Tuesday, March 31, 2015

Markets close Q1 lower on economic data

Dow dropped 200 finishing near the lows, decliners over advancers 3-2 & NAZ pulled back 46.  The MLP index lost 1+ to 429 & the REIT index fell 3+ to the 337s.  Junk bond funds were lower & Treasuries rose in price.  Oil is back in the 47s & gold was lower.

AMJ (Alerian MLP Index tracking fund)

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CLK15.NYM....Crude Oil May 15....47.56 Up  ...0.99 (2.1%)

Live 24 hours gold chart [Kitco Inc.]

Home prices in 20 US cities appreciated at a faster pace in the year ended in Jan, indicating the residential real-estate market continues to firm.  The S&P/Case-Shiller index of property values increased 4.6% from Jan 2014, the biggest gain since Sep after rising 4.4% the prior month.  That matched the projection that prices rose 4.5% from January 2014.  A dearth of supply will continue to drive up home prices heading into the busy spring selling season as demand is spurred by rising rents.  Builders expect to post strong revenue in the warmer months ahead, based on early signs of strength, particularly among first-time buyers.  Seasonally adjusted home prices in the 20-city index increased 0.9% from the prior month, matching Dec's advance.  14 cities in the index showed year-over-year gains that were larger than in the prior month, with Chicago experiencing the largest acceleration.

Home Prices in 20 U.S. Cities Rose at Faster Pace in January

The US Midwest continues to indicate a slowdown in the economy.  The Chicago Business Barometer, also known as Chicago PMI, registered 46.3 in Mar, up from its 5½ year low of 45.8, but still below 50, which points to contraction.  The barometer came in at 50.5 for Q1, down from 61.3 in the previous period.  This is the index's lowest point for a qtr since Q3-2009.  The Mar number suggests economic weakness is continuing beyond the wintry weather & labor problems at West Coast ports, which plagued Feb.  Of the 5 subindices that make up the barometer, only employment ended up above 50.  Production, new orders, order backlog & supplier deliveries all remained in the realm of contraction.

Midwest Factory Activity Rises in March

Iran & world powers may push negotiations into early Wed, missing their Mar 31 deadline for an agreement to resolve the 12-year standoff over the Iran's nuclear program.  The possible extension comes with diplomats struggling to reach an outline agreement that would allow all sides to claim some success, while falling short of the full resolution of every issue dogging the dispute.  The sides would then have until Jun 30 to overcome remaining difficulties & draft a detailed technical agreement.  “We’re making progress but it’s difficult,” French Foreign Minister Laurent Fabius said. “I’m afraid we’ll spend the night on it.”  Negotiators have missed 2 previous deadlines since last Jul, a sign of how difficult it has been for the 2 sides to agree on issues that include restricting and monitoring Iran’s disputed nuclear activities and lifting penalties applied for the Iran's illicit atomic work.  Sanctions, research & development & issues related to uranium enrichment have not yet been resolved, he said, hinting that there may be rifts among the 6 powers negotiating with Iran over how to address the remaining gaps.  White House press secretary Josh Earnest said that the US is willing to keep the negotiations going “if the conversations continue to be productive.”  After more than a year of talks, Iran is running out of time & the US is running out of patience, he said.  But if there is serious engagement from Iran “we should keep going.”

Q1 closed on a down note.  With no significant financial news, fighting in Yemen, nuclear talks dragging on & Greece desperately seeking another bailout, dominated traders' thoughts.  Mar was another down month for the Dow & it fell 50 in Q1.  Tomorrow begins a new qtr, but it may not be much better.

Dow Jones Industrials

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