Dow fell 14, advancers over decliners 3-2 & NAZ added 11. The MLP index lost 1+ to 301 & the REIT index rose 2+ to the 324s. Junk bond funds fluctuated & Treasuries were bid higher. Oil is back in the 41s & gold dropped, still sloshing around the mid 1100s.
Dow dropped 28, advancers over decliners 5-4 & NAZ climbed all of 1. The MLP index lost 1+ to the 301s & the REIT index went up 3+ to the 324s. Junk bond funds inched higher & Treasuries also rose. Oil pulled back below 342 on China worries & gold sold off again into the mid 1100s.
For 3 weeks, China’s stock investors have kept their cool as the
gov dialed back an unprecedented campaign to prop up share
prices. But today, they suddenly decided to head for the exits. While
the Shanghai Composite Index had barely flinched since Nov 6 as
authorities lifted a freeze on IPOs, raised margin
requirements & scrapped an order for securities firms to hold net-long
positions, news of a widening regulatory probe into the brokerage
industry sparked a 5.5% tumble on Fri. While
some of the triggers for the plunge were out of authorities’ hands, a
report showed industrial profits slumped in Oct & 2 companies
said they might not be able to make debt repayments. The slump
illustrates the challenge facing Chinese officials as they seek to wean
the equity market off government support without precipitating another
crash.
That
feat will be made even harder by fresh signs that the economy is
weakening. The earliest economic indicators for Nov show a
deterioration from the previous month, while industrial profits slid 4.6% last month. Fri's losses pared the Shanghai
Composite’s gain since its Aug. 26 low to 17. On
Fri, there was little sign that gov-run funds had stepped in
to ease the selloff.
Crowds were thin at US stores & shopping malls in the early hours
of Fri, initial spot checks showed, as shoppers responded to early
Black Friday discounts with a mix of enthusiasm & caution. Many shoppers headed out to stores on Thanksgiving evening, a month
before Christmas, reflecting the new normal in US holiday shopping,
which was traditionally kicked off the next day, Black Friday. In an effort to attract the most eager holiday shoppers & fend off
competition on the internet, retailers have increasingly extended
their holiday deals by opening stores on the evening of Thanksgiving. Shoppers spent more than $1B online,
22% more than last year, between midnight & 5 pm ET on
Thurs, according to the Adobe Digital Index, which tracked 100M visits to 4½K US retail sites. As much as 20% of holiday shopping is expected to be done over
the Thanksgiving weekend this year. The 4-day
shopping burst will help set the tone for the rest of the season,
signaling to retailers whether they need to drop prices or change
promotions.
The Walt Disney (a Dow stock) sports network ESPN saw
a 3.2% fall in subscribers from the previous fiscal year, in a
market where viewers are migrating to newer forms of sports coverage. The number of ESPN subscribers fell to 92M as at Oct 3, from 95M on Sep 27, 2014. CEO Bob Iger said in Aug it was seeing "modest" declines in ESPN subscribers as viewers move to cheaper digital platforms, but was confident of navigating the shifts. The company earlier this month reported higher quarterly profit that beat forecasts as cable networks including ESPN brought in higher advertising revenue & collected more fees from pay TV distributors. Live sports are one of the few types of programming that still draw
massive audiences at one time, making them valuable to advertisers. And
for many customers, sports is the reason they keep their pay TV
subscriptions. The stock slumped 3.95. If you would like to learn more about DIS, click on this link: club.ino.com/trend/analysis/stock/DIS?a_aid=CD3289&a_bid=6ae5b6f7
The China market decline is worth watching, but otherwise there is not a lot happening with very light volume. Markets close after lunch & little movement is expected in the remainder of the trading day.
Dow edged up all of 1, advancers over decliners over decliners 3-2 & NAZ were up 13. The MLP index was fractionally higher to the 302s & the REIT index added 1+ to the 321s. Junk bond funds did not do much & Treasuries rose. Oil inched higher & gold retreated.
While US consumers are more optimistic about the outlook for the
economy & their personal finances than they were in the aftermath of
the housing bust, their confidence doesn't measure up to previous
cyclical peaks:
Bloomberg
The Nov final reading of the Univ of Mich index of sentiment came in at 91.3, a slight gain from the Oct level, but fell relative to the initial report for the month. The director of the survey, Richard Curtin said this relatively subdued confidence & high savings
rate reflect the notion that future generations might not see an
increase in their standard of living: Retailers will face headwinds based on consumers' demands
that purchases of durable goods would be contingent upon price
discounts. "In only nine surveys in our long history, and this
goes back more than a half a century, have more consumers mentioned
their insistence on price discounts than in this current survey," added
Curtin. As such, the holiday shopping season won't be terrible,
according to the professor, but retailers will have to deal with more
margin compression than they may have anticipated.
New US single-family home sales surged in Oct & the inventory
of properties for sale was the highest since early 2010, which could
allay concerns of a significant slowdown in housing. The Commerce Dept said sales increased 10.7% to a seasonally adjusted annual rate of 495K units.
The Sep sales pace was revised down to 447K units from the
previously reported 468K units. Economists had forecast new home sales, which
account for about 8% of the housing market, rebounding to a rate
of 500K units. Sales were up 4.9% compared to Oct of last
year. Though new home sales tend to be volatile month-to-month because they
are drawn from a small sample, this bounce back should offer some
assurance that the housing market remains on solid ground despite
declines last month in home resales, housing starts & confidence among
builders. New home sales vaulted a record 135.3% in the Northeast to
their highest level since Jan 2010. Sales rose 8.9% in the
populous South & were up 5.3% in the Midwest. They fell 0.9% in the West. The inventory of new homes on the market increased
1.3% to 226K, the highest since Mar 2010. Supply still remains less than half of what it was at the height of
the housing boom. At the Oct sales pace it would take 5.5 months to
clear the supply of houses on the market, down from 6.0 months in
Sep. The median price of a new home fell 6.0% from a year
ago to $281K.
Presi Obama said there is no specific or credible
intelligence indicating a plot against US targets. In a brief
statement after meeting his national-security team, Obama said Americans
should go about their normal Thanksgiving holiday activities but also
urged vigilance. "If you see something suspicious, say something," he
said. He added the US & other nations are stepping up the
pressure on ISIS in the wake of the deadly attacks
in Paris on Nov 13.
On this semi holiday, volume was light & price movements were generally small. Tomorrow begins the important holiday season for retailers & the overall US economy. With so many warnings around, there is a fair amount of worry about the strength of retail sales. Markets will close early on Fri & little is expected with even more traders on holiday (assuming there is no terrorist strike).
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