Dow climbed 51, advancers over decliners 2-1 & NAZ 25. The MLP index rose 6+ to 431 & the REIT index was even at 346. Junk bond funds were higher & Treasuries gave up some of the recent gains. Oil bounced back, finally. Gold also rose & is up 100 from its recent lows
AMJ (Alerian MLP Index tracking fund)
Photo: Bloomberg
Consumer confidence jumped in Jan to the highest level in 11 years as steady job gains & plunging gas prices brightened the outlook for US households. The University of Mich preliminary consumer sentiment index rose to 98.2, the highest in 11 years, from a final reading of 93.6 in Dec. The estimate projected an increase to 94.1. Trips to the pump that are costing less & job gains that have accelerated are helping Americans feel more optimistic about the economic recovery, now in its 6th year. Continued gains in confidence combined with stronger wage growth will be needed to embolden consumers to go out & spend savings on purchases from vehicles to homes. The sentiment survey’s current conditions index, which measures Americans’ assessment of their personal finances, increased to 108.3 this month, the highest in 8 years, from 104.8. The measure of expectations 6 months from now rose to 91.6 from 86.4 in Dec. “Gains in employment and incomes as well as declines in gas prices were cited by record numbers of consumers,” the Michigan Survey of Consumers said. “More consumers spontaneously cited increases in their household incomes in early January than any time in the past decade.” Americans expected an inflation rate of 2.4% in the next year, the lowest since Sep 2010, & down from 2.8% in Dec.
Consumer Sentiment in U.S. Surges to 11-Year High
The cost of living in the US declined in Dec by the most in 6 years, reflecting a plunge in energy costs that’s keeping inflation from rising toward the Federal Reserve's goal. The consumer-price index dropped 0.4%, the biggest decline since Dec 2008, after falling 0.3% in Nov, a Labor Dept report. The forecast called for a 0.4% decline. Excluding volatile food & fuel, the core measure was unchanged, failing to rise for only the 2nd time since 2010. The biggest drop in clothing costs since 1998 combined with falling air fares & cheaper new & used cars signal the deceleration in inflation is spreading beyond energy as Japan & Europe are in or near a recession & some emerging markets cool. Sustained broad-based price declines test the Federal Reserve's view that the drop in fuel won’t reverberate thru the economy. The unchanged reading in the core gauge followed a 0.1% rise in Nov. Economists had forecast a 0.1% gain. Overall consumer prices rose 0.8% in the 12 months ended in Dec, the smallest year-to-year gain since Oct 2009. They were up 1.3% the prior month. The core measure increased 1.6% from Dec 2013 after climbing 1.7%. Energy costs slumped 4.7% in Dec from a month earlier, the most since Dec 2008.
Consumer Prices in U.S. Drop Most in Six Years as Fuel Falls
Factory production cooled in Dec as capital spending & vehicle assemblies slowed, indicating US manufacturers were adjusting to weaker overseas markets. The 0.3% increase in output followed a 1.3% Nov gain that was the strongest since Feb, according to the Federal Reserve. Total industrial production fell 0.1% as utility use slumped. Manufacturing growth is slowing to a more sustainable pace as factories take in fewer orders for business equipment & global economies struggle for traction. At the same time, production may be underpinned by steady US demand as employment & cheap fuel help power consumer spending. Manufacturing output, which accounts for about 12% of the economy, was projected to rise 0.2% last month after a previously reported 1.1%. Total industrial production was forecast to fall 0.1%. Capacity utilization, which measures the amount of a plant that is in use, eased to 79.7% in Dec from 80% the prior month, which was the highest since Mar 2008. Utility output plunged 7.3%, the most since Jan 2006, after a 4.2% gain the previous month. Americans adjusted their thermostats as temperatures climbed, last month was the 2nd-warmest Dec back to 1939. Mining production, including oil drilling, increased 2.2%, the most since Mar 2011, after a 0.3% drop. While the Fed said “much of the gain” was due to oil & gas extraction, well drilling & well-servicing decreased 1.9%, the biggest decline since Aug 2012, after a 0.5% decrease a month earlier. Factory output of consumer goods fell 1.1% in Dec after rising 2.5%. Business equipment production increased 0.1% after a 1.4% jump. Machinery production & wood products output also dropped.
Consumer Prices in U.S. Drop Most in Six Years as Fuel Falls
Oil has finally risen off its lows, but it's too early to take this seriously. More earnings will come next week, many from industrials, which will give a better idea of how the economy did in Q4 & guidance for the new year.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLK15.NYM | ...Crude Oil May 15 | ...49.32 |  ...1.02 | (2.1%) |
| GCF15.CMX | ...Gold Jan 15 | ........1,270.90 | ...6.20 | (0.5%) |
Consumer confidence jumped in Jan to the highest level in 11 years as steady job gains & plunging gas prices brightened the outlook for US households. The University of Mich preliminary consumer sentiment index rose to 98.2, the highest in 11 years, from a final reading of 93.6 in Dec. The estimate projected an increase to 94.1. Trips to the pump that are costing less & job gains that have accelerated are helping Americans feel more optimistic about the economic recovery, now in its 6th year. Continued gains in confidence combined with stronger wage growth will be needed to embolden consumers to go out & spend savings on purchases from vehicles to homes. The sentiment survey’s current conditions index, which measures Americans’ assessment of their personal finances, increased to 108.3 this month, the highest in 8 years, from 104.8. The measure of expectations 6 months from now rose to 91.6 from 86.4 in Dec. “Gains in employment and incomes as well as declines in gas prices were cited by record numbers of consumers,” the Michigan Survey of Consumers said. “More consumers spontaneously cited increases in their household incomes in early January than any time in the past decade.” Americans expected an inflation rate of 2.4% in the next year, the lowest since Sep 2010, & down from 2.8% in Dec.
Consumer Sentiment in U.S. Surges to 11-Year High
The cost of living in the US declined in Dec by the most in 6 years, reflecting a plunge in energy costs that’s keeping inflation from rising toward the Federal Reserve's goal. The consumer-price index dropped 0.4%, the biggest decline since Dec 2008, after falling 0.3% in Nov, a Labor Dept report. The forecast called for a 0.4% decline. Excluding volatile food & fuel, the core measure was unchanged, failing to rise for only the 2nd time since 2010. The biggest drop in clothing costs since 1998 combined with falling air fares & cheaper new & used cars signal the deceleration in inflation is spreading beyond energy as Japan & Europe are in or near a recession & some emerging markets cool. Sustained broad-based price declines test the Federal Reserve's view that the drop in fuel won’t reverberate thru the economy. The unchanged reading in the core gauge followed a 0.1% rise in Nov. Economists had forecast a 0.1% gain. Overall consumer prices rose 0.8% in the 12 months ended in Dec, the smallest year-to-year gain since Oct 2009. They were up 1.3% the prior month. The core measure increased 1.6% from Dec 2013 after climbing 1.7%. Energy costs slumped 4.7% in Dec from a month earlier, the most since Dec 2008.
Consumer Prices in U.S. Drop Most in Six Years as Fuel Falls
Factory production cooled in Dec as capital spending & vehicle assemblies slowed, indicating US manufacturers were adjusting to weaker overseas markets. The 0.3% increase in output followed a 1.3% Nov gain that was the strongest since Feb, according to the Federal Reserve. Total industrial production fell 0.1% as utility use slumped. Manufacturing growth is slowing to a more sustainable pace as factories take in fewer orders for business equipment & global economies struggle for traction. At the same time, production may be underpinned by steady US demand as employment & cheap fuel help power consumer spending. Manufacturing output, which accounts for about 12% of the economy, was projected to rise 0.2% last month after a previously reported 1.1%. Total industrial production was forecast to fall 0.1%. Capacity utilization, which measures the amount of a plant that is in use, eased to 79.7% in Dec from 80% the prior month, which was the highest since Mar 2008. Utility output plunged 7.3%, the most since Jan 2006, after a 4.2% gain the previous month. Americans adjusted their thermostats as temperatures climbed, last month was the 2nd-warmest Dec back to 1939. Mining production, including oil drilling, increased 2.2%, the most since Mar 2011, after a 0.3% drop. While the Fed said “much of the gain” was due to oil & gas extraction, well drilling & well-servicing decreased 1.9%, the biggest decline since Aug 2012, after a 0.5% decrease a month earlier. Factory output of consumer goods fell 1.1% in Dec after rising 2.5%. Business equipment production increased 0.1% after a 1.4% jump. Machinery production & wood products output also dropped.
Consumer Prices in U.S. Drop Most in Six Years as Fuel Falls
Oil has finally risen off its lows, but it's too early to take this seriously. More earnings will come next week, many from industrials, which will give a better idea of how the economy did in Q4 & guidance for the new year.
Dow Jones Industrials
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