Tuesday, March 10, 2015

Markets plunge on strong dollar and Greek debt worries

Dow dropped a very big 332 finishing at the lows, decliners over advancers 5-2 & NAZ fell 82.  The MLP index had buying in the PM & finished up pocket change in the 429s, while the REIT index fell 1 to  the 325s (after recent weakness).  Junk bond funds saw selling & Treasuries had a strong rally.  Oil dropped into the 48s & gold drifted lower in the mid 1100s.

AMJ (Alerian MLP Index tracking fund)

CLJ15.NYM....Crude Oil Apr 15....48.32 Down ...1.68  (3.5%)

Live 24 hours gold chart [Kitco Inc.]

US employers advertised the most jobs in 14 years in Jan, & more workers quit, both signs of a steadily strengthening job market.  Job openings rose 2.5% to nearly 5M, the most since 2001, the Labor Dept said.  The number who quit their jobs increased 3% to 2.8M, the most in more than 6 years.  More quits are generally a sign of confidence in the economy, because people typically leave their jobs when they either have another one lined up, often at higher pay, or are optimistic that they can find a new position.  Increased openings are usually followed by stronger job gains.  Steady economic growth, powered largely by consumer spending, has boosted businesses' confidence in the economy & made them more willing to hire.  The number earning paychecks has jumped nearly 3.3M in the past year, the best 12-month gain since 2000.  That gain has helped to sharply lower the U.S. unemployment rate to 5.5% from 6.7% a year ago.  But the data being reported today is more detailed because it calculates total hires, as well as quits & layoffs.  This report also includes revisions to the previous 5 years of data.  Job openings in Dec were revised down sharply from more than 5M to 4.88M.  Total hiring actually slowed in Jan, to fewer than 5M after reaching 5.2M, a 7-year high, in Dec.  The number of layoffs also fell that month.  There were, on average, 1.8 unemployed workers for every open job in Jan, typical of a healthy economy, & is down from a record high of 6.7 in Jul 2009, just after the recession ended.  Yet so far, the improving job market has yet to lift wages much.  Average hourly pay rose just 2% in the 12 months that ended in Feb, down from a 2.2% year-over-year pay increase in Jan.

US job openings reach a 14-year high, and more workers quit

Small business optimism in the US edged up in Feb amid signs of tightening labor market conditions, bolstering the view that a recent slowdown in economic activity will be temporary.  The National Federation of Independent Business (NFIB) said its Small Business Optimism Index gained 0.1 point to 98, the 3rd highest reading since early 2007.  The survey of 716 small business owners found 29% could not fill open positions, the highest level since April, 2006.  14% of them cited the shortage of skilled labor as their top problem, the highest since Sep, 2007.  "There are fundamental domestic economic currents leading owners to add workers and these should bubble up in the official statistics and support stronger growth in domestic output," the NFIB said.  The gov reported on Fri that nonfarm payrolls increased 295K in Feb, marking the 12th straight month of job gains above 200K, which is the longest such stretch since 1994. 
Economic growth in recent months has been chilled by harsh winter weather as well as a now-settled labor dispute at West Coast ports & softer growth in Asia & Europe.  Q1 growth estimates for the US economy are currently running below a 2% annualized pace.  The NFIB survey found a modest increase in the number of small businesses increasing inventories, a good omen for growth.  Businesses were slightly downbeat on prospects for the next 6 months & the outlook for sales.

Small Business Confidence Ticks Up in February

Target, a Dividend Aristocrat, is laying off 1.7K workers & permanently closing out another 1.4K open positions.  The announcement puts a number on last week's announcement that the company would eliminate several thousand jobs as part of a restructuring aimed at saving $2B in costs over the next 2 years.  The cuts will come primarily at headquarters locations in the Minneapolis area.  The stock dropped 90¢.  If you would like to learn more about TGT, click on this link:

Target Corp. says 1,700 to be laid off, 1,400 open jobs eliminated in restructuring

Target (TGT)

In addition to all the drama surrounding refinancing Greek debt, the € has been dropping.  Today the € fell 1½ pennies & may be heading for parity ($1=1€).  Multi national companies genrally are hurt when currency rates change sharply & this will not make refinancing Greek debt easier.  Slow growth in US wages & household income is another nagging problem that this 6 year bull market has to cope with.  For the moment, traders are throwing in the towel.  Dow is down 130 in Mar & in the red again YTD.

Dow Jones Industrials

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