Wednesday, December 26, 2012

Markets fluctuate ahead of more fiscal cliff talks

Dow slid 8, advancers & decliners were equal & NAZ lost 14, (going below 3K again).  The Financial Index lost a fraction, taking it below 221 in what has been a good month for bank stocks.  The MLP index fell 3 to the 383s in a tough month for MLPs while the REIT index slipped a fraction in the 267s.  Junk bond funds were lower & Treasuries had modest gains.  Oil rose for the first time in 3 days as the pres will cut short his vacation for talks to avert spending cuts & tax increases that threaten the economy of the world’s biggest oil consumer.  Gold futures rose on speculation that Japan's new gov will act to bolster the economy.

AMJ (Alerian MLP Index tracking fund)

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CLG13.NYMCrude Oil Feb 1390.76 TUp 2.15 (2.4%)

GCZ12.CMXGold Dec 121,725.70 Up 67.10 (4.1%)

Economy Weighs on Shoppers in Final Holiday Weekend Dash to Mall

Photo:   Bloomberg

US holiday retail sales this year grew at the weakest pace since 2008, when the nation was in a deep recession.  This year, the shopping season was disrupted by bad weather & consumers' rising uncertainty about the economy.  A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said that sales in the 2 months before Christmas increased 0.7%, compared with last year.  Many had expected holiday sales to grow 3-4%.  In 2008, sales declined by 2-4% as the financial crisis that crested that fall dragged the economy into recession.  Last year, by contrast, retail sales in Nov & Dec rose 4-5%, according to ShopperTrak.  A 4% increase is considered a healthy season.  Shoppers were buffeted this year by a string of events that made them less likely to spend: Superstorm Sandy & other bad weather, the distraction of the presidential election & grief about the massacre of schoolchildren in Newtown, CT.  Additionally, DC's current budget impasse is trickling down to Main Street & unsettling consumers.

New housing construction is seen in Darnestown, Maryland, October 23, 2012. REUTERS/Gary Cameron

Photo:   Yahoo

Single-family home prices rose in Oct for 9 months in a row, reinforcing the view the domestic real estate market is improving & could bolster the economy in 2013.  The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.7%, stronger than the 0.5% rise forecast.  "Looking over this report, and considering other data on housing starts and sales, it is clear that the housing recovery is gathering strength," David Blitzer, chairman of the index committee at S&P.  While record low mortgage rates & modest job growth should keep the housing recovery on track, analysts cautioned home prices face downward pressure from a likely pickup in the sales of foreclosed & distressed properties, & reduced buying investors & speculators.  Prices in the 20 cities rose 4.3% year over year, beating expectations for a rise of 4.0%.  "Higher year-over-year price gains plus strong performances in the Southwest and California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy," Blitzer said.  Housing contributed 10% to the overall US economic growth in Q3, while the sector represented less than 3% of GDP.  Excluding seasonal factors, however, home prices in 12 of the 20 cities fell in Oct from Sep as home values tend to decline in fall winter, Blitzer said.

Home-Price Gains Pick Up as U.S. Real Estate Market Rebounds

Toyota Forecasts Record 2013 Sales on Overseas Auto Demand

Photo:   Bloomberg

Toyota, poised to regain its title as the world’s biggest carmaker in 2013, said vehicle sales may rise 2% next year to a record, led by demand from overseas markets.  Global sales may climb to 9.9M vehicles in 2013, TM said after sales expanded 22% to a record 9.7M this year (the biggest gain since at least 2000).  It's counting on the US to boost sales next year, countering a projected 15% drop in Japan, where gov subsidies to purchasers of fuel-efficient vehicles expired in Sep.  This forecast surpasses the previous high of 9.37M units in 2007, before the global financial crisis sapped demand.  In 2013, overseas sales should rise 8% to 7.87M, while deliveries in Japan will decline to 2.04M, the company said.  “We expect sales in the U.S. and Asia to continue to rise next year,” Joichi Tachikawa, a Tokyo-based spokesman for TM, said.  “Asia’s sales will be driven by Indonesia, while for the U.S., models such as Avalon and Lexus LS will likely help boost sales.”  The US stock fell 26¢.

Toyota Forecasts 2% Sales Volume Gain in 2013 on Overseas Auto Demand

Toyota (TM)

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Stocks are stuck in neutral as traders await developments out of DC.  But retail sales over the important holiday season, which indicate where the economy is going, were disappointing.  You know the situation is serious if the pres is flying back to participate in the budget debate.  It's anybody's guess where this will lead.  But even if there is a last minute resolution, it will be unsatisfactory to some & forces are already in place to give the economy a weak start in the new year.

Dow Jones Industrials

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