Dow rose 66, advancers were just ahead of decliners & NAZ was up 10. The Financial Index did little in the 233s. The MLP index fell 2+ to the 423s on profit taking after a monster rally this year & the REIT index was flat at 279. Junk bond funds were mixed & Treasuries inched higher. Oil fell below $95 a barrel, declining from a 4-month high, as capacity on the Seaway pipeline was reduced & the IMF cut its global growth forecasts. Gold slipped back again, remaining in its longer term sideways range around 1650.
AMJ (AlerianMLP Index tracking fund)
Photo: Yahoo
The House voted to permit the gov to borrow enough money to avoid a first-time default for at least 4 months, defusing a looming crisis setting up a springtime debate over taxes, spending & the deficit. Reps backed away from their previous demand that any increase in gov borrowing cap be paired with an equivalent level of spending cuts. Senate Majority Leader Harry Reid said the chamber would immediately move to advance the legislation to the White House, which has announced Obama would sign. The measure would suspend the $16.4T cap on federal borrowing & reset it on May 19 to reflect the additional borrowing required between the date the bill becomes law & then. The amount of borrowing required depends on the tax receipts received during filing season, but over a comparable period last year the gov ran deficits in the range of $150B. The measure also contains a provision that slaps at the Senate, which hasn't debated a budget since 2009, by withholding the pay for either House or Senate members if the chamber in which they serve fails to pass a budget plan.
Photo: Bloomberg
The IMF cut its global growth forecasts, projecting a 2nd year of contraction in the euro region as progress in battling Europe’s debt crisis fails to produce an economic recovery. The world economy will expand 3.5% this year, less than the 3.6% forecast in Oct. While the fund projects growth this year increasing from last year’s 3.2% pace, it expects the 17-country euro area to shrink 0.2% in 2013, instead of growing 0.2% as forecast in Oct. “Is Europe on the mend? I think the answer is yes and no,” IMF Chief Economist Olivier Blanchard said. “Something has to happen to start growth.” For the global economy, “this is better, but it is not great,” Blanchard said today. “In particular, the growth numbers are not enough to make a dent to the unemployment rate in advanced economies.” The IMF foresees Spain leading the contraction in the euro area, while growth slows in Germany, the region’s largest economy. “It’s clear that financial markets are ahead of the real economy. The question is whether they are too much ahead or not,” Blanchard said. “What we know is that it always takes some time for financial markets’ optimism to feed to the real economy and at this stage there are still obstacles to it.”
IMF Cuts Forecast on Second Year of Europe Contraction
Photo: Bloomberg
Google rose the most since 2011 after reporting profit that topped estimates as advertisers boosted spending to reach consumers during the holiday season. Q4 EPS, excluding certain items, rose to $10.65, above the $10.50 estimate. The adjusted figure excludes items such as taxes tied to stock-based compensation. Net income rose 6.7% to $2.89B, or $8.62 a share. Earnings were boosted after retailers poured money into online advertising & extended the gift-buying season. Revenue, excluding sales passed on to partner sites, rose 39% to $12.2B which compares with $12.4B projected by analysts. Sales from operations excluding the Motorola Home set-top box unit, which GOOG agreed to sell last month, increased 36% to $14.4B. “We ended 2012 with a strong quarter,” CEO Larry Page said. “I am incredibly optimistic about the opportunities we have as a technology company focused on user benefits.” The stock jumped $38.
Google Rises as Profit Tops Estimates on Demand for Year-End Advertising
Google (GOOG)
While stocks remain hot in Jan, they generally cooled off a little today. Dow had a fairly good day, largely due to IBM (IBM) & Disney (DIS). IBM had a good Q4 & expects EPS of $16.70 this year which gave the entire tech sector a lift. But there were disappointments. Coach (COH) had unsatisfactory earnings & the stock sank $10. The budget mess drones on in DC. Even though raising the debt ceiling has been kicked down a road for a few months, budget cuts are set to begin on Mar 1 & at the end of the month the federal gov needs money to fund its operations. The debt mess may not be weighing on traders, but it is on business execs running companies of all sizes. Q1 GDP numbers could be dreary.
Dow Jones Industrials
AMJ (AlerianMLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.074% | |
U.S. 2-year | 0.240% | |
U.S. 10-year | 1.833% |
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif) |
The House voted to permit the gov to borrow enough money to avoid a first-time default for at least 4 months, defusing a looming crisis setting up a springtime debate over taxes, spending & the deficit. Reps backed away from their previous demand that any increase in gov borrowing cap be paired with an equivalent level of spending cuts. Senate Majority Leader Harry Reid said the chamber would immediately move to advance the legislation to the White House, which has announced Obama would sign. The measure would suspend the $16.4T cap on federal borrowing & reset it on May 19 to reflect the additional borrowing required between the date the bill becomes law & then. The amount of borrowing required depends on the tax receipts received during filing season, but over a comparable period last year the gov ran deficits in the range of $150B. The measure also contains a provision that slaps at the Senate, which hasn't debated a budget since 2009, by withholding the pay for either House or Senate members if the chamber in which they serve fails to pass a budget plan.
House Votes to Defuse Debt Limit Crisis, Sets Stage for Debate AP
The IMF cut its global growth forecasts, projecting a 2nd year of contraction in the euro region as progress in battling Europe’s debt crisis fails to produce an economic recovery. The world economy will expand 3.5% this year, less than the 3.6% forecast in Oct. While the fund projects growth this year increasing from last year’s 3.2% pace, it expects the 17-country euro area to shrink 0.2% in 2013, instead of growing 0.2% as forecast in Oct. “Is Europe on the mend? I think the answer is yes and no,” IMF Chief Economist Olivier Blanchard said. “Something has to happen to start growth.” For the global economy, “this is better, but it is not great,” Blanchard said today. “In particular, the growth numbers are not enough to make a dent to the unemployment rate in advanced economies.” The IMF foresees Spain leading the contraction in the euro area, while growth slows in Germany, the region’s largest economy. “It’s clear that financial markets are ahead of the real economy. The question is whether they are too much ahead or not,” Blanchard said. “What we know is that it always takes some time for financial markets’ optimism to feed to the real economy and at this stage there are still obstacles to it.”
IMF Cuts Forecast on Second Year of Europe Contraction
Photo: Bloomberg
Google rose the most since 2011 after reporting profit that topped estimates as advertisers boosted spending to reach consumers during the holiday season. Q4 EPS, excluding certain items, rose to $10.65, above the $10.50 estimate. The adjusted figure excludes items such as taxes tied to stock-based compensation. Net income rose 6.7% to $2.89B, or $8.62 a share. Earnings were boosted after retailers poured money into online advertising & extended the gift-buying season. Revenue, excluding sales passed on to partner sites, rose 39% to $12.2B which compares with $12.4B projected by analysts. Sales from operations excluding the Motorola Home set-top box unit, which GOOG agreed to sell last month, increased 36% to $14.4B. “We ended 2012 with a strong quarter,” CEO Larry Page said. “I am incredibly optimistic about the opportunities we have as a technology company focused on user benefits.” The stock jumped $38.
Google Rises as Profit Tops Estimates on Demand for Year-End Advertising
Google (GOOG)
While stocks remain hot in Jan, they generally cooled off a little today. Dow had a fairly good day, largely due to IBM (IBM) & Disney (DIS). IBM had a good Q4 & expects EPS of $16.70 this year which gave the entire tech sector a lift. But there were disappointments. Coach (COH) had unsatisfactory earnings & the stock sank $10. The budget mess drones on in DC. Even though raising the debt ceiling has been kicked down a road for a few months, budget cuts are set to begin on Mar 1 & at the end of the month the federal gov needs money to fund its operations. The debt mess may not be weighing on traders, but it is on business execs running companies of all sizes. Q1 GDP numbers could be dreary.
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