Thursday, January 8, 2015

Markets advance on hopes for global stimulus

Dow jumped 323 closing at the highs, advancers over decliners 3-1 & NAZ gained 85.  The MLP index went up 5+ to the 445s & the REIT index added 1+ to the 442s, nearer to the record high 8 years ago.  Junk bond funds rose with stocks & Treasuries retreated.  Oil fell again while gold slid lower.

AMJ (Alerian MLP Index tracking fund)

CLG15.NYM....Crude Oil Feb 15....48.03 Down ...0.62  (1.3%)

Live 24 hours gold chart [Kitco Inc.]

US consumer borrowing increased in Nov as an improving economy emboldened Americans to take out school & auto loans.  The $14.1B increase in total credit followed a revised $16B gain in Oct, according to the Federal Reserve.  Non-revolving lending accounted for all the gain.  Low gasoline prices & an accelerated pace of hiring have galvanized the American consumer to spend more.  Household buying, which accounts for almost 70% of the economy, climbed at a 3.2% annualized pace in Q3, according to the Commerce Dept, as people splurged on new cars, appliances, televisions & clothing.  The forecast called for a $15B advance.  The report doesn’t track mortgages, home-equity lines of credit, or other real estate-backed debt.  Revolving debt, including credit-card balances, fell by $946M, the first drop in 3 months & following a $1.48B advance in Oct.  Non-revolving credit, which includes car & education loans, gained $15B after advancing $14.5B in the previous month.  Autos sold at a seasonally adjusted 17.1M annual rate for the month.  Federal lending to consumers, which mostly entails school tuitions, increased $5.8B before seasonal adjustments, after rising $5.1B in Oct. 

Consumer Credit in U.S. Increased by $14.1 Billion in November

China isn’t planning to expand fiscal spending to stimulate growth, according to the economic planning agency, as pres Xi Junping said the country is able to maintain a “medium to high growth” rate.  China is accelerating 300 infrastructure projects valued at 7T yuan ($1.1T) this year.  Pres Xi said today that China's economy has entered a “new normal,” a phrase adopted to reflect a push to manage a slower expansion.  The NDRC has also relaxed requirements for companies to get approval for outbound investment.  Companies only need to register at, rather than get approval from, the NDRC if projects aren’t related to sensitive countries & industries.  Currently, the economic planning body requires companies to get approval for all outbound investment projects worth $1B or more.

China Plays Down Stimulus Talk While Xi Trumpets New Normal Growth

Apple is putting a number to the jobs it has created or supported at home: over 1M.  Applications designed for Apple’s smartphones & tablets have helped create more than 627K US jobs while 334K jobs have resulted from its spending & growth.  66K work directly for the company in the US.  Revenue generated through its App Store rose 50% to a record in 2014.  “Apple ignited the app revolution with the launch of the App Store in 2008,” the company said.  “Since then, an entire industry has been built around app design and development.”  In 2013, customers spent more than $10B in the App Store.  CEO Tim Cook has worked in the past few years to boost US manufacturing & open domestic data centers . For example, the company invested more than $100M to begin Mac Pro assembly in Austin, Texas.  It has 265 retail stores in 44 states with 30K employees.  That’s compared with 250 stores & 26K retail workers in 2012.  It has 8K US-based suppliers with materials coming from 31 states & AAPL spent more than $3B with US suppliers running small or diverse businesses last year.  The last time AAPL released its estimate for job creation, in 2012, it pegged the number at 599K in the US.  The company reported having 50K US jobs at the time.  Sustained demand for apps sets the stage for Cook’s entry this year into smartwatches, which also will use programs downloadable from the online store.  Apps generated more than $10B in revenue for developers in 2014, the company said.  Developers have earned $25B from the sale of apps & games on the App Store.  The stock rose 4.14.  If you would like to learn more about AAPL, click on this link:

Apple Touts U.S. Job Creation, Says App Store Sales Rose 50%

Apple (AAPL)

Stocks had 2 great days, which put the popular averages in the black for the first 5 trading days of 2015.  Traders are hoping that the US will extend growth while Janet keeps throwing cheap money at the markets.  Speeches given by Federal Reserve officials have given no indication they are in a rush to start raising rates, although they have said higher rates could begin in Q2 (only a few months ago).  Extending low interest rates while the economy is expanding is a major disconnect.  Something will have to give.

Dow Jones Industrials

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