Monday, August 3, 2015

Weak markets after consumer spending data

Dow fell 55, decliners over advancers almost 3-2 & NAZ was off only a fraction.  The MLP index dropped a very large 6 to 375 & the REIT index went up 1+ to 320.  Junk bond funds were mixed & Treasuries advanced.  Oil sold off again, taking it into the 46s, & gold was weak.

AMJ Alerian MLP Index tracking fund)

CLV15.NYM...Crude Oil Oct 15....46.5Down ....0.96  (2.0%)

GCQ15.CMX...Gold Aug 15...1,089.70 Down ...5.20  (0.5%)

American households kept spending in Jun, capping a stronger quarterly performance for the biggest part of the economy.  The 0.2% increase in purchases followed a 0.7% May advance, according to the Commerce Dept.  The Jun gain matched the forecast that incomes would climb 0.4% for a 3rd month.  Americans, enjoying a hiring pickup & no longer fettered by high prices at the gas pump, helped the economy stir last qtr after an early-year slumber.  A tempering of spending at the end of Q2 shows stronger wage growth is probably needed to convince more consumers to open their wallets with greater frequency & allow the economy to build momentum.  The Jun gain helped spending increase in Q2 at a 2.9% annualized rate, up from a 1.8% pace in Q1 & stronger than the 2% average from 2010-2014.  Disposable income, or the money remaining after taxes, rose 0.2% from the prior month after adjusting for inflation.  The saving rate climbed to 4.8% from 4.6% in May.  The data showed that after adjusting for inflation, in order to generate the figures used to calculate GDP, purchases were little changed in Jun after a 0.4% gain in May.  Sustained momentum in consumer purchases will be needed to keep US growth chugging along.  Spending on durable goods, including automobiles, fell 1.1% after adjusting for inflation, following a 1.3% jump in May.  The report also showed the price index tied to consumer spending increased 0.2% from the prior month.  It rose 0.3% from Jun 2014.  This inflation gauge is preferred by Federal Reserve policy makers & hasn’t reached their 2% goal since Apr 2012.  Stripping out the volatile food & energy categories, the price measure climbed 0.1% from May & rose 1.3% in the 12 months ended in Jun.

Americans Kept Spending in June to End Better Second Quarter

Greece’s stock market reopened after 5 weeks to the most savage wave of selling in decades, underlining a crisis that’s crippled the economy.  Banks led the plunge following the shutdown, which was due to capital controls to prevent the lenders from bleeding more deposits.  The benchmark ASE Index dropped 16% at the close after sliding as much as 23%.  The selloff shows the scale of the crisis still facing Prime Minister Tsipras as he negotiates a 3rd bailout with creditors.  Now Greek traders can only buy stocks, bonds, derivatives & warrants with new money such as funds transferred from abroad or earnings from the future sale of shares, or from existing investment account balances held at Greek brokerages, the Finance Ministry said.

Greek Stocks Plunge Most in Decades

US manufacturing cooled in Jul from the highest level in 5 months, a sign of fitful progress in the industry.  The Institute for Supply Management’s index fell to 52.7 from a Jun reading of 53.5 that was the fastest since the start of the year.  Readings greater than 50 indicate expansion.  The employment measure declined from a month earlier & order backlogs slumped.  A pickup in the ISM’s orders index to a 7-month high & increased production indicate steady consumer spending is underpinning activity at American factories.  Without stronger overseas markets & a rebound in business investment, acceleration in manufacturing may prove difficult to achieve.  The ISM group’s new orders gauge climbed to 56.5 from 56 the prior month, & a measure of production rose to 56 from 54.  The index for orders waiting to be filled decreased to 42.5, the weakest since Nov 2012, from 47.  The employment index declined to 52.7 from 55.5.  The measure of export orders fell to 48 from 49.5.  The gauge of factory inventories dropped to 49.5 from 53, & customer stockpiles decreased to 44 from 48.5.  The report also showed the index of prices paid dropped to 44 from 49.5.  11 of 18 industries surveyed by the purchasing managers’ group posted growth, led by textile mills, paper products & apparel & leather.

Manufacturing in U.S. Cooled in July From Five-Month High

The new month started on the wrong foot, this may be a dismal month for stocks.  Economic data in the US has not been able to show consistent strength & that trend is continuing.  The Greek debt mess lumbers along as it faces another deadline in a couple of weeks.  Overseas market are not impressive.  Dow is down YTD & near the low end of its trading range this year.  While tech stocks are keeping NAZ fairly strong, the overall market is still on defense.

Dow Jones Industrials

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