Wednesday, March 23, 2016

Markets fall as oil declines on inventory data

Dow dropped 79, decliners over advancers almost 3-1 & NAZ retreated 52.  The MLP index sank 9+ to the 262s & the REIT index lost 1+ to 330.  Junk bond funds were weak & Treasuries rallied as stocks were sold.  Oil pulled back (see below) & gold had a tough day.

AMJ (Alerian MLP Index tracking fund)

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CL.NYM....Crude Oil May 16....40.95 Down ...0.50  (1.2%)

Live 24 hours gold chart [Kitco Inc.]

Purchases of new homes climbed in Feb for the 4th time in the last 5 months as demand snapped back in the west.  Sales increased 2% to a 512K annualized pace following a 502K rate in Jan that was stronger than previously reported, according to the Commerce Dept.  Demand is in line with last year's pace, indicating residential construction will remain a source of support for the economy.  Low mortgage rates & a labor market that’s added almost ¼M workers a monthly over the last 2 years is giving Americans the confidence and means to buy a home.  Increased availability of entry-level properties would help persuade lower-income & first-time buyers to move off the sidelines & give the industry an added boost.

The estimate called for a 510K rate.  Purchases were 2.8% more than the same period in 2015 on an unadjusted basis.  The increase was due to a 38.5% surge in the West, the biggest gain since Dec 2010.  Sales in that region had dropped 32.7% a month earlier.  Purchases declined in the other 3 regions.  There were 240K new houses on the market at the end of last month.  While little changed from 236K in Jan, it was the most since Oct 2009.  The supply of homes at the current sales rate held at 5.6 months.  The median sales price increased 2.6% last month from a year ago to $301K.

Sales of New Homes in U.S. Rebounded in February on Jump in West

Oil prices were down after US crude stockpiles soared to record highs for a 6th straight week & triple expectations, rekindling worries of a glut that could reverse the 2-month long rally.  The gov-run Energy Information Administration (EIA) said crude stockpiles rose 9.4M barrels last week, not far from the 8.8M-barrel build indicated by industry group American Petroleum Institute yesterday.  The data was partially positive, with gasoline stocks falling 4.6M barrels, also 3 times more than forecast.  Demand for the motor fuel over the past 4 weeks soared 7% year-on-year.  Crude stockpiles at the Cushing, Oklahoma, also fell for the first time in 7 weeks.  But the focus remained on total crude stockpiles which hit all-time highs of 532.5M.  Weaker US equity markets, which since the start of this year have traded in tandem with oil, also weighed on crude.  A stronger $ further rendered commodities priced in the greenback less affordable to holders of currencies such as the €.  Crude has rallied about 50% over the past 2 months from 12-year lows, lifting crude from around $26 & Brent from around $27.

Oil Extends Losses After Big Stockbuild in U.S. Crude

The National Retail Federation (NRF) expects Easter spending this year to reach a 13 year high of $17.3B.  According to the NRF, people celebrating will spend an average of $146 per person.  The most spending will be done on food with a total of $5.5B, followed by $3B on clothing, $2.7B on gifts & $2.4B on candy.  The NRF said that shoppers should expect a number of promotions related to Easter merchandise.

Easter Spending To Hit 13 Year High

This was another another quiet day.  Stocks remain vastly overbought after the 6 week rally off the lows.  The ugly news from Brussels has been absorbed, but the over vastly overbought condition of the stock market has not changed.  Oil still has a whopper supply problem to deal with.  Dow is up less than 100 YTD.
Dow Jones Industrials


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