Friday, December 12, 2014

Stock markets tumble as oil sinks below $58

Dow plunged 309 (closing at the lows), decliners over advancers 3-1 & NAZ declined 54.  The MLP index fell 7+ to the 433s & the REIT index was off 2+ to 324.  Junk bond funds sold off & Treasuries advanced while stocks sold off.  Oil extended losses below $58 a barrel as the Intl Energy Agency cut its global demand forecast for the 4th time in 5 months.  Gold fell for a 3rd day as gains for the US economy cut demand for the metal as a haven.

AMJ (Alerian MLP Index tracking fund)

CLF15.NYM....Crude Oil Jan 15....58.01 Down ...1.94  (3.2%)

Live 24 hours gold chart [Kitco Inc.]

Consumer Sentiment
Photo:   Bloomberg

Americans brimmed with confidence in early Dec as they shopped for holiday gifts, signaling retailers will see sales continue to accelerate heading into 2015.  The Thomson Reuters/University of Michigan preliminary Dec index of consumer sentiment increased to 93.8, the highest since Jan 2007, from 88.8 last month. The gain exceeded the 89.5 forecast, topping the estimate by the most since Mar 2013.  6 months of falling gasoline prices are freeing up disposable income for households during merchants’ busiest time of the year.  Sustained hiring combined with faster wage growth is providing the impetus for further retail sales gains that will underpin the economy as the year draws to a close.  The gain in sentiment this month put the index above its average in the  5 years leading up to the last recession that began in Dec 2007.  The gauge of current conditions, which measures Americans’ views of their personal finances, increased to the highest level since Feb 2007.  The gauge of Americans’ expectations about the economy 6 months from now was the strongest since Jan 2007.  Its 6.2-point gain from Nov was the biggest since May 2013.  Consumers in the Michigan survey forecast the annual inflation rate will increase to 2.9% 5 years from now, rebounding from the 2.6% projection in Nov that was the lowest since 2009.

Americans Exuding Confidence Point to Growth in Sales: Economy

China Industrial Output
Photo:   Bloomberg

China’s economy slowed in Nov as factory shutdowns exacerbated weaker demand, raising pressure on the central bank to add further stimulus.  A GDP tracker came in at 6.78% year-on-year in Nov, down from 6.91% in Oct & a 4th month below 7%, according to a preliminary reading.  Factory production rose 7.2% from a year earlier, retail sales gained 11.7%, & investment in fixed assets expanded 15.8% Jan-Nov from a year earlier, official data showed.  The gov ordered some factories to close in Beijing & surrounding provinces during the Asia-Pacific Economic Cooperation forum in early Nov to curb pollution.  China’s central bank has been seeking to ease monetary conditions including with a cut to benchmark interest rates last month, helping spur a rebound in the broadest measure of new credit.  Aggregate financing rose to 1.15T yuan ($186B) in Nov, the People’s Bank of China’s said, compared with 662B yuan previously reported in Oct & the 895B estimate.  New local-currency loans were 852B yuan, & M2 money supply grew 12.3% from a year earlier compared with the estimate of 12.5%.  New yuan loans, which measure new lending minus loans repaid, compared with an estimate of 655B yuan & 548B reported in Oct.

China’s Slowdown Deepens as Factory Output Growth Wanes: Economy

General Electric, a Dow stock, raised its quarterly div 4.5% as CEO Jeff Immelt rebuilds the payout he chopped during the recession.  The div will be 23¢, up a penny.  “Returning cash to shareowners remains our top priority, while we continue to invest in long-term growth,” Immelt said.  The increase is the 7th in the past 5 years.  GE cut the div to 10¢ from 31¢ in 2009, the first reduction since the 1930s.  Immelt has worked since the recession to shrink GE’s finance arm, including selling real estate & foreign bank holdings, & expand its high-margin manufacturing units.  Immelt said the div would grow in line with EPS, which is expected to rise about 2% this year to $1.67.  Cash reserves surpassed $137B as of Sep 30, aiding efforts to reward investors, & the company also can still repurchase more than $10B of stock under its buyback plan.  The stock fell 51¢ in a tough market.  If you would like to learn more about GE, click on this link:

GE Raises Dividend 4.5% in Climb Back From 2009 Payout Reduction

General Electric (GE)

Stocks had another dreary day.  The decline was led by energy issues.  Chevron (CVX) & Exxon (XOM), the 2 oil stocks in the Dow, each fell about $2 to roughly 2 year lows.  AMZ is at an almost 18 month low.  The breadth of the decline was less severe than it could have been, but that is not much consolation to most investors.  DC is struggling to pass funding to run the gov for several months, another headache for investors to absorb.  The stock market is taking a breather after its stellar run since early 2009.

Dow Jones Industrials

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