Monday, October 1, 2012

HIgher markets on improved US manufacturing data

Dow shot up 151, advancers over decliners almost 4-1 & NAZ gained 22.  The Financial Index gained 3 to the 213s.  The MLP index rose 3 to the 407s (4 below its record high earlier this year) & the REIT index was flattish at 262.  Junk bond funds went up & Treasuries hardly moved.  Oil dropped from the highest close in a week as manufacturing contracted unexpectedly in China, raising speculation that fuel demand may decline.  Gold jumped to the highest since Nov after Federal Reserve Bank of Chicago President Charles Evans said the Federal Reserve can do more to boost growth, fueling concern that inflation will accelerate.

AMJ (Alerian MLP Index tracking fund)

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CLX12.NYM...Crude Oil Nov 12...92.85 .....Up 0.66 (0.7%)

GCV12.CMX...Gold Oct 12.......1,788.90 ...Up 17.80 (1.0%)

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  • <p>               Supporters of the small right-wing Independent Greeks party, gathered outside the finance ministry before a meeting between Greece's finance minister and debt inspection teams from the International Monetary Fund, European Central Bank and European Commission, known as the troika, in Athens, Monday, Oct. 1, 2012. Greece's finance minister Yannis Stournaras will submit the 2013 draft budget to Parliament on Monday, as the government resumed negotiations with international creditors over a two-year additional austerity package. (AP Photo/Thanassis Stavrakis)
Photo:   Yahoo

Greece's recession is set to extend into a 6th year in 2013, when the economy will contract by another 3.8%, according to forecasts in the draft budget submitted to Parliament & this year's recession will see the economy shrink around 6.5%.  Unemployment is predicted to rise to 24.7% in 2013 from an average 23.5% in 2012.  The budget sees Greece's gov still running at a loss despite waves of spending cuts & tax hikes over the past 2 years, as it has struggled to meet the terms for rescue loans.  The deficit for 2012 is expected to stand at 6.6% of GDP, improving slightly to 4.2% or €8B ($10.3B).  Greece still has a primary deficit, which excludes interest rates paid on existing debt, of 1.4% of GDP this year, disappointing earlier forecasts for a surplus.  That is expected to improve in 2013, when the budget projects a small primary surplus of 1.1% of GDP.  The budget includes about €7.8B worth of austerity measures for next year.  They are part of a €13.5B package of spending cuts & tax hikes for 2013 & 2014 that Greece's intl creditors have demanded in exchange for continued payout of the rescue loans that are protecting the country from a messy default.  The debt mess is far from over.

Manufacturing in the US grew for the first time in 4 months, buoyed by a jump in new orders, a hopeful sign that the economy is improving.  The Institute for Supply Management said that its index of factory activity rose to 51.5, up from 49.6 in Aug (a reading above 50 signals growth & below indicates contraction).  The index had been below that threshold from Jun-Aug.  A measure of employment also increased, suggesting manufacturers added workers last month.  The increase could signal that manufacturing is picking up after a weakening this spring because of declining consumer demand & a drop in exports.  The improvement comes even as growth is slowing overseas. Europe's financial crisis has pushed many countries in the region into recession.  Growth in emerging nations such as China & India has slowed.

ISM Index of U.S. Manufacturing Increased to 51.5 in September

Google Passes Microsoft's Market Value

Photo:   Bloomberg

Google surpassed Microsoft, a Dow stock, to become the world’s 2nd-largest technology company, in another sign of the expanding ability of the internet to facilitate computing tasks once completed on desktop machines.  GOOG market cap is about $250B & MSFT fell slightly to about a $248B.  The triumph follows GOOG rise from a search-engine company into an advertising powerhouse that makes the world’s most popular mobile-software.  It also reflects rise of cloud computing, where programs are stored remotely & accessed over the internet as consumers shift more tasks to smartphones & tablets that they once completed on personal computers.  GOOG rose $6 while MSFT was off 21¢.

Google Passes Microsoft’s Market Value as PC Loses to Web

Google (GOOG)

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Microsoft (MSFT)

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Stocks are having a good day, but there hasn't been all that much favorable news.  The manufacturing data was good, but short of great as the index is still on the border between expansion & contraction.  Manufacturing in China was reported as weakening again.  But hopes are riding high on more bailout news from Europe.  Sep auto sales will be reported shortly & then comes the big jobs report on Fri.  Expectations are meager, maybe 100K+ jobs, far below the 200K+ numbers in early 2012.  But Dow is back to 13.6K, it's 4 year high, as if it doesn't have a care in the world.

Dow Jones Industrials

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