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Upbeat consumer confidence and leading economic indicators reports helped lift both the Dow and S&P 500 to record highs Friday.  The Dow, which posted a 121-point gain, was up 1.6% for the week and for the year, the index is up 17.2%.

The University of Michigan Consumer Sentiment report rose to a better-than-expected 83.7, the index’s highest level since September of 2007, while a leading economic indicators report posted its best result since February of 2012.  Comments on Thursday by Fed Chairman Ben Bernanke that the Fed might begin tapering its stimulus efforts should the economy continue to improve caused a brief drop in markets, but momentum returned on Friday, spurred by the healthy economic data and comments from the Minneapolis Fed President suggesting the Fed has not sufficiently lowered interest rates.

The dollar continued to strengthen this week, rising to three-year highs against major currency rivals, in the process hitting a high versus the Japanese yen not experienced since October 2008.  The stronger dollar has put pressure on gold, which declined for the seventh-consecutive session Friday.  For the week, gold was down 5%.

Oil settled at $96.03 per barrel Friday, up $.03 for the week.  Natural gas ended the week at $4.06, up 3.3% on the day and 3.8% for the week.

Next week, economic calendar highlights include April existing home sales on Wednesday, and April new home sales and weekly jobless claims on Thursday.  Expect existing and new home sales to show improvement from March levels and jobless claims to fall to the 350,000 range from 360,000 this week.

Have a good weekend,

James Skjong

 

The Dow was flat most of the day but experienced a late-day surge, finishing up 36 points to a record 15,118.  The S&P 500 also closed at a record high of 1,634.  For the week, the Dow was up 1.0% – its third consecutive weekly gain – and for the year, the index is up 15.4%.

In a speech Friday morning, Fed Chairman Ben Bernanke reaffirmed a continuation of the Fed’s stimulus efforts while also emphasizing the continued monitoring of markets for excessive risk-taking or other practices that could cause destabilization of asset prices.

The dollar experienced its strongest week against other currencies in 10 months, in the process hitting a 4 ½-year high against the Japanese yen Friday.

Oil fell .6% Friday to close at $95.86 per barrel, up .4% for the week.  The price of oil has climbed almost $10 over the past three weeks, but will be watched as the dollar continues to strengthen.

Through Thursday, our trust preferred portfolios are up approximately 6%, on average, year-to-date, versus 5.56% for the S&P Preferred Stock Index and .55 % for the Barclays Aggregate Bond Index.  Over the past week, a couple of trust preferred issues were called.  As a result, you may have seen a higher-than-normal cash balance in your account.  We are in the process of reinvesting the cash in additional trust preferred and preferred securities, focusing on those with more tax-advantageous, qualified dividends.

The preferred shares of Magnum Hunter have recovered nicely over the past week, nearly to pre-accounting-issue levels.  The current and proposed monetization of assets has contributed to the improvement.

Next week, economic calendar highlights include April retail sales on Monday, April inflation data on Wednesday and Thursday, and initial jobless claims and April housing data also on Thursday.  Expect April retail sales to fall slightly from March, inflation to remain a non-issue, jobless claims to remain in the 330,000 range and the April housing numbers to show improvement from March.

Have a good weekend,

James Skjong

 

A better-than-expected April jobs report boosted markets Friday, sending the Dow to a 142-point gain and the S&P 500 to an all-time high at 1,614.  For the week, the Dow was up 1.8% and for the year, the index is up 14.3%.

The employment report showed the creation of 165,000 jobs in April (above the 155,000 consensus estimate) and a drop in the unemployment rate to 7.5% from 7.6%.  In addition, the number of jobs created in February and March were upwardly revised to 332,000 and 138,000 from 268,000 and 88,000, respectively.  The April job growth and accompanying revisions underscore the belief that the economy has so far been able to weather the effects of the sequester and the recovery remains in process, though at a slow place.  The job reports in May and June will be closely watched as the fiscal cuts continue to filter through the economy.

Oil rose 1.6% Friday to close at $95.47 per barrel.  Since April 17, the price of oil has increased almost $10.

Through Thursday, our trust preferred portfolios are up almost 4.5%, on average, year-to-date, versus 4.73% for the S&P Preferred Stock Index and 1.04 % for the Barclays Aggregate Bond Index.

The economic calendar for next week is a light one, with weekly jobless claims on Thursday the highlight.  Expect jobless claims to rise into the 340,000 range from the better-than-expected 324,000 this week.

 

A disappointing first quarter GDP report contributed to a lackluster day in the markets Friday.  After trading sideways most of the day, the Dow managed only a 12-point gain, finishing the week up 1.1%.  For the year, the index is up 12.3%.

First quarter GDP came in at 2.5%, above the fourth quarter 2012 reading of .4% but below the consensus of 2.8%.  The acceleration in growth from the end of 2012 is a positive; however, most of the first quarter gains came in sectors such as consumption and inventories that are forecast to experience a pullback in the second quarter as effects of the sequester become more evident.  Government spending, which fell 4.1% in the first quarter after a 7.1% decline in the fourth quarter of 2012, is also expected to continue to decline over the next three months due to the budget cuts, further dampening growth.  A bright spot today was a consumer confidence report that showed an increase in consumer sentiment from March.

Oil closed at $92.96 per barrel Friday, gaining 5.3% for the week while natural gas closed at $4.23, declining 4.7% for the week.

Through Thursday, our trust preferred portfolios are up almost 4%, on average, year-to-date, versus 3.79% for the S&P Preferred Stock Index and .72% for the Barclays Aggregate Bond Index.

Next week, economic calendar highlights include April consumer confidence and manufacturing on Tuesday, initial jobless claims on Thursday, and the always anticipated jobs report (for April) on Friday.  Expect the consumer confidence and manufacturing reports to show slight declines from March, initial jobless claims to rise into the 340,000 range from 339,000 this week, and the jobs report to show the creation of approximately 150,000 jobs in April (up from 88,000 in March), steadying the unemployment rate at 7.6%.

Have a good weekend,

James Skjong