Markets rise again on budget talk hopes

Dow moved up 36, advancers over decliners 5-2 & NAZ rose 20.  The Financial Index went up 1 to the 212s.  The MLP index was up a fraction to 397 & the REIT index gained 1+ to the 258s.  Junk bond funds rose & Treasuries were little changed.  Oil rose for the first time in 4 days as the US economy expanded more than previously estimated in Q3 & on optimism for an agreement over a new budget.  Gold continued strong in the PM.

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Treasury yields:

U.S. 3-month	0.081%
U.S. 2-year	0.254%
U.S. 10-year	1.618%

CLF13.NYM

...Crude Oil Jan 13

...88.36

... 1.87  (2.2%)

Photo:   Bloomberg

US consumer spending grew less than forecast in Q3, underscoring why Federal Reserve policy makers are fighting unemployment to spur the economy.  Household purchases climbed at a 1.4% rate, the smallest gain in more than a year & down from a previously reported 2% advance, revised figures from the Commerce Dept.  Gains in inventories & a smaller trade deficit more than offset the slowdown to propel GDP to a 2.7%, exceeding the 2% pace previously reported.  At the same time, another report today reinforced signs of a rebound in housing that is helping underpin consumer confidence.  Consumer spending was projected to expanded at a 1.9% pace last qtr

Consumer Spending in U.S. Grows Less Than Forecast

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Photo:   Yahoo

Weak sales at leading US retailers in early Nov dragged down results for the month as the effects of major Northeast storms offset brisk activity over the long Thanksgiving weekend.  Retailers on average reported a 1.6% increase in sales at stores open at least a year, about half the 3.3% rise that analysts had forecast & below a year-earlier gain of 3.5%.  Storms & resulting massive power outages & damage hurt retailers badly.  In addition, increased online shopping and layaway sales hurt Nov results, said International Council of Shopping Centers Chief Economist Michael Niemira.  Retailers do not book layaway sales until they are fully paid for & do not book online sales until the products are shipped.  Niemira expects both layaway & online shopping to help same-store sales in Dec.  However, Cyber Monday was reportedly the biggest online shopping day ever, but came after the Nov sales period ended.  Sales for the Nov-Dec holiday season look set to rise 4.1% to $586B this year after a 5.6% increase in 2011, according to a National Retail Federation forecast given weeks before the Northeast storms.  Other forecasts also hover around 4%.

November Sales Get Thanksgiving Weekend Boost

Photo:   Bloomberg

More contracts were signed in Oct to purchase previously owned homes, another sign the recovery in the housing market is being sustained.  The index of pending home resales climbed 5.2%, exceeding the highest estimate, to 104.8 after a revised 0.4% gain in Sep, according to the National Association of Realtors.  The forecast called for a 1% gain.  The lowest mortgage rates on record, stable prices & waning foreclosures are helping underpin sales 3 years after the last recession ended.  The prior month’s figure was originally reported as a 0.3% advance.  Compared with a year earlier, the index increased an unadjusted 18% after an 8.7% gain in the 12 months ended in Sep.  After seasonal adjustment, pending purchases climbed 13.2% from a year ago.

Pending Sales of Existing U.S. Homes Rose 5.2% in October

Markets respond to every whisper about budget talks out of DC.  There is nothing new & both sides are dug in for a long fight.  Talk is cheap & there is plenty of hot air coming out of DC.  But that's all it is, hot air.  However stocks are hanging in pretty well.  Other times in the past, this kind of uncertainty has caused sellers to drag stocks lower.  After all is said & done today, Dow finished just above 13K & NAZ went over 3K.  The bulls like to see that.

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