Monday, February 14, 2011

Markets fluctuate after new federal budget announced

Dow dropped 32, decliners barely ahead of advancers & NAZ was up 3.  Bank stocks are lower on profit taking after recent strength.


Value 229.01 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change     -0.89   (-0.4%)

The MLP  Index gained a fraction in the 369s while the REIT index dropped 1+ (from a 29 month high) to 235.  Junk bond funds were flatish & Treasuries also did little The yield on the 10 year Treasury bond hardly budged at 3.61+%.

Treasury yields:

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerian MLP Index  ---   2 weeks

Dow Jones REIT Index  ---   2 weeks

10-Year Treasury Yield Index  ---   2 week

Oil rose as China said exports in Jan surged, a sign that the global economy was gaining steam.  Gold continued its sideways motion from last week.

CLH11.NYM...Crude Oil Mar 11...86.12 ...Up 0.54  (0.6%)

GCG11.CMX...Gold Feb 11.......1,363.70 ....Up 3.80 (0.3%)

Gold Super Cycle Link! Click Here

Pres Obama proposed a budget that would cut the deficit by $1.1T over 10 years, but Reps said it did not curb spending deeply enough. The budget deficit would rise to $1.645T in FY2011 (a new record), then fall to $1.101T in FY2012.  This trend would trim the deficit as a share of the US economy to 3.2% by 2015 from 10.9% this year.  Two thirds of the deficit savings come from spending cuts & expected reductions in interest payments (huh?) as the deficit declines. The rest comes from higher revenue, as provisions in a Dec pact on payroll taxes & jobless aid expire, & as stronger growth lifts tax revenue.  Non-security discretionary spending will be frozen for 5 years, lowering the deficit by $400B over 10 years.

Obama's $3.7 Trillion Budget Sets Fight in Congress

The Treasury says that service on the national debt will triple amid record budget deficits (this projection is not coordinated with the proposed budget just released).  Interest expense will rise to 3.1% of GDP by 2016, from 1.3% in 2010 with the forecast to run cumulative deficits of more than $4T through the end of 2015.  Net interest expense will triple to an all-time high of $554B  in 2015 from $185B in 2010.  The yield on the 10-year Treasury bond will climb to 4.25% by the end of the Q2 in 2012, from 3.63% last week, according forecasts by economists.  Demand for Treasuries remains close to record levels at debt auctions. Investors bid $3 for each dollar of bonds sold in the $178B of auctions last month. Indirect bidders, a group that includes foreign central banks, bought a record 71%, or $17B of the $24B in 10-year bonds offered on Feb 9.  Budgets cuts make few people happy.

Geithner Tells Obama Debt Expense to Increase to Record

There is little significant corp news, the proposed budget is getting most attention.  It will be subject to modifications based on political considerations.  Egypt remains reasonably quiet.  For the time being markets should just drift, looking for direction.

Dow Jones Industrials  ---   2 week

Find out what's inside Trend TV  

Perfect "R" Portfolio Report. Aimed at retirement accounts  

Get your favorite symbols' Trend Analysis TODAY! 

1 comment:

Glenn Millar said...

How can I contact you?