Thursday, May 7, 2015

Markets advance on consumer spending data

Dow rose 82, advancers over decliners 4-3 & NAZ gained 25.  The MLP index sank 7+ to the 436s & the REIT index added 4+ to the 319s.  Junk bond funds drifted lower & Treasuries rallied following recent selling.  Oil gave up some of its recent gains & gold fell again.

AMJ (Alerian MLP Index tracking fund)

CLM15.NYM....Crude Oil Jun 15....58.87 Down ...2.06  (3.4%)

Live 24 hours gold chart [Kitco Inc.]

American consumer borrowing rose in Mar by the most in 8 months, helped by a rebound in credit card debt after 2 straight declines.  The $20.5B increase in total credit followed a revised $14.8B gain in the previous month, according to the Federal Reserve.  Revolving debt, which includes credit card balances, also advanced by the most since Jul.  Americans are becoming more willing to borrow as interest rates remain low & rising home values & stock-market gains shore up household finances.  An improving job market also should sustain growth in consumer spending, the biggest part of the economy.  The forecast called for a $15.8B increase in credit after a previously reported $15.5B advance in Feb.  The consumer credit report doesn’t track debt secured by real estate, such as home equity lines of credit & home mortgages.  Revolving debt advanced $4.4B following a $2.4B decrease.  Non-revolving debt, such as that for college tuition & the purchase of vehicles & mobile homes, jumped $16.2B after advancing $17.2B.  Student loans increased $29.7B to $1.36T in Q1 on an unadjusted basis.  Borrowing for the purchase of motor vehicles climbed by $14.6B to $972B last qtr.

Consumer Borrowing in U.S. Increases by Most in Eight Months

Last qtr's slowdown in consumer spending doesn't spell gloom & doom.  There are hints that households are again ready to unleash the pent-up buying power spurred by low gasoline prices.  So says an early look at last month's consumer spending data from Visa (V), a Dow stock, which released figures as part of a new quarterly report.  Retail sales excluding automobiles & gas stations increased 4.5% in Apr from the same time in 2014, the figures show.  While that's below the 5.3% gain in Mar, the pace has stabilized at a higher rate than last year & the kinds of items Americans are buying are keeping, Visa said.  Buoyant consumers are ready to open their wallets a bit more.  Spending at hotels jumped 9.4% last month from a year earlier, its fastest pace since Nov.  Purchases at electronics, appliance & furniture stores showed their strongest gain in 3 months.  Restaurant sales, which have been running hot for quite a while, also hit a 3-month high.  Building-supply stores & hardware stores, which notched a 9.4% year-over-year gain in Mar, advanced 4.5% in Apr for the 2nd-best reading since Nov.  The Visa figures offer one of the first looks at household spending for Q2; the gov won't be releasing the more widely watched official retail sales figures for Apr until May 13.  Gov data showed that retail sales in Mar increased at a slower pace than projected, capping a lackluster Q1.  The big question since then has been whether that slowdown will prove temporary or longer-lasting.  The Visa figures, while using similar categories, are compiled differently from the survey data used by the Commerce Dept, making year-over-year rates not comparable.  Visa also adds figures for spending at hotels & on airfare & car rentals to the mix.  Visa says it sees roughly 25¢ of every retail dollar spent in the US, among the billions of transactions that flow thru its network each day.  The data represented in this quarterly report extrapolate figures from about 40M accounts in an algorithmic model that determines overall spending across types of transactions.  By comparison, the Commerce Dept monthly retail sales report surveys about 5K firms on its first take before revisions.

U.S. Consumers Are Spending Again, Early Data Suggest

Whole Foods fell the most in a year after the chain's latest sales results trailed estimates, underscoring its troubles reaching millennials & competing with lower-priced rivals.  Revenue in the fiscal Q2 was $3.65M, below the  projected $3.7B.  Comparable-store sales growth slowed to 3.6 %, compared with a forecast for a gain of 5.3%, according to Consensus Metrix.  WFM has been losing momentum as competitors sell more organic & local fare.  It said that it will introduce a new store concept targeted at millennials, a bargain-hunting group that the premium-priced chain has had a hard time wooing.  The new concept is an attempt to keep sales & profit increases above those of rivals.  The revenue gain slowed to 9.9% in fiscal 2014, the smallest increase since 2009.  New stores will have their own brand & offer products at value prices.  The retailer is building a team to focus on the new stores and negotiate leases.  The first locations will open next year, & the expansion will be “fairly rapid.”  “It will deliver a convenient, transparent, and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high-quality fresh food at great prices,” Walter Robb, co-CEO said.  EPS in the qtr rose to 44¢ from 38¢  a year earlier.  Excluding some items, profit totaled 43¢, matching the estimate.  The company reiterated its forecast for revenue growth of at least 9% this fiscal year & comparable-store sales will grow in the low to middle single-digit percentage.  The stock slumped 4.67.  If you would like to learn more about WFM, click on this link:

Whole Foods Falls as Rivals Begin to Catch Up

Whole Foods (WFM)

Stocks had a good day in response to selling earlier this week.  REITs bounced back after dropping more than 10% in 6 weeks.  The MLP index gained 30 in 7 weeks, then about half of that was lost this week.  And Dow has been trading sideways, under 18K, for months.  If the jobs report tomorrow is not pretty, stocks will have another bad day.  More retail earnings are coming next week.

Dow Jones Industrials

3 Stocks You Should Own Right Now - Click Here!

No comments: