Dow dropped 54, decliners ahead of advancers 3-1 & NAZ fell 2. The Financial Index lost 1+ to below 206 (a more than 2 month low). The MLP index was off another fraction to the 381s (a low since the start of Jul) & the REIT index fell 1+ to the 255s. Junk bond funds plunged, dropping 2-3%, & Treasuries only edged higher. Oil & gold also rose, but modestly.
Tim Geithner said it will be necessary to raise personal income tax rates on the wealthiest Americans to reduce long-term budget deficits, because capping deductions won’t raise enough revenue. President Obama is “not prepared to extend the upper-income tax cuts,” Geithner said. “There’s obviously universal support for the middle-class tax cuts. Doing that would remove the greatest source of anxiety and much of the greatest risk in the fiscal cliff.” Obama has invited leaders in Congress for talks on a deal to reduce budget deficits that would avert the $607B in automatic spending cuts & tax increases slated to take effect Jan 1. The Congressional Budget Office has forecast that the fiscal cliff would push the economy into a recession next year. The deficits add to national debt, which will most likely hit the $16.4T limit at the end of Dec, with extraordinary measures enabling the US to meet its obligations “until early in 2013,” the Treasury Dept said on Oct 31. Geithner today said budget deficits should be brought down gradually to below 3% of GDP to avoid damaging the prospects for economic growth. Both sides say there is room for compromise, but sure what that really means.
Geithner Says Higher Income Tax Rates Can’t Be Avoided
Americans cut back on spending at retail businesses in Oct, an indication that some remain cautious about the economic outlook. Superstorm Sandy also depressed car sales & slowed business in the Northeast at the end of the month. The Commerce Dept said that sales dropped 0.3% after 3 months of gains. Auto sales fell 1.5%, the most in more than a year. Excluding the volatile categories of autos, gas & building materials, sales fell 0.1%. That followed a 0.9% gain in Sep for that category. Online & catalog purchases fell 1.8%, the most in a year. Electronics & clothing stores also posted lower sales. The gov said Sandy "had both positive and negative effects" on sales. Some stores & restaurants closed & lost business. Others reported sales increases ahead of the storm as people bought supplies. Some hope the Oct decline in retail sales may be temporary. The storm cut retail spending in the Northeast by about 20% last week, according to MasterCard Advisors' SpendingPulse (excluding auto sales). The Northeast accounts for about 24% of retail sales nationwide & typically generates $18.7B in sales for the week ended Sat. But sales that week fell to about $15B. The storm also cut power to roughly 8M homes & businesses. Some are still without power & that may have had an impact on online sales.
Photo: Bloomberg
Cisco, a Dow stock, rose the most in almost 3 months after its profit topped estimates, price reductions helped spur sales & cost cuts kept margins intact. EPS excluding some costs was 48¢ a share in fiscal Q1, topping the 46¢ estimate. CEO John Chanmbers boosted profit by cutting expenses, shutting businesses & reducing prices to win back sales. EPS was 39¢, up from 33¢ a year earlier. Revenue rose 5.5% to $11.9B, compared with the projection for $11.8B. For fiscal Q2, CSCO forecast EPS excluding some costs of 47-48¢, compared with the forecast for 47¢. Revenue will rise 3.5-5.5% from a year earlier, which translates to a range of $11.9B-$12.2B, similar to the projection of $12B. The stock rose $1.12.
Cisco Rises as Profit Tops Estimates on Price Reductions
Markets continue to slip & slide lower. The decline in junk bond prices today is an indication that selling is picking up steam. Going over the fiscal cliff becomes more worrisome each day there is no resolution & deeply dividend DC will probably drag this agony out for another month at least. Then there is raising the debt ceiling which will be needed in a couple off months. Behind that are more credit downgrades. Dow is down more than 850 from its highs a month ago & the outlook is not good.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.101% | |
U.S. 2-year |
0.246% | |
U.S. 10-year |
1.599% |
| CLG13.NYM | ...Crude Oil Feb 13 | ...87.35 | ... 0.87 | (1.0%) |
| GCX12.CMX | ...Gold Nov 12 | ....1,727.00 | ... 2.80 | (0.2%) |
Tim Geithner said it will be necessary to raise personal income tax rates on the wealthiest Americans to reduce long-term budget deficits, because capping deductions won’t raise enough revenue. President Obama is “not prepared to extend the upper-income tax cuts,” Geithner said. “There’s obviously universal support for the middle-class tax cuts. Doing that would remove the greatest source of anxiety and much of the greatest risk in the fiscal cliff.” Obama has invited leaders in Congress for talks on a deal to reduce budget deficits that would avert the $607B in automatic spending cuts & tax increases slated to take effect Jan 1. The Congressional Budget Office has forecast that the fiscal cliff would push the economy into a recession next year. The deficits add to national debt, which will most likely hit the $16.4T limit at the end of Dec, with extraordinary measures enabling the US to meet its obligations “until early in 2013,” the Treasury Dept said on Oct 31. Geithner today said budget deficits should be brought down gradually to below 3% of GDP to avoid damaging the prospects for economic growth. Both sides say there is room for compromise, but sure what that really means.
Geithner Says Higher Income Tax Rates Can’t Be Avoided
Americans cut back on spending at retail businesses in Oct, an indication that some remain cautious about the economic outlook. Superstorm Sandy also depressed car sales & slowed business in the Northeast at the end of the month. The Commerce Dept said that sales dropped 0.3% after 3 months of gains. Auto sales fell 1.5%, the most in more than a year. Excluding the volatile categories of autos, gas & building materials, sales fell 0.1%. That followed a 0.9% gain in Sep for that category. Online & catalog purchases fell 1.8%, the most in a year. Electronics & clothing stores also posted lower sales. The gov said Sandy "had both positive and negative effects" on sales. Some stores & restaurants closed & lost business. Others reported sales increases ahead of the storm as people bought supplies. Some hope the Oct decline in retail sales may be temporary. The storm cut retail spending in the Northeast by about 20% last week, according to MasterCard Advisors' SpendingPulse (excluding auto sales). The Northeast accounts for about 24% of retail sales nationwide & typically generates $18.7B in sales for the week ended Sat. But sales that week fell to about $15B. The storm also cut power to roughly 8M homes & businesses. Some are still without power & that may have had an impact on online sales.
Photo: Bloomberg
Cisco, a Dow stock, rose the most in almost 3 months after its profit topped estimates, price reductions helped spur sales & cost cuts kept margins intact. EPS excluding some costs was 48¢ a share in fiscal Q1, topping the 46¢ estimate. CEO John Chanmbers boosted profit by cutting expenses, shutting businesses & reducing prices to win back sales. EPS was 39¢, up from 33¢ a year earlier. Revenue rose 5.5% to $11.9B, compared with the projection for $11.8B. For fiscal Q2, CSCO forecast EPS excluding some costs of 47-48¢, compared with the forecast for 47¢. Revenue will rise 3.5-5.5% from a year earlier, which translates to a range of $11.9B-$12.2B, similar to the projection of $12B. The stock rose $1.12.
Cisco Rises as Profit Tops Estimates on Price Reductions
Cisco (CSCO)
Markets continue to slip & slide lower. The decline in junk bond prices today is an indication that selling is picking up steam. Going over the fiscal cliff becomes more worrisome each day there is no resolution & deeply dividend DC will probably drag this agony out for another month at least. Then there is raising the debt ceiling which will be needed in a couple off months. Behind that are more credit downgrades. Dow is down more than 850 from its highs a month ago & the outlook is not good.
Dow Jones Industrials
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