Thursday, December 6, 2012

Markets edge higher on budget talk hopes

Dow rose 39, decliners just ahead of advancers & NAZ gained 15.  The Financial Index was up a fraction in the 213s, where it was a month ago.  The MLP index lost another 1+ to the 384s (down an enormous 15 this week) & the REIT index jumped 2+ to 262.  Junk bond funds were mixed & Treasuries rose, bringing yields to 4 month lows.  Oil lost ground on prospects of weaker demand from euro countries & gold rose, taking it near $1700.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

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U.S. 2-year


U.S. 10-year


CLF13.NYM...Crude Oil Jan 13...86.07 ...Down 1.81  (2.1%)

Live 24 hours gold chart [Kitco Inc.]

Household Worth in U.S. Rose by $1.72 Trillion in Third Quarter

Photo:   Bloomberg

The net wealth of US households rose in Q3 to its highest since late 2007, providing a hopeful sign for future consumer spending.  Net financial wealth grew $1.7T to $64.8T, according to the Federal Reserve.  That left household wealth $1.2T short of where it stood in Q4 of 2007, just as the economy was sinking into a severe recession.  Wealth peaked at $67.3T in Q3 of that year.  Rising home prices helped drive the increase in Q3 as the value of real estate owned by households rose about $300B & stock holdings climbed by about $520B.  Increases in wealth could make consumers feel more comfortable spending their money.  The data also showed Americans continued their 4-year-old effort to shed debt.  Households cut debt at a 2% annual rate Q3, the steepest drop since Q2 of 2011.  Household debt fell $65.5B to $12.9T, reversing a small gain logged over the prior 3 qtrs, a possible sign that households still feel they need to cut debt.  In the Q3, total household liabilities were 112.7% of after-tax income, the lowest since 2003 & down from 113.4% in Q2.

Household Net Worth in U.S. Increases by $1.72 Trillion

  • <p>               Greek Prime Minister Antonis Samaras waits the arrival of  Lebanese President Michel Suleiman  in Athens, Thursday, Dec. 6, 2012. Greece's is finalizing a major tax reform bill, demanded by international rescue creditors as one of several conditions for continued payments. Greece's conservative-led government has promised to try and stem the country's punishing recession, but last month introduced another round of austerity measures. New unemployment figures, released Thursday, showed the country's jobless rate rising to 26 percent in September.  (AP Photo/Petros Giannakouris)
Photo:   Yahoo

Greek Prime Minister Antonis Samaras
Photo:   Yahoo

Greece's unemployment rate rose to a new record 26% in Sep, underscoring the economic plight in the country as it heads toward a 6th year of recession.  The Greek Statistical Authority said that 1.3M, more than one-fourth of the workforce in this nation of 10M, were recorded as unemployed, up from 25.3% the previous month & 18.9% a year earlier.  Unemployment has surged to the highest since the 1960s as a result of harsh austerity measures imposed in return for vital international rescue loans.  The conservative-led coalition gov is finalizing a major tax reform bill, demanded by intl rescue creditors as one of several conditions for continued payments   It has promised to try to stem the country's recession, despite being forced last month to introduce another round of deeply unpopular austerity measures that are part of Greece's bailout commitments.  These measures include raising €3B ($3.9B) in extra tax revenue.  A draft of the new tax bill presented to the conservative 2 center-left coalition partners calls for cuts in corp tax rates from 40 to 33%, a move meant to provide relief to employers struggling to cope with the crisis while maintaining a sufficient flow of tax revenue.  The draft also lowers the top income tax rate from 45 to 40%, but expands the number of people who would have to pay that rate by including all incomes over €40K ($52K) a year.  Maybe the US can learn from this draft.

Greek jobless rate up to record 26 percent AP

AT&T, a Dow stock & Dividend Aristocrat, plans to sell $4B of bonds in a 3-part offering as soon as today.  It will issue $1B of 3-year notes to yield 50 basis points more than similar-maturity Treasuries & equal $1.5B portions of 5-year bonds paying 80 basis points more than benchmarks & 10-year debt with a spread of 110 basis points.  The company last sold new dollar-denominated benchmark debt in Jun, issuing $1.15B of 1.7% notes due 2017.  Those securities traded at 102.2¢ on the dollar yesterday to yield 1.19%, or 58 basis points more than similar- maturity Treasuries.  The most indebted US telecommunications firm is increasing capital expenditures to $22B, its highest level ever, to add long-term evolution technology, a network that promises to offer connections 3 times as fast as the previous standard for devices such as the iPhone.  The cost of money is cheap, why not?  The stock was off 26¢.

AT&T Said to Plan $4 Billion Bond Sale in Three-Part Offer

AT&T (T)

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Stocks continue to meander looking for direction ahead of the Nov jobs report tomorrow.  The only significant news today was the forecast by the ECB for weaker economies next year in the euro zone.  Gridlock continues in DC with little prospects of compromise, especially by the pres.  Dow finished on an up note, with the modest gain coming in the last half hour.  Call that traders evening out positions.  But it's recovery in the last 3 weeks only brought it back to where it was on election day.  While stocks are holding, demand for Treasuries (safe haven investments) is strong.

Dow Jones Industrials

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