Friday, January 11, 2013

Markets fluctuate, worried about earnings season

Dow was up 17, advancers & decliners were about equal & NAZ added 3.  The Financial Index lost fraction to just above 230.  The Alerian MLP Index rose another fraction to 414, pennies from a new record, while the REIT index slipped a fraction to the 273s.  Junk bond funds were generally higher & Treasuries had gains after recent weakness.  Oil held most of the AM gains & gold slipped about 1%, unable to break out of the 1600s.

AMJ (Aleiran MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

The US annual budget deficit is on track to reach $1T for a 5th straight year, though gov revenue jumped last month as people paid some taxes early to avoid higher rates in 2013.  The Treasury said that the federal deficit grew just $260M in Dec.  But for the first 3 months of the budget year, the deficit widened to $292B.   In Dec, tax revenue rose 12% to $270B.  Spending fell 17% to nearly the same amount.  The budget year begins on Oct. 1.  The size of the annual deficit will hinge, in part, on how Congress & the White House resolve a debate over raising the nation's borrowing limit.   Monthly figures are volatile & can be affected by calendar quirks that shift payments from one month to another.  Much of the December gain in revenue occurred because some companies accelerated bonuses or other payments into 2012 to avoid the possibility of higher taxes in 2013.  In addition, spending fell last month partly because the gov provided.  No such payments were made last month. 

US budget deficit grows by $260M in December AP

China Dec. Consumer Prices Rise 2.5% Vs 2.3% Analyst Est.

Photo:   Bloomberg

China's inflation accelerated more than forecast to a 7-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery.  The CPI rose 2.5% in Dec (from a year earlier), the National Bureau of Statistics said.  That compares with the 2.3% estimate & a 2% gain in Nov.  The decline in the PPI eased to 1.9%.  Chen Yulu, a central bank academic adviser, said on Tues that price gains may become a concern in H2.   It is feared that inflation may temporarily accelerate to more than 3% next month, reflecting the impact of cold weather on food prices & the week long Chinese Lunar New Year holiday, which fell in Jan last year.  

China Inflation Quickening to Seven-Month High Curbs Scope for PBOC Action

Auto sales in China, including those of cars & buses, may accelerate this year & surpass 20M units for the first time, spurred by a rebound in economic growth & urbanization.  Wholesale deliveries may gain 7% this year to 20.6M units, led by demand for passenger vehicles, the state- backed China Association of Automobile Manufacturers said.  SUV sales will remain the fastest- growing segment, while commercial vehicles will post a slight gain, according to the projections.  “A continuous and stable macroeconomic policy will be good for the development of the vehicle market,” CAAM said.  Vehicle demand will be supported by urbanization and there exists a big market potential for exports, the group said.  However, the pace of growth remains less than a qtr of the stimulus-led 32%t rate in 2010, as cities including Beijing & Guangzhou restrict new vehicles to reduce smog & traffic jams.  Passenger-vehicle sales may climb 8.5% to about 16.8M units, CAAM estimates, while commercial vehicle sales will probably rebound from last year’s 5.5% contraction to gain 1% to about 3.8M units.  Ford (F) whose top seller in China in 2011 ranked 10th, had the best-selling sedan in China last year with the Focus.  The car beat GM’s Chevrolet Sail & Buick Excelle --last year’s top seller.  Auto sales in China rose 4.3% to 19.3M last year, missing official projections for deliveries of as much as 20M made in Jul.  Passenger-car sales rose 7.1% to 15.5M units in 2012, with SUV the fastest-growing segment at 26% growth, CAAM said.  US vehicle sales are running over 14M.

China 2013 Auto Sales May Top 20 Million; Ford Focus Becomes Best Seller

Little was decided in today's markets.  But there is nervousness about earnings season which will begin full force next week.  The Euro zone area is  doing well with the € at a 9 month high, $1.33½.  The modest loss for the federal budget is not as encouraging as it could be.  For the current fisal year (ending Sep 30), it is expected to top $1T for the 5th consecutive year.  A few years ago, that would have been mind boggling, but there are some who don't care today.  Raising the debt ceiling will not be looked at seriously until next month when politicos will come up with another Band-Aid fix that is supposed to represent their version of a long term fix.  But it won't be.

Dow Jones Industrials

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