Tuesday, January 15, 2013

Markets fall on concerns about raising the debt ceiling

Dow lost 20, advancers barely ahead of decliners & NAZ dropped 15 as Apple (AAPL) went below $500.  The Financial Index was flattish at 230.  The MLP index fluctuated, off pennies at its record high, & the REIT index was also off pennies in the 274s.  Junk bond funds edged higher & Treasuries were strong.  Oil pulled back but gold is finding favor again with the debt ceiling doubts coming out of DC.

AMJ (Alerian MLP Index tracking fund)

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CLG13.NYM...Crude Oil Feb 13...94.08 ...Down 0.06  (0.1%)

GCF13.CMX...Gold Jan 13...1,679.50 ...Up 10.60 (0.6%)

A woman looks for supplies at a Waldbaums grocery store in Long Beach, New York November 2, 2012. REUTERS/Shannon Stapleton

Photo:   Yahoo

Retail sales rose solidly in Dec as Americans shrugged off the threat of higher taxes & bought autos & a other goods, suggesting momentum in consumer spending as the year ended.  Retail sales increased 0.5% after rising 0.4% in Nov, according to the Commerce Dept.  The forecast was for sales to rise only 0.2%.  Sales were up 4.7% from Dec 2011 & rose 5.2% for all of of 2012.  Core sales, which strip out autos, gasoline & building materials, & correspond most closely with the consumer spending component of GDP, increased 0.6% after advancing 0.5% in Nov.  The 2nd straight month of gains in core sales suggested consumer spending picked up in Q4 after rising at a annual pace of 1.6% in Q3.  But economists estimate that tax increases which kicked in this month could shave as much as 1.2 percentage points off consumer spending in Q1.  Retail sales last month were up almost across the board, with receipts at auto dealerships rising 1.6% after increasing 2.7% in Nov.  Sales at service stations fell 1.6%, reflecting a 14¢ drop in gas prices at the pump.  Receipts at gasoline stations declined 4.5% in Nov.

Sales at U.S. Retailers Rose More Than Forecast in December

German Economy Probably Contracted 0.5% in Fourth Quarter

Photo:   Bloomberg

Germany's economy probably shrank in Q4 as the sovereign debt crisis & weaker global growth damped exports & company investment.  GDP may have dropped as much as 0.5% from Q3, the Federal Statistics Office in Wiesbaden said.  It said growth slowed to 0.7% in 2012 from 3% in 2011.  The forecast was for 0.8% expansion for last year.  Germany posted a budget surplus of 0.1% of GDP, the first since 2007 & up from a deficit of 0.8% in 2011.  While today’s Q4 estimate leaves Germany on the brink of recession, the Bundesbank predicts the economy will stabilize & avoid 2 consecutive periods of contraction even as the debt crisis curbs growth across the euro region.  Latest data suggest confidence is improving, & ECB President Mario Draghi last week expressed optimism that the euro economy will return to health later this year.

German Economy Probably Contracted 0.5% in Fourth Quarter

Lennar Earnings Beat Analysts' Estimates as Revenue Jumps

Photo:  Bloomberg

Lennar quarterly profit handily beat expectations & the homebuilder reported a 7th straight jump in new home orders.  "Low mortgage rates, affordable home prices, reduced foreclosures and an extremely favourable 'rent vs. own' comparison continue to drive the recovery," CEO Stuart Miller said.  4443 homes were delivered, up 32%, in Q4, while the average selling price of the homes delivered rose 7% to $261K.  Operating margin on home sales was 12.2%, up 660 basis points, due to an increase in selling prices & fewer buyer incentives.  Miller said Lennar was "extremely well positioned" to gain market share in 2013 & that the company expects to be strongly profitable.  EPS was 56¢ in Q4, up from 16¢ a year earlier.  Revenue rose to $1.35B from $953M a year earlier.  But the stock slipped 13¢ in a weak market.

Lennar Earnings Beat Analysts’ Estimates as Revenue Jumps

Lennar (LEN)

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The pres had fighting words about raising the debt ceiling yesterday, making the Reps mad.  Even though it is fast becoming a crisis, they won't really get serious for another month, when a knife is pressed against somebody's throat.  Nothing will be done until the last minute, whenever that is, & then it will be made to sound like a brilliant solution.  But one major difference this time is that Reps are in an ugly mood & they control the House.  DC confusion can also bring a credit downgrade.  So far the markets are adjusting, except for AAPL. That has to be worrisome, even to the hardiest bulls.

Dow Jones Industrials

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