Markets crawl higher

Stocks were mildly higher today.  Dow rose 26, advancers 3-2 over decliners & NAZ was up 4.  This was another do nothing kind of day for the markets.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month	0.112%
U.S. 2-year	0.309%
U.S. 10-year	1.827%

The biggest news was after the close when Apple (AAPL) & Amazon (AMZN) reported earnings.  AAPL was down 7 during regular trading but recovered 3 after the close even though it missed estimates.  AMZN lost 5 during the day & another 2 after the close.  These are based on gut reactions, but it looks like they will set up for a negative open tomorrow.  Sorry for the abbreviated post, but Blogger, from Google (GOOG), was giving me problems.

Dow Jones Industrials

Markets rise on lower unemployment claims

Dow gained 34, advancers over decliners 4-3 & NAZ was up 9.  The Financial Index added 1 to the 214s.  The MLP index rose 1+ to over 410 while the REIT index dropped 2 to the 259s.  Junk bond funds edged higher & Treasuries pulled back.  The yield on the 10 year Treasury is near its highest level since mid May.  Oil was little changed after giving up a gain of 1.2%.  Gold rebounded, heading for the biggest gain in 3 weeks, as Brazil & Turkey’s central banks increased holdings of gold & amid signs that purchases are rising in India, the world’s biggest buyer.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month	0.106%
U.S. 2-year	0.305%
U.S. 10-year	1.835%

CLG13.NYM

...Crude Oil Feb 13

...87.47

..... 0.63

(0.7%)

GCV12.CMX

...Gold Oct 12

.....1,715.20

... 14.70

(0.9%)

Photo:   Bloomberg

Weekly applications for unemployment aid fell last week to 369K, a level consistent with modest hiring.  The Labor Dept said that applications dropped 23K, from a revised 392K in the previous week.  The 4 week average rose to 368K.  The figures appear to have stabilized after being distorted in the previous 2 weeks by seasonal adjustment problems.  Applications are a proxy for layoffs. When they fall below 375K, it suggests hiring is strong enough to lower the unemployment rate.  Employers are hesitant to add more workers as long as growth remains tepid & Europe's financial crisis threatens to push that region into recession.  Many also are holding off because they are worried about tax increases & gov spending cuts that would kick in next year if Congress doesn't reach a budget deal to avert them.  The number continuing to receive unemployment aid fell to 4.9M, about 85K fewer than the previous week.  Some of those no longer receiving benefits may have gotten jobs, but many have simply used up all the benefits available to them. 

Firings Highest Since 2010 as Ford to Dow Face Slump


US companies remained cautious in Sep & held back on orders for long-lasting manufactured goods that signal investment plans.  Weak business investment has contributed to slower economic growth.  The Commerce Dept said that orders for durable goods jumped 9.9% last month.  While it was the biggest gain in nearly 3 years, most of the gain was driven by a tremendous spike in aircraft orders, which are very volatile & plummeted in the previous month.  When taking out transportation, orders rose just 2%.  Demand for core capital goods, such as machinery and equipment, were unchanged in Sep.  Core capital goods are considered a proxy for business investment plans & those orders rose only slightly in Aug after steep declines in Jul & Jun.  Demand is sharply lower this year, which has weakened manufacturing & hampered economic growth.  Businesses have held back on investing in machinery & equipment.  And slower global growth has dampened demand for US exports.

Orders for U.S. Capital Goods Stagnate Spending Slumps


Procter & Gamble, a Dow stock & Dividend Aristocrat, fiscal Q1 net income fell 7%, as costs related to restructuring & the stronger dollar weighed on results.  But adjusted results beat expectations, as it cut costs, made market share gains & commodity costs eased.  PG, maker of Tide & Pampers, said it held or grew market share in businesses representing over 45% of sales, up from 30% in the prior qtr.  That jumped to nearly 60% in the US, up from 15% in the prior qtr.  Its market share is still slightly down globally, but it expects global market share gains by H2 of the year.  In May PG announced a plan to focus on its 40 top businesses, 20 biggest new products & 10 most profitable emerging markets, as it is undergoes a cost-cutting plan aimed at saving $10B by fiscal 2016.  "We're confident that this strategy will enable P&G to generate superior levels of shareholder return in both the short and long term," CEO McDonald said.  EPS fell to 96¢, down from $1.03 last year.  Excluding restructuring & European legal charges, core EPS was $1.06, beating expectations of 96¢.  Revenue fell 4% to $20.7B & analysts expected $20.8B.  The stronger dollar, which cuts into the value of overseas sales, hurt revenue by 6 percentage points.  For fiscal Q2, PG predicts adjusted core EPS of $1.07-$1.13 with revenue ranging from -1% to -1%, implying revenue $21.9B-$22.3B.  Analysts expect $1.09 on revenue of $21.8B.  For the full year PG kept its guidance for adjusted core earnings of $3.80-$4 on flat revenue growth to +1%.  The stock rose $2.45.

P&G First-Quarter Profit Exceeds Analyst Estimates as McDonald Trims Costs

Procter & Gamble (PG)

Stocks are doing a little better, but buying is not robust.  News continues to be so-so at best.  The 2 big problems with earnings reports are sluggish sales, sometimes even lower, & a negative foreign earnings impact.  Weak sales is the biggest problem & that is not going away soon with Europe in recession & the US looking at the approaching fiscal cliff & its effects.  Meanwhile Dow keeps lumbering along, just above 13K.  If that support level gives way, look out below.

Dow Jones Industrials

Markets slide lower after FOMC meeting

Dow fell 25, decliners over advancers 5-4 & NAZ was off 8  The Financial Index slipped back a fraction to 213.  The MLP index was up 1 to 409 & the REIT index fell pocket change in the 261s (little changed in 4 months).  Junk bond funds climbed higher & Treasuries were mixed to lower.  Oil continued sliding & gold fell $5 to just above $1700.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month	0.106%
U.S. 2-year	0.285%
U.S. 10-year	1.770%

CLZ12.NYM

Crude Oil Dec 12

85.76 2:37PM EDT

0.91 (1.05%)

Photo:    Bloomberg

ECB President Draghi defended his plan to buy gov bonds in the German parliament with a warning about deflation risks.  The ECB’s so-called Outright Monetary Transactions “will not lead to inflation,” Draghi said.  “In our assessment, the greater risk to price stability is currently falling prices in some euro-area countries,” he said.  “In this sense, OMTs are not in contradiction to our mandate: in fact, they are essential for ensuring we can continue to achieve it.”  Draghi is seeking to win support in Europe's largest economy for his plan to purchase gov bonds to stem the debt crisis & safeguard the €.  Some German policy makers including Bundesbank President Jens Weidmann have said the proposal is tantamount to printing money to finance govs, which is prohibited by the ECB’s statutes.  “OMTs will not lead to disguised financing of governments,” Draghi said.  “All this is fully consistent with the Treaty’s prohibition on monetary financing. Moreover, they will focus on shorter maturities and leave room for market discipline.”  Speaking at a press conference afterwards, Draghi said while it would be “too ambitious” to claim he had won over the German public, he had a “very productive, wide-ranging” exchange with German parliamentarians, which was aimed at building confidence & trust. 

Draghi Defends Bond Purchases With Warning of Deflation




Photo:   Bloomberg

The Federal Reserve (FED) stuck to its plan to keep stimulating the US economy until the job market improves & repeated its vow to keep rates near zero until mid-2015.  After a 2 day meeting, the FED acknowledged hints of strength in the US housing market, but reiterated a pledge to continue supporting growth even as the recovery picks up.  It said it would continue purchasing $40B in mortgage-backed debt per month to push interest rates lower.  The FED did nod to a recent increase in inflation but said it was linked to higher energy prices, adding that inflation expectations have remained stable.  It also noted household spending has grown "a bit more quickly" but cautioned that business investment was softening.  "The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the FOMC said.  The FED, which has held rates close to zero for 4 years, had already bought $2.3T in mortgage-related & gov debt before it launched its latest round of stimulus.  The problem is, GDP grew at an annual rate of just 1.3% in Q2.  While the pace of recovery quickened a bit, it is not enough to put steady downward pressure on the jobless rate.  At the same time, a looming tightening of US fiscal policy risks tossing the economy back into recession.  Europe's debt crisis, a key source of concern for the FED, also remains unresolved, although it is not flaring up too wildly in financial markets, offering comfort that the US economy will escape any contagion.

Fed Says Growth ‘Moderate’ While Maintaining Bond Buying

Photo:    Bloomberg

Americans bought new homes in Sep at the fastest pace in 2 years, another sign the industry is bouncing back.  Sales climbed 5.7% to a 389K annual pace, the most since Apr 2010, following a revised 368K rate in Aug, according to the Commerce Dept.  The estimate called for an increase to 385K.  Population growth & mortgage rates pushed to record lows by Federal Reserve purchases of housing debt are generating sales for builders & spurred the 3 year economic recovery.  Housing starts in Sep jumped 15% to the fastest pace since Jul 2008, a report showed last week.  Demand for new houses was up 27.1% from a year ago & the median price for a new house climbed 11.7% from the same month last year to $242K.  Purchases increased in 3 of 4 regions, led by a 16.8% gain in the South & a 16.7% increase in the Northeast.  But sales in the Midwest dropped 37.3%, the biggest decrease since Jan 1994.

Home Sales Rising to Two-Year High Spur U.S. Growth: Economy


This was another dismal day for the markets.  The FED said nothing new, to be expected so close to the election.  The earnings season continues to dominate the news & it has not been good.  There were a few better reports today, but on balance companies are weighed down by sluggish demand for products & services.  In addition, negative currency impacts many of the intl giants.  On this uneventful day for the markets, Dow lost 50 in the last 1+ hours.  Not a good sign going forward as it is only 76 above the 13K floor.

Dow Jones Industrials