Dow dropped 145, decliners over advancers more than 2-1 & NAZ sank 33. The MLP index fell 2+ top the 414s (not seen since the start of 2013) & the REIT index was up pennies in the 312s. Junk bond funds lost ground & Treasuries rallied again (3 days in a row). Oil pulled back to 60 & gold went up a tad.
AMJ (Alerian MLP Index tracking fund)
Consumer confidence rose more than forecast in Jun as Americans were the most upbeat about their wage prospects in 7 years. The University of Michigan preliminary consumer sentiment index increased to 94.6, topping all estimates, from a final reading of 90.7 in May that was the lowest in 6 months. Consistent labor-market improvement has helped buoy consumers’ attitudes even as costs at the gas pump rise from the cheapest rates since 2009. Further job gains & bigger paychecks should brighten moods & help underpin the household spending that makes up the largest part of the economy. The Michigan sentiment survey’s index of expectations 6 months from now increased to 86.8 from 84.2 last month. The gauge of current conditions, which measures Americans’ views of their personal finances, rose to 106.8 in Jun from 100.8 a month earlier. “The June data are consistent with a 3 percent annual growth rate in real personal consumption expenditures during 2015,” Richard Curtin, director of the Michigan Survey of Consumers, said. “The majority of consumers anticipated good times in the economy as a whole during the year ahead.” Americans expected an inflation rate of 2.7% in the next year, down from 2.8% in May. Over the next 5-10 years, they also projected a 2.7% rate of inflation, compared with 2.8% in the previous month. Measures of sentiment have been uneven as Americans adjust their outlook after the Q1 growth slump. The Conference Board’s consumer confidence index rose in May to 95.4 from 94.3 the prior month that was the weakest since Dec. More Americans viewed current economic conditions as favorable, according to the research group’s data.
US producer prices in May recorded their biggest increase in more than 2½ years as the cost of gasoline & food rose, suggesting that an oil-driven downward drift in prices was nearing an end. The Labor Dept producer price index for final demand increased 0.5% last month, the largest gain since Sep 2012. That followed a 0.4% decline in Apr. In the year to May, the PPI fell 1.1%, marking the 4th straight 12-month decrease. Prices dropped 1.3% in the 12 months thru Apr, the biggest fall since 2010. The forecast was for the PPI rising 0.4% & falling 1.1% from a year ago. A sharp decline in crude oil prices since last year & a strong dollar have weighed on producer prices. While rising oil prices are easing some of the downward pressure on inflation, the upward trend in producer prices will be gradual because of the dollar's strength. The greenback has gained about 13.2% against the currencies of US main trading partners since June 2014. Stabilization in producer prices should support views that the Federal Reserve will raise interest rates this year. While the spillover from producer prices to consumer prices has weakened, higher gasoline & food prices are likely to feed into the May consumer price index. The volatile trade services component, which mostly reflects profit margins at retailers & wholesalers, increased 0.6% in May after falling 0.8% in the prior month. May's rise likely reflects improving profit margins at services station, which had been pressured by falling gasoline prices. A key measure of underlying producer price pressures that excludes food, energy & trade services dipped 0.1% last month after ticking up 0.1% in Apr. Core PPI was up 0.6% in the 12 months thru May.
As if fighting a year-long war against pro-Russian separatists wasn’t enough, Ukraine is also scrambling to shore up a banking system that’s bleeding assets amid a tumbling economy, wavering talks with creditors about overdue debt & skyrocketing inflation, which the central bank estimates will end this year at 45-50%. A run of liquidations has shaken consumers’ confidence in the often mismanaged financial institutions they once trusted to protect their money. Since 2014, the central bank has declared 1/4 of the 180 domestic banks insolvent, liquidated 37 of them as of the end of May & earmarked 36B hryvnia ($1.7B) for bailouts this year alone. Cleaning up the troubled banks, left with insufficient supervision for years, has been a painful process as the country fights rebels in a conflict that’s killed over 6K & displaced 1M citizens. Thousands of Ukrainians & some oligarchs saw some of their assets vanish as banks were declared insolvent. The affected banks, ranging from small players to the country’s 4th-largest, Delta Bank, have suffered from their inability to drum up enough capital in the economy expected to contract 9% this year, according to the IMF forecast. Many of the smaller banks only served affiliated businesses & ran into troubles when debtors didn’t repay loans. The crisis escalated last year when former pres Yanukovych fled Kiev, Russia annexed Crimea in Mar & the separatist insurgency in Ukraine’s easternmost regions pitted Russia against the US & EU in their worst standoff since the Cold War. The conflict deepened the woes of an already fragile economy and banking sector.
Consumer confidence data was encouraging, but not good enough to overcome depressing news on the Greek debt mess. Talks mean little because they are going nowhere. Dow remains stock near 18K (today below 18K), hugging that flat line as it has for months. Meanwhile, MLPs, REITs & Junk bond funds are drifting lower as investors are demanding higher yields with increased interest rates approaching.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLN15.NYM | ....Crude Oil Jul 15 | ...59.95 |  ...0.82 | (1.4%) |
| GCM15.CMX | ...Gold Jun 15 | .....1,177.00 | ...2.90 | (0.3%) |
Consumer confidence rose more than forecast in Jun as Americans were the most upbeat about their wage prospects in 7 years. The University of Michigan preliminary consumer sentiment index increased to 94.6, topping all estimates, from a final reading of 90.7 in May that was the lowest in 6 months. Consistent labor-market improvement has helped buoy consumers’ attitudes even as costs at the gas pump rise from the cheapest rates since 2009. Further job gains & bigger paychecks should brighten moods & help underpin the household spending that makes up the largest part of the economy. The Michigan sentiment survey’s index of expectations 6 months from now increased to 86.8 from 84.2 last month. The gauge of current conditions, which measures Americans’ views of their personal finances, rose to 106.8 in Jun from 100.8 a month earlier. “The June data are consistent with a 3 percent annual growth rate in real personal consumption expenditures during 2015,” Richard Curtin, director of the Michigan Survey of Consumers, said. “The majority of consumers anticipated good times in the economy as a whole during the year ahead.” Americans expected an inflation rate of 2.7% in the next year, down from 2.8% in May. Over the next 5-10 years, they also projected a 2.7% rate of inflation, compared with 2.8% in the previous month. Measures of sentiment have been uneven as Americans adjust their outlook after the Q1 growth slump. The Conference Board’s consumer confidence index rose in May to 95.4 from 94.3 the prior month that was the weakest since Dec. More Americans viewed current economic conditions as favorable, according to the research group’s data.
Consumer Sentiment in U.S. Climbed More Than Forecast in June
US producer prices in May recorded their biggest increase in more than 2½ years as the cost of gasoline & food rose, suggesting that an oil-driven downward drift in prices was nearing an end. The Labor Dept producer price index for final demand increased 0.5% last month, the largest gain since Sep 2012. That followed a 0.4% decline in Apr. In the year to May, the PPI fell 1.1%, marking the 4th straight 12-month decrease. Prices dropped 1.3% in the 12 months thru Apr, the biggest fall since 2010. The forecast was for the PPI rising 0.4% & falling 1.1% from a year ago. A sharp decline in crude oil prices since last year & a strong dollar have weighed on producer prices. While rising oil prices are easing some of the downward pressure on inflation, the upward trend in producer prices will be gradual because of the dollar's strength. The greenback has gained about 13.2% against the currencies of US main trading partners since June 2014. Stabilization in producer prices should support views that the Federal Reserve will raise interest rates this year. While the spillover from producer prices to consumer prices has weakened, higher gasoline & food prices are likely to feed into the May consumer price index. The volatile trade services component, which mostly reflects profit margins at retailers & wholesalers, increased 0.6% in May after falling 0.8% in the prior month. May's rise likely reflects improving profit margins at services station, which had been pressured by falling gasoline prices. A key measure of underlying producer price pressures that excludes food, energy & trade services dipped 0.1% last month after ticking up 0.1% in Apr. Core PPI was up 0.6% in the 12 months thru May.
Wholesale Inflation Sees Largest Gain Since 2012
As if fighting a year-long war against pro-Russian separatists wasn’t enough, Ukraine is also scrambling to shore up a banking system that’s bleeding assets amid a tumbling economy, wavering talks with creditors about overdue debt & skyrocketing inflation, which the central bank estimates will end this year at 45-50%. A run of liquidations has shaken consumers’ confidence in the often mismanaged financial institutions they once trusted to protect their money. Since 2014, the central bank has declared 1/4 of the 180 domestic banks insolvent, liquidated 37 of them as of the end of May & earmarked 36B hryvnia ($1.7B) for bailouts this year alone. Cleaning up the troubled banks, left with insufficient supervision for years, has been a painful process as the country fights rebels in a conflict that’s killed over 6K & displaced 1M citizens. Thousands of Ukrainians & some oligarchs saw some of their assets vanish as banks were declared insolvent. The affected banks, ranging from small players to the country’s 4th-largest, Delta Bank, have suffered from their inability to drum up enough capital in the economy expected to contract 9% this year, according to the IMF forecast. Many of the smaller banks only served affiliated businesses & ran into troubles when debtors didn’t repay loans. The crisis escalated last year when former pres Yanukovych fled Kiev, Russia annexed Crimea in Mar & the separatist insurgency in Ukraine’s easternmost regions pitted Russia against the US & EU in their worst standoff since the Cold War. The conflict deepened the woes of an already fragile economy and banking sector.
War-Weary Ukraine Shutters Cash-Starved Banks as Trust Falls
Consumer confidence data was encouraging, but not good enough to overcome depressing news on the Greek debt mess. Talks mean little because they are going nowhere. Dow remains stock near 18K (today below 18K), hugging that flat line as it has for months. Meanwhile, MLPs, REITs & Junk bond funds are drifting lower as investors are demanding higher yields with increased interest rates approaching.
Dow Jones Industrials
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