Thursday, April 2, 2015

Higher markets on jobless claims data

Dow rose 69, advancers over decliners better than 2-1 & NAZ added 9.  The MLP index went up 3 to 431 & the REIT index added 2+ to 340.  Junk bond funds did little & Treasuries pulled back.  Oil slid below 50 after recent strength & gold is hovering around 1200.

AMJ (Alerian MLP Index tracking fund)

CLK15.NYM...Crude Oil May 15...49.31 Down ...0.78  (1.6%)

GCJ15.CMX....Gold Apr 15......1,199.60 Down ...8.50  (0.7%)

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The fewest Americans in 9 weeks filed applications for unemployment benefits, a sign of further strength in the labor market that may continue to support the expansion.  Jobless claims dropped 20K to 268K, the lowest since Jan 24 & 2nd-lowest in at least a year, according to the Labor Department.  The forecast called for 286K.  The figures indicate employers are upbeat about the prospects for sales after a recent slowdown & are dismissing fewer workers.  The outlook for employment bodes well for household spending, the biggest part of the economy, & is in sync with Federal Reserve policy makers’ view of the job market’s progress.  The 4-week moving average for jobless claims decreased to 285K last week, from 300K.  The number continuing to receive jobless benefits dropped 88K to 2.33M & the unemployment rate among people eligible for benefits fell to 1.7% from 1.8%.  Claims over the past month have dropped below the 300K level that us consistent with an improving job market.

Jobless Claims in U.S. Fall to a Nine-Week Low of 268,000

The US trade deficit shrank in Feb to the lowest level in more than 5 years as a labor dispute at West Coast ports contributed to the weakest reading on purchases from abroad since 2011.  The gap narrowed by $7.2B to $35.4B, lower than the lowest forecast & the smallest since Oct 2009, according to the Commerce Dept.  Imports contracted 4.4%, the biggest slump since Feb 2009, when the economy was still in the recession.  The logjam of ships waiting to unload foreign-made goods at West Coast ports will soon dissipate as the worker dispute has been resolved, which means that imports will probably again flood into the US.  Meanwhile, a strong dollar, which makes American-made goods more expensive to customers overseas, means exports will remain muted, causing the deficit to swell.  The Jan shortfall was revised to $42.7B from an initially reported a $41.8B.  Imports declined to $221B, the least since Apr 2011, from $232B in Jan.  The drop was broad-based with decreases in fuel, autos, capital & consumer goods.  Imports from Japan were the weakest since May 2011, signaling the West Coast port stoppage probably played a role.  America’s growing energy independence also had an impact, with purchases of foreign petroleum declining to the lowest level since 2004.  The difference between imports & exports of the fuel shrank to $8.1B, the smallest since 2002.  Exports decreased 1.6% to $186B, the weakest since Oct 2012.  The drop in shipments overseas was also broad based.  After eliminating the effects of price fluctuations, which generates the numbers used to calculate GDP, the trade deficit narrow to $50.8B, the smallest since Nov, from $54.6B a month earlier.  The average so far this qtr is larger than in Q4-2014, indicating trade will again subtract from economic growth.

Trade Deficit in U.S. Shrinks to Five-Year Low

As Greek Prime Minister Tsipras struggles to secure a financial bailout to stay in the euro, his chief rival said he’s open to offering a political rescue.  Opposition leader Antonis Samaras, who was ousted by Tsipras in Jan elections, signaled his willingness to join a unity gov if the concessions required to win emergency loans drive a wedge through the ruling anti-austerity coalition.  “If the plan is to keep Greece in the euro area, we will provide support,” Samaras said.  “Exit would signal a total catastrophe.”  While Samaras questioned Tsipras’s commitment to the single currency, he said it’s the only conceivable economic path for Greece.  “For the euro area, the spillover effect from Greece leaving the euro is not going to be today as big as it would have been four years ago,” Samaras said.  “But it’s still going to be huge, and it’s going to be a political disaster,” he said, where bullet holes in the walls & windows remained after a 2013 attack by opponents of his austerity policies.  Tsipras dismissed the prospect of joining the opposition leader.  “Scenarios of a pro-bailout unity government that Mr. Samaras and various forces in Greece and abroad are plotting, are a midsummer night’s dream,” according the premier’s spokesman.

Greek Opposition Offers Alliance to Keep Country in Euro

Sellers gave up today.  After recent selling, they are taking a day off to enjoy their profits.  But there is no shortage of negative news.  The Greek bailout remains in limbo, nuclear talks are going nowhere fast & the MidEast situation is as confused as ever.  Most importantly, the US economic recovery is just stumbling along.  The 3 popular averages are little worried as all are close to setting new record highs.

Dow Jones Industrials


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