Friday, October 17, 2014

Markets rise on economic data

Dow surged 233, advancers over decliners 4-1 & NAZ shot up 61. The MLP index jumped 9 to 506 & the REIT index went up 1 to the 302s.  Junk bond funds rose & Treasuries retreated.  Oil climbed higher & gold slid back.

AMJ (Alerian MLP Index tracking fund)

CLX14.NYM...Crude Oil Nov 14...82.90 Up ...0.20 (0.2%)

GCV14.CMX...Gold Oct 14......1,237.40 Down ...3.10  (0.3%)

3 Stocks You Should Own Right Now - Click Here!

Consumer sentiment n the US unexpectedly rose in Oct to the highest level in 7 years, showing a brightening in Americans’ moods as gas prices drop & the labor market gains traction.  The Thomson Reuters/University of Michigan preliminary sentiment index for this month increased to 86.4, the strongest since Jul 2007, from a final reading of 84.6 in Sep.  The projection called for 84.  Job gains on pace for their strongest year since 1999 & cheaper gas prices are keeping households upbeat about economic expansion amid the weakening in Europe & emerging nations.  Faster wage increases & more broad-based improvement in the labor market would help further spur the consumer spending.  The gain in confidence reflected a jump in Americans’ expectations about the economy 6 months from now as that gauge rose to 78.4, a 2-year high, from 75.4 last month.  The gauge of current conditions, which measures Americans’ views of their personal finances, was unchanged at 98.9.

Consumer Sentiment in U.S. Increases to Seven-Year High

Work began on more US homes in Sep, indicating gains in residential construction will help bolster economic growth.  Housing starts climbed 6.3% to a 1.02M annualized rate from a 957K pace in Aug, accordinto the Commerce Dept.  The reading was in line with the median estimate which projected 1M.  Work increased on multifamily & one-family homes.  The drop in mortgage rates in recent weeks will probably underpin sales, giving builders reason to take on more projects.  Sustained job gains that fuel faster wage growth would help give the market an additional boost that would include more first-time home buyers.  Permits for future projects also increased, rising 1.5% to a 1.02M annualized pace & pointing to a sustained pace of construction.  They were projected to climb to 1.03M.  Construction of multifamily projects such as condominiums & townhomes jumped 16.7% to an annual rate of 371K.  Work on single-family properties rose 1.1% to a 646K rate from 639K the prior month.  Today’s figures stand in contrast to a report yesterday showing builder conrfiedence dropped in Oct to a 3-month low after reaching its highest level in 9 years the previous month.  Sentiment eased in all 4 US regions, the National Association of Home Builders/Wells Fargo gauge showed.

Housing Starts Rise as U.S. Construction Firms Regain Footing

Chevron Corp. CEO John Watson
Photo:  Bloomberg

Chevron, a Dow stock & Dividend Aristocrat, CEO John Watson shrugged off “surplus capacity today” & speaks of growth going forward and the “inevitable decline” of existing supplies.  Nothing fires up Watson quite like matching the $150B of new projects CVX has in the pipeline to his belief that billions of new customers will be coming on stream for oil & natural gas.  Since taking charge of the world’s 3rd-largest crude producer almost 5 years ago, he has presided over an era of skyrocketing costs, dramatic market swings, declining production & rising concern about how fossil fuels might be harming the planet.  He’s convinced he’s on the right track.  Companies CVX size keep their eye on the long-term horizon when market disruptions like the current one occur, as was the case for a similar plunge in oil prices 2 years ago when crude fell to $77 a barrel.  When he looks out, Watson sees 2.2B backers for his belief that 19th century fuels will enjoy a secure future in the 21st century as the desire for a higher standard of living trumps actions on climate change.  Watson expects almost 1/3 of the earth’s population to switch from burning fuels like dung & wood to oil & gas as they join the middle class over the next 2 decades.  The surge would relegate climate policy & carbon cuts to a back seat compared to the need for cheap & abundant fuel to power everything from stoves to mopeds.  “For most of the countries I visit, getting affordable energy in the hands of the people is a preoccupation,” Watson said .  “We’re going to be in the fossil fuels business for a long time.”  The stock rose 1.42.  If you would like to learn more about CVX, click on this link:   

Chevron’s Watson Sees Secure Future in Global Oil Thirst

Chevron (CVX)

The data looked good, so buyers come out in force.  But these are wild times when 1-200 swings in the Dow have become routine.  Even with this rally, Dow is down a stunning 700 this month & lower YTD.  The VIX, volatility index, dropped 4 to below 21, but is still far above 12 which has been common for months.  Earnings will get more attention next week unless military conflicts flare up, especially in Syria/Iraq.

Dow Jones Industrials

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