Dow dropped 94, decliners over advancers almost 4-1 & NAZ fell 24. The MLP index was off 2+ to the 443s & the REIT index fell 2+ to the 328s. Junk bond funds slid lower & Treasuries sold off, taking the yield on the 10 year Treasury back over 2%. Oil inched higher & gold was flattish.
AMJ (Alerian MLP Index tracking fund)
The US economy barely grew in Q1, buffeted by slumps in business investment & exports after oil prices plunged and the dollar surged. GDP rose at a 0.2% annualized rate after advancing 2.2% the prior qtr, according to the Commerce Dept. The forecast called for a 1% gain. While the restraints of harsh winter weather & delays at West Coast ports were temporary, the effects of the drop in fuel prices & stronger currency will probably prove longer-lasting. Federal Reserve officials wrapping up their meeting later in the day may signal they’re in no rush to begin raising interest rates. Corp fixed investment decreased at a 2.5% annualized pace, the worst performance since the end of 2009 after growing at a 4.5% rate Q4. Investment in nonresidential structures, including office buildings & factories, dropped 23.1%, the most in 4 years. It rose 5.9% in the prior qtr. The decline reflected weakness in petroleum exploration as oil companies slashed budgets on the heels of plunging crude prices. Spending on wells & mines fell at a 48.7% annualized rate, the biggest plunge since Q2-2009 when the economy was still in the recession. It climbed 8.1% at the end of 2014. Machinery makers are suffering the brunt of the damage from slumping energy exploration, a stronger dollar & tepid overseas markets. Bookings for non-military capital goods excluding aircraft, a proxy for future corp spending on new equipment, dropped in Mar for a 7th consecutive month. The report showed spending on equipment climbed 0.1% after a 0.6% gain in the prior qtr. The trade deficit swelled to an annualized $522B rate from $471B, as exports decreased & imports climbed. The gap subtracted 1.25 percentage points from growth, the most in a year. Spending by state & local gov agencies was another soft spot, dropping at a 1.5% annualized rate, the most in 3 years. Federal outlays were also weak, rising at a 0.3% pace. Consumer spending, which accounts for about 70% of the economy, grew at a 1.9% annualized rate, following a 4.4% jump in Q4 (the biggest since 2006). Purchases added 1.3 percentage points to growth. One bright spot is automobile demand. Sales of cars & light trucks rose to a 17M annualized rate in Mar from 16.2M the previous month.
The ECB raised the amount of emergency liquidity
available to Greek banks, while signaling that access to such funds may
become more difficult if bailout talks remain deadlocked. The Governing Council lifted the cap on Emergency Liquidity
Assistance by €1.4B ($1.5B) to €76.9B, according to leakers. That follows an
increase of about €1.5B last week. With no speedy deal between Greece & its creditors in sight, the
ECB is studying measures to rein in ELA funding to limit risks. Staff
have proposed increasing the discounts imposed on the securities banks
post as collateral when borrowing, & the Governing Council may discuss
the issue at its May 6 meeting. Household & business deposits fell €1.9B in Mar to
€138.6B, the lowest level since Jan 2005, according to
Bank of Greece data. Weekly ELA injections reflect deposit outflows, as liquidity buffers
are kept at about €3B to give the Bank of Greece & the ECB
time to react in an emergency. Mar deposit outflows bring the 4-month drop to almost €26B, or about 16% of the
total, amid growing alarm among savers over the country’s place in the
euro area. While the rate of decline has slowed, outflows probably continued into Apr, as reflected by successive ELA-ceiling increases. ECB help to Greek banks “can’t continue indefinitely,” Governing
Council member Christian Noyer said. “What’s needed are decisions on fundamental reforms.
The number of Americans who signed contracts in Mar to buy previously owned homes climbed after the biggest increase in more than 4 years, a sign for further progress in the housing recovery. The index of pending home sales rose 1.1% after a revised 3.6% jump in Feb that was the biggest since Oct 2010, according to the National Association of Realtors. Demand picked up in the South & West. An improving labor market & low borrowing costs are making homeownership attainable for more Americans. Wider credit availability & a pickup in wage growth will be needed to spur even bigger gains, while continued price appreciation may help convince more prospective sellers to put their properties on the market. Purchases rose 13.4% in Mar from the previous year on an unadjusted basis, the most since Oct 2012, after a 12.5% advance in the 12 months that ended in Feb. “While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news,” the group’s chief economist Lawrence Yun said. “It indicates this year’s activity is being driven by more long-term homeowners.” The pending home sales index was 108.6 on a seasonally-adjusted basis, the highest since Jun 2013.
The GDP data was hardly disappointing, everybody was expecting bad news. More importantly is what Janet has to say in a couple of hours. The bulls are hoping that drab economic data will mean the FOMC will delay the first rate increase which is expected to be in Jun or possibly Sep. Dow is still up for Apr.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLM15.NYM | ...Crude Oil Jun 15 | ...56.96 |  ...0.10 | (0.2%) |
| GCK15.CMX | ...Gold May 15 | ....1,211.80 | ...1.80 | (0.2%) |
The US economy barely grew in Q1, buffeted by slumps in business investment & exports after oil prices plunged and the dollar surged. GDP rose at a 0.2% annualized rate after advancing 2.2% the prior qtr, according to the Commerce Dept. The forecast called for a 1% gain. While the restraints of harsh winter weather & delays at West Coast ports were temporary, the effects of the drop in fuel prices & stronger currency will probably prove longer-lasting. Federal Reserve officials wrapping up their meeting later in the day may signal they’re in no rush to begin raising interest rates. Corp fixed investment decreased at a 2.5% annualized pace, the worst performance since the end of 2009 after growing at a 4.5% rate Q4. Investment in nonresidential structures, including office buildings & factories, dropped 23.1%, the most in 4 years. It rose 5.9% in the prior qtr. The decline reflected weakness in petroleum exploration as oil companies slashed budgets on the heels of plunging crude prices. Spending on wells & mines fell at a 48.7% annualized rate, the biggest plunge since Q2-2009 when the economy was still in the recession. It climbed 8.1% at the end of 2014. Machinery makers are suffering the brunt of the damage from slumping energy exploration, a stronger dollar & tepid overseas markets. Bookings for non-military capital goods excluding aircraft, a proxy for future corp spending on new equipment, dropped in Mar for a 7th consecutive month. The report showed spending on equipment climbed 0.1% after a 0.6% gain in the prior qtr. The trade deficit swelled to an annualized $522B rate from $471B, as exports decreased & imports climbed. The gap subtracted 1.25 percentage points from growth, the most in a year. Spending by state & local gov agencies was another soft spot, dropping at a 1.5% annualized rate, the most in 3 years. Federal outlays were also weak, rising at a 0.3% pace. Consumer spending, which accounts for about 70% of the economy, grew at a 1.9% annualized rate, following a 4.4% jump in Q4 (the biggest since 2006). Purchases added 1.3 percentage points to growth. One bright spot is automobile demand. Sales of cars & light trucks rose to a 17M annualized rate in Mar from 16.2M the previous month.
U.S. Economy Stalls in the First Quarter
Bailout talks drag on
The number of Americans who signed contracts in Mar to buy previously owned homes climbed after the biggest increase in more than 4 years, a sign for further progress in the housing recovery. The index of pending home sales rose 1.1% after a revised 3.6% jump in Feb that was the biggest since Oct 2010, according to the National Association of Realtors. Demand picked up in the South & West. An improving labor market & low borrowing costs are making homeownership attainable for more Americans. Wider credit availability & a pickup in wage growth will be needed to spur even bigger gains, while continued price appreciation may help convince more prospective sellers to put their properties on the market. Purchases rose 13.4% in Mar from the previous year on an unadjusted basis, the most since Oct 2012, after a 12.5% advance in the 12 months that ended in Feb. “While contract activity being up convincingly compared to a year ago is certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news,” the group’s chief economist Lawrence Yun said. “It indicates this year’s activity is being driven by more long-term homeowners.” The pending home sales index was 108.6 on a seasonally-adjusted basis, the highest since Jun 2013.
Pending Sales of Previously Owned U.S. Homes Rose 1.1% in March
The GDP data was hardly disappointing, everybody was expecting bad news. More importantly is what Janet has to say in a couple of hours. The bulls are hoping that drab economic data will mean the FOMC will delay the first rate increase which is expected to be in Jun or possibly Sep. Dow is still up for Apr.
Dow Jones Industrials
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