Thursday, January 10, 2013

Markets advance on earnings hopes

Dow rose 80, advancers over decliners 2-1 & NAZ was up 15.  The Financial Index gained 3 to the 231s, a new yearly high.  The MLP index was up another 3+ to 413, so close the the 414 record highs, & the REIT index inched up a fraction to 274.  Junk bond funds were higher & Treasuries sold off.  Oil  held most of the AM gains & gold shot up 20, trying for $1700 again.

AMJ (Alerian MLP Index tracking fund)

stock chart

Live 24 hours gold chart [Kitco Inc.]

Consumer Comfort Falls as U.S. Payroll Tax Takes Hold

Photo:   Bloomberg

Consumer confidence  waned last week & layoffs unexpectedly climbed, the first sign that higher payroll taxes will slow the economic expansion at the start of this year.  The Bloomberg Consumer Comfort Index fell to minus 34.4 in the 7 days ended Jan 6 from minus 31.8 the prior week, the biggest drop since Aug.  Jobless claims increased by 4K to 371K in the week ended Jan 5.  Paychecks are shrinking after Congress last week let the tax that funds Social Security benefits revert to 6.2% from 4.2%.  That means Americans will have to rely on increases in salaries to counter some of the lost income at the same time the job market shows little sign of further progress and the debate in DC turns to federal spending cuts and the debt.  The decline in comfort last week was broad-based as all 3 components retreated.  The personal finances gauge fell to minus 2.6 from 0.8 & the barometer measuring Americans’ views on the state of the economy decreased to minus 58.7 from minus 57.1.  The buying climate index dropped to minus 41.9, falling for a 4rd consecutive week to reach the weakest level in more than 3 months.  Lower take home pay strikes hard at consumers.

Consumer Comfort Falls as U.S. Payroll Tax Takes Hold: Economy

China’s Exports Rose 14.1% in December, Exceeding Forecasts

Photo:   Bloomberg

China's exports rose more than forecast last month & a broad measure of credit surged 28%, helping the its new leaders sustain a pickup in economic growth after a 7 qtr slowdown.  Overseas shipments increased 14.1% from a year earlier, the most since May, customs administration data showed.  Total financing of 1.63T yuan ($262B), which includes bank & non- bank lending, was up from 1.27T yuan a year earlier, according to the central bank.  But a subdued US recovery & European austerity measures may restrain China’s trade this year, while growth in non-bank financing threatens to increase debt risks.  Dec imports grew 6% after being unchanged in the previous month.  The trade surplus almost doubled from a year earlier to $31.6B.

China Exports Accelerate With Credit in Recovery Boost

<p>               An elderly man passes graffiti that reads in Greek: ''Terrorism = Job Seeking'' in the northern Greek port city of Thessaloniki, Thursday, Jan. 10, 2013. Unemployment has reached new highs in Greece, with October 2012 figures showing the jobless rate at 26.8 percent, a major increase from the same month in 2011. (AP Photo/Nikolas Giakoumidis)
Photo:   Yahoo
 Greece's coalition gov reported a steep drop in the budget deficit in 2012, but unemployment rose again at an alarming rate as state savings cuts continued to hurt the economy & erode living standards.   Deputy Finance Minister Christos Staikouras said provisional data showed the annual budget shortfall was 8.2% of GDP in 2012, down from 10.9% the previous year & slightly better than the target of 8.4%.   Greece has been struggling through a severe financial crisis since late 2009, & has been dependent on intl rescue loans since May 2010.   In return, the gov has slashed salaries, cut spending & increased taxes to reduce debt.   The measures, however, have also plunged the country into a recession.   Tens of thousands of businesses have shut down.  "The massive sacrifices being made by the Greek people are producing results," Staikouras said of the drop in deficit.  "But the course we are on remains long and hard."   The impact was underscored by new statistics showing unemployment reached a stunning 26.8% in Oct.   The Statistical Authority said the unemployment rate increased from 26.2% in Sep 2012 & 19.7% of Oct 2011.

Greek deficit improves but jobless rate soars AP

Traders are feeling good & bidding up stock prices.  Dow is within in 200 of reaching a new multi year high & the S&P 500 already has.  There is a great deal of optimism that the US economy will continue to recover, starting with superior Q4 earnings.  The big banks are the first, but it is difficult to fully understand what they really have to to say with their maze of numbers.  But soggy earnings & cautious guidance for the year will prove disappointing for the markets.

Dow Jones Industrials

stock chart

No comments: