Tuesday, December 11, 2012

Higher markets on budget talk optimism

Dow rose 78, advancers ahead of decliners 3-2 & NAZ went up 35.  The Financial Index gained 1 to the 215s.  The MLP index slipped a fraction in the 383s (after being weak all month) & the REIT index was up a fraction in the 263a.  Junk bond funds were mixed to higher & Treasuries sold off.  Oil did little.  Gold fell for the first time in 4 sessions as investors awaited signals on whether Federal Reserve policy makers will expand monetary stimulus as they start a 2-day meeting today.

AMJ (Alerian MLP Index tracking fund)

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CLF13.NYM....Crude Oil Jan 13....85.59 ...Up 0.03 (0.0%)

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Live 24 hours gold chart [Kitco Inc.]

Job Openings in U.S. Increased in October to Four-Month High

Photo:   Bloomberg

Job openings in the US rose to a 4-month high in Oct, as companies kept expanding in the face of looming tax increases & budget cuts.  The number of positions waiting to be filled rose 128K to 3.68M according to the Labor Dept.  More openings lay the groundwork for the accelerated job growth needed to bolster consumer spending, which accounts for about 70% of the economy.  Today’s report showed job openings in the Northeast were up 8K in Oct, while hiring dropped 101K as Superstorm Sandy swept ashore on Oct 29.  For establishments in the storm-affected region that failed to respond to the survey & which met certain criteria, the Labor Dept said that it assumed there were no job openings & that the business was closed.  “There were very few establishments subject to the special procedures,” the agency said.  In the US, the number of people hired rose to 4.34M in Oct, pushing up the hiring rate to 3.2% from 3.1%.

Job Openings in U.S. Rose in October to Four-Month High

German Investor Confidence Jumped in December on Growth Outlook

Photo:   Bloomberg

German investor confidence jumped more than forecast to a 7-month high in Dec on speculation Europe's largest economy will gather momentum next year.  The ZEW Center for European Economic Research in Mannheim said its index of investor & analyst expectations, which aims to predict economic developments six months in advance, climbed to 6.9 from minus 15.7 in Nov, beating a gain to minus 11.5 that was predicted.  The German economy will contract in Q4 & stagnate in the next qtr as the sovereign debt crisis curbs demand for its goods in the euro area, the Bundesbank forecast last week.  But German stocks have rallied.  ZEW’s gauge of the current economic situation rose to 5.7 from 5.4 in Nov.  German economic growth slowed to 0.2% in Q3 from 0.3% in Q2 as the euro area slipped into recession for the 2nd time in 4 years.

Boehner Says He’s Waiting for Obama’s Specific Spending Cuts

Photo:   Bloomberg

John Boehner accused the president of slow-walking negotiations to avoid the "fiscal cliff," & urged him to name specific cuts in gov spending he would support as part of a compromise.  "Let's be honest. We're broke.  The plan we offered is consistent with the president's call for a balanced approach," he said.  "We're still waiting for the White House" to do the same."  But the administration & House Democratic Leader Nancy Pelosi disputed the assertion within moments.  "The irony of this is that the White House offer had very specific cuts, the GOP counteroffer had almost none," tweeted communications director Dan Pfeiffer.  After Boehner spoke, Pelosi also called on him & the Rep leadership to permit a vote on Obama's plan to extend expiring tax cuts for most Americans, while letting them lapse at upper incomes.  She predicted it would have "overwhelming support."  Despite optimistic words coming from some sources, these sound like fighting words.

Boehner Says He’s Waiting for Obama’s Specific Spending Cuts

The stock market is behaving as if an agreement on the budget debate is all but a done deal.  Not so fast.  The Dems have only talked about raising taxes on the rich while budget cuts have been pushed aside.  It is likely that there will be some tax increases on for the rich.  Make no mistake that higher taxes will hit everybody, that means you & me, because there are a number of taxes that are going or will go up.  The marginal tax rate for the rich is not the only tax!  After a vague, general agreement on some tax hikes, the hard work on budget cuts begins & both sides are faaaar apart!  Budget cuts means the federal gov will spend less (or at least spending growth will be cut back).  That includes money going to states & local govs who will be squeezed further.  The Reps are not happy with reports that the budget debate is over because "they gave up."  Watch for more sparks to fly!  Talk is cheap & there will be plenty of words coming from both sides in DC.

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