Friday, December 26, 2014

Markets extend rally on holiday cheer

Dow went up 23 (good enough for a new record), advancers over decliners almost 3-1 & NAZ added 33.  The MLP index was fractionally lower to the 459s & the REIT index rose 1 to 232.  Junk bond funds & Treasuries advanced.  Oil dropped even with increased fighting in Libya (a major oil exporter) but gold had a good day.

AMJ (Alerian MLP Index tracking fund)

CLG15.NYM....Crude Oil Feb 15....54.71 Down ...1.13  (2.0%)

Live 24 hours gold chart [Kitco Inc.]

Retailers are on pace to sell more products online than ever this holiday season, aided by early promotions & investments in delivery systems that helped avoid the widespread shipping delays of last year.  Web sales rose 14% from Nov 27 - Dec 21, ChannelAdvisor said, roughly in line with ComScore Inc.’s Nov forecast that online purchases would gain 16% to $61B during the 3 months thru Dec.  The total may include $7.9B in mobile sales, ComScore said.  Consumers, aided by lower unemployment & cheaper gas, responded to pre-Thanksgiving promotions instead of splurging at the last minute, something that contributed to last year’s delivery delays.  On Christmas Day, consumers went online to buy music, applications & other content for new smartphones & tablets they received as gifts.  Online spending increased 8.3% yesterday from a year earlier, International Business Machines (IBM) said.  That compares with last year’s Dec 25 growth rate of 17%.  Slowing growth on Christmas Day may follow a broader trend of a longer shopping season with spending less concentrated on any particular day.  More than 10M new customers this holiday season tried Amazon Prime, the company’s $99 annual subscription that offers delivery discounts & video streaming, Amazon (AMZN) announced today.  Those enrolled in Amazon Prime spend more on average than other customers.

Online Holiday Sales on Pace to Hit Record on Early Deals

China plans to temporarily waive a requirement for banks to set aside reserves for some deposits, according to leakers, highlighting efforts to boost lending amid a slowdown of the economy.  Commercial lenders won’t be required to set aside reserves for the savings that they hold for non-deposit-taking financial institutions.  The waiver is part of planned changes to how banks’ loan-to-deposit ratios are calculated.  The waiver is seen as another move to replace a universal reserve-requirement ratio cut that the People’s Bank of China (PBOC) needs to boost credit & bolster the economy.  Concerned that a broad reduction might send out a strong easing signal & bring turmoil to stock market, the PBOC has added liquidity by stealth at least 4 times in the past 4 months.  This waiver follows a planned loan-to-deposit rule change reported last month that would let banks classify savings they hold for non-deposit-taking financial institutions as deposits, a gov official said.  Chinese banks are allowed to lend a maximum of 75% of deposits, & required to set aside 20% as reserves.  The change may add 7T yuan ($1.1T) of money will be classified as deposits.  The central bank are expected to cut banks’ required reserve ratio by a total of 1 percentage point in H1.

China Said to Plan Waiving Reserve Requirement for Some Deposits

Ukraine & pro-Russian separatists exchanged prisoners in the eastern Donetsk region, as peace talks that resumed 2 days ago faltered.  Ukraine released 222 captives in the largest exchange since the conflict started & the rebels freed 146 soldiers, with 4 more expected tomorrow, Svyatoslav Tsegolko, Ukraine’s presidential chief of staff, said.  Envoys from Ukraine, Russia, the Organization for Security & Cooperation in Europe & the separatists met Wed for a planned 2 rounds of negotiations after a shaky cease-fire was renewed earlier this month.  Almost 5K have been killed in fighting that started in mid-Apr in Ukraine’s east.  The exchange was the only agreement reached at the meeting, rebel negotiator Denis Pushilin said.  The prisoners held by Ukraine included Russian officers.  The envoys were initially planning to today as well as Wed, to discuss the prisoner swap & weapons pullback.  But today’s talks didn’t happen.  The withdrawal of artillery to create a buffer zone around the rebel-held territory may start after rebels observe a silent regime, or full cease-fire, for 48 hours, an Ukrainian military spokesman said.  Russia today hardened its military doctrine, identifying a NATO buildup close to its borders as a major threat.

Ukraine, Pro-Russian Rebels Swap Captives as Peace Talks Stall

Stocks advanced on very low volume.  In this environment, relatively small buy orders can bring fairly big gains.  But the bulls are happy.  MLPs have had a tough go in recent months & the index is down a tad in a year when popular averages & yield securities have done well.   Dow rose 250 this week & NAZ at 4.8K is approaching its record above 5K in 2000.

Dow Jones Industrials

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