Dow shot up 166 & closed at its highs, advancers over decliners about 4-1 & NAZ rose 47 (helped by an excellent earnings report from Google). Bank stocks were higher from buying in the PM with the Financial Index near its 3 month highs.
The MLP index is solidly above 351, 10% below its record high & the level that has acted as a ceiling for a few months, & the REIT index gained 4 to 211. Junk bond funds were up 1% & Treasuries sold off, bringing the yield on the 10 year Treasury back towards 2¼% (50 basis points above its record lows last month). Oil rose to a 3-week high as the Group of 20 began discussions on a solution to Europe’s debt crisis & US retail sales climbed. Gold continues lumbering along in the low 1600s, losing its appeal in this rising stock market.
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![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Confidence among consumers unexpectedly dropped in Oct as Americans’ outlooks for the economy their finances slumped to the lowest level since 1980. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 57.5 this month from 59.4 in Sep, below estimates of 60.2. The gauge of consumer expectations for 6 months from now, which more closely projects the direction of consumer spending, dropped to 47, the lowest since May 1980! The figures show a larger-than-projected increase in retail purchases in Sep may not persist. The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation & whether they consider it a good time to buy big-ticket items like cars, decreased to 73.8 from 74.9 in the prior month. Consumers said they expect an inflation rate of 3.2% over the next 12 months, compared with 3.3% in the prior survey. Over the next 5 years, the range tracked by the Federal Reserve, Americans expect a 2.7% rate of inflation, the lowest since Sep 2010, after 2.9% last month. More data that says all is not well in this recovery.
U.S. Michigan Consumer Sentiment Index Unexpectedly Falls as Outlook Sours
The federal gov ran a $1.3T deficit for the budget year that ended last month, the 3rd straight year it has operated more than $1 trillion in the red. The 2011 budget deficit was the 2nd highest on record, slightly ahead of the previous budget year's $1.29T deficit but below the $1.41T imbalance record in 2009. That's $4T in just 3 years!! A decade ago, the gov was running surpluses & trillion-dollar deficits seemed unimaginable. For 2011, the gov had to borrow 36¢ of every dollar it spent. The string of massive debts has made interest on that debt the fastest growing budget category. For 2011, net interest payments rose 15.7% to $227B (when interest rates were near record lows). A slightly improved job market helped boost income tax revenue this year. From Oct 2010 thru last month, the economy added 1.3M jobs which compares with only 339K job gains in the previous 12-month period. The gov also lost revenue because of the 2 percentage point cut in Social Security taxes & it paid for an extension of emergency unemployment benefits. Total revenues increased 6.5% to $2.3T & spending rose 4.2% to $3.6T. The nation's debt is now $14.8T. Just about 1 month remaining for the super committee to recommend fixes to stop this bleeding.
U.S. Gov't Runs $1.3T Budget Deficit in 2011- AP
The Group 20 of rich & developing nations wrangled over whether the eurozone should pick up the whole bill for its escalating debt crisis, or whether the rest of the world should help out more. The IMF, the world's lender of last resort, has until now funded about a third of the cost of the bailouts of Greece, Ireland & Portugal. While some are arguing that Europe has more than enough money to spend its way out of the crisis, others are pushing for more support as debt troubles risk dragging the world economy back into recession. The region's bailout fund, the €440B ($608B) European Financial Stability Facility (EFSF), is expected to soon start buying their bonds on the open market with the hope that it will support their prices & keep a lid on their borrowing costs to allow them to carry on funding themselves in the markets. However most economists & a growing number of European officials believe that the EFSF is too small to stabilize both countries & recapitalize banks in other cash-strapped countries. Meanwhile there is a growing drive to get the IMF to come up with more money. But any attempt to get the IMF to play a more hands-on approach, by possibly joining the EFSF in bond market interventions is likely to meet with resistance as well as require changes to the IMF's legal framework. Bailout II for Greece & its aftermath remain a fuzzy concept.
S&P 500 Financials Sector Index
| Value | 169.90 | |
| Change | 2.37 (1.4%) |
The MLP index is solidly above 351, 10% below its record high & the level that has acted as a ceiling for a few months, & the REIT index gained 4 to 211. Junk bond funds were up 1% & Treasuries sold off, bringing the yield on the 10 year Treasury back towards 2¼% (50 basis points above its record lows last month). Oil rose to a 3-week high as the Group of 20 began discussions on a solution to Europe’s debt crisis & US retail sales climbed. Gold continues lumbering along in the low 1600s, losing its appeal in this rising stock market.
Get the latest market update below:
Alerian MLP Index
| Value | 356.57 | |
| Change | 3.90 (1.1%) |
Treasury yields:
U.S. 3-month | 0.015% | |
U.S. 2-year | 0.261% | |
U.S. 10-year | 2.228% |
| CLX11.NYM | ...Crude Oil Nov 11 | ...87.11 | .... 2.88 | (3.4%) |
Confidence among consumers unexpectedly dropped in Oct as Americans’ outlooks for the economy their finances slumped to the lowest level since 1980. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 57.5 this month from 59.4 in Sep, below estimates of 60.2. The gauge of consumer expectations for 6 months from now, which more closely projects the direction of consumer spending, dropped to 47, the lowest since May 1980! The figures show a larger-than-projected increase in retail purchases in Sep may not persist. The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation & whether they consider it a good time to buy big-ticket items like cars, decreased to 73.8 from 74.9 in the prior month. Consumers said they expect an inflation rate of 3.2% over the next 12 months, compared with 3.3% in the prior survey. Over the next 5 years, the range tracked by the Federal Reserve, Americans expect a 2.7% rate of inflation, the lowest since Sep 2010, after 2.9% last month. More data that says all is not well in this recovery.
U.S. Michigan Consumer Sentiment Index Unexpectedly Falls as Outlook Sours
The federal gov ran a $1.3T deficit for the budget year that ended last month, the 3rd straight year it has operated more than $1 trillion in the red. The 2011 budget deficit was the 2nd highest on record, slightly ahead of the previous budget year's $1.29T deficit but below the $1.41T imbalance record in 2009. That's $4T in just 3 years!! A decade ago, the gov was running surpluses & trillion-dollar deficits seemed unimaginable. For 2011, the gov had to borrow 36¢ of every dollar it spent. The string of massive debts has made interest on that debt the fastest growing budget category. For 2011, net interest payments rose 15.7% to $227B (when interest rates were near record lows). A slightly improved job market helped boost income tax revenue this year. From Oct 2010 thru last month, the economy added 1.3M jobs which compares with only 339K job gains in the previous 12-month period. The gov also lost revenue because of the 2 percentage point cut in Social Security taxes & it paid for an extension of emergency unemployment benefits. Total revenues increased 6.5% to $2.3T & spending rose 4.2% to $3.6T. The nation's debt is now $14.8T. Just about 1 month remaining for the super committee to recommend fixes to stop this bleeding.
U.S. Gov't Runs $1.3T Budget Deficit in 2011- AP
The Group 20 of rich & developing nations wrangled over whether the eurozone should pick up the whole bill for its escalating debt crisis, or whether the rest of the world should help out more. The IMF, the world's lender of last resort, has until now funded about a third of the cost of the bailouts of Greece, Ireland & Portugal. While some are arguing that Europe has more than enough money to spend its way out of the crisis, others are pushing for more support as debt troubles risk dragging the world economy back into recession. The region's bailout fund, the €440B ($608B) European Financial Stability Facility (EFSF), is expected to soon start buying their bonds on the open market with the hope that it will support their prices & keep a lid on their borrowing costs to allow them to carry on funding themselves in the markets. However most economists & a growing number of European officials believe that the EFSF is too small to stabilize both countries & recapitalize banks in other cash-strapped countries. Meanwhile there is a growing drive to get the IMF to come up with more money. But any attempt to get the IMF to play a more hands-on approach, by possibly joining the EFSF in bond market interventions is likely to meet with resistance as well as require changes to the IMF's legal framework. Bailout II for Greece & its aftermath remain a fuzzy concept.
G-20 wrangles over Europe's crisis bill AP
Dow gained a massive 540 this week after a modest gain in the first week of Oct. There was no dramatic news to support this advance, just a lot of hope that the European powers will straighten out the financial mess in some some countries. For the moment, they are still trying to figure out how to arrange bailout II for Greece & deal with other countries which need help. This looks like a fluid situation to me, subject to disappointment. Next week will start off with 3 big banks reporting earnings & they probably will not be pretty. Dow is banging on the 10.6K ceiling that has held for over 2 months. If it gives way markets will rise. But not sure bulls can keep up the momentum.
Dow Industrials (INDU)
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