Higher markets continue after Beige Book report

Dow shot up 293 closing at the high, advancers over decliners nearing 3-1 & NAZ surged 113.  The MLP index rose 2+ to the 353s & the REIT index added 3+ to the 296s.  Junk bond funds edged higher & Treasuries pulled back.  Oil climbed to the 46s & gold slid lower.

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CLV15.NYM

....Crude Oil Oct 15

....45.60

,,,0.19

(0.4%)

The US economy expanded across most regions & industries in Jul & Aug, a Fed report showed, as tighter labor markets boosted wages for some workers.  6 of 12 districts reported “moderate” growth, & 5 others said expansion was “modest,” according to the Beige Book.  The survey is based on reports gathered on or before Aug 24 by regional Fed banks.  The report gives central bank officials, who next meet Sep 16-17, an anecdotal picture of growth as they consider ending 6 years of near-zero interest rates.  “Most districts reported modest to moderate growth in labor demand,” the Beige Book said, with this tightening in labor markets pushing up wages slightly in some industries, especially in the NY, Cleveland, St. Louis & San Francisco districts.  The Beige Book also showed that manufacturing activity was mostly positive, with only the NY & Kansas City Fed districts seeing declines.  “Credit quality was reported to be improving in most districts, while credit standards were generally said to be unchanged,” the Beige Book said.  48% of 54 economists surveyed last week expect a Sep increase in the benchmark lending rate, down from 77% two weeks earlier.  About ¼ say the Fed will lift off in Dec, while 17% said Oct.

U.S. Economy Expanded Across Most Regions: Fed’s Beige Book

The difference between the 2 parties in the latest polls published in Athens shows the country's Sep 20 election is too close to call.

Greece's main opposition New Democracy party would get 25.3% of the total vote if elections were held now, leading for the first time over former Prime Minister Alexis Tsipra's Syriza party, which would get 25% of the vote, according to a voting intention poll.  No party would get enough votes for an outright majority in the next parliament, meaning that Europe’s most indebted state could face thorny coalition talks after the ballot.  Those could have the effect of delaying or derailing the implementation of its bailout clauses.  Syriza party would get 23% of the total vote if elections were held now, compared with 22.6% for the main opposition party, New Democracy, a voting-intentions website survey shows.  The far-right Golden Dawn party polls at 3rd place with 6.1%, while pro-bailout River & Pasok parties would get just over 4% each.  Independent Greeks, the junior coalition partner in Tsipras’s last gov doesn’t get enough votes to elect lawmakers.  Popular Unity, a party founded by former Syriza lawmakers who revolted against Tsipras’s decision to strike a bailout agreement with creditors would get 3.9% of the vote, while 14% of respondent are undecided.  Tsipras’s lead has narrowed to 0.4 points, from 1.5 points, in its previous survey, which was released on Aug 28.

The Latest Polls Shows Greek Elections Are on a Knife Edge

New orders for US factory goods rose for a 2nd straight month in Jul on strong demand for automobiles, which could help to keep manufacturing supported as it deals with a strong dollar & softening global demand.  The Commerce Dept said new orders for manufactured goods increased 0.4% after an upwardly revised 2.2% rise in Jun.  Factory activity has been hobbled by a strong dollar & spending cuts in the energy sector after last year's sharp plunge in crude oil prices.  Tepid global demand is also hurting manufacturing, which accounts for about 12% of the domestic economy.  Economists had forecast factory orders rising 0.9% after a previously reported 1.8% increase in Jun.  The dollar has gained against the currencies of the US main trading partners since Jun 2014, which has undercut export growth & weighed on the profits of multinationals.  Orders for transportation equipment rose 5.5% as bookings for motor vehicles & parts increased 4.0%, the largest gain in a year.  Orders for automobiles are likely to remain strong after sales surged in Aug.  In Jul, there were increases in orders for machinery, electrical equipment, appliances & components, & computers & electronic products.  Orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence & spending plans, increased 2.1% instead of the 2.2% rise reported last month.  Shipments of these core capital goods, which are used to calculate business equipment spending in the GDP report, increased 0.6%, unchanged from last month's estimate.  Inventories of factory goods slipped 0.1% after 3 straight months of gains.  That left the inventories-to-shipments ratio at a lofty 1.35, unchanged from Jun, suggesting manufacturers might be sitting on a pile of unwanted goods, which could hurt production & weigh on growth in the coming quarters.  Unfilled orders at factories rose 0.2%, increasing for a 2nd straight month.

July Factory Orders Boosted by Strong Autos

Stocks were relieved that the world did not come to an end after yesterday's plunge.  But this rally is short of impressive, partly because of this being a semi holiday week ahead of Labor Day.  Dow is near a 2 year low & down 1½K YTD (almost 10%) as the threat of a interest rate hike still spooks the market.  It would be best to get it over, admitting that the emergency period that lasted almost a decade is over.

Dow Jones Industrials