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Wednesday, November 18, 2015
Higher markets ahead of FOMC minutes
Dow rose 91, advancers over decliners 2-1 & NAZ gained 26.The MLP index added 4 to the 315s & the REIT index went up 1 to the 314s. Junk bond funds were mixed & Treasuries pulled back. Oil rebounded while gold slid lower.
New-home building declined more than projected in Oct, led by a
slump in apartment construction & showing fitful progress in
residential real estate. Residential starts dropped 11% to a
1.06M annualized rate, the slowest since Mar, from a revised
1.19M pace the prior month, according to the Commerce Dept. The forecast called for 1.16M. The most construction permits for single-family homes since
2007 indicates ground-breaking will rebound in coming months. The
figures suggest the real-estate market is settling into a more
sustainable pace, fueled by persistent job growth & cheap borrowing
costs. A labor market that begins to drive faster wage growth would help
provide additional impetus for home sales, contributing more to the
economy. Permits, a proxy of
future construction, increased 4.1% to a 1.15M annualized
rate. They were led by an increase in applications for single-family
homes, which climbed to a 711K pace, the strongest since Dec
2007.
The
decrease in starts last month was primarily due to a 25.1% slump
in work on multifamily homes, the biggest since Aug 2014. Data on
these projects, which have led housing starts in recent years, tend to
be volatile. Builders may be
less willing to begin construction on new multifamily units because the
number of current projects already under way has reached the highest
level since 1986. Construction of single-family
houses fell 2.4% a 722K rate. The decline was due entirely to a
decrease in the South as starts of detached homes picked up in the rest
of the country. 2 of 4 regions showed decreases in total
starts last month, led by an 18.6% slump in the South & construction fell 16.2% in the West.
Chinese pres Xi Jinping acknowledged downside risks to growth
while assuring fellow leaders that Asia’s biggest economy is resilient & will remain on the path of reform. China is working to
overcome the challenges of slowing global growth this year by advancing
reforms & won’t change its policy on foreign investment, Xi said at
the Asia-Pacific Economic Cooperation chief executives summit in Manila. “In general, China’s positive economic fundamentals
and long-term trajectory remain unchanged,” Xi said. “On the other hand, China’s economy
is still coping with the complicated internal and external environment,
considerable downward pressure and the temporary pain of deep reforms.” China
is on pace for the slowest expansion in 25 years, a worry for Asia’s
smaller economies which have become increasingly reliant on it for
export demand. Leaders are stepping up fiscal stimulus after 6
interest rate cuts in the past year failed to spur a revival in growth. Industrial
output in China last month matched the weakest gain since the global
credit crisis, while fixed-asset investment so far this year has
increased at the slowest pace since 2000. Meanwhile, retail sales growth
is accelerating, underscoring a shift in the economy toward greater
reliance on consumer spending as old growth engines falter. "Some
economic indicators have somewhat fluctuated between months and
quarters, but the overall economy has operated within the reasonable
range and maintained steady and fairly rapid growth," Xi said. He
also touted China’s efforts to take a leadership role in the development & integration of Asia, citing his "One Belt, One Road" initiative to
link the country with Europe through central & western Asia as well as
the $100M China-led Asian Infrastructure Investment Bank.
Target, a Dividend Aristocrat, reported a
bigger-than-expected increase in quarterly profit & raised the low end
of its fiscal-year forecast as revenue got a boost from strong demand
for products at the center of the retailer's turnaround plan. Under CEO Brian Cornell, Target has focused on
promoting a narrower set of products, or "signature categories," that
include apparel & items for children, babies & health & wellness. "The third quarter marked the fourth consecutive quarter in which we
have grown traffic, and Target's sales growth continues to be led by our
signature categories," Cornell said. Comparable sales in these categories grew more than 2.5 times faster
than the company average in Q3. The retailer raised the low end of its
fiscal-year EPS forecast to $4.65 from $4.60 & kept the
high end at $4.75. Excluding special items, earnings rose to 86¢ from 79¢ a year earlier. Analysts were expecting a EPS of 86¢. Net sales rose 2.1% to $17.61B, compared with the estimate for $17.57B. Sales at stores open at least a year rose 1.9%,
beating the estimate of 1.7%. Digital sales, including online & mobile, increased 20%, adding 0.4 percentage points to comparable sales growth. The company narrowed its after-tax loss from discontinued operations in Canada to $73M from $174M a year earlier. TGT repurchased $942M of its shares, continuing a buyback program it resumed 2 years ago. In Mar, the company announced a restructuring plan to eliminate several
thousand corp jobs & revamp grocery operations. It also included a
$1B investment in technology in areas such as supply chain, &
the company is focusing on improving stock levels in stores. But the stock lost 3.09. If you would like to learn more about TGT, click on this link: club.ino.com/trend/analysis/stock/TGT?a_aid=CD3289&a_bid=6ae5b6f7
Stocks are marking time, waiting for minutes from the Fed meeting & hoping to get hints about the next rate hike. By the time of the Dec meeting, these minutes will be ancient history. Already there is a declared war against ISIS & nobody knows how it will affect global business. Meanwhile, global business is stumbling along & the US is leading the way with only meager results.
...0.63 
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