Tuesday, July 22, 2014

Markets advance on housing sales data

Dow climbed 63, advancers over decliners almost 3-1 & NAZ gained 35.  The MLP index went up 1+ to the 523s (near its recent record) & the REIT index rose 1+ to the 308s (a more than 1 year high).  Junk bond funds saw buying & Treasuries pulled back .  Oil & gold slid lower.

AMJ (Alerian MLP Index tracking fund)

CLQ14.NYM...Crude Oil Aug 14...104.32 Down ...0.27  (0.3%)

GCN14.CMX...Gold Jul 14...1,313.40 Down ...0.30  (0.0%)

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German Foreign Minister Frank-Walter Steinmeier
Photo:   Bloomberg

EU govs labored to identify more Russian businesspeople & companies to sanction pressed pres Putin to speed a probe into the downing of Malaysian Air flight MH17 or face isolation.  EU foreign ministers were debating how to deliver on the bloc’s commitment to expand a 72-person blacklist.  UK Foreign Secretary Philip Hammond said an arms embargo may be considered against Russia, which Ukraine said had massed as many as 41K troops on its border.  The jet’s downing of MH17 has galvanized sentiment against Russia in the EU, which had moved slower on sanctions than the US.  Already penalized for his decision to annex Crimea in Mar, Putin is trying to refute accusations from Ukraine & the US & EU allies that rebels shot down the aircraft over their territory & that it supplied the insurgents with the surface-to-air missile that they used.  The EU needs a twin-track policy of pursuing diplomacy & “to accompany this readiness with higher pressure, which means taking tougher measures,” German Foreign Minister Steinmeier said.  French President Hollande said last night that he’s prepared to cancel the sale of the 2nd of 2 helicopter carrier ships to Russia.  The first ship has been paid for & set for delivery in Oct, he said.

EU Works to Punish Russia Over MH17 as Putin Masses Army

Sales of previously owned US homes climbed in Jun to an 8-month high, a sign the housing market is making more headway.  Sales increased 2.6% to a 5.04M annual rate, led by gains in all 4 US regions, according to the National Association of Realtors.  The forecast projected sales would rise to a 4.99M rate.  Prices advanced at the slowest pace since Mar 2012 & inventories increased to an almost 2-year high.  Historically low interest rates & smaller price increases are helping bring homeownership within reach for more Americans.  A pickup in employment opportunities that lead to faster wage growth would provide an added spark for a residential real-estate market that began to soften in the middle of 2013.  Compared with a year earlier, purchases of previously owned properties decreased 2.3% on an adjusted basis & the median price of an existing home increased 4.3% to $223K from $214K a year before.  The number of properties on the market rose 6.5% to 2.3M from a month earlier, the most since Aug 2012.  At the current pace, it would take 5.5 months to sell those houses, the same as in May.  The median time a home was on the market decreased in June to 44 days from 47 days in the prior month.  Purchases of single-family homes increased 2.5% to an annual rate of 4.43M.  Cash transactions accounted for about 32% of all purchases & investors made up 16% of purchases.  Sales of distressed property, including foreclosures, accounted for 11% of the total last month, matching the lowest share since Oct 2008.  First-time buyers accounted for 28% of all purchases, up from 27% a month earlier.

Previously Owned U.S. Home Sales Rise to Eight-Month High

Coca-Cola Co. Chief Executive Officer Muhtar Kent
Photo:    Bloomberg

Coca-Cola, a Dow stock & Dividend Aristocrat, Q2 sales missed estimates amid sluggish demand for drinks such as juice & Diet Coke in North America.  Revenue fell 1.4% to $12.6B below the $12.8B estimate.  Global juice sales volume declined 1%, hurt by price increases in North America to offset higher ingredient costs.  CEO Muhtar Kent is cutting costs & overhauling marketing as he contends with a slowdown in the market for fizzy beverages.  The company also is increasingly relying on overseas markets to maintain growth.  Global sales volume rose 3%, matching the estimates.  Sales volumes in key Europe, Latin America & North America business units were little changed.  Brand Coca-Cola volume grew 1%, a sequential improvement.  Gross margin rose to 61.7% from 60.9% a year ago & above the 61.1% estimate.  The additional cash was largely spent to boost global marketing.  “We remain focused on the work required to return our business to the level of sustainable growth we and our shareowners expect,” Kent said.  EPS fell to 58¢ from 59¢ a year earlier,  Excluding some items, EPS was 64¢ a share, compared with a  63¢ estimate.  The stock dropped 1.34.  If you would like to learn more about KO, click on this link:

Coca-Cola Misses Sales Estimates Amid Juice, Diet Coke Slide

Coca-Cola (KO)

Traders are feeling good & taking stocks higher.  Dow is flirting with setting a new record as buyers are not concerned with conflicts around the world.  KO's earnings were disappointing, but that is not related to macro economic issues.   But they are out there.  Consumer spending accounts for about 2/3 of the economy & it has not been growing very slowly since the recession.  That reflects sluggish growth in wages, not good for the companies.

Dow Jones Industrials

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