Thursday, October 9, 2014

Lower markets on tensions in the MidEast

Dow dropped 103, decliners over advancers 5-2 & NAZ fell 14.  The MLP index sank another 6+ to the 504s & the REIT index rose 1+ to 300.  Junk bond funds slid lower & Treasuries were pretty much even.  Oil fell to a 17-month low while gold finallly found some friends who are buying.

AMJ (Alerian MLP Index tracking fund)

CLX14.NYM...Crude Oil Nov 14...86.78 Down .....0.53  (0.6%)

GCV14.CMX...Gold Oct 14......1,225.90 Up ...20.60 (1.7%)

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The number of Americans filing applications for unemployment benefits unexpectedly fell last week, pushing the average over the past month to the lowest level in 8 years & signaling that employers are hanging on to workers as the economy improves.  Jobless claims declined 1K to 287K, according to the Labor Dept.  The forecast called for 295K.  The 4 week average decreased to 287K, the least since Feb 2006.  Layoffs are hovering around the lowest in almost a decade as employers hang onto workers to meet rising demand.  That lays the ground for stronger gains in hiring & wages that will give the economy a boost even as global growth cools.  The 4-week moving average for jobless claims dropped last week from 295K in the prior period.  The number continuing to receive jobless benefits fell by 21K to 2.38M in the latest week, the fewest since May 2006.  The unemployment rate among people eligible for benefits held at 1.8%.

Jobless Claims in U.S. Fall, With Average at Eight-Year Low

Germany Exports
Photo:   Bloomberg

German exports slumped the most since Jan 2009 in the latest sign Europe’s largest economy is struggling to rebound from its Q2 contraction.  Exports dropped 5.8% in Aug, after a 4.8% increase in Jul, the Federal Statistics Office said.  The forecast was for a decline of 4%.  While the typically volatile data was influenced by the timing of German school holidays in late summer, it still depicts an economy that is stumbling as the euro-area recovery grinds to a halt.  The ECB has added unprecedented stimulus to try to revive inflation & economic growth in the currency bloc.  German imports declined 1.3%, after dropping 1.4% in Jul.  The country’s trade surplus narrowed to €14.1B ($18B) from a record €23.5B.  The current account surplus shrank to €10.3B from €20.1B.  German GDP fell 0.2% in Q2.  Data earlier this week showed factory orders & industrial production in Aug each declined by the most since Jan 2009.

German Exports Slide Most Since 2009 as Economy Stumbles

Kurdish leaders in Turkey called for an end of violence in the country’s southeast & urged the gov to accelerate peace talks to defuse a crisis over its handling of Islamic State attacks against Kurds in Syria.  The imprisoned leader of the PKK party, is advising “restraint” after more than 20 were killed in clashes sparked by Kurdish protests this week.  Turkey’s reluctance to help repel Islamic State’s onslaught on Kobani, a Kurdish stronghold across the border in Syria, sparked protests this week across southeastern Turkey.  The crisis has threatened a peace process that pres Erdogan has championed over the past 2 years in a bid to end a 3-decade war with Kurds seeking wider rights.  Warplanes operating under a US led alliance carried out 6 airstrikes on Islamic State positions around Kobani late yesterday.  The Turkish Prime Minister Davutoglu said at least 19 were killed in the violence that spread across Kurdish regions of Turkey the previous night & the gov imposed a curfew across much of the southeast.  The US has rebuffed Turkey’s pleas to help create a buffer zone in Syria near the Turkish border, while Turkey’s prime minister has said it would take part in operations in Syria only if US airstrikes are expanded beyond hitting Islamic State targets to a wider campaign to oust pres Assad.  Kobani’s capture would extend Islamic State’s grip on territory along Syria’s border with NATO-member Turkey. The group’s self-declared caliphate extends from there into Iraq, where it has taken control of major towns in Anbar province to the west of Baghdad in recent days.

Turkey’s Kurdish Leaders Urging Restraint as Targets Are Bombed in Kobani

Yesterday's big rally did not last.  Fighting in the Ukraine drags & ISIL is expanding its influence in Iraq-Syrua.  The euro zone is slipping back into a recession & sanctions against Russia are making matters worse.  China is not finding its way back to higher growth rates.  The US data looks better, but data has not been consistent with housing struggling.  The bulls could not put up a fight against those negative winds.

Dow Jones Industrials

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