Tuesday, December 9, 2014

Markets drift but tech stocks rise

Dow dropped 51 (but near the highs), advancers over decliners 3-2 & NAZ rose 25.  The MLP index recovered 5+ to the 459s as high volatility has become routine & the REIT index went up 1+ to the 526s (a new multi year high).  Junk bond funds pulled back while Treasuries rose.  Oil climbed from 5-year lows.  Gold jumped to a 6-week high as declines in equity markets revived demand for the metal as a haven.

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CLF15.NYM....Crude Oil Jan 15....63.71 Up ...0.66 (1.1%)

Live 24 hours gold chart [Kitco Inc.]

The US labor market continued to show traction in Oct as job openings held near the highest level in almost 14 years & the number quitting & getting hired remained elevated.  The number of positions waiting to be filled rose 149K to 4.83M, the 2nd-highest level since Jan 2001, according to the Labor Dept.  Increasing help-wanted ads, hiring & resignations paint a more vibrant picture & add to signs the labor market is improving as the economy picks up.  The readings are among those tracked by the Federal Reserve (FED) to help policy makers decide when the expansion is strong enough to raise interest rates.  The reading for the month was the strongest since 4.85M in Aug, which in turn was the highest since 5.27M in Jan 2001.  The Labor Dept revised Sep vacancies down to 4.69M from a previously reported 4.74M.  The number of openings, quits & hires are on the radar of the FED because they give clues on worker & employer confidence & help show how quickly labor-market slack is being taken up.  Vacancies are now higher & job dismissals are lower than in the months just before the last recession began, while hires & quits are just short of pre-slump levels.  FED officials are monitoring labor market improvement as they weigh the timing of an interest-rate increase, with a majority of policy makers forecasting they’ll do so at some point next year.  The next meeting of the FOMC is Dec 16-17.

Job Openings Point to Sustained U.S. Employment Gains: Economy

Any break in OPEC solidarity or a price war will drive crude to below $50 or even $40 a barrel, Iran's oil ministry head of petroleum market analysis said.  Middle East crude producers Saudi Arabia & Iraq this month increased the discounts used to set the official prices for their main crudes for buyers in Asia to the widest in more than a decade.  Sellers want to defend market share as oil tumbled into a bear market.  OPEC decided unanimously last week to maintain its output target, prompting a drop in benchmark Brent crude to less than $70 a barrel for the first time since May 2010.  “Any break in OPEC solidarity or price war will lead to an enormous price dive shock” that would push oil to $40 or $50, Mohammad Sadegh Memarian said in Dubai.  The drop to less than $80 is already below market equilibrium, he added.  Saudi Arabia led OPEC’s decision to maintain rather than cut output last month, citing the threat US shale presents to the group’s market share, Iranian Oil Minister Bijan Namdar Zanganeh said on.  Financially-strapped OPEC members such as Iran & Venzuela had called for a cut.  Iran, hobbled by economic sanctions over its nuclear program, wants to boost oil output to 4.8M barrels a day once the curbs are removed, Memarian said.  Saudi Arabia, OPEC’s largest producer, should then “adjust its output marginally to accommodate” Iran’s increase, he said.  Iran pumped 2.78M barrels a day last month.  The country is negotiating with the US & 5 other world powers toward an accord that would limit Iran’s nuclear work in exchange for an end to sanctions.

Iran Sees Oil Falling to $40 a Barrel if OPEC Solidarity Breaks Down

Bank of America now expects trading revenue to decline this qtr from Q3 & a year earlier.  The drop is consistent with customer activity, CEO Brian Moynihan said at a conference.  The bank said that trading is among its " revenue headwinds" after generating $3.27B in Q3 & $2.97B in Q4-2013.  “When activity ebbs and flows, we don’t try to replace that activity with non-customer-driven business,” Moynihan said.  “We stick to our knitting.”  Some hedge-fund managers were blindsided in the first 2 weeks of Oct as stocks & corp debt sold off & interest rates dropped because of concerns that global growth was slowing.  While markets rebounded in the 2nd half of the month, oil tumbled into a bear market & reached a 5-year low last week as the US shale boom added to a global glut at a time of weakening demand growth.  COO Tom Montag has cut costs in the markets division, reducing the amount of trading revenue needed to break even to $2.5B a qtr, down from $3.5B a few years ago, Moynihan said.  Trading revenue climbed 2% to $10.8B in the first 9 months of the year.  The stock was down a dime.  If you would like to learn more about BAC, click on this link:

Bank of America Says Fourth-Quarter Trading to Be Among Revenue Headwinds

Bank of America (BAC)

This was a confusing day in the stock market.  Dow was led lower by AT&T (T), Verizon (VZ), Merck (MRK) & Coca-Cola (KO).  Strength in NAZ came from bio tech stocks.  Markets fundamentals remain iffy with fallout from lower oil prices difficult to assess.  Bulls are happy that Dow remains near its record highs.

Dow Jones Industrials

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