Thursday, April 30, 2015

Markets tumble on earnings and economic data

Dow sank 195 finishing not far from the lows, decliners over advancers better than 3-1 & NAZ fell 82.  The MLP index climbed 3 to the 452s & the REIT index lost 4+ to the 319s.  Junk bond funds drifted lower & Treasuries saw selling, although finished off the session lows.  Oil went up again, with its eyes on 60, & gold dropped (but closed above the lows).

AMJ (Alerian MLP Index tracking fund)

CLM15.NYM....Crude Oil Jun 15....59.76 Up ...1.18 (2.0%)

Live 24 hours gold chart [Kitco Inc.]

The American job market shows signs of entering a new stage that will bolster households as employers fight to retain & attract workers by paying them more.  Wages for private-sector employees climbed 0.7% in Q1 & were up 2.8% in the 12 months thru Mar, the biggest gain in more than 6 years, according to the Labor Dept.  The agency also said the number of claims for jobless benefits declined last week to the lowest level since 2000.  6 years after the recession ended, unemployment may now be low enough to start prompting companies to compete against each other for staff.  Bigger paychecks, a missing piece of the expansion, would make it more likely that the slowdown in economic growth last qtr will be fleeting, bearing out Federal Reserve policy makers’ assessment.  The Labor Dept's total employment cost index, which includes wages & benefits, also climbed 0.7% in Q1 from the prior qtr.  It was up 2.6% from the same time in 2014, the biggest year-to-year advance since the end of 2008.  In Q1, the 12-month gain was 1.8%, & the 0.8 point pickup since then marks the biggest acceleration since records began in 2001.  Increased employer costs would be a sign that businesses might be starting to feel the effects of a dwindling pool of workers, who are able to demand bigger paychecks.  The number of unfilled positions at US employers climbed to 5.13M in Feb, the most since Jan 2001.  There are about 1.7 unemployed Americans per opening, matching the lowest level since Nov 2007 (one reason layoffs have abated).

Wages in U.S. Show Signs of Picking Up as Job Market Improves

An economic yardstick for the manufacturing-heavy Midwest rose to its highest level since Jan, pointing to expansion.  The Chicago Business Barometer, commonly known as the Chicago PMI climbed by 6.0 points in Apr to 52.3 from 46.3 in Mar.  By moving above the 50-point threshold, the index once again indicates economic growth above historic trends, & distances itself further from a 5½-year low in Feb.  4 of the 5 subcatetgories in the index moved higher, including a double-digit gain in new orders.  Only the prices-paid subindex declined, a category hurt by the continuing effects of the winter's harsh weather & labor troubles at West Coast ports.  "The bounce back in activity at the start of second quarter is consistent with a resumption of normal activity following the poor weather and port strikes earlier in the year," said Philip Uglow, chief economist of MNI Indicators.

Chicago PMI Swings Back to Growth Mode

Time Warner Cable reported disappointing profit & revenue for Q1, though the company reported strong subscriber growth.  The report comes just a week after its $45B deal to be bought by Comcast (CMCSA) fell apart amid increasing pressure from regulators.  CEO Rob Marcus said that the qtr was among the company's best ever in terms of subscribers.  "We are a far stronger company than we were just five short quarters ago, " he said.  TWC added a net 205K residential customer relationships, its best qtr ever.  High-speed data customers grew by a net 315K, while voice customers increased by 320K.  Video customers grew 30K, its first positive quarterly net additions since 2009.  Triple Play customers grew by a net 298K.  Overall, EPS was $1.59, down from $1.70 in the prior-year period.  Expenses were higher as programming & content costs grew 8.4% & customer care costs grew 10%.  The qtr also included $26M in merger & restructuring costs.  Excluding certain items, EPS was $1.65.  Revenue grew 3.5% to $5.78B.  Analysts had projected EPS of $1.87 & $5.83B in revenue.  Business services revenue grew 16.9%, while residential services revenue grew 2.1%.  The stock fell 2.34.  If you would like to learn more about TWC, click on this link

TWC Results Disappoint, Subscribers Increase

Time Warner (TWC)

Stocks had a reality check today & did not like what they saw.  Earnings continue to be varied & economic data is inconsistent.  There is growing awareness that the first interest rate hike is coming, that is enough to shake even the heartiest bulls.  And the Greek debt mess is not going away anytime soon.  Dow inched up 50 in Apr & is barely in the black YTD.

Dow Jones Industrials

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