Friday, January 9, 2015

Lower markets on wage data

Dow sank 147, decliners over advancers better than 2-1 & NAZ fell 27.  The MLP index dropped 4+, to 441, & the REIT index lost 1+ to go below 341.  Junk bond funds were lower & Treasuries rose, taking the yiled on the 10 year Treasury below 2% once again.  Oil slid lower while gold managed a small gain.

AMJ (Alerian MLP Index tracking fund)

CLG15.NYM...Crude Oil Feb 15...48.53 Down ...0.26  (0.5%)

GCF15.CMX...Gold Jan 15.......1,213.60 Up ...5.20 (0.4%)

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A rise in employment & a falling jobless rate in Dec capped the best year for the labor market since 1999 & reinforced the US role as the global economy’s standout performer.  The addition of 252K jobs followed a 353K rise the prior month that was more than previously estimated, according to the Labor Dept.  The jobless rate dropped to the lowest level since Jun 2008.  But the report wasn’t all good news as earnings unexpectedly declined from a month earlier.  An additional 2.95M Americans found work in 2014, the most in 15 years & a sign companies are optimistic US demand will persist even as overseas markets struggle.  The combination of job growth & cheaper gasoline will probably help stretch workers’ paychecks & sustain consumer spending.  Job growth last month was highlighted by the biggest gain in construction employment in almost a year.  Factories, health care providers & business services also kept adding workers.  Revisions to prior reports added 50K jobs to overall payrolls in the previous 2 months.  The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.7% from 62.9%.  Average hourly earnings for all employees dropped by 0.2%, the biggest since comparable records began in 2006, to $24.57 from the prior month.  Earnings rose 0.2% in Nov.  They increased 1.7% over the 12 months ended in Dec, the smallest gain since Oct 2012.

December Employment Gain Caps Best Year for U.S. Since 1999; Wage Gains Lag

US holiday sales grew at their fastest pace in almost a decade, lifted by a strengthening economy & consumers spreading out their purchases over a longer season, according to ShopperTrak.  Holiday spending over Nov & Dec jumped 4.6% versus the same period of last year, beating ShopperTrak’s prediction of 3.8%, the best performance since 2005, before the last recession, when sales gained 5.2%.  Retailers are relying less on major sales events such as Black Friday & coaxing consumers into buying gifts more steadily over a 2-month stretch.  Shoppers also had more money to spend this season, thanks to lower gas prices & an improving job market.  “The outcome punctuates the declining importance of a single day within the season,” ShopperTrak said.  “This 10-year trend speaks to retailers’ success in elongating the shopping season, as well as the consumers’ increased willingness to shop early.”  A separate research firm, First Data, said retail sales rose 3.2% from Nov 1-Jan 4, compared with a 0.5% gain in sales during the same period a year earlier.  Sales gained 5.3% from Thanksgiving thru Cyber Monday.  Sales jumped 2.2% in Nov 2014, compared with a 1.3% decline a year earlier, while Dec sales were up 2.9%, compared with a 1% gain in 2013, First Data said.

Holiday Sales Growth Was Best Since ’05, ShopperTrak Says

US retailers posted Dec same-store sales that topped estimates as improving employment & falling gas prices encouraged shoppers to spend on gifts.  Same-store sales for retailers tracked by Retail Metrics rose 2.9% last month, excluding results from drugstores.  Analysts had estimated a 2.8% gain.  Retailers offered deep holiday discounts to lure customers, while lower unemployment & cheaper fuel spurred shoppers to spend more.  Companies started promotions earlier than ever this holiday season & kept customers coming out to stores with the expectation that they’d be able to buy gifts at steep discounts.  For most retailers, spending in Dec may have been fueled by sustained growth in the job market as companies added 252K employees last month, more than forecast.

U.S. Retailers’ December Sales Top Estimates Amid Job Growth

Stocks after spectacular gains, are entitled to a pause today.  MLPs continue under selling pressure with the index down 100 from its record high at the end of Sep.  Meanwhile, REIT's are at multi year highs & junk bond are recovering from selling in H2-2014.  Dow is down in Jan & continues under pressure on worries that high interest rates will come sooner rather than later.

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