Dow managed a 33 gain (helped by a favorable earnings report from Coke), advancers ahead of decliners 3-2 & NAZ was up 2. Bank stocks were pretty much flat.
The MLP index was up a fraction in the 397s & the REIT index fell a fraction to just under 251 (still near its yearly highs). Junk bond funds edged higher but Treasuries sold off. Oil rose after Bernanke said the jobs market is not healthy. Gold shot up 24, near its 10 week highs, on unsettled conditions coming out of Europe.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
PM Papademos is meeting with the local leaders tomorrow, instead of tonight as previously scheduled. Instead, But he will meet tonight with the troika (the European Commission, the ECB & the IMF) to put final touches to terms required for a €130B ($172B) rescue package. The delay is yet another hitch in completing a package that’s been on the table since Jul as the gov struggles to wind up financing to avert a collapse of the economy. Chancellor Merkel said yesterday “time is running out” to reach an accord. An official said earlier the gov & creditors were close to a final draft & structural measures needed to extend the financial lifeline. While the PM & party chiefs have agreed to make further cuts this year, they have yet to close gaps over measures demanded by creditors for the rescue. Unions, which struck today, have derided the conditions as “blackmail.” This drama has been dragging on for over half a year & still no resolution.
Greece, Troika Work on Final Rescue Draft
Photo: Bloomberg
Ben Bernanke is urging senators to resolve debates over tax cuts that expire this month & at the end of the year, saying uncertainty around both could slow the economy. Bernanke told a Senate panel that he agrees with an analysis by the CBO that growth would slow to 1.1% next year if the so-called Bush tax cuts expire. He also says the economy would be hampered if a Social Security tax cut expires at the end of this month. The tax cuts hinge on a debate over trimming the federal deficit, which is projected to run above $1T for the 4th straight year. He added that the 8.3% rate of unemployment understates weakness in the U.S. labor market. “It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work,” Bernanke said. “There are also a lot of people who are either out of the labor force because they don’t think they can find work” or in part- time jobs.
Opposition to a pay freeze for federal workers tripped up talks about extending a payroll-tax cut, exposing deep divisions between Dems & Reps about how to fund the break. Largely Dems objected to freezing US gov employees’ wages in order to pay for a 10 month extension of the 2 percentage-point cut. If Congress doesn’t act by Feb 29, the payroll tax would revert to 6.2% from 4.2% & jobless benefits for workers would also be scaled back to 26 weeks from 99 weeks. Doctors reimbursed by Medicare would also get lower payments. Reps pointed to a recent CBO study showing that federal workers earn about 16% more than their private-sector counterparts, saying that gov employees had to pitch in to pay for the tax-cut extension & other programs. Reps say federal employees make a whole lot more than people in the private sector & many think it’s fair to ask them to make a sacrifice as well.
The MLP index was up a fraction in the 397s & the REIT index fell a fraction to just under 251 (still near its yearly highs). Junk bond funds edged higher but Treasuries sold off. Oil rose after Bernanke said the jobs market is not healthy. Gold shot up 24, near its 10 week highs, on unsettled conditions coming out of Europe.
JPMorgan Chase Capital XVI (AMJ)
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Treasury yields:
U.S. 3-month | 0.076% | |
U.S. 2-year | 0.246% | |
U.S. 10-year | 1.965% |
| CLH12.NYM | ....Crude Oil Mar 12 | ....98.48 | ... 1.57 | (1.6%) |
PM Papademos is meeting with the local leaders tomorrow, instead of tonight as previously scheduled. Instead, But he will meet tonight with the troika (the European Commission, the ECB & the IMF) to put final touches to terms required for a €130B ($172B) rescue package. The delay is yet another hitch in completing a package that’s been on the table since Jul as the gov struggles to wind up financing to avert a collapse of the economy. Chancellor Merkel said yesterday “time is running out” to reach an accord. An official said earlier the gov & creditors were close to a final draft & structural measures needed to extend the financial lifeline. While the PM & party chiefs have agreed to make further cuts this year, they have yet to close gaps over measures demanded by creditors for the rescue. Unions, which struck today, have derided the conditions as “blackmail.” This drama has been dragging on for over half a year & still no resolution.
Greece, Troika Work on Final Rescue Draft
Ben Bernanke is urging senators to resolve debates over tax cuts that expire this month & at the end of the year, saying uncertainty around both could slow the economy. Bernanke told a Senate panel that he agrees with an analysis by the CBO that growth would slow to 1.1% next year if the so-called Bush tax cuts expire. He also says the economy would be hampered if a Social Security tax cut expires at the end of this month. The tax cuts hinge on a debate over trimming the federal deficit, which is projected to run above $1T for the 4th straight year. He added that the 8.3% rate of unemployment understates weakness in the U.S. labor market. “It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work,” Bernanke said. “There are also a lot of people who are either out of the labor force because they don’t think they can find work” or in part- time jobs.
Opposition to a pay freeze for federal workers tripped up talks about extending a payroll-tax cut, exposing deep divisions between Dems & Reps about how to fund the break. Largely Dems objected to freezing US gov employees’ wages in order to pay for a 10 month extension of the 2 percentage-point cut. If Congress doesn’t act by Feb 29, the payroll tax would revert to 6.2% from 4.2% & jobless benefits for workers would also be scaled back to 26 weeks from 99 weeks. Doctors reimbursed by Medicare would also get lower payments. Reps pointed to a recent CBO study showing that federal workers earn about 16% more than their private-sector counterparts, saying that gov employees had to pitch in to pay for the tax-cut extension & other programs. Reps say federal employees make a whole lot more than people in the private sector & many think it’s fair to ask them to make a sacrifice as well.
Pay-Freeze Politics Trip up Payroll-Tax Talks MarketWatch
Photo: Yahoo
Americans accelerated their borrowing in Dec for the 2nd straight month, running up more credit card debt & taking out loans to buy cars & attend school. Consumer borrowing rose $19.3B after a $20.4B gain in Nov according to the Federal Reserve. The 2 increases were the biggest monthly gains in a decade. Total consumer borrowing is now at $2.5T, nearly matching the pre-recession borrowing level. It's also up 4.4% from the Sep 2010 post-recession low. This is another encouraging sign about economic recovery.
There is hope that Greek talks will lead to a conclusion, but nobody knows where they are going. 2 groups of talks, one for budget cuts & the other with the bondholders, remain stuck in neutral. This impasse is similar to talks in DC about extending tax cuts which are going nowhere. There is not a lot to do but await developments. Even with these nervous moments, Dow keeps plodding ahead, hoping to top 13K because the economy is doing reasonably well (except for the unemployed & underemployed).
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