Thursday, April 16, 2015

Lower markets on housing data

Dow fell 20 (but off the earlier lows), decliners over advancers 3-2 & NAZ lost 6.  The MLP index slid 1+ to the 443s & the REIT index gained a fraction to go over 330.  Junk bond funds were lower & Treasuries declined.  Oil pulled back after its recent run to highs for 2015 & gold eased lower.

AMJ (Alerian MLP Index tracking fund)

CLK15.NYM...Crude Oil May 15...55.22 Down ...1.17  (2.1%)

GCJ15.CMX....Gold Apr 15......1,203.00 Up ....1.50 (0.1%)

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Fewer than 300K American workers filed applications for unemployment benefits for the 6th consecutive week, pointing to labor-market strength even as hiring cooled last month.  While a Labor Dept report showed jobless claims increased 12K to 294K, readings this low are typically consistent with an improving job market.  The forecast was for 280K.  The total number receiving benefits was the lowest since 2000.  Layoffs have remained low even as other labor-market data have shown the economy battled harsher weather, weaker demand from abroad & West Coast port disruptions early this year.  A muted pace of dismissals, & job openings at a 14-year high, will help buoy hiring after payroll gains cooled last month.  The 4-week average of claims, a less-volatile measure than the weekly figure, was little changed at 282K.  The number continuing to receive jobless benefits dropped 40K to 2.27M in the latest week, the fewest since 2000 & the unemployment rate among people eligible for benefits held at 1.7%.

Jobless Claims in U.S. Hold Below 300,000 for Sixth Week

Beginning US home construction rose less than forecast in Mar, indicating builders were slow to take advantage of favorable weather & underscoring a temperate housing recovery.  Starts of new homes climbed 2% to a 926K annualized rate from a revised 908K in Feb that was the weakest in more than a year, according to the Commerce Dept.  The Mar reading was lower than the most pessimistic projection.  Applications for future construction dropped more than forecast.  The smaller-than-projected gain in starts highlights the challenges builders face, including difficulty acquiring land for new projects, stricter loan standards & limited wage growth.  At the same time, an improving labor market & rising sales in the 3 months thru Feb have rekindled homebuilder sentiment approaching the spring selling season.  Homebuilding in Mar was held back by slowdowns in the West & South.  The smaller-than-estimated gain in the US also reflected the weakest pace of construction of multifamily homes since Sep 2013.  Building permits declined 5.7% to a 1.04M annualized rate.  They were projected to fall to a 1.08M rate.  Applications for the construction of single-family projects exceeded the number of starts, signaling some room for a pickup in construction.  While construction of single-family houses increased 4.4% to a 618K rate, it followed a 15.2% plunge a month earlier.  Work on multifamily homes, such as apartment buildings, declined 2.5% to a 308K rate.   By region, construction declined 19.3% in the West to a 201K rate, which was the weakest since May.  Starts fell 3.5% in the South to a 498K pace, the slowest in 4 months.  Construction rebounded in the rest of the country after inclement winter weather in Feb stymied builders.  Starts in the Northeast jumped a record 115% & were up 31.3% in the Midwest.  Even with the gains, starts in the 2 regions were just the strongest since January.

Housing Starts in U.S. Rose Less Than Forecast in March

Citigroup boosted profit more than estimated after a cost-cutting push helped it weather a slump in trading.  Q1 EPS was $1.51.  Excluding accounting adjustments, EPS rose to $1.52, surpassing the $1.39 estimate.  CEO Michael Corbat is focusing on targets for curbing costs & boosting returns after winning Federal Reserve approval to increase capital payouts to shareholders.  In Q4, he sought to put much of the bank’s expenses from probes, severance & office closures in the past by setting aside more than $3.5B.  CFO John Gerspach has said the move would resolve a “significant portion” of the firm’s legal burden.  “We tightly managed our expenses,” Corbat added.  “We are on track to hit our financial targets for the year.”  Q1 expenses dropped 10% to $10.9B.  Legal & repositioning costs accounted for $403M of that, down 65% from a year earlier.  The lender is still contending with investigations into money-laundering controls & rigging of interest-rate & currency benchmarks.  Its main banking subsidiary is under pressure to plead guilty to a felony in the foreign-exchange probe.  Total revenue excluding accounting adjustments fell 1.9% to $19.8B, in line with estimates.  Revenue from bond & equity trading dropped 9.5% to $4.36B.  Citi had predicted 6 weeks ago that it would fall by as much as a “high single-digit” percentage.  Fixed-income, currencies & commodities trading revenue, excluding some accounting adjustments, slumped 11% from a year earlier to $3.48B, missing the $3.64B estimate.  Revenue from equities trading slipped 1% to $873M.  Net income at the institutional clients group rose 1.6% to an adjusted $2.97B on revenue of $9.03B & investment banking revenue climbed 14% to $1.2B.  Global consumer banking boosted net income 3.8% to $1.73B.  Citi Holdings, the unwanted assets the bank has tagged for sale, earned $146M as assets fell 5.4% to $122B by the end of last month from Q4.  The stock rose 1.08.  If you would like to learn more about Citi, click on this link:

Citigroup Beats Estimates as Cost Cuts Cushion Trading Slump

Citigroup (C)

Stock have had a good run in recent weeks for no particularly good reason.  The strongest plus is the world didn't collapse as evidenced by Greece's ability to muddle by with many debt refinancing deadlines looming.  The latest word is that Jun will be crucial & it sounds like most of the other countries using € currency are going to get tough this time.  The US economy keeps stumbling its way forward.  While not in a recession, economic data should be a lot better.  The core problem is that consumer spending jumps around from one month to the next.  US GDP data for Q1 will be out next week & that is not going to be pretty.

Dow Jones Industrials

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