Thursday, February 2, 2017

Mixed markets on concerns about future rate hikes

Dow lost 10, advancers over decliners 4-3 & NAZ was essentially even.  The MLP index was off a fraction to the 332s & the REIT index added 3+ to the 339s.  Junk bond funds were a little higher & Treasuries went up.  Oil rose & gold shot up to 1222.

AMJ (Alerian MLP Index tracking fund)

Crude Oil Apr 17

Gold Futures,Apr-2017

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Worker productivity in the US cooled in Q4 following the biggest jump in 2 years, resuming the weak efficiency gains that have plagued the expansion.  The measure of employee output per hour increased at a 1.3% annualized rate, after a revised 3.5% rise in the prior 3 months, Labor Dept figures showed.  The projection called for a 1% gain.  Expenses per worker rose at a 1.7% pace.  The latest slowdown, following a Q3 gain that ended the longest streak of productivity declines since 1979, underscores the challenge of developing a sustained pickup.  With wage growth remaining below pre-recession levels, businesses have relied on more hiring rather than investing in technology to increase efficiency.  Unit labor costs, adjusted for efficiency gains, were forecast to rise at a 1.9% rate in Q4.  They increased 0.2% in the prior qtr, revised from a previously reported advance of 0.7%.  Productivity increased 1% from Q4-2015.  Labor costs rose 1.9% from a year earlier.  Adjusted for inflation, hourly earnings fell at a 0.4% rate last qtr, the 2d drop in 2016, after increasing at a 2.1% pace.  Output rose at a 2.2% rate, following a 4.2% gain.

U.S. Productivity Gains Cooled Last Quarter; Labor Costs Rose

Fewer Americans filed applications for unemployment benefits last week, marking 100 straight weeks of claims below 300K.  That’s the longest streak since 1970 & indicates a healthy job market.  Jobless claims declined 14K to 246K, according to the Labor Dept.  The forecast called for 250K.  Continuing claims also fell.  The sustained trend of historically low jobless claims shows businesses are retaining existing employees as they face a shortage of skilled workers amid a tight labor market.  Employers also continue to hire at a solid pace.  Monthly data due tomorrow are projected to show the economy added more jobs in Jan than the prior month.  The latest stretch below 300K claims ranks behind the record 161-week period that ended in 1970 (statistics began in 1967).  Such a level is consistent with a healthy labor market.  The number of people continuing to receive jobless benefits fell 39K to 2.06M & the unemployment rate among people eligible for benefits held at 1.5%.  The 4-week moving average increased to 248K last week, from 246K.

Filings for U.S. Jobless Benefits Fell to 246,000 Last Week

Oil prices rose as evidence that OPEC & other big exporters were cutting production outweighed a sharp rise in US crude and gasoline stockpiles.  US light crude gained 15¢ to $54.03 after climbing $1.07 yesterday.  Crude oil benchmarks are now near the top of recent price ranges.  US crude oil inventories rose last week by an unexpected 6.5M barrels to 495M barrels, the Energy Information Administration said.  The build in crude stocks far exceeded expectations for an increase of 3.3M barrels.  Inventories in the US, the world's biggest oil consumer, have been near record highs for much of the past year & domestic production is rising as US companies drill for shale oil.

Oil up as OPEC Cuts Outweigh Rise in U.S. Inventories

Not much happening today in the stock market.  Trump is moving forward with his agenda & the Dow remains close to its record highs reached last week.  And DC is a mess with expectations that fighting will drag on for months.

Dow Jones Industrials


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