Thursday, May 7, 2015

Markets fluctuate on mixed economic data

Dow was up 14, decliners slightly ahead of advancers & NAZ added 7.  The MLP index dropped a very big 7+ to the 437s & the REIT index climbed 1+ to the 316s.  Junk bond funds slid lower & Treasuries rose after a decline in the last month.  Oil pulled back after its recent rally, but remains above 60, & gold lost ground.

AMJ (Alerian MLP Index tracking fund)

CLM15.NYM...Crude Oil Jun 15...60.37 Down ...0.56  (0.9%)

GCK15.CMX...Gold May 15....1,185.30 Down ...5.00  (0.4%)

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Fewer Americans than forecast filed applications for unemployment benefits last week, dropping the average over the past month to the lowest in 15 years, indicating companies are holding on to workers.  Jobless claims increased 3K to 265K, according to the Labor Dept.  The  forecast projected 278K.  The 4-week average, a less-volatile measure, fell to 279K, the least since May 2000.  A reduction in applications for unemployment benefits shows demand remains strong enough for employers to maintain staffing levels.  The number continuing to receive jobless benefits dropped 28K to 2.23M, the fewest since 2000.  In that same period, the unemployment rate among people eligible for benefits held at 1.7%, where it’s been since mid-Mar.

Greece's gov is sticking to its non-negotiable "red lines" on labor& pension issues & expects its EU & IMF creditors also to make concessions to reach a deal.  The new leftist gov has said further cuts to pension payments & reforms making it easier to layoff workers in the private sector are among "red lines" it will no cross.  "There should not be an expectation on the part of institutions that the government has to back down on everything in order to have a deal," a gov spokesman said.  "When you negotiate, there should be mutual concessions. We won't go beyond the limits of our red lines. It's clear that we cannot cut pensions," he added.  Greece is running out of money but has yet to reach a deal with its lenders, who have ruled out an agreement by a meeting of euro zone ministers.  However, the gov hopes that meeting will acknowledge Greece's position & will allow the ECB to relax liquidity restrictions so that a cash crunch is eased.  An omnibus bill of reforms promised to lenders in return for aid will only be submitted to parliament after a deal with the creditors has been struck.  "We know that the debt is not viable but we are not raising it emphatically so that a deal can be concluded at this stage," the spokesman said.  "But soon, whether we want it or not, it will not be possible for that to be shoved under the carpet."

Greece Wants Concessions from Lenders

Chicago Federal Reserve pres Charles Evans said the central bank should push any interest rate hike into next year, despite what he expects to be a rebound in the economy in Q2 & the rest of 2015.   "There are uncertainty reasons to sort of make you say, 'Why should you be in a rush to do this,'" he said.   "Accommodation is helping the economy move up," he argued.  "And if inflation were to pick up more strongly than I'm expecting, we know how to deal with that, we can increase rates."  The initial look at US economy in Q1 already signaled weak growth & slow growth is expected to be revised lower based on recent sluggish.  "We kind of think that was transitory, in part because the dollar has been high, inventory accumulation was high, [the] consumer was weaker. But we think things are going to improve," said Evans (among the most dovish voting members on the policy committee).  He said he's looking forward to a stronger Q2 that's "more consistent with the stronger growth outlook that I and so many other people have of like 2.5 percent to 3 percent this year."

Fed's Evans: Why rate hikes should wait until 2016

Stocks aren't doing much with little significant news today.  The Greek debt mess drones on with no sign of relief.  Oil finally was hit with selling after its recent rise.  Dow is back to where its was in late Nov & does not have a clue where to go next.  More selling is on the way, especially if the jobs report tomorrow is anything short of spectacular.

Dow Jones Industrials


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