Monday, November 30, 2015

Markets drift lower after early reports on holiday sales

Dow dropped 78, decliners ahead of advancers 5-4 & NAZ fell 18.  The MLP index lost a fraction to below 301, & the REIT index was 2+ lower to the 321s.  Junk bond funds did little & Treasuries traded higher.  Oil fell back & gold advanced.

AMJ (Alerian MLP Index tracking fund)

CLF16.NYM....Crude Oil Jan 16....41.64 Down ...0.07  (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Just hours after the Thanksgiving leftovers were packed away, shoppers hit the streets in search for the best Black Friday deals.  While expectations weren’t out of this world, shoppers proved one thing: The American consumer is gaining strength as the economy improves.  Sarah Quinlan, senior VP of Market Insights for MasterCard Advisors, said while shopping on Thanksgiving was a bit more muted than last year, as big-name retailers & others closed their doors to give their employees time with their families, it was still a good turnout overall.  “We were obviously expecting a short decline, as we saw, and now we’ll accelerate into the season,” she explained.  “Do remember, the holiday is all about experiences and it will be a long holiday shopping season that goes all the way through December 31.”  The Consumer Federation of America said about 38% of Americans planned to reduce their overall spend this holiday season, while 10% plan to spend more.  Meanwhile, spending overall is expected to rise 2.5% to 3% for the overall holiday season.  While figures from the Thanksgiving weekend won’t be finalized until next week, Quinlan said the initial trends suggest electronics are expected to be the biggest laggard since there’s no breakout product that would be likely to drive the consumer rush.  Meanwhile, apparel is seen as the biggest winner.  “There’s been this delayed pent up demand of people not actually buying clothing and because we haven’t seen the shift in the weather, but that’s what the deals – and that’s will drive them to the shopping space,” she said.  Department stores are also likely to see a drop off as shoppers increasingly turn to online sales to check off items on their holiday shopping lists, explaining part of the reason is because consumers are more choosy about where they spend their money – so, although they buy items department stores tend to sell, they’re not necessarily shopping at those particular outlets.  Quinlan added that consumers won’t just spend money this holiday season on physical goods, they’re also increasingly likely to spend on experiences like travel & dining out, thanks to an economy that continues to improve.  “The unemployment rate has dropped since last year, and more people, frankly, are finding full-time jobs, not just part time ones,” she said.  “So, that’s leading to the consumer having the money [to shop], and also, obviously, the gasoline savings dividend [is helping to drive traffic.]”  She estimated that savings from low oil & gas prices adds about $1054 to every pocket…& shoppers on average are spending about 72¢ per dollar saved.

Black Friday Muted, Shoppers Spend Online

Deere, the world’s largest manufacturer of agricultural machinery, is indefinitely laying off 220 workers amid weak demand for the company’s products.  The employees at its seeding & cylinder factory in Moline, Ill, will be laid off from Feb.  Last week DE forecast a 3rd successive decline in full-year sales.  The stock went up 48¢.  If you would like to learn more about DE, click on this link:

Deere to Lay Off Workers at Illinois Plant Amid Demand Slump

Deere (DE)

Target's, a Dividend Aristocrat, website was down for part of the day due to heavy traffic on Cyber Monday.  Shoppers looking for bargains were greeted with an error message: "So sorry, but high traffic's causing delays. If you wouldn't mind holding, we'll refresh automatically & get things going ASAP."  Mid-morning TGT said it had teams "working diligently" to restore  The site was up & running in the PM.  In what the company has called its "Biggest, Boldest Plans" for Cyber Monday, the retailer is offering 15% discounts on almost all items on  Deals include 50% off licensed kids' cameras & select in-ear headphones.  Other websites that have faced outages since early Thurs.  About 121M shoppers planned to shop online on Cyber Monday, down slightly from the 126.9M who planned to participate last year, according to the National Retail Federation.  The stock fell 94¢.  If you would like to learn more about TGT, click on this link:

Target Website Crashes on Cyber Monday Due to Heavy Traffic

Target (TGT)

Early retail reports are sketchy.  It looks like the stores did not do well & internet traffic was good, although perhaps below expectations.   Dow managed to eke out a tiny gain for Nov after finishing at its lows of a narrow trading range today.  Dec is generally a good month for stocks.  This time the FOMC meeting at mid-month looms large with a 25 bp rate hike widely expected.  

Dow Jones Industrials

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