Tuesday, June 10, 2014

Markets fluctuate while digesting recent gains

Dow was inched up 2 to a new record, decliners ahead of advancers almost 3-2 & NAZ crawled up 1.  The MLP index was fractionally higher to the 504s & the REIT index slid 2+ to 300.  Junk bond funds were mixed to higher & Treasuries continued weak.  Oil was about even & gold finally found a few buyers.

AMJ (Alerian MLP Index tracking fund)

CLN14.NYM....Crude Oil Jul 14....104.23 Down ...0.18  (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Britain’s strengthening recovery has probably pushed the economy back above its pre-crisis level, ending the longest period of below-peak output in a century.  The National Institute of Economic & Social Research (NIESR) estimates GDP rose 0.9% in the 3 months thru May.  That puts it about 0.2% above where it was in Jan 2008.  Britain is the last of the G-7 nations bar Italy to regain its pre-recession level.  The development may add to the debate among Bank of England officials about when to raise interest rates from a record low as they begin to diverge on the timing of policy tightening.  NIESR published its estimate after data today showed UK industrial production rose for a 3rd month in Apr, driving the annual increase to 3%, the most since 2011.  The gain would have been even bigger were it not for a sharp drop in electricity & gas output, which was down 11.5% from a year earlier, partly related to warmer weather this year, & knocked about 1 percentage point off industrial production.  Today’s data also showed manufacturing rose 0.4% in Apr from Mar.  That was a 5th consecutive increase, the longest streak of gains since 2010.

U.K. Economy Is Seen Back at Pre-Recession Peak on Recovery in Factories

Best Buy raised its quarterly div for the first time in 2 years after CEO Hubert Joly cut costs & improved cash flow, signaling that a comeback is under way.  The div was boosted 12% to 19¢.  Joly, who took over as CEO in Sep 2012, has been reducing expenses & renovating stores to include new spaces for vendors such as Samsung.  He’s set a goal of trimming $1B in annual costs & piled on discounts while making a permanent a policy of matching competitors’ prices in an effort to ward off online rivals.  “Our decision to increase the amount of cash we are returning to shareholders is indicative of our improved cash position and our confidence in the cash-generating power,” Joly said.  While Joly has shrank the size of quarterly sales declines, the retailer posted a 3.3% drop in revenue last qtr, the 9th straight quarterly decrease & also trailed estimates.  The company blamed part of its inability to revive sales on a lack of innovation in the electronics industry.  Still, adjusted EPS beat estimates & net income was $461M compared with a loss of $81M a year earlier.  Last month, Joly said the company had cut $95M more in annual costs in Q1.  The company last announced a div increase in Jun 2012, when the div was raised a penny to 17¢.  The stock gained 69¢.  If you would like to learn more about BBY,
Click here for a FREE analysis of BBY and be sure to notice the intermediate time frame

Best Buy Boosts Dividend to 19 Cents in First Increase Since ’12

Best Buy (BBY)

Google is acquiring satellite company Skybox Imaging for $500M as it works to bolster its mapping services & improve internet access.  The all-cash deal will be subject to adjustments.  Skybox has designed satellites to capture images & deliver them to customers with details down to less than a meter.  “Skybox’s satellites will help keep Google Maps accurate with up-to-date imagery,” GOOG said on its website.  “Over time, we also hope that Skybox’s team and technology will be able to help improve Internet access and disaster relief -- areas Google has long been interested in.”  GOOG is scouring the technology companies for deals that push into new markets & bolster its traditional services, including mapping & search.  The company is also looking for new ways to offer online services to users thru Project Loon, which it unveiled last year to help connect people in rural or remote areas to the Web using balloons & other machinery.  In Apr, GOOG said it bought Titan Aerospace, a maker of high-altitude, solar-powered satellites that provides access to data services around the world.  GOOG stock fell 1+.  If you would like to learn more about GOOG,
Click here for a FREE analysis of GOOG and be sure to notice the intermediate time frame

Google Buying Satellite Company Skybox Imaging for $500 Million

Google (GOOG)

Stocks had an uneventful day which was in order.  After the recent run, a pause was needed.  This barely qualifies as profit taking, but some rest is necessary as a reminder that the Dow is not rising forever.  The economic background in the US is less sensational than record levels for the Dow & S&P 500 suggest.  Economic growth around 2% is nothing to write home about.  Unemployment at 6.3% remains at high levels.  The number of jobs is only back to the level 6 years ago & many new jobs are low paying.  The gov debt mess remains.  While deficits are coming down, they remain at high levels.  Don't forget this when the Dow reaches 17K shortly.

Dow Jones Industrials

stock chart  

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