Friday, December 5, 2014

Higher markets on November jobs data

Dow rose 48, advancers over decliners 5-4 & NAZ went up 9.  The MLP index lost 1+ to the 485s & the REIT index fell 2+ to 323.  Junk bond funds were mixed to lower & Treasuries declined.  Oil is poised for the lowest close in more than 5 years after Saudi Arabia offered its oil customers in Asia the biggest discount on record, signaling it’s defending market share.  Gold also sold off.

AMJ (Alerian MLP Index tracking fund)

CLF15.NYM...Crude Oil Jan 15...65.84 Down ......0.97  (1.5%)

GCZ14.CMX...Gold Dec 14....1,194.30 Down ...13.20  (1.1%)

3 Stocks You Should Own Right Now - Click Here!

Photo:   Bloomberg

A broad-based Nov hiring surge ranging from factories to offices & retailers powered the US economy to create the largest number of jobs in almost 3 years, triggering long-awaited wage gains.  The 321K advance exceeded the most optimistic projection & followed a 243K gain in Oct that was stronger than previously reported, according to the Labor Dept.  The jobless rate held at a 6-year low of 5.8%.  Average hourly earnings rose 0.4%, the most since Jun of last year.  Persistent job growth that’s generating income growth & stoking demand increases the likelihood of employment opportunities for even more Americans.  The report showed factory payrolls rose the most in a year, while professional & business services took on the largest number of workers since Nov 2010.  Hiring at retailers also picked up.  Revisions to prior reports added 44K jobs to payrolls in the previous 2 months.  The participation rate, which indicates the share of working-age people in the labor force, held at 62.8%.  Employment in business & professional services climbed 86K last month, while payrolls rose by 28K at factories.  Retail employment increased 50K, the most this year.  Transportation and warehousing payrolls climbed 170K, boosted by a 4K gain at couriers & messenger services which began hiring for the holidays.

Biggest Payroll Gain in Almost Three Years Boosts U.S. Wages

The trade deficit was little changed in Oct as an improving US economy caused imports to climb to a record while exports also rose.  The gap narrowed by 0.4% to $43.4B from the prior month’s revised $43.6B,  according to the Commerce Dept.  The forecast called for a narrowing to $41.2B.  Purchases of foreign-made capital goods such as computers & semiconductors were the highest ever, pointing to gains in business investment.  Weaker growth overseas is putting a limit on foreign demand for US goods & services, signaling trade will provide less of a boost to the US economy.  At the same time, a drop in American orders for petroleum from abroad is helping keep a lid on imports & a broadening in the trade gap.  Imports increased 0.9% to $241B from $238.8B the prior month.  In addition to capital goods, purchases of foods, feeds & beverages were the highest ever, & demand for foreign autos & parts also surged.  The increase in imports was held back by a drop in demand for fuel as purchases of petroleum dropped to the lowest level since Nov 2009.  Exports rose 1.2% to $197.5B from $195.2B in Sep.  The increase was also led by record demand for capital goods as customers abroad bought more American-made aircraft, generators & industrial equipment.   After eliminating the influence of prices, which generates the numbers used to calculate GDP, the trade deficit was little changed at $50.8B compared with $50.9B in Sep.  Figures released last week showed that less narrowing of the trade deficit than previously calculated offset some improvement elsewhere in economic growth in Q3.  GDP grew at a 3.9% annualized rate, with net exports accounting for 0.8 percentage points of the advance.

Trade Gap in U.S. Little Changed as Imports, Exports Increase

German factory orders rose more than forecast in Oct in a sign Europe's largest economy is continuing its recovery from a mid-year dip.  Orders, adjusted for seasonal swings & inflation, climbed 2.5% after a revised increase of 1.1% in Sep, data from the Economy Ministry.  Economists predicted an increase of 0.5%.  Orders grew 2.4% from year earlier.  Germany's economy barely expanded in Q3 after contracting in Q2, & the Bundesbank has said growth will lack momentum until at least the end of the year.  The euro area, the country’s biggest trading partner, is struggling to avoid stagnation, prompting the ECB to prepare further stimulus measures that can be used if needed.  Domestic factory orders led the Oct gain with a jump of 5.3%, compared with an increase of 0.6% in export orders.  Investment goods gained 3% & basic goods rose 2.5%.  Orders for consumer goods fell 0.1%.  Latest data show a mixed picture for the German economy.  While business confidence increased for the first time in 7 months in Nov, manufacturing & services expanded at the slowest pace in 16 months.

German Factory Orders Beat Forecast in Sign Economy Recovering

The jobs data was better than almost any of the bulls could hope  for.  All considered,the market advance today has to be considered muted.  Maybe even the strongest bulls are reaching their limits.  Dow is nearing 18K, which it should go over soon, & up almost a massive 2K from the mid Oct lows.  This is a vastly overbought market & a correction is overdue.
Dow Jones Industrials

No comments: