Monday, January 14, 2013

Markets waffle after president's news conerence

Dow added 18, advancers barely ahead of decliners & NAZ fell 8, led by Apple (AAPL) dropping 20 to an 11 month low.  The Financial Index lost a fraction to the 229s.  The Alerian MLP Index was up a fraction to 414, flirting with the record highs reached last Oct, & the REIT index was also up a fraction in the 274s.  Junk bond funds slid lower & Treasuries gained.  Oil & gold rose but remained close to longer term sideways trading levels.

AMJ (Alerian MLP Index tracking fund)

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<p>               President Barack Obama speaks during his final news conference of his first term in the East Room of the White House in Washington, Monday, Jan. 14, 2013. (AP Photo/Carolyn Kaster)
Photo:   Yahoo

The pres demanded that lawmakers raise the nation's $16.4T federal debt limit quickly, warning that "Social Security benefits and veterans' checks will be delayed" if they don't & cautioning Reps not to insist on cuts to gov spending in exchange.  "They will not collect a ransom in exchange for not crashing the economy," he said.   "The full faith and credit of the United States of America is not a bargaining chip. And they better decide quickly because time is running short."  "We are not a deadbeat nation," he declared, less than a week away from taking the oath for a second term.   Priorities come first with gov spending, first pay employees & then punish the innocent (Social Security & veterans).  This is another reminder that raising the debt ceiling is far down the road.

Obama on Debt Limit: 'We Are Not a Deadbeat Nation'   AP

A man wipes the logo of the Dell IT firm at the CeBIT exhibition centre in Hannover February 28, 2010. REUTERS/Thomas Peter
Photo:   Yahoo

Shares of Dell soared to a near 8-month high after it was reported the world's #3 PC maker is in talks with at least 2 private equity firms about going private.  The discussions are preliminary & financing has not been secured.  DELL is grappling with dwindling demand for traditional desktop & laptop computers with the advent of tablets.  Sales of PCs over the holidays slid for the first time in more than 5 years, according to industry researcher IDC.  The company, now reinventing itself as a provider of computers and services to corps & gov agencies, saw shipments of computers plummet 21% in Q4, according to IDC.  In Q3, profit slid 47%.  Its fortunes have waxed & waned.  In 2007, CEO Michael Dell returned to the company he founded to try & revive its business.  The company's market value is about $19B before today's rally & Michael Dell now owns more than 14%.  The stock rose 1.39 (13%). 

Dell Said to Be in Buyout Talks With Private-Equity Firms

Dell (DELL)

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Small Firms to Remain Missing Link in U.S. Expansion

Photo:    Bloomberg

Small companies will probably remain a missing element of the current US expansion as their role in driving growth continues to wane.  Payrolls at firms with fewer than 500 employees accounted for less than 50% of the total workforce for the first time in 2008 during the recession & have barely recovered.  After hovering close to 50%, small businesses’ share of GDP began dropping in 2001 to reach about 45% in the latest available data.  In contrast to the gains in confidence for their larger counterparts, sentiment among smaller companies remains at recessionary levels, reflecting a confluence of obstacles, including globalization & a lack of credit as local banks consolidate.  That means the US will lose support from the businesses that helped boost growth & productivity through innovation.  After peaking at 55% in 1987, small-businesses’ share of the US workforce began declining in the 1990s. according to data from a study by Citigroup.  Census Bureau data shows the slump was exacerbated by the 2007-2009 recession, the deepest & longest in the post-World War II era.  Hiring by small companies still accounts for the lion’s share of gains in payrolls.  Nonetheless, even that dominance is fading as the jobs they created accounted for 61% of the total in the 10 years through 2007, down from 65% in the decade ended in 1997 & 77% in the similar period to 1987.

Small Firms to Remain Missing Link in U.S. Expansion: Economy

Without earnings announcements, there was little going on today.  DELL going private was a plus, but AAPL had rather gloomy news.  AAPL had the more important story because that is based on ongoing business.  Buying DELL stock is a one time event.  The pres had no encouraging words about solving the debt crisis other than reminding us that the ones to suffer the most in a crunch are the innocent.  But Dow along with S&P 500 remain near their 5 years highs.

Dow Jones Industrials

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