Thursday, July 21, 2016

Markets fluctuate after 7 days of advancing

Dow gave up 16, advancers over decliners 3-2 & NAZ added 5.  The MLP index rose 1+ to the 326s & the REIT index did little at 371.  Junk bond funds inched higher & Treasuries were a tad lower.  Oil slid lower in the 45s & gold went higher.

AMJ (Alerian MLP Index tracking fund)

Crude Oil Sep 16

Gold Futures,Aug-2016

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The number of applications for US unemployment benefits unexpectedly fell last week, reaching a 3-month low, indicating the labor market remains steady.  Initial jobless claims dropped 1K to 253K from an unrevised 254K in the prior week.  The forecast was for 265K.  Employers continue to retain staff amid improving growth & a shortage of skilled workers that they’re looking to hire.  Sustained low levels of dismissals also signal a strong outlook for the job market that will help lift household spending, the biggest part of the economy.  For 72 consecutive weeks, claims have been below the 300K level that is consistent with an improving job market (the longest stretch since 1973).  Jobless claims data can be volatile in Jul as automakers begin the process of temporarily shutting down plants to retool them for the new model year.  The 4-week moving average decreased to 257K last week from 259K.  The number continuing to receive jobless benefits fell 25K to 2.13M & the unemployment rate among people eligible for benefits dropped to 1.5% from 1.6%.

Jobless Claims in U.. Unexpectedly Decline to Three-Month Low

The ECB kept its stimulus program unchanged as policy makers try to assess the economic damage inflicted by the UK vote to leave the EU.  Officials left the main refinancing rate at zero, the deposit rate at -0.4% & asset purchases at €80B ($88B) a month.  Britain's decision to split from its main trading partner will loom large in Mario Draghi's comments later today.  “The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases,” the ECB said.  The central bank “confirms that the monthly asset purchases of 80 billion euros are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.”  Draghi has predicted the UK referendum result will slow euro-area growth & he may signal officials are ready to deploy more stimulus in Sep, when they will also have new economic forecasts.  Still, a major concern is how much further the ECB can go, with its €1.7T asset-buying program increasingly constrained by ultra-low yields.  Policy makers around the world are grappling with the fallout from Britain's Jun 23 referendum.  The IMF cut its outlook for the global economy this week & the Bank of England has signaled it may announce additional stimulus next month as it seeks to shore up the UK economy.

ECB Leaves Stimulus Unchanged as Draghi Gauges Brexit Effect

Sales of previously owned homes unexpectedly climbed in Jun to the highest level in more than 9 years, giving a boost to residential real estate as it approached the end of its busy selling season.  Contract closings climbed 1.1% to a 5.57M annual rate (forecast was 5.48M), the most since Feb 2007.  Sales increased 1.9% from Jun 2015 before seasonal adjustment.  The median price of an existing home rose 4.8% from Jun 2015 to $247K.  Inventory of available properties dropped 5.8% from a year earlier to 2.12M units, the lowest for a Jun since 2001.  Americans buoyed by stable job growth, the promise of higher wages & rebounding stock prices are in good position to take advantage of historically low borrowing costs, keeping the housing recovery on course in the 8th year of the expansion.  At the same time, builders are running up against a limited supply of available lots for construction, signaling a limit for real-estate growth.  “Demand is still strong -- the choke point is still on the supply,” Lawrence Yun, chief economist at the National Association of Realtors said.  “The fundamentals still remain strong.”

Sales of Existing U.S. Homes Rise to Highest Level in Nine Years

Stocks are not doing a lot, although there is an upward bias to the advancers.  Earnings are coming in mixed to better.  They are expected to be down about 5% in Q2.  Popular averages. near or at record levels is hard to understand.

Dow Jones Industrials


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