Tuesday, February 26, 2013

Markets rise on better than expected reports

Dow went up 115. advancers ahead of decliners 2-1 & NAZ added 13.  The Financial Index gained 1 to the 233s.  The MLP index was up 1+ to the 425s & the REIT index gained 2+ to the 277s.  Junk bond funds were higher & Treasuries also found buyers.  Oil pulled back but gold rose sharply, going well over 1600, on concerns over the budget mess in DC.

AMJ (Alerian MLP Index tracking fund)

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CLJ13.NYM....Crude Oil Apr 13...92.59 ...Down 0.52  (0.6%)

Live 24 hours gold chart [Kitco Inc.]

New-Home Sales in U.S. Surge in January to Highest Since 2008

Photo:   Bloomberg

Purchases of new homes surged in Jan by the most in 2 decades & consumer confidence jumped this month, signs of a rebound in US economic growth at the start of 2013.  Home sales shot up 15.6% to a 437K annual pace, exceeding the highest forecast & following a 378K rate in the prior month.  The figures bolster Big Ben’s view that Q4 slump in growth will prove temporary as the central bank’s efforts to keep interest rates low help households repair finances.  Demand for new houses picked up in all 4 regions of the US as buyers took advantage of mortgage rates near record lows.

Confidence Jump With Housing Gains Point to U.S. Growth: Economy

A worker stocks a new Walgreens store in Chicago January 9, 2012. Walgreen Co is going through "the worst" part of not being in Express Scripts Inc's network and, while the transition is difficult now, the drugstore should rebound as the year progresses, its top pharmacy executive said on Monday. REUTERS/John Gress (UNITED STATES - Tags: BUSINESS) - RTR2W2PT

Photo:   Yahoo

Consumer confidence in the US picked up much more strongly than expected in Feb as Americans shrugged off earlier worries over fiscal policy & tax increases.  The Conference Board index of consumer attitudes accelerated to 69.6, from a downwardly revised 58.4 in Jan, handily topping expectations for 61 & was the highest level since Nov.  Jan was originally reported as 58.6, the lowest level in more than a year.  Consumers last month had been concerned over the impact of the deal on the fiscal cliff at the beginning of the year.  While the full brunt of tax increases & spending cuts that were scheduled to go into effect was averted, the payroll tax deduction holiday came to an end & weighed on consumer attitudes.  "The shock effect caused by the fiscal cliff uncertainty and payroll tax cuts appears to have abated," Lynn Franco, director of The Conference Board Consumer Research Center, said.  The expectations index climbed to 73.8, from 59.9, while the present situation index gained to 63.3, from 56.2.  Consumers felt better about price increases with expectations for inflation in the coming 12 months falling to 5.5%, from 5.7%.

Boehner: Senate Must 'Get Off the Ass' on Spending

Photo:   Bloomberg

John Boehner said one of his “highest” priorities is to overhaul the US tax system.  In his remarks, Boehner said congress should curtail tax breaks “as part of tax reform that lowers rates and helps create jobs.”  “It’s time we shift the balance of power from the tax collector to the taxpayer,” Boehner said.  The speaker said he supported efforts to rewrite the tax code & he reiterated his opposition to higher tax revenue.  “The president has a different view: The first thing he wants to do about taxes is have more of them,” Boehner said, adding that congress passed higher taxes for top earners in Jan as part of a deal to avert tax increases for all income levels.  “Higher tax rates are not the answers to our problems. Spending is the problem, and spending cuts are the solution,” Boehner said.

Risk averse thoughts were discarded today & buyers were eager to bid up stock prices.  Actually the rally wasn't very impressive, the breadth of the market was nothing to write home about.  Economic data sounded good, but the budget mess in DC drones on with no end in sight.  The pres thinks the best strategy is to get away from DC & give campaign speeches elsewhere.  But divided DC remains mired in doubt.  Even after today's advance, Dow is still struggling to climb above 14K.  On Feb 1, Dow rose big time taking it over 14K (barely).  Now it is looking at 14K as a ceiling that it hasn't able to break thru in a convincing fashion.

Dow Jones Industrials

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