Thursday, February 14, 2013

Markets fluctuate on worries about the economy

Dow slipped 9, advancers & decliners were equal & NAZ rose 1.  The Financial Index was up almost 1 to over 240 (up almost 60 since last Jun).  The MLP index rose 1+ to the 434s, up an amazing 55 since the end of the year, while the REIT index fell 1 to 280.  Junk bond funds were weak & Treasuries found buyers in the PM.  Oil is pushing towards $100 & gold pulled back again.

AMJ ((Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLH13.NYM...Crude Oil Mar 13...97.36 ...Up 0.35  (0.4%)

Live 24 hours gold chart [Kitco Inc.]

<p>               Speaker of the House John Boehner, R-Ohio, speaks during an interview with The Associated Press at his Capitol office, in Washington, Wednesday, Feb. 13, 2013. (AP Photo/J. Scott Applewhite)

Photo:   Yahoo

John Boehner is pulling back.  After 2 stressful years as the most powerful Rep & a pair of failed, high-profile rounds of budget talks with the pres, the speaker has adopted a you-first approach to White House proposals & his allies who control the Senate.  In dealing with the upcoming across-the-board spending cuts set to slam the economy in 2 weeks he says a solution is up to Obama & Senate Dems.  Boehner's approach is a break from the experience of 2 years ago.  Fortified by dozens of tea party freshmen, he & the GOP House stormed the DC battlefield, winning some concessions on spending but seeing many initiatives killed by the Senate & overshadowed by the presidential campaign.  "Frankly, every time I've gotten into one of these high-profile negotiations, you know, it's my rear end that got burnt," Boehner says.  Let's see what this brings.

Boehner taking a you-first approach to proposals

Berkshire Joins 3G Capital to Buy Heinz in $23 Billion Deal

Photo:   Bloomberg

Berkshire Hathaway (BRK.A) & Jorge Paulo Lemann’s 3G Capital agreed to buy HJ Heinz for about $23B, a company that dates back to the 1860s.  The buyers will pay $72.50 a share, compared with yesterday’s closing price of $60.48.  BRK.A will spend about $12-$13B on the deal.  Warren Buffett has been seeking deals after the cash pile at BRK.A climbed to more than $45B.  He has previously wagered on consumer products thru equity investments in Coca-Cola (KO), a Dow stock & Dividend Aristocrat, & he helped finance Mars’s purchase of chewing gum maker Wm Wrigley.  Heinz shares climbed $12 to $72.48 & is sharply above the trading range in the last year.

Berkshire Hathaway to Acquire H.J. Heinz for $23 Billion With 3G Capital
HJ Heinz (HNZ)

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The European recession deepened more than forecast with the worst performance in almost 4 years as the region’s 3 biggest economies suffered slumping output.  GDP fell 0.6% in Q4 from Q3, the EU statistics office said.  That’s the most since Q1 2009 in the aftermath of the collapse of Lehman, & exceeded the 0.4% forecast.  The data capped releases showing that the economies of Germany, France & Italy all shrank more than forecast in Q4.  ECB President Mario Draghi said last week that confidence in the 17-nation bloc has stabilized & the ECB sees a gradual recovery beginning later this year, though the situation is “fragile.”

Europe Economy Shrinks by Most Since 2009 Recession With Germany Slumping

Stocks couldn't decide what to do even though the HNZ buyout sent a very bullish signal.  Divided DC & how it's going to handle budget cutbacks are getting more notice by the markets.  Negative news about the recession in Europe is not helping.  Treasuries were strong, bolstered by strong demand at today’s sale for $16B of 30 year debt.  That's also another reminder that raising the debt ceiling has be dealt with.  Getting less notice, crude oil is pushing towards $100.  The price of gas is already back up to $3.63, another tax on the consumer & business.  But the markets are being priced to perfection with the Dow near its record highs.  Something has to give! 

Dow Jones Industrials

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