Dow rose 119, advancers ahead of decliners 5-2 & NAZ was up 30. The Financial Index recovered from recent weakness & rose 2+ to 238. AM gains for the MLPS were trimmed, but the index still managed a gain of 1+ to 228 & the REIT index was up 2½ to 280. Junk bond funds were mixed & Treasuries inched higher. Oil rose,
paring the biggest weekly decline since Dec, after German
business confidence climbed to a 10-month high. Gold slipped 2 to 1576.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
2 Federal Reserve (FED) officials rejected a warning from economists that potential losses on the $3.1T balance sheet may undermine central bank control of monetary policy. Boston Fed President Eric Rosengren said today “this discussion does not do justice to the policy trade-offs” of the large-scale asset purchases, referring to a paper written by four economists. The FED hold may weaken should possible losses on its balance sheet coincide with high US budget deficits & an inability of congress & the White House to put fiscal policy on a sustainable path, according to the economists’ paper. “The combination of a massively expanded central bank balance sheet and an unsustainable public debt trajectory is a mix that has the potential to substantially reduce the flexibility of monetary policy,” the economists said. “This mix could induce a bias toward slower exit or easier policy, and be seen as the first step toward fiscal dominance. It could thereby be the cause of longer-term inflation expectations and raise the risk of inflation overall.” These are uncharted waters.
Fed Officials Reject Warning Losses May Weaken FOMC Clout
Photo: Yahoo
The president intensified pressure on Reps, saying that lawmakers still have "the opportunity to make the right decisions" & avert a series of mandatory budget cuts by Mar 1. Despite little sign of a deal emerging with Reps, Obama said he does not believe it is inevitable that the $85B across-the-board budget cuts will take effect. He said finding a way to avert the cuts should be a "no-brainer" for congressional lawmakers. Obama said that in contrast to earlier DC fiscal fights, he didn't believe the economic impact of the cuts would threaten the world financial market, but added that if the economy slows as a result of the cuts, the global economy could suffer as well. Obama's statements continued an administration drumroll of warnings this week. The fight between Obama & Reps has centered on a seemingly intractable issue: Obama says he wants a more methodical & restrained plan for budget-cutting & one that would necessitate an additional tax increase but GOP lawmakers for the most part have come together to oppose any new revenue measures.
Obama urges Congress to do 'right thing' on cuts AP
Photo: Bloomberg
The euro-area economy will shrink in back-to-back years for the first time, driving unemployment higher as govs, consumers & companies curb spending, according to the European Commission. GDP will fall 0.3% this year, compared with a Nov prediction of 0.1% growth, the commission forecasted today, & unemployment will climb to 12.2%, up from the previous estimate of 11.8% & 11.4% last year. Economic & Monetary Affairs Commissioner Rehn said authorities must press on with reforms to end the region’s debt crisis & help the recovery. While “hard data” has been disappointing, there also has been more encouraging “soft data” that points to better times, he said. A strengthening of the euro economy later this year could be led by Germany, where investor confidence rose in Feb to a 10-month high. The commission’s weak outlook reflects gov austerity measures & efforts by companies & consumers to reduce debt.
Europe’s Economy Will Shrink for Second Year as EU Scraps Growth Forecast
Today's rally was less exciting than a gut reaction would suggest because there were no solid reasons behind it. Finally, $85B in federal budget cuts are getting the attention they deserve. The problem is federal employees don't like them & they will support efforts to make their consequences as painful as possible. Sadly there has been no effort to cut vast amounts of waste in gov. That's because, gov workers would have to admit the country could live with fewer gov employees. Dow is at the same level as Feb1, when it vaulted over 14K. Since then it has gone nowhere, clawing its way back over 14K today. That trend could continue next week with indecision in DC.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.124% | |
U.S. 2-year |
0.252% | |
U.S. 10-year |
1.966% |
| CLJ13.NYM | ...Crude Oil Apr 13 | ....93.16 | ... 0.32 | (0.3%) |
Photo: Bloomberg
2 Federal Reserve (FED) officials rejected a warning from economists that potential losses on the $3.1T balance sheet may undermine central bank control of monetary policy. Boston Fed President Eric Rosengren said today “this discussion does not do justice to the policy trade-offs” of the large-scale asset purchases, referring to a paper written by four economists. The FED hold may weaken should possible losses on its balance sheet coincide with high US budget deficits & an inability of congress & the White House to put fiscal policy on a sustainable path, according to the economists’ paper. “The combination of a massively expanded central bank balance sheet and an unsustainable public debt trajectory is a mix that has the potential to substantially reduce the flexibility of monetary policy,” the economists said. “This mix could induce a bias toward slower exit or easier policy, and be seen as the first step toward fiscal dominance. It could thereby be the cause of longer-term inflation expectations and raise the risk of inflation overall.” These are uncharted waters.
Fed Officials Reject Warning Losses May Weaken FOMC Clout
Photo: Yahoo
The president intensified pressure on Reps, saying that lawmakers still have "the opportunity to make the right decisions" & avert a series of mandatory budget cuts by Mar 1. Despite little sign of a deal emerging with Reps, Obama said he does not believe it is inevitable that the $85B across-the-board budget cuts will take effect. He said finding a way to avert the cuts should be a "no-brainer" for congressional lawmakers. Obama said that in contrast to earlier DC fiscal fights, he didn't believe the economic impact of the cuts would threaten the world financial market, but added that if the economy slows as a result of the cuts, the global economy could suffer as well. Obama's statements continued an administration drumroll of warnings this week. The fight between Obama & Reps has centered on a seemingly intractable issue: Obama says he wants a more methodical & restrained plan for budget-cutting & one that would necessitate an additional tax increase but GOP lawmakers for the most part have come together to oppose any new revenue measures.
Obama urges Congress to do 'right thing' on cuts AP
Photo: Bloomberg
The euro-area economy will shrink in back-to-back years for the first time, driving unemployment higher as govs, consumers & companies curb spending, according to the European Commission. GDP will fall 0.3% this year, compared with a Nov prediction of 0.1% growth, the commission forecasted today, & unemployment will climb to 12.2%, up from the previous estimate of 11.8% & 11.4% last year. Economic & Monetary Affairs Commissioner Rehn said authorities must press on with reforms to end the region’s debt crisis & help the recovery. While “hard data” has been disappointing, there also has been more encouraging “soft data” that points to better times, he said. A strengthening of the euro economy later this year could be led by Germany, where investor confidence rose in Feb to a 10-month high. The commission’s weak outlook reflects gov austerity measures & efforts by companies & consumers to reduce debt.
Europe’s Economy Will Shrink for Second Year as EU Scraps Growth Forecast
Today's rally was less exciting than a gut reaction would suggest because there were no solid reasons behind it. Finally, $85B in federal budget cuts are getting the attention they deserve. The problem is federal employees don't like them & they will support efforts to make their consequences as painful as possible. Sadly there has been no effort to cut vast amounts of waste in gov. That's because, gov workers would have to admit the country could live with fewer gov employees. Dow is at the same level as Feb1, when it vaulted over 14K. Since then it has gone nowhere, clawing its way back over 14K today. That trend could continue next week with indecision in DC.
Dow Jones Industrials
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