Friday, December 21, 2012

Markets lose ground on fiscal cliff confusion

Dow sank 120, decliners ahead of advancers 5-2 (relatively mild) & NAZ fell 29.  The Financial Index dropped 2+ to the 221s.  The MLP index fell 4 to the 387s, following a very good week & the REIT index lost 1 to the 267s.  Junk bond funds were weak & Treasuries were strong.  Oil tumbled but gold found buyers on confusion out of DC.

AMJ (Alerian MLP Index tracking fund)

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CLG13.NYM...Crude Oil Feb 13...88.71 ...Down 1.42  (1.6%)

Live 24 hours gold chart [Kitco Inc.]

Boehner, Cantor on Decision Not to Vote on `Plan B'

Photo:   Bloomberg

John Boehner said some Reps refused to back his tax measure because they didn’t want to be accused of raising taxes.  Boehner spoke after he scrapped a plan to allow higher tax rates on annual income above $1M, throwing already-stalled budget talks into turmoil.  It was “not the outcome I wanted, but it was the will of the House,” he said.  “They were dealing with the perception that someone might accuse them of raising taxes.”  Now that Boehner has pulled his plan, congress won’t vote on the end-of-year budget issues until after Christmas.  That will give them less than a week to reach agreement to avert $600B in tax increases & spending cuts.  The speaker said he pushed his alternative tax plan in the House to “basically jump start and try to kick into gear some action by the Senate to avert these tax increases going into effect Jan. 1.”  “If the Senate wants to act on that bill we’ll certainly take a look at it,” Boehner said.  Senate Dems objected to Boehner’s assertion that the House’s failure to pass his proposal shifts the responsibility to the Senate.  Instead, they said Boehner must abandon his position that a budget proposal needs to pass the House with a Republican majority.  Boehner “must allow a bill to pass with a combination of Dem & Rep votes,” according to a spokesman for Harry Reid.  He continued that  Boehner should return to the talks with Obama, describing an Obama-Boehner deal as “the only way to avoid the cliff altogether.”  These are fighting words coming out of DC.

Boehner Says Republicans Didn’t Want Tax Increase

China Airlines ordered 6 Boeing, a Dow stock, 777 aircraft, amount to $2B.  It is the first order of the aircraft by the carrier, based in Taiwan, which are typically used for intl flights.  BA said that the flag carrier of Taiwan is adding new planes to its long-haul fleet & plans to use the new planes for flights between Asia & North America.  The airline already flies 21 Airbus A330s, one of the main competitors for the 777.  The airline also flies 747 passenger jets & 747 freighters.  BA has booked orders for more than 1100 planes this year.  The stock lost 13¢.

Boeing says China Airlines buying 6 of its 777s AP

Boeing (BA)

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KB Home fellafter the homebuilder reported better-than-expected quarterly results, but its growth in orders for new homes was  disappointing.  Some analysts were also not impressed by the margins & deliveries.  EPS was 10¢, down 45% from a year ago.  That beat predictions of 6¢.  Revenue jumped 21% to $578M, above the prediction of $563M. But new home orders rose just 4% to 1,557.  Overall housing appears to be picking up, thanks in part to low interest rates &; a thinning of available homes that had driven down prices sharply for years.  Home sales are up 14.5% from a year ago, though they remain below the roughly 5.5M consistent with a healthy market.  An analysts cut his rating on KBH to "Sell," saying orders, margins, community count & deliveries were all disappointing.  While the company has posted one of the sharpest increases in the average sale price of its homes, it hasn't significantly affected its profitability.  The stock lost 45¢.

KB Home shares fall on disappointing order growth AP

KB Home (KBH)

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Stocks got thru today with only little damage.  The news out of DC was ugly, but sellers did not take control of the markets.  Bulls still have command.  However DC will be driving the markets next week, in what is traditionally a mild week with an upward bias going into end of year.  Not this time!

Dow Jones Industrials

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