Dow climbed 116, advancers over decliners 5-2 & NAZ gained 26. The ML:P index rose 2+ to the 246s & the REIT index was fractionally higher to the 312s. Junk bond funds slipped lower & Treasuries were slightly lower. Oil jumped up to the 33s & gold continued climbing (the highest since the end of Oct).
AMJ (Alerian MLP Index tracking fund)
The number of Americans filing applications for unemployment benefits rose last week as employers continued to adjust staffing levels following the holidays. Jobless claims climbed 8K to 285K from a revised 277K in the prior week, according to the Labor Dept. The forecast called for 278K. The 4-week average exceeded 280K for a 3rd consecutive week, indicating the pace of layoffs has sped up a bit from historically low levels. While the uptick in claims bears watching, it may also represents the week-to-week volatility common to claims data around holidays. The 4-week moving average increased to 284K from 282K in the prior week. The last time the average exceeding 280K for at least 3 consecutive weeks was in Apr. The number of applications dropped as low as 255K in mid-Jul, the lowest in 4 decades. The number continuing to receive jobless benefits fell 18K to 2.26M & the unemployment rate among people eligible for benefits held at 1.7%. Since early Mar, claims have been below the 300K level that economists say is typically consistent with an improving job market.
The slowdown in emerging economies is posing a major threat to recovery in the euro area, the European Commission said as it trimmed its 2016 growth forecast for the 19-nation region & warned inflation would be much slower than expected. The commission sees consumer-price growth averaging just 0.5% this year, ½ the pace forecast in Nov & far below the ECB goal of just under 2%. It cut its prediction for economic expansion in the currency bloc to 1.7% from 1.8% & said the largest economies of Germany, France & Italy will all perform worse than predicted just 3 months ago. “With the assumed path of energy prices, inflation should remain very low in the first half of this year,” European Economics Commissioner Pierre Moscovici said. “It should then rise slightly in the second half when the impact from the past sharp falls in oil prices abates.” Faced with a slowdown in China & volatility closer to home associated with terrorism & a surge of refugees from the Middle East & Africa to Europe in 2015, the euro area is still struggling to recover nearly 6 years after it first bailed out Greece. The deteriorating inflation outlook may spur the ECB into action again. Pres Mario Draghi has said policy makers will review their stimulus in Mar as the oil price collapse threatens price stability. Risks to the economy include “policy reactions to migration and security threats, which could put further pressure on the Schengen system” of passport-free travel in Europe “as well as uncertainty surrounding further implementation of much-needed reforms,” the commission said. The arrival of many migrants has given a boost to public consumption, he added. The EU commission downgraded its 2016 forecast for the euro area's 3 largest economies each by 0.1 percentage point. It maintained its growth prediction for 2017 at 1.9% of GDP. The commission said the price of oil will increase later than it forecast in Nov, which would “delay the rebound of inflation from its current very low level and to put additional financial pressure on commodity-exporting countries.” The ECB will review & may boost its stimulus in Mar as the oil slump delays the return of inflation to the ECB goal that the euro area hasn’t reached in almost 3 years.
US mortgage rates for 30-year loans fell to the lowest level since late Apr, reducing borrowing costs as the housing market enters its key selling season. The average rate for a 30-year fixed mortgage was 3.72%, down from from 3.79% last week, according to Freddie Mac. The average 15-year rate slipped to 3.01% from 3.07%. Borrowing costs are declining as turbulent global markets drive investors to the safety of US gov bonds. Increased competition for the debt is forcing investors to accept smaller yields, resulting in lower mortgage rates. That may be good news at the start of the prime homebuying season, which traditionally begins after the Super Bowl (the game is this Sun). Mortgage costs were expected to climb after the Federal Reserve raised its benchmark lending rate in Dec.
With today's advance, the Dow broke into the black for Feb, not much of an achievement. Unlike times in the past, stocks are following price changes in oil, not going in the opposite direction. No significant news out of China today & next week the markets will be closed for the new year. News from the US is muddy at best. The big oil companies are reporting earnings, & they are ugly (although much of that has been priced in the stocks already). Dow remains in the red YTD. With all the tumult in the financial markets, safe haven investments like Treasuries & gold are attracting a lot of interest.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLH16.NYM | ...Crude Oil Mar 16 | ...33.47 |  ....1.19 | (3.7%) |
| GCG16.CMX | ...Gold Feb 16 | ......1,156.70 | ...15.40 | (1.4%) |
The number of Americans filing applications for unemployment benefits rose last week as employers continued to adjust staffing levels following the holidays. Jobless claims climbed 8K to 285K from a revised 277K in the prior week, according to the Labor Dept. The forecast called for 278K. The 4-week average exceeded 280K for a 3rd consecutive week, indicating the pace of layoffs has sped up a bit from historically low levels. While the uptick in claims bears watching, it may also represents the week-to-week volatility common to claims data around holidays. The 4-week moving average increased to 284K from 282K in the prior week. The last time the average exceeding 280K for at least 3 consecutive weeks was in Apr. The number of applications dropped as low as 255K in mid-Jul, the lowest in 4 decades. The number continuing to receive jobless benefits fell 18K to 2.26M & the unemployment rate among people eligible for benefits held at 1.7%. Since early Mar, claims have been below the 300K level that economists say is typically consistent with an improving job market.
Jobless Claims in U.S. Rise Amid Post-Holiday Adjustments
The slowdown in emerging economies is posing a major threat to recovery in the euro area, the European Commission said as it trimmed its 2016 growth forecast for the 19-nation region & warned inflation would be much slower than expected. The commission sees consumer-price growth averaging just 0.5% this year, ½ the pace forecast in Nov & far below the ECB goal of just under 2%. It cut its prediction for economic expansion in the currency bloc to 1.7% from 1.8% & said the largest economies of Germany, France & Italy will all perform worse than predicted just 3 months ago. “With the assumed path of energy prices, inflation should remain very low in the first half of this year,” European Economics Commissioner Pierre Moscovici said. “It should then rise slightly in the second half when the impact from the past sharp falls in oil prices abates.” Faced with a slowdown in China & volatility closer to home associated with terrorism & a surge of refugees from the Middle East & Africa to Europe in 2015, the euro area is still struggling to recover nearly 6 years after it first bailed out Greece. The deteriorating inflation outlook may spur the ECB into action again. Pres Mario Draghi has said policy makers will review their stimulus in Mar as the oil price collapse threatens price stability. Risks to the economy include “policy reactions to migration and security threats, which could put further pressure on the Schengen system” of passport-free travel in Europe “as well as uncertainty surrounding further implementation of much-needed reforms,” the commission said. The arrival of many migrants has given a boost to public consumption, he added. The EU commission downgraded its 2016 forecast for the euro area's 3 largest economies each by 0.1 percentage point. It maintained its growth prediction for 2017 at 1.9% of GDP. The commission said the price of oil will increase later than it forecast in Nov, which would “delay the rebound of inflation from its current very low level and to put additional financial pressure on commodity-exporting countries.” The ECB will review & may boost its stimulus in Mar as the oil slump delays the return of inflation to the ECB goal that the euro area hasn’t reached in almost 3 years.
EU Slashes 2016 Inflation Forecast to 0.5% as Growth Seen Slower
US mortgage rates for 30-year loans fell to the lowest level since late Apr, reducing borrowing costs as the housing market enters its key selling season. The average rate for a 30-year fixed mortgage was 3.72%, down from from 3.79% last week, according to Freddie Mac. The average 15-year rate slipped to 3.01% from 3.07%. Borrowing costs are declining as turbulent global markets drive investors to the safety of US gov bonds. Increased competition for the debt is forcing investors to accept smaller yields, resulting in lower mortgage rates. That may be good news at the start of the prime homebuying season, which traditionally begins after the Super Bowl (the game is this Sun). Mortgage costs were expected to climb after the Federal Reserve raised its benchmark lending rate in Dec.
U.S. Mortgage Rates Fall With 30-Year at the Lowest Since April
With today's advance, the Dow broke into the black for Feb, not much of an achievement. Unlike times in the past, stocks are following price changes in oil, not going in the opposite direction. No significant news out of China today & next week the markets will be closed for the new year. News from the US is muddy at best. The big oil companies are reporting earnings, & they are ugly (although much of that has been priced in the stocks already). Dow remains in the red YTD. With all the tumult in the financial markets, safe haven investments like Treasuries & gold are attracting a lot of interest.
Dow Jones Industrials
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