Tuesday, September 30, 2014

Markets fluctuate after consumer confidence data

Dow added 29, decliners just ahead of advancers & NAZ climbed 6.  The MLP index was off 2+ to the 526s & the REIT index slipped pennies in the 294s.  Junk bond funds were mixed & Treasuries inched higher.  Oil is heading for the biggest quarterly decline in more than 2 years as ample supply shielded the market from the risk of disruption from conflict in the MidEast & gold continues to sell off, near multi year lows.

AMJ (Alerian MLP Index tracking fund)

CLF15.NYM....Crude Oil Jan 15...92.59 Down ...0.19  (0.2%)

GCQ15.CMX...Gold Aug 15....1,208.00 Down ...13.60  (1.1%)

The Conference Board’s consumer confidence index fell to 86 in Sep from 93.4 a month earlier.  The forecast called for a reading of 92.5 & estimates ranged from 88.7 to 95.  The measure averaged 96.8 during the last expansion & 53.7 during the recession that ended in Jun 2009.

Consumer Confidence Index in U.S. Decreased to 86 in September

A Chinese manufacturing gauge fell from an initial reading a week ago as a property slump weighs on the economy.  The Purchasing Managers' Index from HSBC Holdings & Markit Economics for Sep was at 50.2, lower than the preliminary figure of 50.5 & unchanged from Aug.  Numbers above 50 signal expansion.  Estimates for this year’s GDP growth after data have been  cut as industrial profits, factory output & credit showed a deteriorating outlook.  While the gov has set an expansion target of about 7.5% for this year, Premier Li Keqiang & other policy makers have insisted for months they don’t need strong stimulus measures.  One bright spot in data for Aug, export growth, was reflected in today’s report, which showed a stronger expansion of total new business, driven by the fastest rise in new export orders for 4½ years.  China's trade surplus climbed to a record in Aug as exports rose on the back of increased shipments to the US & Europe.  This is the 7th straight month that the final PMI reading was below the preliminary figure.  Strength in external shipments is helping offset the drag from property:  New-home prices fell in all except 2 of the 70 cities monitored by the gov last month, the most since Jan 2011.  A home-price expectation index among urban households declined in Q3.  A separate manufacturing index from the National Bureau of Statistics & China Federation of Logistics & Purchasing is scheduled to be published tomorrow.  That figure declined to 51.1 in Aug from 51.7 in Jul & the estimate for Sep was 51.0.

China Factory Gauge Falls From Initial Reading

Walgreen, a Dividend Aristocrat, fiscal year sales rose to a record $76.4B after the company’s prescription drug business grew, especially from the US gov.  The pharmacy business has expanded as more people in an aging population join Medicare.  The company filled a record 856M prescriptions in fiscal 2014.  Excluding one-time items, fiscal Q4 EPS was 74¢, matching the estimate.  WAG reported a net loss 25¢ a share, compared with EPS or 69¢ a year earlier.  “Our fourth-quarter performance was in line with our expectation, recognizing we have much more to do,” said CEO Greg Wasson.  The chain is in the middle of its biggest deal ever, the purchase of the rest of European health beauty chain Alliance Boots for $15.3B after buying a stake in the company in 2012.  The company said the deal will save the combined business $650M next fiscal year, up from $491M this fiscal year.  Investors have also pressured WAG to boost a $3B share buyback the company announced in Aug.  “We will continue to discuss our capital allocation policies with our board and will make any changes when appropriate,” CFO Tim McLevish said.  Q4 sales grew 6.2% to $19.1B, while same-store sales rose 5.4%.  For the full fiscal year, sales grew 5.8%.  The stock fell 60¢.  If you would like to learn more about WAG, click on this link:

Walgreen Says Sales Reach Record as Prescription Drugs Expand

Walgreen (WAG)

There was selling at the opening, but buyers returned to give the markets a lift.  Nothing dramatic is going on, but the underlying feeling is not positive.  Economic data is uneven to negative in the US & overseas, & military conflicts will sap what strength there is presently.  Then there is Janet Yellen & the threat of higher interest rates next year.  That spells lots of worries for the bulls to think about.

Dow Jones Industrials

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