Tuesday, October 28, 2014

Higher markets on consumer confidence data

Dow rose 51, advancers over decliners better than 3-1 & NAZ gained a very big 49.  The MLP index went up 3 to the 512s & the REIT index slipped a fraction to the 313s (near its yearly highs).  Junk bond funds were mixed & Treasuries retreated.  Oil & gold were little changed, although oil held above the important 80 resistance level.

AMJ (Alerian MLP Index tracking fund)

CLZ14.NYM...Crude Oil Dec 14...80.80 Down ...0.20  (0.3%)

GCV14.CMX...Gold Oct 14.....1,230.70 Up ...1.60 (0.1%)

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Confidence among US consumers rose in Oct to a 7-year high as gasoline prices dropped & the job market improved.  The Conference Board’s index climbed to 94.5, the highest since Oct 2007, from a Sep reading of 89 that was stronger than initially estimated.  The forecast projected a reading of 87.  More job security, declining gasoline prices, & a strengthening labor market are setting the stage for a stronger expansion.  Bigger wage increases & a reduction in long-term unemployment would help keep sentiment improving and lay the groundwork for gains in spending.  The Conference Board’s gauge of consumer expectations barometer for the next 6 months jumped to 95 from 86.4 & the index of present conditions rose to 93.7 from 93 in Sep.  Today’s report corroborates other readings on sentiment. The Thomson Reuters/University of Michigan preliminary Oct gauge also climbed to the highest level in 7 years, while the weekly Bloomberg Consumer Comfort Index recently matched the 2nd-highest level since Aug 2013.  The Conference Board’s data showed Americans’ assessments of current & future labor-market conditions improved.  The share of Americans who said jobs were currently plentiful rose to 16.5% from 16.3% & the share who said jobs were hard to get fell to 29.1, the lowest since May 2008, from 29.4 in Sep.  A greater number of consumers expected more jobs to become available in the next 6 months as the share increased to 16.8% from 16%.  The share of respondents who said they expected their incomes to rise in the next half year climbed to 17.7% from 16.9% in Sep.

Consumer Confidence in U.S. Rose to Seven-Year High in October

Pfizer, a Dow stock, earnings beat estimates after sales of top vaccine & pain products grew & the company continued to buy back $B in treasury stock.  EPS rose to 42¢ from 39¢ a year earlier.  EPS excluding one-time items of 57¢ beat by 2¢ the estimate.  Pfizer is in the middle of a strategic transformation, & has split its business into 3 internal units that it may eventually break into individual companies.  After trying to do major deals that failed, a breakup of the company isn’t likely to happen until at least 2017, according to CEO Ian Read.  Instead, PFE has announced share buybacks worth at least $46B since Feb 2011.  Of that, $31B has come within last 2 years.  Sales of the highest-selling drugs, the pain drug Lyrica & the vaccine Prevnar, which helps prevent pneumococcal infections, rose.  Lyrica sales grew 16% to $1.32B & Prevnar grew 19% to of $1.14B.  The newest drugs are growing, though still aren’t large enough yet to replace multibillion-dollar medicines like Celebrex, an arthritis treatment, which is losing patent protection this year.  PFE lowered its full-year sales & EPS forecasts for the 2nd straight qtr.  Revenue for Q3 fell 2% to $12.4B.  Full-year sales will be as much as $49.7B this year, compared to a prior forecast of $50.7B, the company said.  EPS excluding one-time items will be $2.23-$2.27, narrowing from a prior forecast of $2.20-$2.30.  The reduced forecast reflects foreign exchange impacts & anticipated impact of generic competition for Celebrex in the US, CFO Frank D’Amelio said.  The stock was up pennies.  If you would like to learn more about PFE, click on this link:

Pfizer Buys Back Billions in Stock as It Beats Estimates

Pfizer (PFE)

Orders for durable goods dropped unexpectedly in Sep, falling for a 2nd month, on waning demand for machinery & computers that signals companies are reluctant to invest in updating equipment.  Bookings for goods meant to last at least 3 years decreased 1.3% after declining 18.3% in Aug, according to the Commerce Dept.  The forecast called for a 0.5 % gain.  Companies are looking for more signs of sustained consumer demand before making high-dollar investments, even as households benefit from strong job gains & pared-down debt.  As markets in Europe & emerging nations slow, fewer exports will probably also damp orders in coming months, indicating American manufacturing will cool.  Excluding transportation equipment, which is often volatile month to month, bookings declined 0.2%.  Orders for non-defense capital goods excluding aircraft, a proxy for future business investment in items like computers, engines & communications equipment, dropped 1.7%, the most since Jan, after a 0.3% gain the previous month.  Shipments of non-defense capital goods, used in calculating GDP, fell 0.2% after rising 0.1%.  The figures may prompt cuts in forecasts for Q3 GDP growth.  But cars & trucks remain a source of strength for manufacturing & the economy.  US car & truck sales probably will rise for an unprecedented sixth straight year in 2015 & might exceed 17M for the first time since 2001, said Joe Hinrichs, Ford’s (F) pres of the Americas.  “We think the housing market will continue to improve, which does influence the truck market,” Hinrichs said last month.  Ford expects US auto sales to rise to a record 18M by the end of the decade.  Durable goods data were hurt by a 2.8% drop in demand for machinery, the biggest decline since Feb 2013.  Bookings for computers & electronic equipment fell 2.5%, the most this year.

Durable Goods Orders in U.S. Decrease for Second Month

Markets are having a good day led by techs on the NAZ.  Durable goods data was pushed aside & the focus was on consumer confidence data.  MLPs have bounced back from the plunge earlier this month, although there are still questions about how low priced oil will affect energy companies who  transport so much oil thru their pipelines.  The REIT index is at its highs since early 2007, prior to the recession which hit those stocks very hard.  But there are numerous problems out there starting with dismal overseas data, military conflicts that don't end & uneven US economic data. 

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