Wednesday, June 4, 2014

Markets pull back on weaker than expected jobs report

Dow lost 37, decliners over advancers 2-1 & NAZ added all of 1.  The MLP index went up fractionally to the 498s & the REIT index slipped a fraction to under 301.  Junk bond funds were mixed & Treasuries did little.  Oil edged higher & gold has a tiny rebound after recent selling.

AMJ (Alerian MLP Index tracking fund)

CLN14.NYM...Crude Oil Jul 14...103.20 Up ...0.54 (0.5%)

GCN14.CMX...Gold Jul 14.......1,247.10 Up ....2.90 (0.2%)

US companies added fewer jobs than forecast in May, a sign of uneven progress in the labor market.  The 179K increase in employment was the smallest in 4 months & followed a 215K gain the prior month that was less than initially estimated, according to ADP Research Institute.  The forecast called for May advance of 210K.  Some companies are confident they can meet demand without adding as many workers to headcounts after the economy shrank in Q1.  Faster job growth that propels bigger wage gains would give consumers the wherewithal to boost spending.  Goods-producing industries, which include manufacturers & construction companies, increased headcount by 29K & construction employment climbed 14K.  Factory payrolls rose by 10K & payrolls at service providers advanced by 150K with low paying jobs.  Companies employing 500 or more workers added 37K jobs, employment at businesses with 50-499 employees added 61K & the smallest companies boosted payrolls 82K.

Companies Add Fewer Workers Than Forecast, ADP Data Show

The trade deficit ballooned in Apr to the widest in 2 years as Americans bought record amounts of consumer goods, business equipment & automobiles from abroad.  The gap grew by 6.9% to $47.2B from the prior month’s $44.2B, which was larger than previously estimated, according to the Commerce Dept.  The Apr reading exceeded all estimates & was the biggest in 2 years.  Exports were little changed.  A rebound in US growth after a harsh winter is likely to be driven by gains in consumer spending & business investment that will bolster imports.  At the same time, slower expansions abroad will probably check gains in exports, keeping the trade gap elevated.  The Commerce Dept initially reported a $40.4B shortfall for Mar.  Today’s release included annual revisions from the Census Bureau & Bureau of Economic Analysis that affected data on goods & services back to 1999.

Trade Gap Jumps to Two-Year High as Americans Buy Imports

Pres Putin offered the first face-to-face talks with Obama since pro-Russian separatists unleashed an insurgency that’s claimed almost 200 lives in Ukraine.  The Russian leader, who rejected accusations his military is present in Ukraine, said he’s ready to meet Obama this week in France during 70th anniversary commemorations of the allied landings in World War II.  Meanwhile, Obama met Ukrainian pres-elect Petro Poroshenko in Warsaw, where he pledged to step up non-lethal military aid.  That’s his choice -- I’m ready for dialogue,” Putin said.  “I hope this isn’t a new phase of the Cold War.”  The White House repeated that there are no plans for Obama to have a separate meeting with Putin, while not ruling out the possibility.  French pres Hollande, German Chancellor Merkel & UK Prime Minister Cameron all have scheduled meetings with Putin while in France.  The US & the EU are at odds with Russia over Ukraine, where the gov is reinforcing the nation’s borders to stem an influx of fighters into its easternmost regions.  Poroshenko, who’ll be inaugurated on Sat, has said he’ll bolster a military operation to counter the separatist groups that control swathes of the Donetsk & Luhansk regions.  Putin called on Ukraine's gov to engage its opponents thru negotiations rather than “tanks and planes.”  He said Russia has no intention of annexing its neighbor’s territory after absorbing the Black Sea Crimean peninsula in Mar, a move the US & the EU consider illegal.

Putin Offers to Meet Obama as East Ukraine Battles Rage

The economic news was not encouraging, another sign that the recovery in the US is uneven.  Now there are greater worries about what the big jobs report on Fri.  It's estimated to show 200K new jobs.  The news in Europe is another reminder that Putin is the leader calling the shots.  The others are followers.

Dow Jones Industrials

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