Dow rose 107 (closing near the highs), but decliners slightly ahead of advancers & NAZ went up 44. The MLP index lost 7+ to the 263s on falling oil prices & the REIT index added 1+ to the 341s. Junk bond funds eased back & Treasuries lost a little ground. Oil dropped to the 36s & gold also declined.
For the past couple of years, automakers have helped keep the economy
going as confident consumers raced to replace their aging rides with
more luxurious cars & sport utility vehicles. That torrid growth is
starting to level off. The 3 US automakers posted sales
gains that missed estimates in Mar, while Japan's Toyota
(TM) reported a surprise decline. General Motors (GM) said the industry sold cars at an annualized rate of about 17.1M
vehicles, healthy by historical comparisons but the slowest pace since
Jun.
Add
in the fact that some automakers are starting to spend more on sales
incentives & making longer-term loans, it's clear executives
are no longer counting on rip-roaring demand. It also brings the
industry more into line with an economy that has been logging steady but
not stellar growth. Even
with relatively cheap gasoline stoking consumer demand for SUVs &
pickups, GM, Ford (F) & Fiat Chrysler (FCAU) all fell
short of sales estimates for the month.
Cleveland
Federal Reserve pres Loretta Mester said at the Apr meeting is when she'll decide how to vote on a possible rate
rise. “I want to see all the data that’s coming in. My best guess at
this point is that the economy will evolve in a way that will entail
bringing interest rates up gradually sometime this year but when it is
and how many, I can’t tell you at this point,” she said. She added that the economy has been resilient in the
face of the global-growth worries that plagued financial markets in Q1, the rising $, & low oil prices. “Despite all these drags, and they are downside risks to the
outlook, the economy has been very resilient through it. And that makes
me think, to me, it’s appropriate that we are on this gradualization
path. Gradual is the watch word.” She reiterated what Yellen has repeatedly said, that by being gradual, the Fed can
analyze all of the economic data pouring in on the state of the economy (not just figures on the labor market & inflation) & take its time
without worrying about moving too quickly or too slowly on rates.
Consumer sentiment fell slightly in Mar suggesting some caution on the
part of Americans facing better job prospects but a still uncertain
global economy. The University of Michigan final consumer
sentiment index for Mar registered at 91.0. That's
down from the final Feb reading of 91.7. The preliminary Mar
reading, released 2 weeks ago, was 90.0. Expectations were for a Mar index reading of 90.4.
The relative stability in recent months reflects "more positive
personal finances being offset by less favorable prospects for the
economy," said Richard Curtin, the survey's chief economist.
Oil tumbled 4%, taking it back into the 36s. Its advance from late Feb has been wiped out. Comments from Saudi Arabia are responsible for today's decline. In this world, when Saudi Arabia speaks, the world listens. A sluggish oil market & gloomy earnings reports can be tough on this 2 month bull market which is overdue for a correction. For the time being, Dow is up almost 400 YTD & nearing its record high.
Dow climbed 24, decliners over advancers almost 2-1 & NAZ gained 13. The MLP index sank 8+ to the 262s & the REIT index was flattish in the 339s. Junk bond funds slid lower & Treasuries rose in price. Oil plunged to the 37s (see below) & gold retreated.
Employment in the US climbed & wages picked up in Mar, signs of
labor-market durability in the face of lethargic global growth. The
215K gain in payrolls followed a revised 245K Feb advance, according to the
Labor Dept. Average hourly earnings
increased 0.3% from a month earlier, while the jobless rate crept
up to 5% as more people entered the labor force. A
still-robust pace of job creation represents a vote of confidence by
employers that the US will hold up against an anemic global economic
backdrop. Additional tightening in the labor market that sparks bigger
pay gains for American workers may convince Federal Reserve policy
makers that the economy is more insulated to weakness overseas.
Construction
payroll growth accelerated in Mar, while manufacturing employment
slumped by the most since Dec 2009. Other industries adding jobs
included retail, health care, leisure & hospitality, & professional
services. Gov hiring was the strongest since Aug. Details showed that some people entering the labor force were only able
to find part-time employment. The number working part-time
for economic reasons rose by 135K to 6.12M, the highest since
Aug. That pushed up the broadest measure of unemployment, which also includes discouraged workers, to 9.8% from 9.7%. The
labor force participation rate, which indicates the share of
working-age people who are employed or looking for work, rose to 63%, the highest in 2 years. Wage growth rebounded from a
month earlier with average hourly earnings rising more than
forecast after a 0.1% drop. The year-over-year increase was 2.3%.
Manufacturing expanded in Mar for the first time in 7 months,
fueled by a surge in orders that signals American factories are emerging
from their worst slump since the last recession. The Institute
for Supply Management index climbed to 51.8 from 49.5 in Feb. It was the
first time since Aug that the gauge exceeded 50, the dividing line
between growth & contraction. Factory bookings were the
strongest since Nov 2014 & a measure of production reached a
10-month high as companies made further progress getting inventories in
line with sales. The outlook for manufacturing is a bit brighter
following a recent recovery in commodities prices & a tempering of the
$ strength.
12 of 18 industries posted
growth, including printing, furniture, machinery & plastics. The
ISM index was the strongest since Jul & exceeded the forecast of 51. The new orders gauge increased to 58.3 from 51.5, & a
measure of production rose to 55.3 from 52.8. 13 of 18 industries
reported a pickup in bookings. The index for orders waiting to be filled advanced to 51 from 48.5. One weak spot in the report was the factory employment measure, which decreased to 48.1 from the prior month’s 48.5. The index of export orders rose to 52, from 46.5, the biggest jump since Apr 2011. The gauge of factory inventories edged up to 47 from 45, & customer stockpiles rose to 49 from 47. The
index of prices paid surged 13 points, the most since Aug 2012, to
51.5. It was the first time since Oct 2014 that the measure
indicated rising prices.
Oil erases its gains for the year as Saudi Arabia's
deputy crown prince said the kingdom will only freeze production if Iran & others follow suit. With producers scheduled to meet
this month to complete an accord on capping output, Saudi Arabia signaled that if any
country raises output, the kingdom will also boost sales. While Iran will attend,
it has ruled out limiting supply as it restores exports after sanctions
were lifted. Oil extended losses & the $ gained as
US jobs data bolstered the case to raise interest rates.
"If
all countries agree to freeze production, we’re ready," the Saudi Arabia spokesman said. "If there is anyone that decides to raise their
production, then we will not reject any opportunity that knocks on our
door.” OPEC
boosted output 64K barrels to 33.09M a day in Mar as
Iran pumped at the highest level in almost 4 years. Iranian output rose 100K barrels a day to
3.2M last month, the most since May 2012.
The jobs report had mixed information. Fewer jobs were created than in the prior month & the unemployment rate inched higher. Even the bulls have to admit that a stronger jobs report will give the timid FOMC courage to raise interest rates this month. After a strong start this year, oil prices have gone nowhere in the last month. And earnings season will begin in a week.
![Live 24 hours gold chart [Kitco Inc.]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_tJl5AJiVy-czwGF1khcGTmUQhVjuBgMHC2hb11QsrqumWWUQthXapTFG9amzrFqYuQF-AngOWGDBQEVJFNSibrchC0Tw5yAjObhWXPiNaAe0K663iB0Fk8SS-SpHU=s0-d)
...1.30 
