Thursday, March 23, 2017

Markets edge higher while waiting for healthcare vote

Dow went up 17, advancers over decliners 3-1 && NAZ gained 6.  The MLP index added 1+ to the 315s & the REIT index rose 2+ to 343.  Junk bond funds were off a tad & Treasuries drifted a little lower.  Oil slid lower & gold was also off slightly.

AMJ (Alerian MLP Index tracking fund)

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Filings for US unemployment benefits rose to a 7-week high, representing a departure from other data showing a solid labor market.  Jobless claims increased 15K to 258K in the latest week, a Labor Dept report showed.  The forecast called for 240K.  Even with the pickup in claims last week, hiring managers have been slow to dismiss workers as the labor market tightens & job vacancies become harder to fill with skilled & experienced employees.  Companies also have been adding to payrolls at a healthy pace & gradually increasing wages.  The report also included annual revisions for both initial & continuing claims back thru 2012.  The latest reading marked 80 straight weeks of filings below 300K, the level considered consistent with a healthy labor market.  Before the annual revisions, the streak had been at 106 weeks.  The 4-week average for all jobless claims rose to 240K from 239K in the prior week.  The number of people continuing to receive jobless benefits decreased 39K to 2M & the unemployment rate among people eligible for benefits dropped to 1.4% from 1.5%.

Claims for U.S. Jobless Benefits Increase to Seven-Week High

Purchases of new homes increased in Feb to a 7-month high, indicating the effects of the recent rise in borrowing costs on the US residential real estate market have been modest.  Sales rose 6.1% to a 592K annualized pace, Commerce Dept data showed.  The forecast called for a 564K rate.  Warmer winter weather probably played a role in boosting demand as purchases in the Midwest surged by the most since Oct 2012.  The pace of new single-family home purchases is building on a solid 2016, which was the strongest in 9 years.  Resilient job growth & steadily improving household balance sheets continue to underpin demand as they allow some buyers to withstand higher mortgage rates.   Last month was the strongest reading for a Feb since 2008.  The pickup in demand was led by a 30.9% jump in the Midwest.  That put the annualized rate of sales in the region at 89K in Feb, the strongest pace since 2007.  Purchases also increased in the West & South.  The supply of homes declined to 5.4 months, from 5.6 months in Jan.  There were 266K new houses on the market at the end of Feb.  The median sales price of a new house dropped 4.9% from Feb 2016 to $296.K.

U.S. New-Home Sales Climbed to a Seven-Month High in February

Greek deposit outflows resumed, prompting the central bank to raise the ceiling of emergency liquidity available to lenders, as a deadlock in bailout talks sparked fears among savers of reliving the 2015 drama that pushed the country to the edge of economic collapse.   The Governing Council of the ECB didn't object to a Bank of Greece request to raise the ceiling of Emergency Liquidity Assistance available to Greek lenders to €46.6B ($50B).  The €400M increase “reflects developments in the liquidity situation of Greek banks, taking into account private-sector deposits flows,” the central bank said.  Outflows this year thru last Thurs totaled about €3.6B.  They reflect a diminishing stock of banknotes as people pay taxes & an orderly flow of funds toward foreign bank accounts.  It is the first time since the Bank of Greece started releasing ELA ceiling data in Sep 2015 that an increase was deemed necessary, & the first time the central bank omitted a reference to a “stabilization” or “improvement” of deposit flows in its statement.  Greece's financial sector saw net inflows in 2016, when savers’ confidence in banks’ health was gradually returning.  The Bank of Greece had lowered the ELA ceiling by €100M only 2 weeks ago.  Negotiations between Greek bailout auditors & Finance Minister over the terms of the emergency loans have so far failed to reach a successful conclusion, prolonging a standoff that risks leaving the country unable to service debt payments this summer.  Uncertainty has been weighing on economic activity, threatening to derail hopes for a recovery this year.  

Greek Deposits Bleeding Drama Resumes Amid Bailout Uncertainty

Stocks are meandering.  Not much to do until the House votes this evening on the healthcare bill.  Its importance is huge for stocks, because the Reps need to pass a bill so they can begin work on tax reform.  No one has it in sight, but that drama will be another ugly time.  Limited stock buying today is encouraging, even though it will mean little when the actual vote takes place (assuming it is not pulled because of a lack of confidence about getting it passed).  Not to be forgotten, the Greek debt mess is back!!

Dow Jones Industrials

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