Tuesday, May 10, 2016

Markets rise led by higher oil prices

Dow jumped up 174, advancers over decliners 3-1 & NAZ gained 34.  The MLP index recovered 2+ to the 289s & the REIT index was up fractionally in the 351s following its recent run.  Junk bond funds rose & Treasuries were flattish.  Oil climbed to the 44s & gold pulled back.

AMJ (Alerian MLP Index tracking fund)

CLM16.NYM...Light Sweet Crude Oil Futures,J...43.70 Up ...0.26 (0.6%)

GC.CMX..........Gold Apr 16...............................1,249.50  .....0.30 (0.0%)

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US small business confidence rebounded from a 2-year low in Apr amid growing labor market optimism, supporting views economic growth will regain momentum in Q2.  The National Federation of Independent Business (NFIB) said its small business optimism index increased 1.0 point to a reading of 93.6 last month, the first increase in the index this year.  The index hit a 2 -year low in Mar.  Despite the jump in Apr, it remained below the 100 reading in Dec 2014 & its 42-year average of 98.  Last month's increase is in line with expectations that the economy will pick up speed in Q2 after GDP growth slowed to a 0.5% annualized rate in Q1.  Growth was hampered by the lingering effects of the $'s rally between Jun 2014 & Dec 2015, weak global demand, an inventory overhang as well as low oil prices, which have hurt profits in the energy sector.  5 components of the index rose last month, while 4 were unchanged & one declined.  Labor market measures increased, with the share of small business owners reporting hiring gaining 5 points to 53%, but many said they could not find suitable workers for the open positions.  There was also an increase in the number of owners planning to hire workers, with most of the job creation in construction, manufacturing & professional services.  While there was an improvement in the share of small business owners reporting higher sales, an equal number said sales were weak.

Small Business Confidence Rises From Two-Year Low

While Puerto Rico missed its most recent bond payment on May 1, the US is trying to find a solution to the problem before its next scheduled payment in Jul.  Treasury Sec Jack Lew said the best answer to the crisis is restructuring the nation’s debt.  “Here in Puerto Rico you’d have restructuring combined with an oversight board to make sure that the fiscal problems are solved today, tomorrow and in the future,” Lew explained.  “I think that is so profoundly the right solution and it is so much the opposite of a bailout that it’s important to make the point and to make it clearly.”  Lew stressed that taxpayer money would not go toward restructuring, & that Congress is working on legislation to help move the process forward.  “I believe we’re making progress,” he said. “I think we’ve made very good progress. We’re not quite there yet, there’s more work to be done.”  He added: “There’s urgency because the kind of chaos that comes from missing July payments will take this to a new level of crisis. We’re at a level of crisis, but that crisis will keep escalating until Congress acts. And the time to act is now.”

Jack Lew: Time to Act on Puerto Rico's Debt Crisis is Now

Job openings rose more than projected in Mar, a sign the labor market was still strong toward the end of Q1.  The number of positions waiting to be filled in the US increased by 149K to 5.76M, the 2nd-highest in data back to 2000, from a revised 5.61M in Feb, according to the Labor Dept.  Hiring slumped & more Americans quit their jobs.  Rising job listings & subdued dismissals indicate demand for workers remained steady in Mar even as economic growth was starting to slow, continuing the divergence seen in the past year.  The report, which includes measures tracked by Janet Yellen, is in sync with the central bank's view of continued labor-market progress.  The forecast projected 5.45M openings, little changed from the month before.  Openings reached a record 5.79M in Jul.

Job Openings in the U.S. Climb to Second-Highest in Records

Nothing special happening in the stock markets, but buyers have returned.  The fires in western Canada help explain the rise in oil, & that makes stock buyers feel better.  Dow is heading back towards 18K, although it has not been able to advance from the trading range since late Mar.

Dow Jones Industrials


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