Tuesday, February 19, 2013

Markets rise on talks of company buyout deals

Dow gained 53, advancers over decliners 2-1 & NAZ was up 21.  The Financial Index climbed 2 to the 241s, another multi year high.  The MLP index rose 4+ to the 434s (a new record) & the REIT index was up 1+ to the 281s.  Junk bond funds were marginally higher & Treasuries lost ground.  Oil had a good day, as it climbs towards 100, & gold fell to just above 1600.

AMJ (Alerian MLP Index tracking fund)

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CLH13.NYM...Crude Oil Mar 13...96.35...Up 0.49 (0.5%)

Live 24 hours gold chart [Kitco Inc.]

U.S. President Barack Obama

Photo:   Bloomberg

The pres stepped up pressure on congress to avert a “brutal” automatic $1.2T in budget cuts set to kick in Mar 1.  Obama said that if the spending reductions take effect, the US may lose hundreds of thousands of jobs, military readiness would be damaged, aid to state & local govs would shrink & the ability of the gov to respond to natural disasters or other emergencies would be diminished.  If lawmakers can’t agree on a broad deal to replace the across-the-board spending reductions, congress should “at minimum” pass a temporary, smaller package that provides more time for negotiations, he said.  That's called kicking the can down the road!  Obama spoke hours after the leaders of his 2010 deficit commission offered a $2.4T plan to reduce the debt.   Under their plan, one quarter of the deficit reduction would come from health-care changes, including lower payments to Medicare & Medicaid providers & higher Medicare premiums for top earners.  Another quarter would come from a rewrite of tax laws that would scale back most exemptions & deductions.  Part of the savings would be used for deficit reduction & the rest to reduce income tax rates.

Obama Pressures Congress for Deal to Avert Automatic Cuts

An illustration picture show application icons on an Apple Ipad tablet held by a woman in Bordeaux, Southwestern France, February 4, 2013. REUTERS/Regis Duvignau

Photo:   Yahoo

Apple, with the largest market cap in the world, was recently attacked by hackers who infected the Mac computers of some employees, the company said.  Unknown hackers infected the computers when employees visited a website for software developers that had been infected with malicious software.  The malware had been designed to attack Macs, the company said.  The same software, which infected Macs was used to launch attacks against Facebook (FB), which was disclosed on Fri.  The malware was also employed in attacks against Mac computers used by "other companies," AAPL said.  It is understood that these attacks hit hundreds of companies, including defense contractors & mark the highest-profile cyber attacks to date on businesses running Macs.  The stock dropped 80¢ as stockholders battle about issuing a preferred stock so they can get more divs.

Apple (AAPL)

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Wal-Mart E-Mails Show Tax Pressure on Retail Sales, Analysts Say

Photo:   Bloomberg

The payroll tax increases & delayed tax returns that Wal-Mart, a Dow stock & Dividend Aristocrat, executives blamed in internal e-mails for weak Feb sales, may be poised to hurt other retailers as well.  WMT had the worst monthly sales start in 7 years, according to internal e-mails obtained by Bloomberg News.  Jerry Murray, WMT VP of finance & logistics, in an e-mail called the retailer’s Feb month-to-date sales “a total disaster.”  When a payroll-tax break expired Dec 31, Americans began paying 2 percentage points more in Social Security taxes on their first $113K in wages.  That’s about $15 a week for a person making $40K a year.  In addition, tax returns may be delayed in part because of the late release of forms, WMT said.  Delayed tax rebates will be “a significant short-term issue” for retailers.  The stock lost 70¢.

Wal-Mart E-Mails Seen Showing Tax Drag Mounting on Retailers

Wal-Mart (WMT)

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Stocks had a winning day, but not in a convincing fashion.  Banks stocks are back in favor.  The Financial Index is up an amazing 61 since the start of Jun.  The eruo debt has been easing (at least for the time being) & domestic lending business has been good, although it's not clear they are lending to marginal companies.  MLPs continue to be on fire with the US boom in gas & oil.  But dull macro issues remain.  The early word on the tax hikes & delayed tax refunds is not good for retailers.  Then congress has to get its act together & the clock is ticking.  Dow went back above 14K, but it's only wavering.  It will need help from news events to achieve a new record.  Dow started Feb by going over 14K, & since then has been flat lining all month. 

Dow Jones Industrials

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