Thursday, December 20, 2012

HIgher markets ahead of House vote on Plan B

Dow added 59 (closing at the high), advancers ahead of decliners better than 3-2 & NAZ was up 6.  The Financial Index rose another 2+ to the 223s as bank stocks are back in favor.  The MLP index rose 2+ to the 391s (up 11 in 3 days) & the REIT index was up 3+ to the 367s.  Junk bond funds were higher & Treasuries didn't move much.  Oil clawed its way higher.  Gold fell to the lowest since Aug after a report showed the  US economy grew more than forecast in Q3, damping expectations that the Federal Reserve will expand monetary stimulus.

AMJ (Alerian MLP Index tracking fund)

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CLF13.NYM...Crude Oil Jan 13....89.42 ....Down 0.09  (0.1%)

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  • <p>               House Speaker John Boehner of Ohio arrives to speak on the fiscal cliff negotiations on Capitol Hill in Washington, Wednesday, Dec. 19, 2012. Boehner says President Barack Obama should support a Republican plan to avoid January tax increases on everyone but those earning over $1 million. Boehner says if Obama doesn't support the measure, the president will be responsible for what he calls "the largest tax increase in history."(AP Photo/Jacquelyn Martin)
Photo:   Yahoo

The House pushed ahead with a bill that would raise taxes on people earning over $1M a year as hopes faded for a pre-Christmas deal between the president & Reps to avert the fiscal cliff.  Dems vowed to let the House measure die in the Senate without a vote & urged Boehner to return to the negotiating table.  As a grand bargain to avoid the fiscal cliff, Harry Reid said lawmakers would return to the Capitol after the holiday to try again.  "The president and Boehner have to negotiate this, OK?" said Sen Schumer  "We don't need a vehicle. We need an agreement."  But Boehner accused Obama & the Dems of doing nothing to prevent sweeping tax hikes & spending cuts that hit in early Jan unless lawmakers head them off.  But at the same time, he said he would conitnue trying to strike a deal with the pres.  "Our country faces serious challenges," he said.  "The president and I in our respective roles have a responsibility to work together to get them resolved. I expect that we'll continue to work together."  Majority Leader Eric Cantor said the GOP has enough votes to pass the bill aimed at upping the year-end pressure on Capitol Hill Dems & the pres.  "We, as Republicans, have taken concrete actions to avoid the fiscal cliff," Cantor insisted. The White House has said Obama would veto the measure.  Spokesman Jay Carney called the GOP move a fruitless step.

House GOP plans vote on fiscal cliff 'Plan B' AP

The IMF urged the EU to step up its efforts to stabilize the bloc's financial system by swiftly moving toward a fully integrated banking sector.  The EU still faces great challenges "with continuing banking and sovereign debt crises", the IMF said, adding that it needs a comprehensive region-wide solution as its banks are so heavily interconnected.  In its first financial stability assessment for the bloc, the IMF welcomed this month's EU decision to create a single banking supervisor, but called it "only an initial step" toward a full banking union.  That will require further steps such as a joint deposit guarantee, a single set of rules for banks & a joint bank bailout fund.  European policymakers, however, are reluctant to create a full banking union because joint liability implies one country's taxpayers would someday have to bail out struggling banks of another EU country.  Leaders in more economically disciplined countries such as Germany & the Netherlands are concerned that their taxpayers' money could be used to bail out banks in weaker countries without giving them a say over the use of the funds.

IMF urges full EU banking union to counter crisis AP

The number applying for unemployment benefits rose last week by 17K, reversing 4 weeks of declines.  The Labor Dept reported that 361K sought unemployment, up from a revised 344K the week before.  But the less-volatile 4-week moving average fell 1K to 367K, the lowest since late Oct, suggesting that the job market continues to grow modestly.  Applications had surged after Superstorm Sandy, then fell back.  Applications are a proxy for layoffs.  The drop of the 4-week average suggests that companies are cutting fewer jobs, even if they aren't hiring enough to lower the unemployment rate significantly.  The economy has generated an average of 151K jobs a month in 2012, not enough to pull high unemployment down sharply.

Number of Americans applying for weekly unemployment benefits rises by 17,000 to 361,000 AP

Dow is up 176 this week even though there has be no positive news about the fiscal cliff debate.  That is very tough to comprehend.  MLPs are hot after what had been a very bad Dec.  The Dems have the final vote on the fiscal cliff disaster & it increasingly looks like they won't mind letting the Jan 1 deadline come & go.  They will be happy with defense cuts & quickly blame Reps for higher taxes.  That takes us back to politics which will be the deciding factor in what is an extremely complex financial headache.  It looks like the markets will take any crumbs coming out of DC as a positive influence.  Tomorrow should be interesting after Plan B gets passed.  Then Dems will have to justify stalling..  More holiday time is next for everybody who has been working hard, blowing hot air.

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