Dow lost 32, decliners just ahead of advancers & NAZ was up 6. The Financial Index rose a fraction in the 211s. The MLP index was even near 408 & the REIT index rose 1+ to over 260. Junk bond funds were mixed to higher as were Treasuries. Oil & gold pulled back.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Ben Bernanke is increasingly aiming for gains in stock prices as the Federal Reserve (FED) reaches for new tools to spur the 3-year recovery & reduce unemployment stuck above 8%. Bernanke, setting the stage for a 3rd round of quantitative easing in an Aug 31 speech in Jackson Hole, said the strategy works in part by boosting the prices of assets such as equities. In a speech yesterday in Indianapolis he said higher stock & home prices would provide further impetus to spending by businesses & households. One analyst said the large-scale asset purchases will probably lift stocks by 3% over the 2 years following as low yields on gov bonds push investors into riskier assets. QE could also lift home prices by 2% over 2 years, assuming the FED maintains purchases of Treasuries & mortgage debt thru 2013. Gains in stocks & real state could boost economic growth by half a percentage point over the next 2 years, enough to add about 500K jobs & cut the unemployment rate by 0.3% resulting from this optimistic assessment. We'll see how it works out.
Photo: Yahoo
Bill Gross, founder and& co-chief investment officer of PIMCO, said he sees the US going the way of Greece if it does not get its fiscal house in order. Gross, writing in his most recent monthly investment outlook, said the US must cut spending or raise taxes by 11% of GDP over the next 5-10 in order to preserve its role as financial safe haven. "If we continue to close our eyes to existing 8 percent of GDP deficits, which, when including Social Security, Medicaid and Medicare liabilities, compose an average estimated 11 percent annual 'fiscal gap,' then we will begin to resemble Greece before the turn of the next decade," Gross wrote. He said that the current deficit of 8% of GDP still makes the US the most viable option for investment safety, or "the cleanest dirty shirt," but that annual data from the CBO, IMF & Bank of International Settlements show that US estimated future debts suggest a "budgetary crystal meth" habit. The proposed 11% deficit that the US is running up will require spending cuts & taxes amounting to $1.6T per year, Gross said. He added that the debt & "fiscal gap" issues are characteristic of the US, Japan, Greece, the UK, Spain & France while nations such as Canada, Italy, Brazil, Mexico & China & other developing countries are more in control of their budgets & have less debt. Gross, who has referred in past outlooks to the unsustainable debt pile the US continues to accumulate, added that rising debts will lead the Federal Reserve to print more money, stoking inflation & debasing the dollar. The resulting scenario would adversely affect stocks & bonds, while only gold & real asset investments would survive, Gross said. This is the other side of the coin.
Auto sales are a bright spot in the economy for another month. Sep sales rose for most automakers, led by gains of more than 30% for Toyota (TM) & Volkswagen. Buyers are replacing aging cars, banks offered cheap loans & auto companies rolled out a promising lineup of fuel-efficient models. Beneath that, buyers felt more confident about the jobs market, a key factor influencing car sales. TM sales rose 42% from a year earlier, while Volkswagen jumped 34%. Detroit didn't fare as well. Chrysler reported a 12% increase, but General Motors (GM) & Ford (F) sales were either up slightly or flat. Nissan, which has been hurt as Toyota & Honda recover from last year's earthquake in Japan, saw sales slide 1.1%. Total US sales are expected to rise to more than 1.1M vehicles, up 11% from Sep of 2011 & the annual rate is expected to be around 14.5M. Auto sales have stayed robust this year, even as other parts of the economy weakened. They've maintained an annual pace of at least 14M in most months.
US auto sales rise again in September AP
What ever happened to the old idea that stocks rise because of rising earnings & divs? Now buyers are waiting for the next signal about another bailout. That kind of thinking is behind much of this year's gains in the stock market. Solve today's problems today, tomorrow will take care of itself. The Fri jobs report is looming large for the markets. Then the earnings reports come with Alcoa (AA), a Dow stock, reporting next Tues after the close, followed by some of the biggest banks. Markets have been hesitating for more than 2 weeks because traders are nervous about these reports. I know because I'm nervous,
AMJ (Alerian MLP Index tracking fund)
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Treasury yields:
U.S. 3-month |
0.086% | |
U.S. 2-year |
0.234% | |
U.S. 10-year |
1.611% |
| CLZ12.NYM | Crude Oil Dec 12 | 92.63 |  0.22 (0.2%) |
Photo: Bloomberg
Ben Bernanke is increasingly aiming for gains in stock prices as the Federal Reserve (FED) reaches for new tools to spur the 3-year recovery & reduce unemployment stuck above 8%. Bernanke, setting the stage for a 3rd round of quantitative easing in an Aug 31 speech in Jackson Hole, said the strategy works in part by boosting the prices of assets such as equities. In a speech yesterday in Indianapolis he said higher stock & home prices would provide further impetus to spending by businesses & households. One analyst said the large-scale asset purchases will probably lift stocks by 3% over the 2 years following as low yields on gov bonds push investors into riskier assets. QE could also lift home prices by 2% over 2 years, assuming the FED maintains purchases of Treasuries & mortgage debt thru 2013. Gains in stocks & real state could boost economic growth by half a percentage point over the next 2 years, enough to add about 500K jobs & cut the unemployment rate by 0.3% resulting from this optimistic assessment. We'll see how it works out.
Bill Gross, founder and& co-chief investment officer of PIMCO, said he sees the US going the way of Greece if it does not get its fiscal house in order. Gross, writing in his most recent monthly investment outlook, said the US must cut spending or raise taxes by 11% of GDP over the next 5-10 in order to preserve its role as financial safe haven. "If we continue to close our eyes to existing 8 percent of GDP deficits, which, when including Social Security, Medicaid and Medicare liabilities, compose an average estimated 11 percent annual 'fiscal gap,' then we will begin to resemble Greece before the turn of the next decade," Gross wrote. He said that the current deficit of 8% of GDP still makes the US the most viable option for investment safety, or "the cleanest dirty shirt," but that annual data from the CBO, IMF & Bank of International Settlements show that US estimated future debts suggest a "budgetary crystal meth" habit. The proposed 11% deficit that the US is running up will require spending cuts & taxes amounting to $1.6T per year, Gross said. He added that the debt & "fiscal gap" issues are characteristic of the US, Japan, Greece, the UK, Spain & France while nations such as Canada, Italy, Brazil, Mexico & China & other developing countries are more in control of their budgets & have less debt. Gross, who has referred in past outlooks to the unsustainable debt pile the US continues to accumulate, added that rising debts will lead the Federal Reserve to print more money, stoking inflation & debasing the dollar. The resulting scenario would adversely affect stocks & bonds, while only gold & real asset investments would survive, Gross said. This is the other side of the coin.
Auto sales are a bright spot in the economy for another month. Sep sales rose for most automakers, led by gains of more than 30% for Toyota (TM) & Volkswagen. Buyers are replacing aging cars, banks offered cheap loans & auto companies rolled out a promising lineup of fuel-efficient models. Beneath that, buyers felt more confident about the jobs market, a key factor influencing car sales. TM sales rose 42% from a year earlier, while Volkswagen jumped 34%. Detroit didn't fare as well. Chrysler reported a 12% increase, but General Motors (GM) & Ford (F) sales were either up slightly or flat. Nissan, which has been hurt as Toyota & Honda recover from last year's earthquake in Japan, saw sales slide 1.1%. Total US sales are expected to rise to more than 1.1M vehicles, up 11% from Sep of 2011 & the annual rate is expected to be around 14.5M. Auto sales have stayed robust this year, even as other parts of the economy weakened. They've maintained an annual pace of at least 14M in most months.
US auto sales rise again in September AP
What ever happened to the old idea that stocks rise because of rising earnings & divs? Now buyers are waiting for the next signal about another bailout. That kind of thinking is behind much of this year's gains in the stock market. Solve today's problems today, tomorrow will take care of itself. The Fri jobs report is looming large for the markets. Then the earnings reports come with Alcoa (AA), a Dow stock, reporting next Tues after the close, followed by some of the biggest banks. Markets have been hesitating for more than 2 weeks because traders are nervous about these reports. I know because I'm nervous,
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1 comment:
I agree with you, thanks for the updates.
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