Dow fell 25, advancers ahead of decliners about 5-4 & NAZ lost 12. The MLP index was flattish in the 335s & the REIT index added a fraction to the 318s. Junk bond funds slid lower & Treasuries rose, bringing the yield on the 10 year Treasury near 2%. Oil prices did little & gold keeps climbing higher.
AMJ (Alerian MLP Index tracking fund)
Consumers in the US tempered purchases at retailers in Sep, pocketing the savings from lower fuel costs & making for a weak finish Q3. The 0.1% gain followed little change in the prior month that was weaker than previously reported, according to the Commerce Dept. The forecast called for a 0.2% advance. More than ½ of merchant categories showed decreases. Sluggish sales may raise concern about the staying power of consumer spending, which accounts for about 70% of the economy, at a time overseas demand is also cooling. While job gains & cheap fuel may help to underpin purchases, a pickup in wages remains elusive as the Federal Reserve weighs whether to raise interest rates. The Aug tally was previously reported as a 0.2% increase. 7 of 13 major categories showed declines, led by a 3.2% plunge at service stations as fuel costs retreated (the biggest drop since Jan). Turmoil in financial markets may be prompting consumers to put some of those savings in the bank rather than spending it at the mall. In addition to service stations, the report showed electronics stores, building-material dealers, grocery stores & online merchants saw purchases retreat last month. Retail sales excluding autos decreased 0.3%, the biggest decline since Jan. They were projected to fall 0.1%. The figures used to calculate GDP, which exclude categories such as food services, auto dealers, home-improvement stores & service stations, showed a 0.1% decline after the prior month’s 0.2% increase in the retail control group. The Aug advance was half as large as previously projected.
Retail Sales Rise Less Than Forecast as Americans Save More
Wholesale prices in the US declined in Sep by the most since the start of the year as costs fell for gasoline, food & brokerage services. The 0.5% decrease in the producer-price index was the biggest since Jan & followed no change in Aug, according to the Labor Dept. The forecast called for a 0.2% drop. Costs were down 1.1% over the past 12 months. Prices for wholesalers & households have been subdued as global demand wanes and puts pressure on commodities. That poses a challenge for Federal Reserve policy makers, who are looking for signs that inflation will move back toward their 2% target as they consider raising borrowing costs. Energy expenses decreased 5.9% in Sep, the most since Jan, after falling 3.3% the month before. Food prices dropped 0.8% after a 0.3% gain. The costs of eggs slumped, while beef & veal prices plunged 7.9%, the most since 2004. Wholesale prices excluding these 2 components unexpectedly declined 0.3% versus a forecast for a 0.1% gain. Those costs were up 0.8% from Sep 2014. After eliminating food, energy & trade services to arrive at a reading that some prefer because it excludes one of the report’s most volatile components, wholesale costs also decreased 0.3%, the biggest decline since records began in 2013.
Wells Fargo reported a rise in quarterly profit for the first time in 3 qtrs, helped by its purchase of commercial loans from General Electric (GE), a Dow stock. EPS applicable to common shareholders rose to $1.05 from $1.02 a year earlier. Analysts had expected EPS of $1.04. Mortgage banking revenue fell 2.7% to $1.59B, accounting for about 15% of non-interest income. Low interest rates have prevented the company from capitalizing on their growing deposit base & applications for home loans have fallen by about 25% since mid-Jan. WFC has responded by using its hefty balance sheet to diversify its business. Average loans in its wholesale banking business rose 15%, boosted by loan acquisitions. The bank earlier this year agreed to buy a portion of GE commercial real estate loans worth $9B which started to contribute to earnings in Q3. In its latest deal, the bank said yesterday it would buy a portfolio of commercial loans & leases worth more than $30B from GE. WFC stock fell 31¢. If you would like to learn more about WFC, click on this link:
club.ino.com/trend/analysis/stock/WFC?a_aid=CD3289&a_bid=6ae5b6f7
The initial response to to early earnings reports is not positive. The retail sales report is drab, which has been the case for almost all of the 6 year recovery period. Consumers are not seeing higher incomes & that has resulted in spotting spending habits. Earnings for Q3 can not be counted on to bring a rising stock market.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLX15.NYM | Crude Oil Nov 15 | 46.25 |  0.41 (0.9%) |
| GCV15.CMX | Gold Oct 15 | 1,168.20 | 2.40 (0.2%) |
Consumers in the US tempered purchases at retailers in Sep, pocketing the savings from lower fuel costs & making for a weak finish Q3. The 0.1% gain followed little change in the prior month that was weaker than previously reported, according to the Commerce Dept. The forecast called for a 0.2% advance. More than ½ of merchant categories showed decreases. Sluggish sales may raise concern about the staying power of consumer spending, which accounts for about 70% of the economy, at a time overseas demand is also cooling. While job gains & cheap fuel may help to underpin purchases, a pickup in wages remains elusive as the Federal Reserve weighs whether to raise interest rates. The Aug tally was previously reported as a 0.2% increase. 7 of 13 major categories showed declines, led by a 3.2% plunge at service stations as fuel costs retreated (the biggest drop since Jan). Turmoil in financial markets may be prompting consumers to put some of those savings in the bank rather than spending it at the mall. In addition to service stations, the report showed electronics stores, building-material dealers, grocery stores & online merchants saw purchases retreat last month. Retail sales excluding autos decreased 0.3%, the biggest decline since Jan. They were projected to fall 0.1%. The figures used to calculate GDP, which exclude categories such as food services, auto dealers, home-improvement stores & service stations, showed a 0.1% decline after the prior month’s 0.2% increase in the retail control group. The Aug advance was half as large as previously projected.
Retail Sales Rise Less Than Forecast as Americans Save More
Wholesale prices in the US declined in Sep by the most since the start of the year as costs fell for gasoline, food & brokerage services. The 0.5% decrease in the producer-price index was the biggest since Jan & followed no change in Aug, according to the Labor Dept. The forecast called for a 0.2% drop. Costs were down 1.1% over the past 12 months. Prices for wholesalers & households have been subdued as global demand wanes and puts pressure on commodities. That poses a challenge for Federal Reserve policy makers, who are looking for signs that inflation will move back toward their 2% target as they consider raising borrowing costs. Energy expenses decreased 5.9% in Sep, the most since Jan, after falling 3.3% the month before. Food prices dropped 0.8% after a 0.3% gain. The costs of eggs slumped, while beef & veal prices plunged 7.9%, the most since 2004. Wholesale prices excluding these 2 components unexpectedly declined 0.3% versus a forecast for a 0.1% gain. Those costs were up 0.8% from Sep 2014. After eliminating food, energy & trade services to arrive at a reading that some prefer because it excludes one of the report’s most volatile components, wholesale costs also decreased 0.3%, the biggest decline since records began in 2013.
Wells Fargo reported a rise in quarterly profit for the first time in 3 qtrs, helped by its purchase of commercial loans from General Electric (GE), a Dow stock. EPS applicable to common shareholders rose to $1.05 from $1.02 a year earlier. Analysts had expected EPS of $1.04. Mortgage banking revenue fell 2.7% to $1.59B, accounting for about 15% of non-interest income. Low interest rates have prevented the company from capitalizing on their growing deposit base & applications for home loans have fallen by about 25% since mid-Jan. WFC has responded by using its hefty balance sheet to diversify its business. Average loans in its wholesale banking business rose 15%, boosted by loan acquisitions. The bank earlier this year agreed to buy a portion of GE commercial real estate loans worth $9B which started to contribute to earnings in Q3. In its latest deal, the bank said yesterday it would buy a portfolio of commercial loans & leases worth more than $30B from GE. WFC stock fell 31¢. If you would like to learn more about WFC, click on this link:
club.ino.com/trend/analysis/stock/WFC?a_aid=CD3289&a_bid=6ae5b6f7
Wells Fargo Profit Rise, Boosted by GE Loan Book
Wells Fargo (WFC)
The initial response to to early earnings reports is not positive. The retail sales report is drab, which has been the case for almost all of the 6 year recovery period. Consumers are not seeing higher incomes & that has resulted in spotting spending habits. Earnings for Q3 can not be counted on to bring a rising stock market.
Dow Jones Industrials
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