people spend more time watching online video, leaving DISH & its competition struggling to find more revenue or make deals to change course.  The rush to consolidate is driven by a need to cut costs as most Americans already pay for TV service.  Higher programming costs, as well as expenses such as advertising to draw more customers, put pressure on DISH profit in Q1.  EPS from continuing operations were 38¢, below 44¢ the estimate.  EPS fell to 38¢ from 47¢.  “As the pay-TV industry has matured, we and our competitors increasingly must seek to attract a greater proportion of new subscribers from each other’s existing subscriber bases rather than from first-time purchasers of pay-TV services,” DISH said.  “Some of our competitors have been especially aggressive by offering discounted programming and services for both new and existing subscribers.”  The average monthly bill for a customer rose to $82.36, up from $81.24 in Q4 & $78.44 a year ago.  The company also spent more on marketing & promotional offers to reduce its churn rate to 1.42% from 1.47% a year ago.  About 53K internet broadband subscribers were added in Q1, compared with the 57K projected.  The stock fell 2.52.  To learn more about DISH:
Click here for a FREE analysis of DISH and b e sure to notice the intermediate time frame

Dish Beats User Growth Estimates Amid Pay-TV Slump

DISH Network (DISH)

Dow sent over 16.6K, new record territory, but that didn't hold.  Business data has been mixed.  There were 4 new IPOs today which received only a mixed response.  US data is unclear for retailers & the housing recovery has slowed.  Europe has a meager recovery & China has not been able to crank up its growth engine.  Dow closed marginally below its record.  False starts on new records is not a good sign,

Dow Jones Industrials

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