Retailers rise in mixed markets

Late day buying brought the markets into the black, barely.  Dow gained 21, advancers just below decliners & NAZ was down pocket change.  Bank stock also waffled as the Financial Index slipped a fraction to the 179s.

The Alerian MLP index shot up 4 to 395, as reaching a new record high yesterday brought out MLP buyers.  The REIT index fell 2+ to below 231, junk bond funds were mixed while Treasuries were weaker.  Oil fluctuated near an 8 month high after the EU said it’s working to sanction oil imports from Iran & on concerns that Europe’s debt crisis will affect consumption.  Gold rose for those same reasons.

ALERIAN MLP Index



DJ REIT INDEXDJR

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.010%
U.S. 2-year	0.259%
U.S. 10-year	1.984%

CLG12.NYM

...Crude Oil Feb 12

...103.26

... 0.30

(0.2%)

Photo:   Bloomberg

Auto sales increased as  consumer confidence reached an 8 month high in Dec, & carmakers aired holiday ads.  US automakers rallied in 2011, 2 years after General Motors & Chrysler emerged from bankruptcies & GM reclaimed the top spot in world vehicle sales from Toyota (TM).  GM Dec vehicle sales rose 4.5% to 234K, topping the 4.4% estimate.  Chrysler sales jumped 37% to 138K cars & light trucks, more than the 33% estimate.  Toyota & Nissan also beat estimates.  Industry light-vehicle sales in Dec may have run at a 13.4M annual rate, up from the 12.5M pace a year earlier.  TM sales of Toyota, Lexus & Scion models increased 0.4% from a year ago to 178K vehicles, topping an expected 1% decline.  Nissan deliveries rose 7.7% to 100K, beating the 5% gain predicted  GM & Ford were each up fractionally.

GM, Ford, Chrysler U.S. Sales Top Estimates

General Motors Company (GM)

Ford Motor Credit Company (F)

Photo:   Bloomberg

Groupon shares fell below the IPO price, as merchants & investors are having second thoughts about the industry.  Half the businesses that offered an online deal- of-the-day in the past aren’t planning to do so again in the next 6 months because merchants were concerned about a low rate of repeat business from new customers gained through such offers.  To keep growing, the industry may more than double to $4B by 2015, will probably agree to charge businesses less which will cut into its profits.  Margins are already shrinking.  While 80% of merchants were satisfied with daily-deal companies, about 52% of merchants said they’re not planning to offer a discount through such sites.  The stock dropped 48¢ to $18.79 & is below the $20 offering price.

Groupon’s Shares Tumbling Below IPO Price Reflects Daily-Deal Peril: Tech

Groupon, Inc. (GRPN)

Markets were not able to follow thru after yesterday's big gain.  The big jobs report on Fri can be felt already & tensions with Iran are another major negative.  Retail sales & auto sales were OK, although discounting probably reduced profitability.  Tomorrow may be another nervous day for traders with little accomplished.  The standout performance is for the MLP index, but MLPs are yield securities & rising prices bring lower yields.  The yield for the index is about 6%, below that has signaled trouble in the past.

Dow Industrials

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Lower markets on European debt unrest

Dow slipped 26, decliners over advancers 2-1 & NAZ fell 9.  The Financial Index was down 2+ to the 177s, erasing half of yesterday's advance,

The MLP index continues on its winning ways, up 2 to 293 for a new record.  But the REIT index pulled back 3 to 230, junk bond funds were lower & Treasuries were pretty much even.  Oil is adjusting to yesterday's big gain, with threats by Iran encouraging more buyers.  Gold is doing well on growing uncertainties in the world.

ALERIAN MLP Index



DJ REIT INDEXDJR

Treasury yields:

U.S. 3-month	0.010%
U.S. 2-year	0.255%
U.S. 10-year	1.954%

CLG12.NYM

...Crude Oil Feb 12

...102.86

..... 0.10  (0.1%)

GCF12.CMX

...Gold Jan 12

........1,610.20

... 10.50

(0.7%)

Get the latest market update below:

Photo:   Bloomberg

New orders for factory goods rose solidly in Nov, but business spending on capital is cooling.  The Commerce Dept said orders for manufactured goods increased 1.8%, snapping 2 consecutive months of declines, as demand for transportation equipment surged.  This was the largest rise since Jul.  Oct orders were revised to show a much smaller 0.2% fall, which was initially reported as a 0.4% drop.  The forecasted increase was 1.7% for Nov.  Orders excluding transportation rose 0.3% in Nov after advancing 0.4% in the prior month.  Orders for non-defense capital goods excluding aircraft, seen as a measure of business confidence & spending plans, fell 1.2% after declining 0.9% in Oct.  The closely tracked shipments for this category fell 0.8% after dropping 0.9% in Oct, indicating business appetite for capital spending may be waning & Nov marked the 3rd straight month of declines.  Business spending had risen sharply since the end of the 2007-09 recession & was one of the drivers of the recovery.  Unfilled orders of non-defense capital goods rose 0.9% after increasing 1.0%t in Oct.  Orders for transportation equipment jumped 14.7% in Nov as demand for civilian aircraft soared 73.9%.  This is a lukewarm report.

Demand for Factory Goods Rises Most in Four Months


The Greek prime minister discussed labor costs with unions & trade federations before a crucial visit by the country's debt inspectors.  Lucas Papademos' meetings come after a gov spokesman warned that Greece could have to leave the euro if the struggling country fails to finalize the details of its 2nd bailout, for €130B ($169B), & more tough austerity measures may be needed.  Debt inspectors from the IMF, ECB & European Commission are expected in mid-Jan. Collectively known as the troika, the inspectors have said Greece needs to reduce its labor costs as part of efforts to make the country more competitive.  But the head of the Hellenic Federation of Enterprises, said his federation would do "whatever it can" to ensure the minimum wage is not lowered.  Hmmm!  Greece has been kept solvent by an initial package of €110B ($142B) bailout loans.  In return, the gov imposed deeply resented austerity measures to contain a bloated budget deficit, including cutting salaries & pensions & introducing repeated tax hikes.  These measures have led to frequent & often violent demonstrations over the past 2 years.  This reality is sinking into the markets today.

Greek PM to meet with labor union, business reps AP

Photo:   Bloomberg

Retail sales at stores open more than a year may have gained as much as 4.5% in Dec, more than previously estimated, as shoppers pursued holiday discounts.  Same-store sales in Dec were earlier projected to have advanced as much as 4% according to the Intl Council of Shopping Centers (ICSC).  New data shows that sales at retail chains last week rose 5.3% from a year earlier.  Sales in the last 2 weeks of Dec increased from a year earlier as retailers extended hours & benefited from Christmas Eve falling on a Sat, providing a strong end to a holiday season that already had exceeded some forecasts.  Major retailers also offered discounts on already marked-down merchandise in the week after Christmas.  “The last few weeks of December helped to lift the full- month performance above our earlier expectation,” said the ICSC.  The National Retail Federation last month raised its forecast for the holiday season after steeper discounts & earlier opening hours contributed to a record $52.4B in sales during the Thanksgiving weekend.  It said sales may increase 3.8% to a record $469B in Nov & Dec, up from a previous projection for a 2.8% gain.  Such an increase would be higher than the 10 year average of 2.6% growth but slower than last year’s 5.2% increase.  Fairly good news, but margins should be hurt by markdowns.

Retail Estimate for December Raised, Discounts Heavy


The markets calmed down after the big move yesterday.  There was selling in the last hour & that's continuing today.  Economic news is reasonably good against a background of many intl financial problems & DC politicos returning next week.  MLPs are on fire again with the index moving up from 320 to over 390 in 3 months. 

Dow Industrials

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Markets soar into 2012

Dow surged 179 (80 below the highs) on the first day of trading in the new year, advancers over decliners almost 4-1 & NAZ jumped 43.  Bank stocks had a strong day, following a bad year in 2011, taking the Financial Index up 5.

S&P 500 Financials Sector Index

Value	180.06
Change	4.83    (2.8%)

The MLP index rose 1 to a new record, 391, while the REIT gained 1+ to the 233s.  Junk bond funds were mixed while Treasuries sold off in the rising stock market.  Oil prices soared as tensions grow over key Persian Gulf oil shipments.  Gold jumped the most in 10 weeks on demand for a safe haven following a report that Iran produced its first nuclear-fuel rod.

Alerian MLP Index

Value	391.22
Change	1.29     (0.3%)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.005%
U.S. 2-year	0.255%
U.S. 10-year	1.956%

CLG12.NYM

...Crude Oil Feb 12

...103.04

... 4.21

(4.3%)

US consumers were lured to auto showrooms by holiday discounts & may have pushed car sales to the 2nd fastest pace in more than 2 years.  Light-vehicle sales in Dec, set for release tomorrow, may have run at a 13.4M annual rate, up from the 12.5M pace a year earlier.  While the rate would trail the 13.6M pace in Nov, typically a slow sales month, the number of units sold increased in Dec.  Consumer confidence reached an 8-month high in Dec, according to the Conference Board, as carmakers aired holiday ads & continued promotions begun in late Nov.  Ad campaigns brought consumers into showrooms seeking year-end deals.

Dealer’s Best December in Five Years Follows U.S. Sale Ads: Cars\


VF Corp.'s stock rose after the stock was raised to "Buy" from "Neutral" & added to a Top Picks Live List.  The analyst said that VFC strong clothing brands, which include Timberland & The North Face, are seeing revenue increases.  VFC bought boot & shoe maker Timberland in Sep, adding $163M to its Q3 revenue.  Profit margins should benefit from lower cotton prices, reduced inventories & price hikes that are likely to be able to be maintained.  The price target was boosted to $157 from $137 & the stock stock climbed $2.68 (2%) to $129.67.

VF rises as analyst lifts rating, price target AP

V.F. Corporation (VFC)

• 

Photo:   Yahoo

In a major shift, the Federal Reserve (FED) will start updating the public 4  times a year on how long it plans to keep short-term interest rates at record lows.  The first forecast will be included in its economic projections after the Jan 24-25 meeting.  The change marks the latest move by the FED  to make its communications more open & explicit which could help assure investors, companies & consumers that rates won't rise before a specific time.  It is hoped that this might help lower long-term yields further to lead consumers & businesses to borrow & spend more.  Lower yields on bonds also tend to cause some investors to shift money into stocks, which can boost wealth & spur more spending.

Fed to Make Benchmark Rate Forecasts Public


Stocks began the year with substantial gains.   Manufacturing data was encouraging, but there was more than that to this rally.  Maybe it was because new pension money went into stocks right away.  Dow crashed thru the 12.2K ceiling, wanting to go higher.  Fri will be the last jobs report for 2011 & Mon the DC politicos return.  Let's see how that plays out.  With oil prices over $100, rising tensions in the Mideast are worth watching.

Dow Industrials

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Markets begin the year with a bang!

Dow shot up 240, advancers ahead of decliners almost 7-1 & NAZ gained 55.  As usual, banks are leading the way higher with the Financial Index rising 5+ to 181 (over 5 is a big gain).

The MLP index was up a relatively modest 1, good enough for a new record, & the REIT index rose almost 5 to the 236s.  Junk bond funds were a little higher & Treasuries pulled back as buying went into the stock market.  Oil climbed to a 6-week high after manufacturing in the US & Asia expanded in Dec & as concern persisted that further sanctions against Iran may disrupt shipments.  Gold also joined in the rally, trying to extend its streak of annual gains to 13.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Treasury yields:

U.S. 3-month	0.010%
U.S. 2-year	0.251%
U.S. 10-year	1.954%

CLG12.NYM

...Crude Oil Feb 12

...102.80

..... 3.97

(4.0%)

GCF12.CMX

...Gold Jan 12

.........1,597.90

... 32.10

(2.1%)

Get the latest market update below:

Photo:   Bloomberg

Manufacturing across the globe showed improvement in Dec, suggesting production is weathering strains from the sovereign debt crisis.  Purchasing manager indices for the UK, Switzerlamd, China, India & Australia all rose in Dec, while German unemployment fell more than forecasted as exports of cars & machinery rose.  In addition,  US manufacturing growth accelerated more than forecasted to the fastest pace in 6 months. The factory production data indicate some resilience in the industry while European leaders work to end the debt turmoil that’s threatening to drag the region back into recession. The IMF may cut its 2012 global growth forecast this month after lowering it to 4% in Sep, when it predicted “severe” repercussions if Europe fails to contain its crisis.  A manufacturing purchasing managers’ index for India rose to the highest level in 6 months & China, manufacturing rebounded last month from a contraction in Nov.  Australian factory production expanded for the first time since Jun, driven by gains in basic metals, transport & publishing.  Manufacturing in Singapore rose 6.5% from a year earlier in Q4, after climbing a revised 13.4% in the previous qtr.  In Europe, a gauge of Swiss manufacturing rose to 50.7 in Dec from 44.8 in Nov, the first reading above 50, which divides contraction from expansion, since Aug.  A UK index rose to 49.6 from a revised 47.7 & a measure of new export orders increased for the first time in 5 months, led by demand from customers in Germany, Eastern Europe & China.  All this sounds good, but the debt mess in Europe drags on.

Global Manufacturing Displays Resilience to Europe’s Debt Crisis: Economy

• 

Photo:   Yahoo

Construction spending in the US jumped in Nov as builders spent more on single-family homes, apartments & remodeling projects.  The Commerce Dept said that spending on construction projects rose 1.2% in Nov, following a revised 0.2% drop in Oct.  The increase was the 3rd in 4 months & the largest since a 2.2% rise in Aug.  The Nov increase pushed spending to an annual rate of $807.1B, still barely half the $1.5T that is considered healthy & it could be 4 years before construction returns to health levels.  Home construction has begun a gradual rebound & likely added to GDP growth in 2011, because apartments are being built almost twice as fast as 2 years ago.  For Nov, private residential construction increased 2% to a $522B rate, the 5th consecutive gain.  Single-family construction rose 1.5% while multi-family construction including apartments rose 1.3% & the category that covers home remodeling rose 9.5%.  Nonresidential construction was unchanged at an annual rate of $243B.  Spending on gov projects rose 1.7 % to an annual rate of $285B, following a 1.8% drop in Oct. State & local construction gained 1.3% & federal building activity increased 5.3%.  But even with those gains, activity in the gov sector was down 5.3% from a year ago.  More favorable data.

Construction Spending in U.S. Climbs 1.2%


All news is not good.  Greece's gov warned that it will have to ditch the € if it fails to finalize the details of its 2nd, €130B ($169B) bailout & that more austerity measures may need to be implemented.  A key component of the package, which was agreed last Oct, is that Greece has to persuade its creditors to take a 50% reduction on the face value of their holdings of Greek debt.  A spokesman said that negotiations in the next 3-4 months with intl debt monitors will "determine everything," including whether Greece escapes a disastrous bankruptcy.  Greece is being kept afloat by a first, €110B ($142B) bailout agreed in May 2010.  An additional rescue package was agreed in Oct but that deal has yet to be finalized.  Sorting out the details of the bailout, which also depends on banks & other big financial firms forgiving Greece a substantial part of its debt, is the main task of the coalition gov headed by former central banker Lucas Papademos, whose short mandate is expected to expire in early Apr.  The Greek drama is far from over.

Greece: No Second Bailout, No Euro


Dow wants to make it 4 straight years of gains.  The manufacturing data brought out buyers in force but the financial side of the markets is still a bit soggy.  For the time being the bulls are happy, taking the average thru the 12.2K ceiling which has held for months.  The MLP index gain is less than impressive, although it's good enough to eke out a new record, something few securities can claim.

Dow Jones Industrial Average

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