Friday, December 14, 2012

Markets drift lower, waiting for fiscal news from DC

Dow lost 35, decliners head of advancers 5-4 & NAZ fell 20 hurt by another plunge at Apple (AAPL).  The Financial Index lost a fraction to 215.  The MLP index was off 1 to 379 & the REIT index was essentially flat at 261.  Junk bond funds fell & Treasuries found buying after recent selling.  Oil was higher but only extended its longer term sideways trading in the upper 80s.  Gold slipped pocked change, unable to break above $1700.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF13.NYM...Crude Oil Jan 13....86.70 ...Up 0.81 (0.9%)

Live 24 hours gold chart [Kitco Inc.]

Consumer Prices in U.S. Declined More Than Forecast in November

Photo:   Bloomberg

The cost of living fell more than forecast in Nov as energy prices dropped.  The 0.3% decrease in the CPI was the first drop since May & followed a 0.1% gain in the prior month, according to the Labor Dept.  The estimate called for a 0.2% drop.  The core index, excluding volatile food & energy costs, climbed less than projected.  Facing little threat of inflation, Federal Reserve policy makers this week expanded asset purchases in a continuing bid to reduce unemployment and spur growth.

Consumer Prices in U.S. Decline More Than Forecast

ECB President Mario Draghi

Photo:   Bloomberg

The ECB said there are still risks to financial stability in the euro area, even after tensions abated “tangibly” in the last half year.  “Key financial-stability risks remain and there is no room for complacency,” the bank said in its biannual Financial Stability Review.  At the same time, “stresses on the euro-area financial system have eased tangibly since the summer, as the intensity of self-fulfilling and destructive confidence spirals has dissipated.”  European stocks have rallied 20% since this year’s low on Jun 4 & bond yields in Spain & Italy have subsided after ECB President Draghi on Jul 26 pledged to save the € & subsequently unveiled an unlimited bond-buying plan that would be activated if a country asks for aid.  Europe's leaders have also charged the ECB with supervising the region’s lenders in an effort to bolster confidence in the banking sector & defeat the crisis that has roiled markets since late 2009.  “An unequivocal commitment by the ECB to combat unfounded concerns about euro revocability has played a key role in this development by mitigating the tail risks that had been priced in to financial-asset prices,” according to the report.

ECB Says Risks Remain as Financial Tensions Ease Tangibly

General Electric, a Dow stock, is raising its quarterly div 1% while extending & expanding its share repurchase plan.  The new quarterly div is 19¢, up from 17¢.  GE is also extending the stock buyback plan through 2015 by authorizing up to $10B for additional shares.  The plan had $4.9B available for repurchase at the end of Q3.  GE manufactures products such as jet engines & refrigerator,s & provides equipment & services to a growing roster of energy companies.  The stock was up pennies.

GE raises dividend, expands share buyback plan AP

General Electric (GE)

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Stocks continue to fluctuate with a slight downward bias.  Fiscal cliff talks are going nowhere fast, but the markets are not greatly disturbed.  The Alerian MLP Index has tumbled 33 from its record highs less that 2 months ago.  AAPL, with the largest market cap ion the world, is down a massive 197 since its peak about 10 weeks ago  (10 month low).  But Dow continues its largely sideways trading, near 13K even though the fiscal cliff is close & will bring higher taxes (including Social Security taxes), budget cuts & debt limit problems to an economy which is just getting by.  The pres still plans to go to Hawaii for a "well deserved" vacation that will add $40M to the budget deficit.

Dow Jones Industrials

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