Monday, September 22, 2014

Markets decline on lower sales of existing homs

Dow sank 40, decliners over advancers better than 4-1 & NAZ was also off 40.  The Alerian MLP index dropped 4 to the 533s & the REIT index was off 1+ to the 296s.  Junk bond funds edged lower & Treasuries climbed as stocks fell.  Oil was a tad lower & gold inched higher.

AMJ (Alerian MLP Index tracking fund)

CLV14.NYM....Crude Oil Oct 14...92.06 Down ...0.35  (0.4%)

GCQ15.CMX...Gold Aug 15.....1,226.50 Up ...6.70 (0.6%)

Russia’s banks are feeling the effects of granting free-spending consumers loans for everything from mobile phones to household appliances & foreign holidays as late repayments surge amid US & European sanctions.  Non-performing retail loans jumped 49% in the 12 months thru Jul to 588B rubles ($15B), taking the ratio versus total consumer credit to an almost 3-year high of 5.4%, according to Russian central bank data.  That compares with 37% increase in Turkey in the period & a bad-debt ratio of 2.4%.  For an economy where growth over the past decade has been fueled partly by consumers’ willingness to borrow, rising delinquencies risk exacerbating the worst slowdown since 2009.  By forcing policy makers raise interest rates to shore up markets, pres Putin's conflict with Ukraine is serving to spur debt-servicing costs & curtail lending.  As non-performing loans rise, growth in lending to individuals in the world’s largest energy exporter slumped to 22% in Jun, the slowest pace since Feb 2011, from 36% a year earlier.  That’s signaling the end of a boom that saw banks triple their retail loan books in 4 years thru 2013.  Russia’s delinquent-loan ratio climbed by 1.1 percentage points in the 12 months to Jul while the equivalent Turkish measure increased 0.4 point.  Russian banks have been virtually blocked from Western financing after the US & EU banned the provision of new liquidity to some of the biggest Russian lenders & energy companies with maturity of more than 30 days.  GDP is expected to expand just 0.25% this year, the slowest since the economy shrank 7.8% in 2009.  Growth may halt next year with falling consumption being one of the culprits.

Ukraine Blowback Adds to Russian Bank Consumer-Loan Woes

Purchases of previously owned US homes unexpectedly declined in Aug for the first time in 5 months as investors retreated from the market.  Existing home sales dropped 1.8% to a 5.05M annual pace, from a revised 5.14M pace in Jul, the National Association of Realtors reported.  The forecast called for 5.2M.  The share of properties sold to investors was the lowest in almost 5 years.  As wage gains are slow to materialize & credit conditions remain tight, it has been difficult for first-time homebuyers to enter the housing market to make up the decrease in investor activity.  Employment growth & easier lending rules could help would-be buyers to feel more secure in taking the plunge into homeownership.  The median price of an existing home rose 4.8% to $219K in Aug from $209K a year earlier, today’s report showed.  The number of existing properties for sale fell to 2.31M from 2.35M.  At the current pace, it would take 5.5 months to sell those houses, the same as in Jul.  Transactions paid for completely in cash fell to about 23% of the market from the usual 33%, NAR Chief Economist Lawrence Yun said.  Investors accounted for 12%, the fewest since late 2009.  The drop in sales last month is “primarily attributable to investors stepping out of the market,” he added.  Existing home sales, which are tabulated when a purchase contract closes, have rebounded from a 13-year low of 4.11M in 2008.  They reached a record 7.08M in 2005.

Sales of Existing U.S. Homes Decrease as Investors Retreat

Apple Sells Record 10 Million of Latest IPhones in Debut Weekend
Photo:   Bloomberg

Apple sold a record of more than 10M iPhones in the weekend debut of 2 new models, as consumers flocked to stores & web shops to buy handsets featuring bigger screens.  Sales surpassed last year’s 9M units when the iPhone 5s & 5c were introduced.  “While our team managed the manufacturing ramp better than ever before, we could have sold many more iPhones with greater supply and we are working hard to fill orders as quickly as possible,” CEO Tim Cook said.  Estimates varied widely, with a high of 15M units while others cautioned that the results could fall short of last year’s shipments of the new iPhones because of production shortages & the fact that the new devices didn’t go on sale in China.  Cook is using the iPhone 6, which has a 4.7" display, & iPhone 6 Plus with a 5.5" screen to push into the turf of the competition with jumbo-sized smartphones.  The rollout of the new iPhones, which account for more than half of Apple’s $171B revenue, will be followed by the anticipated debut of new iPad models next month as the company revamps its product lineup ahead of the holiday shopping season.  Demand is robust.  Pre-orders of the latest models topped 4M in the first 24 hours.  IPhone sales exceeded expectations for the first weekend, “shattering all previous sell-through records by a large margin,” Cook said.  But analysts differ on the outlook for the new iPhone.  The stock went up chump change.  If you would like to learn more about AAPL, click on the attached link:

Apple Sells Record 10 Million IPhones in Debut Weekend

Apple (AAPL)

Nothing seems to be going right for the stock market.  Existing home sales were disappointing & intl news goes from bad to worse.  China is dampening talk about its economic stimulus plans while the MidEast is heating up.  ISIS is adding propaganda videos on its brutality, Yemen has major problems & the Turks are fighting Kurds.  This is UN week in NYC.  Maybe Obama can wave is cloak of magic to make problems disappear.  The goings on at the UN should be center stage & the outlook is they will be negative for world peace.

Dow Jones Industrials

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