Thursday, December 10, 2015

Higher markets on economic data

Dow gained 118, advancers over decliners 3-2 & NAZ went up 25.  The MLP index fell 1+ to the 276s after yesterday's big rally & the REIT index was up a fraction  in the 317s.  Junk bond funds were lower & Treasuries sold off.  Oil dropped to the 36s & gold also retreated.

AMJ (Alerian MLP Index tracking fund)

CLF16.NYM...Crude Oil Jan 16...36.78 Down ...0.38  (1.0%)

GCZ15.CMX...Gold Dec 15....1,072.60 Down ...5.00  (0.5%)

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Applications for unemployment benefits jumped last week to a 5-month high, interrupting steady labor-market progress.  Jobless claims rose 13K to 282K, the highest level since Jul 4, according to the Labor Dept.  The forecast was 270K.  Even with the increase, layoffs are holding close to 4-decade lows.  The jump last week represents a departure from a more subdued level of dismissals & may reflect the difficulty adjusting the data during the year-end holidays.  Employers in Nov hired at a faster pace than projected, highlighting headway in the job market that will probably convince Federal Reserve policy makers to raise borrowing costs next week.  In Jul, layoffs dropped to 255K, the lowest since the 1970s.  The 4-week average of claims rose to 270K from 269K in the prior week.  The number continuing to receive jobless benefits climbed 82K, the largest increase in a year, to 2.24M.  The unemployment rate among people eligible for benefits rose to 1.7%, the highest since the week ended Sep. 12, from 1.6%.  Since the beginning of Mar, claims have been holding below the 300K level that is consistent with strength in the labor market.

Jobless Claims in U.S. Rose Last Week to a Five-Month High

US import prices fell in Nov as the cost of petroleum & several goods continued to decline, suggesting that cheaper crude oil & a strong dollar will keep imported inflation pressures subdued for a while.  The Labor Dept said import prices dropped 0.4% last month after a revised 0.3% decrease in Oct.  Import prices have declined in 15 of the last 17 months.  Economists had forecast import prices falling 0.7% after a previously reported 0.5% drop in Oct.  In the 12 months thru Nov, prices tumbled 9.4%.  Dollar strength & a sharp decline in oil prices have dampened inflation, leaving it running well below the Federal Reserve's 2% target.  But given tightening labor market conditions, tame price pressures are unlikely to prevent the Fed from raising interest rates next week.  Last month, imported petroleum prices fell 2.5% after rising 0.4% in Oct.  Import prices excluding petroleum slipped 0.3% after falling 0.4% in Oct.  Imported food prices fell 0.5%, declining for a 3rd straight month.  Prices for industrial supplies, excluding petroleum fell 1.0% after a similar drop in Oct.  Prices for imported capital goods dipped 0.1% & prices for imported automobiles also fell by the same margin.  Export prices decreased 0.6% last month after slipping 0.2% in Oct.  They were down 6.3% in the 12 months thru Nov.

November Import Prices Fell by 0.4%

US crude fell to a near 7-year low, as oversupply concerns persisted, & prices were seen as vulnerable to further weakness in the run up to year-end.  Crude inventories fell 3.6M barrels last week, compared with expectations for an increase of 252K barrels, according to Energy Information Administration (EIA) data.  OPEC last week failed to reach an agreement on production quotas, leading to fears that increased production from Iran & elsewhere would increase the glut further.  It forecast that oil supply from non-member countries would fall more sharply next year, a development that would suggest its strategy of defending market share is working.  Oil has traded in a tight range close to $40 since Mon when it fell to its lowest since 2009.  There were signs of more demand from China.  Vehicle sales were up 20% in Nov from a year earlier to 2.5M vehicles, the China Association of Automobile Manufacturers said.  But there was also fresh evidence of market oversupply.  EIA data showed that US distillate stockpiles rose 5M barrels, twice the expected increase & the sharpest increase since Jan.

Oil Hits Fresh Seven-Year Low as Global Gut Persists

There is not much going on in the stock market despite today's rise.  Stocks are a little oversold giving bargain hunters ideas.  But there has been no dramatic rethinking.  Yield stocks (MLPs, REITs & junk bond funds) are trading at depressed levels.  Their higher yields are needed for buyers.  AM optimism in the market may not last in the PM.

Dow Jones Industrials

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