Thursday, December 11, 2014

Markets rebound after Nov retail sales data

Dow jumped 202, advancers over decliners better than 4-1 & NAZ gained 67.  The MLP index recovered 7+ to the 449s & the REIT index went up a fraction to 327, another multi year high.  Junk bond funds rose & Treasuries retreated.  Oil was flattish near its 5 year lows.  Gold fell for the 2nd straight day as gains in the US economy boosted speculation that the Federal Reserve will raise interest rates soon.

AMJ (Alerian MLP Index tracking fund)


CLF15.NYM...Crude Oil Jan 15...60.85 Down .....0.09  (0.2%)

GCZ14.CMX...Gold Dec 14....1,216.70 Down ...12.20  (1.0%)








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Retail Sales

Photo:   Bloomberg

The biggest employment gain in more than a decade & lowest gasoline prices since 2010 are paying divs as US retail sales climbed in Nov by the most in 8 months.  The 0.7% increase in purchases exceeded the estimate of 0.4% & followed a 0.5% advance in Oct that was larger than previously reported, according to the Commerce Dept.  Demand improved in 11 of 13 major store categories.  A surge in hiring & the lowest gasoline prices in 4 years are giving households the wherewithal to sustain spending, which accounts for almost 70% of the economy.  Last month’s sales gain was the biggest since a 1.5% advance in Mar.  The increases at building materials, clothing & department stores were the biggest since Apr.  The figures showed sales climbed 1.7% at automobile dealers after a 0.8% increase the prior month.  Industry figures, the ones used to calculate economic growth, showed sales of cars & light trucks rose to a 17.1M annualized rate in Nov.  Retail sales excluding autos also increased 0.5%, beating the 0.1% estimate.  The only 2 retail categories showing declines last month were service stations & miscellaneous retailers.  Gasoline station sales dropped 0.8% as lower gasoline costs depressed receipts.  Excluding autos, gasoline & building materials, which render the figures used to calculate GDP, sales climbed 0.6%, the most since Jun, after a 0.5% increase the previous month.  Early discounts prompted consumers to spend on holiday gifts.



The People’s Bank of China (PBOC) injected 400B yuan ($65B) into the banking system, according to a leaker, pressing ahead with targeted steps to add liquidity as the economy slows.  The injection to the banks began yesterday via China Development Bank.  The move comes as a previous PBOC injection of 500B yuan comes due this month.  The PBOC had said it pumped that amount into the economy in Sep with a term of 3 months & a rate of 3.5%.  Another 269B was added in Oct with the same terms, it said.  The central bank cut the benchmark interest rate last month for the first in 2 years, spurring an 18% gain in the Shanghai Composite Index.  The rally has also been driven by speculation that the PBOC may cut Chinese banks’ required reserve ratios.

China’s Central Bank Is Said to Inject $65 Billion Into Banking System


Walgreen, a Dividend Aristocrat, CEO Greg Wasson will retire, clearing the way for top shareholder Stefano Pessina to tighten his grip amid a merger with his European retailer Alliance Boots.  Pessina will be acting CEO while the company searches for a successor.  The move makes almost a clean-sweep of former execs.  CFO Wade Miquelon left the company & Pharmacy President Kermit Crawford is retiring, following a revision that cut the company’s 2016 adjusted earnings forecast by more than $1B.  The change caps a 2-year campaign by Pessina for greater control of the company.  His rise at the company dates to the chain’s decision to buy a 45% stake in Alliance Boots in 2012.  After that, Pessina began to meet with shareholders to ask what kinds of changes they wanted.  The stock shot up 3.45.  If you would like to learn more about WAG, click on this link::
club.ino.com/trend/analysis/stock/WAG?a_aid=CD3289&a_bid=6ae5b6f7

Walgreen Says CEO Greg Wasson to Retire After Alliance Boots Deal Closes

Walgreen (WAG)




The retail sales data was just what an oversold market needed to bring out the buyers.  Stimulus spending in China didn't hurt.  But fundamentals of low oil prices causing dislocations in economies around the world have not gone away.  However for the time being, stockholders are feeling better.

Dow Jones Industrials









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