Dow shot up 107, advancers over decliners 3-2 & NAZ gained 31 The MLP index fell 1+ to the 446s (continuing its sideways trend for 3 months) & the REIT index went up 3+ to the 339s. Junk bond funds did little & Treasuries retreated, taking the yield on the 10 year Treasury back over 2%. Oil slid lower in the 49s & gold was off a tad.
AMJ (Alerian MLP Index tracking fund)
Consumer purchases adjusted for inflation rose in Jan, a sign the plunge in gasoline prices is helping boost the biggest part of the US economy. The 0.3% increase followed a 0.1% drop the prior month, according to the Commerce Dept. Nominal spending, which doesn’t take into account changes in price, declined 0.2%, more than estimated, while incomes grew 0.3% for a 2nd month. The best job market since 1999, low borrowing costs & cheaper fuel bills are driving household spending. Consumption, having wrapped up its strongest quarterly performance in 4 years, may get further support as wages pick up & prices remain contained. Nominal spending was projected to fall 0.1% & the the estimate called for incomes to rise 0.4%. Adjusting consumer spending for inflation, which generates the figures used to calculate GDP, purchases of durable goods such as furniture & appliances rose 0.2%. Demand for non-durable goods also climbed 0.2%. Outlays on services increased 0.4%, the most since Sep. Demand for automobiles remains steady. Major automakers all reported their best Jan US vehicles sales in at least 7 years. The plunge in energy expenses pushed the measure of inflation based on consumer spending, the Federal Reserve’s preferred gauge, down 0.5% from the prior month. It was up 0.2% from a year earlier, the least since Oct 2009. The gauge hasn’t been above the central bank’s 2% goal since Mar 2012. The core price measure, which excludes food & fuel, rose 0.1% from the prior month & was up 1.3% from Jan 2014. Disposable income, or the money left over after taxes, climbed 0.9% after adjusting for inflation, the biggest jump since Dec 2012. It was up 0.5% in the prior month. The saving rate increased to 5.5%, also a 2-year high, from 5%. Wages & salaries climbed 0.6% after advancing 0.1% in Dec.
The Institute for Supply Management’s index dropped to 52.9, the lowest since Jan 2014, from 53.5 a month earlier. Readings above 50 indicate growth & the forecast was 53. Cutbacks in demand from overseas customers & domestic energy producers led to the weakest growth in new orders since May 2013, prompting US factories to slow the rate of hiring. At the same time, manufacturing is being underpinned by sustained spending from American consumers who are enjoying low prices at the gas pump. The gauge of new orders declined to 52.5 last month from 52.9 in Jan. Order backlogs climbed. Export orders dropped to 48.5, the lowest since Nov 2012, & indicating demand is falling at a faster rate, from 49.5. In China, a manufacturing gauge in Jan signaled contraction for the first time since Sep 2012 & underscored a slowing economy. Growth in the euro-area economy increased 0.3% in Q4. The factory employment index declined to 51.4, the lowest since Jun 2013, from 54.1 the prior month. The production gauge cooled to 53.7 from 56.5 in Jan. The report also showed the gauge of factory inventories climbed in Feb to a 4-month high. An index of prices paid held at 35, the lowest since Apr 2009.
Intel, a Dow stock, is shipping new mobile chips that represent the semiconductor company's biggest hope for making progress in smartphones this year. Responding to a growing market in China for low-cost handsets, often priced below $100, INTC plans to launch the chip, code named Sofia, later in the year. "We went from PowerPoint to shipping in 15 months," said the General Manager of INTC's Platform Engineering Group. As well as smartphones, the Sofia chip fills a gap in its lineup of chips for tablets. Over 20 manufactures plan to make devices made with Sofia, with many on display at this week's Mobile World Congress event. After falling behind in mobile chips, INTC has been rushing to catch up with the competition. In a costly strategy that elevated INTC to the #2 spot in tablet chip market share, it last year paid manufacturers some of the engineering cost of developing low-end tablets using another chip, code named Bay Trail, that it originally had designed for more expensive devices. The mobile unit had a loss of $4.2B last year, worse than its $3.1B loss in 2013. The company believes the new Sofia chips are ideal for the fast-growing, low-end smartphone market in Asia & has said it does not plan to use costly subsidies to sell the chips this year. The Sofia chips currently shipping have 3G features for low-end phones, & 4G versions for pricier smartphones will be released later this year. The stock rose 44¢. If you would like to learn more about INTC, click on this link:
club.ino.com/trend/analysis/stock/INTC?a_aid=CD3289&a_bid=6ae5b6f7
Stocks are taking the early signals of Feb economic data as positive, although they look more mixed to me. Next comes auto sales which will continue showing strength. The big jobs report is due on Fri & that is expected to make for pleasant reading. But even relatively good economic data in the US is coming in fits & spurts. Consumer spending is not as good as it should be in a growing economy & overseas business is a drag while the popular averages hover near record highs.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLJ15.NYM | ....Crude Oil Apr 15 | ...49.10 |  ...0.66 | (1.3%) |
| GCH15.CMX | ...Gold Mar 15 | ....1,212.20 | ...0.40 | (0.0%) |
Consumer purchases adjusted for inflation rose in Jan, a sign the plunge in gasoline prices is helping boost the biggest part of the US economy. The 0.3% increase followed a 0.1% drop the prior month, according to the Commerce Dept. Nominal spending, which doesn’t take into account changes in price, declined 0.2%, more than estimated, while incomes grew 0.3% for a 2nd month. The best job market since 1999, low borrowing costs & cheaper fuel bills are driving household spending. Consumption, having wrapped up its strongest quarterly performance in 4 years, may get further support as wages pick up & prices remain contained. Nominal spending was projected to fall 0.1% & the the estimate called for incomes to rise 0.4%. Adjusting consumer spending for inflation, which generates the figures used to calculate GDP, purchases of durable goods such as furniture & appliances rose 0.2%. Demand for non-durable goods also climbed 0.2%. Outlays on services increased 0.4%, the most since Sep. Demand for automobiles remains steady. Major automakers all reported their best Jan US vehicles sales in at least 7 years. The plunge in energy expenses pushed the measure of inflation based on consumer spending, the Federal Reserve’s preferred gauge, down 0.5% from the prior month. It was up 0.2% from a year earlier, the least since Oct 2009. The gauge hasn’t been above the central bank’s 2% goal since Mar 2012. The core price measure, which excludes food & fuel, rose 0.1% from the prior month & was up 1.3% from Jan 2014. Disposable income, or the money left over after taxes, climbed 0.9% after adjusting for inflation, the biggest jump since Dec 2012. It was up 0.5% in the prior month. The saving rate increased to 5.5%, also a 2-year high, from 5%. Wages & salaries climbed 0.6% after advancing 0.1% in Dec.
U.S. Consumer Spending Rises After Adjusting for Drop in Fuel
The Institute for Supply Management’s index dropped to 52.9, the lowest since Jan 2014, from 53.5 a month earlier. Readings above 50 indicate growth & the forecast was 53. Cutbacks in demand from overseas customers & domestic energy producers led to the weakest growth in new orders since May 2013, prompting US factories to slow the rate of hiring. At the same time, manufacturing is being underpinned by sustained spending from American consumers who are enjoying low prices at the gas pump. The gauge of new orders declined to 52.5 last month from 52.9 in Jan. Order backlogs climbed. Export orders dropped to 48.5, the lowest since Nov 2012, & indicating demand is falling at a faster rate, from 49.5. In China, a manufacturing gauge in Jan signaled contraction for the first time since Sep 2012 & underscored a slowing economy. Growth in the euro-area economy increased 0.3% in Q4. The factory employment index declined to 51.4, the lowest since Jun 2013, from 54.1 the prior month. The production gauge cooled to 53.7 from 56.5 in Jan. The report also showed the gauge of factory inventories climbed in Feb to a 4-month high. An index of prices paid held at 35, the lowest since Apr 2009.
U.S. Manufacturing Grew in February at Slowest Pace in a Year
Intel, a Dow stock, is shipping new mobile chips that represent the semiconductor company's biggest hope for making progress in smartphones this year. Responding to a growing market in China for low-cost handsets, often priced below $100, INTC plans to launch the chip, code named Sofia, later in the year. "We went from PowerPoint to shipping in 15 months," said the General Manager of INTC's Platform Engineering Group. As well as smartphones, the Sofia chip fills a gap in its lineup of chips for tablets. Over 20 manufactures plan to make devices made with Sofia, with many on display at this week's Mobile World Congress event. After falling behind in mobile chips, INTC has been rushing to catch up with the competition. In a costly strategy that elevated INTC to the #2 spot in tablet chip market share, it last year paid manufacturers some of the engineering cost of developing low-end tablets using another chip, code named Bay Trail, that it originally had designed for more expensive devices. The mobile unit had a loss of $4.2B last year, worse than its $3.1B loss in 2013. The company believes the new Sofia chips are ideal for the fast-growing, low-end smartphone market in Asia & has said it does not plan to use costly subsidies to sell the chips this year. The Sofia chips currently shipping have 3G features for low-end phones, & 4G versions for pricier smartphones will be released later this year. The stock rose 44¢. If you would like to learn more about INTC, click on this link:
club.ino.com/trend/analysis/stock/INTC?a_aid=CD3289&a_bid=6ae5b6f7
Intel Launches Chip for Low-Price Smartphone Push
Stocks are taking the early signals of Feb economic data as positive, although they look more mixed to me. Next comes auto sales which will continue showing strength. The big jobs report is due on Fri & that is expected to make for pleasant reading. But even relatively good economic data in the US is coming in fits & spurts. Consumer spending is not as good as it should be in a growing economy & overseas business is a drag while the popular averages hover near record highs.
Dow Jones Industrials
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