Thursday, June 9, 2016

Lower markets on profit taking

Dow fell 54, decliners over advancers 5-2 & NAZ was off 16.  The MLP index lost 3+ to the 314s & the REIT index climbed 2+ to the 345s.  Junk bond funds inched higher & Treasuries advanced.  Oil dropped on profit taking & gold went higher.

AMJ (Alerian MLP Index tracking fund)

CLN16.NYM....Light Sweet Crude Oil Futures,J...50.52 Down ...0.71  (1.4%)

GCM16.CMX...Gold Futures,Jun-2016............1,263.90 Up ...4.10 (0.3%)

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First-time jobless claims unexpectedly fell last week & the number of Americans already receiving benefits tumbled to an almost 16-year low, consistent with a healthy labor market.  Applications for unemployment insurance dropped 4K to 264K, according to the Labor Dept.  The forecast called for 270K.  Continuing claims decreased to 2.1M in the previous week, the lowest since 2000.
The report indicates companies remain reluctant to reduce headcounts even after figures last week showed May was the worst month for hiring in almost 6 years.  Janet Yellen, who called the payrolls slowdown “concerning,” nonetheless pointed to claims as one of the more positive & timely indicators of the labor market.  The 4-week moving average decreased to 269K last week from 277K.  Filings have been below 300K for 66 consecutive weeks, the longest stretch since 1973 & a level consistent with a healthy labor market.  The number continuing to receive jobless benefits dropped 77K & the unemployment rate among people eligible for benefits decreased to a record-low 1.5%.

Jobless Claims in U.S. Fell to 264,000 Last Week

Oil prices fell as traders took profits after 3 sessions of gains, though prices remained close to their highest this year thanks to a fall in US crude inventories & supply disruptions.  A rebounding $ also weighed on prices.  A fall in the $ to a 5-week low yesterday boosted oil prices, but the index recovered today.  A weaker $ makes oil cheaper for holders of other currencies.  Oil prices also gained ground after data yesterday from the Energy Information Administration (EIA) showed US crude stocks last week fell 3.23M barrels, while inventories of gasoline & middle distillates rose.

Oil Prices Fall After Hitting 2016 Highs

ECB pres Mario Draghi warned of "lasting economic consequences" of years of weak output.  "A too-slow return of output to potential is far from innocuous," Draghi said.  "On the contrary, it has lasting economic consequences, since it can ultimately lead to potential being eroded as well."  Every effort needed to be devoted to ensuring that output was returned to potential before subpar growth causes lasting damage, he added.  "For the ECB, this means that we do not let inflation undershoot our objective for longer than is avoidable given the nature of the shocks we face."  The ECB has already announced a slew of measures to tackle fragile growth & deflation, including cutting the deposit rate into negative territory & buying corp bonds.  "The euro area faces a twin policy challenge: to get more firms in each sector to the productivity frontier, and to get more labor and capital to those productive firms," he said.

ECB's Draghi warns of 'lasting damage' from weak output

Stocks are resting as traders take profits, getting ready to enjoy the weekend.  The goings on in the presidential race are more exciting today.  Dow is back below 18k, a tough nut to crack.

Dow Jones Industrials


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