Dow dropped 110, decliners over advancers 3-1 & NAZ fell 47, hurt again by a decline at Apple (AAPL). The Financial Index slipped 1 to 215. The MLP index eased back 1+ to the 412s & the REIT index was off 1 to the 2621s (where it has been treading water for 2 weeks). Junk bond funds were mixed & Treasuries rose as stocks fell. Oil advanced for the first time in 3 days as increasing tension in the MidEast countered
concern that a global economic slowdown will curb demand & gold pulled back $10. .
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Confidence among small
businesses in the US cooled in Sep. Fewer companies said they
planned to hire or invest in new equipment. The National Federation of Independent Business optimism index fell to 92.8 from an Aug reading of 92.9 & 4 of the
10 components that make up the gauge decreased. The 4th decline in the past 5 months showed business leaders may be putting off hiring & investment decisions because of a lack of clarity on tax &
regulatory policy. At the same time, more companies expected
better economic conditions in 6 months, signaling a pickup in
sales & employment may take time to develop. A measure of whether business owners plan to add more
workers fell by 6 percentage points to a net 4%. The
number of respondents who said they planned to invest in
equipment dropped 3 points to a net 21% in Sep. The proportion of respondents who said it was hard to fill
a job opening dropped to 17% from 18%
a month earlier. The number of respondents who expected higher
sales held at 1%. A net negative 1% planned to increase inventories,
also unchanged from Aug. A net negative 1% of small
business owners said their inventories were too low, down one
point from the previous month. The approaching fiscall cliff is taking its toll in the business world.
Confidence Among Small U.S. Businesses Cooled in September
Photo: Bloomberg
The IMF cut its global growth forecasts as the euro area’s debt crisis intensifies & warned of even slower expansion unless officials in the US & Europe address threats to their economies. The world economy will grow 3.3% this year, the slowest since the 2009 recession, & 3.6% next year which compares with Jul predictions of 3.5% in 2012 & 3.9% in 2013. The IMF now sees “alarmingly high” risks of a steeper slowdown, with a one-in-6 chance of growth slipping below 2%. “A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component,” the IMF said in its World Economic Outlook report. “The answer depends on whether European and U.S. policy makers deal proactively with their major short-term economic challenges.” As the IMF urged measures to boost confidence, uncertainties out of Europe show no sign of abating, with leaders still divided over a banking union & Spain resisting a bailout. “Confidence in the global financial system remains exceptionally fragile,” the IMF said. “Bank lending has remained sluggish across advanced economies” & increased risk aversion has damped capital flows to emerging markets, it said. The IMF assessment has been talked about by the IMF for several weeks.
IMF Sees ‘Alarmingly High’ Risk of Deeper Global Slump
Photo: Bloomberg
Speaking of Spain, the black hole in its budget has expanded faster than Prime Minister Rajoy’s attempt to shrink it, portending the same unrest roiling Greece. The harshest austerity since the return to democracy in 1978 has failed to contain the deficit as the economy sinks deeper into recession. The shortfall increased in H1, as it did in the previous 12 months. Even after a sales-tax increase & health-care cuts kick in Q4, it may still approach last year’s 9.4% of GDP, said Ignacio Conde-Ruiz, the independent Applied Economic Research Foundation in Madrid. The fiscal & political consequences of demanding austerity in a shrinking economy highlight the dilemma facing Rajoy. To trigger a European financial lifeline, he may have to impose yet more cuts, repeating the pattern seen in Greece, Portugal & Ireland. “There is no chance that Spain will hit its targets,” Megan Greene, director of European economics at Roubini Global Economics said. “The deficit targets are economic suicide.’ Spanish bonds fell, with the yield on the 5.85% Jan 2022 security rising 6 basis points to 5.77%. Rajoy, who meets French President Francois Hollande tomorrow, has introduced more than €100B ($130B) of tax increases & spending curbs amid a slump that is hollowing out his revenue base & pushing unemployment to 25%. The premier is also facing a secession threat from Catalonia, mounting popular protests unrest from regions forced to rein in their own spending. Rajoy last week pushed back expectations of a bailout, saying no request was imminent. His deputy said the gov needs to ensure a request for help from the European Stability Mechanism (ESM) would be granted before it can call for aid. A bid to the ESM is needed to trigger support from the ECB. German Finance Minister Schaeuble yesterday said that Spain doesn’t need any more financial support after agreeing to as much as €100B in aid for its banks in Jun. As has been the case for months, can you spell confusion?
The markets are back to sputtering & AAPL is off a large 10% from its recent record high. The 13593 high for the Dow on Sep 14 is proving formidable even though it just went over that on Fri. After more than than 3 weeks, Dow is 100 below that level as earnings season kicks off tonight. Ahead of what is supposed to be a meager earnings report from Alcoa (AA), a Dow stock, was up a few pennies & has only a modest gain off its levels in the summer. Even though the ECB said it would do whatever is necessary to defend the €, the debt mess drones on with no end in sight. The € fell a penny to the $1.28s (back to where it was almost a month ago). But eyes will be on the AA earnings report & then comes the big banks. I am not optimistic about earnings season.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.096% | |
U.S. 2-year |
0.258% | |
U.S. 10-year |
1.713% |
| CLX12.NYM | Crude Oil Nov 12 | 92.49 |  3.16 (3.5%) |
Click below for the latest market update:
Confidence Among Small U.S. Businesses Cooled in September
The IMF cut its global growth forecasts as the euro area’s debt crisis intensifies & warned of even slower expansion unless officials in the US & Europe address threats to their economies. The world economy will grow 3.3% this year, the slowest since the 2009 recession, & 3.6% next year which compares with Jul predictions of 3.5% in 2012 & 3.9% in 2013. The IMF now sees “alarmingly high” risks of a steeper slowdown, with a one-in-6 chance of growth slipping below 2%. “A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component,” the IMF said in its World Economic Outlook report. “The answer depends on whether European and U.S. policy makers deal proactively with their major short-term economic challenges.” As the IMF urged measures to boost confidence, uncertainties out of Europe show no sign of abating, with leaders still divided over a banking union & Spain resisting a bailout. “Confidence in the global financial system remains exceptionally fragile,” the IMF said. “Bank lending has remained sluggish across advanced economies” & increased risk aversion has damped capital flows to emerging markets, it said. The IMF assessment has been talked about by the IMF for several weeks.
IMF Sees ‘Alarmingly High’ Risk of Deeper Global Slump
Speaking of Spain, the black hole in its budget has expanded faster than Prime Minister Rajoy’s attempt to shrink it, portending the same unrest roiling Greece. The harshest austerity since the return to democracy in 1978 has failed to contain the deficit as the economy sinks deeper into recession. The shortfall increased in H1, as it did in the previous 12 months. Even after a sales-tax increase & health-care cuts kick in Q4, it may still approach last year’s 9.4% of GDP, said Ignacio Conde-Ruiz, the independent Applied Economic Research Foundation in Madrid. The fiscal & political consequences of demanding austerity in a shrinking economy highlight the dilemma facing Rajoy. To trigger a European financial lifeline, he may have to impose yet more cuts, repeating the pattern seen in Greece, Portugal & Ireland. “There is no chance that Spain will hit its targets,” Megan Greene, director of European economics at Roubini Global Economics said. “The deficit targets are economic suicide.’ Spanish bonds fell, with the yield on the 5.85% Jan 2022 security rising 6 basis points to 5.77%. Rajoy, who meets French President Francois Hollande tomorrow, has introduced more than €100B ($130B) of tax increases & spending curbs amid a slump that is hollowing out his revenue base & pushing unemployment to 25%. The premier is also facing a secession threat from Catalonia, mounting popular protests unrest from regions forced to rein in their own spending. Rajoy last week pushed back expectations of a bailout, saying no request was imminent. His deputy said the gov needs to ensure a request for help from the European Stability Mechanism (ESM) would be granted before it can call for aid. A bid to the ESM is needed to trigger support from the ECB. German Finance Minister Schaeuble yesterday said that Spain doesn’t need any more financial support after agreeing to as much as €100B in aid for its banks in Jun. As has been the case for months, can you spell confusion?
The markets are back to sputtering & AAPL is off a large 10% from its recent record high. The 13593 high for the Dow on Sep 14 is proving formidable even though it just went over that on Fri. After more than than 3 weeks, Dow is 100 below that level as earnings season kicks off tonight. Ahead of what is supposed to be a meager earnings report from Alcoa (AA), a Dow stock, was up a few pennies & has only a modest gain off its levels in the summer. Even though the ECB said it would do whatever is necessary to defend the €, the debt mess drones on with no end in sight. The € fell a penny to the $1.28s (back to where it was almost a month ago). But eyes will be on the AA earnings report & then comes the big banks. I am not optimistic about earnings season.
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