Monday, June 23, 2014

Markets fluctuate on mixed econoic data

Dow lost 23, advancers ahead of decliners 5-4 & NAZ inched up 1.  The MLP index climbed 2 to the 509s & the REIT index went up a fraction in the 203s.  Junk bond funds rose & Treasuries saw buying.  Oil slipped back while gold was flattish.

AMJ (Alerian MLP Index tracking fund)

CLQ14.NYM....Crude Oil Aug 14...106.58 Down ...0.25  (0.2%)

GCM14.CMX...Gold Jun 14.........1,315.70 Down ...0.50  (0.0%)

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Purchases of previously owned homes in the US rose more than projected in May, a sign the industry is stabilizing after a weather-depressed Q1.  Sales climbed 4.9% to a 4.89M annualized rate, the most since Oct, after a 4.66M pace in Apr, according to the National Association of Realtors. The forecast called for a rise to 4.74M & prices increased at the slowest pace in more than 2 years.  A bigger supply of houses, smaller price gains, rising employment & still-low borrowing costs may encourage more Americans to come into the market.  Improving demand is prompting a pickup in construction & builders are optimistic the recovery remains on track.  The median price of an existing home rose 5.1% from May 2013 to reach $213K, but the 12-month increase was the smallest since the year ended Mar 2012.  Compared with a year earlier, purchases decreased 8.2% before seasonal adjustment.  The number of previously owned homes on the market increased 6% from a year earlier to 2.28M.  At the current sales pace, it would take 5.6 months to sell those houses compared with 5.7 months at the end of the prior month.  The month’s supply is consistent with a balanced market Lawrence Yun, NAR chief economist, said.

Sales of Existing U.S. Homes Climbed More Than Forecast in May

A Chinese manufacturing gauge rose to a 7-month high in Jun, supporting Premier Li Keqiang’s contention that the economy will avoid a hard landing as the gov steps up efforts to spur growth.  A preliminary Purchasing Managers’ Index from HSBC Holdings & Markit Economics was at 50.8, exceeding the 49.7 estimate & a final reading of 49.4 in May.  A number above 50 indicates expansion.  JPMorgan Chase & Barclays raised growth forecasts after the report suggested gov measures will help protect its 2014 target of about 7.5% even as fixed-asset investment gains slow & the property market slumps.  Li said last week that his officials are making adjustments to aid expansion without resorting to “strong” stimulus.  The final reading is due Jul 1.  Today’s survey showed increases in subindices for output & new orders, a faster drop in stocks of finished goods & a slower decline in jobs.  New export orders expanded at a slower pace & input prices rose.  Another private report today showed China’s economic slowdown deepened this qtr, as capital spending showed weakness & fewer companies applied for credit.  The slowdown hurt hiring & wages, & interest rates offered by shadow lenders fell below levels offered by banks, according to the China Beige Book, a quarterly survey modeled on the US Federal Reserve report of the same name.

China Manufacturing Gauge Climbs in Sign of Pickup

Starbucks pursuing its expansion beyond coffee to attract customers at different times of the day, will sell handmade sodas in some US stores to boost afternoon sales.  Sodas under the name Fizzio, in flavors including spiced root beer, will be made behind the counter with syrup & a carbonation machine.  They will go on sale starting tomorrow in about 3500 cafes in the southern US, Cliff Burrows, president of the Americas region, said.  The company is also revamping its lunch sandwiches & testing new grilled cheese & beef brisket baguettes.  The chain is targeting the lunch crowd as more competitors encroach on the breakfast business.  Fizzio sodas take about 90 seconds to make, the same as a frappuccino or smoothie, according to Burrows.  “This is the perfect complement to what we’ve done with our lunch program with foods,” Burrows said.  While Starbucks already sells bottled sodas, customers wanted more refreshing drinks.  The Fizzio machines were designed to be used in stores & there’s no plan to sell them to customers.  Prices will vary by market.  A medium-sized Fizzio soda will cost $2.95 in Los Angeles & by this time next year the sodas will be in all 11.6K US stores.  The stock fell pocket change.  If you would like to learn  more about SBUX,
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Starbucks Targets Lunch Sales With Handmade Fizzio Sodas

Starbucks (SBUX)

The data today was short of impressive & the fighting in Iraq grows worse.  The bad guys seem well organized & are gaining ground in northern Iraq.  Stock traders are content with the situation, but the increase in dark clouds worries me.  While Dow is just inches from setting a new record, it has only returned to where it was 2 weeks ago & remains stuck under the important 17K level.

Dow Jones Industrials

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