Wednesday, March 6, 2013

Dow edges higher on stronger jobs report for February

Dow added 42 to yesterday's record high, advancers over decliners a mild 5-4 & NAZ slid 1.  The Financial Index was up 1+ to the 238s, still near its highs 2 weeks ago.  The MLP index sank 4+ to below 430 (a very big daily drop) & the REIT index lost 1+ to 284.  Junk bond funds were mixed & Treasury 10-year yields rose the most in 3 weeks after ADP said companies added more jobs than forecast last month.  Oil slid back towards 90 & gold inched up, still stuck in the 1500s.

AMJ (Alerian MLP Index tracking fund)

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U.S. 10-year


CLJ13.NYM...Crude Oil Apr 13...90.42 ...Down 0.40  (0.4%)

Live 24 hours gold chart [Kitco Inc.]

The House approved legislation to prevent a gov shutdown on Mar 27 & blunt the impact of newly imposed spending cuts on the Defense Department.  The 267-151 vote sent the measure to the Senate, where Dems hope to give additional Cabinet agencies similar flexibility in implementing their shares of the $85B in spending cuts required to take effect by the end of the budget year.  Reps said the measure was essential to keep the gov operating smoothly after current funding expires on Mar 27.  Dems who opposed the measure protested the embedded spending cuts & criticized Reps for refusing to replace some of them with tax loophole closings.  Ironically, the measure underscored joint efforts by the administration & congressional Reps to ease the impact of short-term spending cuts that kicked in with dire White House warnings.  At the same time, both are eager to pocket the full savings for deficit reduction as they pivot to a new clash over Medicare next week, when House Reps & Senate Dems are expected to unveil rival budgets.

House Passes Stopgap Measure to Avoid Government Shutdown

A Federal Reserve (FED) survey showed the US economy expanded in all parts of the country in Jan & Feb, helped by strong auto sales, a continued recovery in housing & improved job prospects.  The FED report says 10 of its 12 regions reported moderate or modest growth, while Boston & Chicago districts reported slow growth.  “The majority of districts reported modest improvements in labor market conditions, although hiring plans were limited in several districts,” the FED said in its Beige Book business survey, which is based on reports from the 12 regional banks.  “Residential real estate markets strengthened in nearly all districts & home prices rose amid falling inventories across much of the country.”  Consumer spending increased in most regions, although the gains slowed in many districts & much of the increases were driven by auto sales.  However many districts said consumers held back on spending elsewhere because of higher taxes, rising gas prices & uncertainty over the federal budget.  Housing markets showed more strength in nearly all parts of the country, while manufacturing showed modest improvements in most regions.

Fed Says Modest Growth Spurred by Housing in Survey

Microsoft Fined $731 Million by EU for Violating Browser Accord

Photo:    Bloomberg

The EU fined Microsoft, Dow stock, €561M ($733M) for breaking a pledge to offer PC users a choice of internet browsers when they install the company's Windows operating system.  The penalty imposed by the EU's executive arm, the Commission, is a first: no company has ever failed to keep its end of a bargain with EU authorities before.  In 2009, MSFT struck a broad settlement with the Commission to resolve disputes over the company's abuse of the dominance of Windows, which had spanned more than a decade.  Back then, the company agreed to pay €860M & promised to give Windows users the option of choosing another browser rather than having Microsoft's Internet Explorer automatically installed on their machines.  But it failed to stick to the deal for 15M installations of Windows 7 in Europe from May 2011 until Jul 2012.  The company admitted the failure last year, adding that it was a mistake.  The Commission's top competition regulator, Joaquin Almunia, said that the fine reflected the size of the violation & the length of time it went on for.  It was also intended to make an example of MSFT & deter other companies from doing same thing.  In theory, the commission could have fined MSFT up to 10% of its global annual sales during the period the violation took place.  The stock slipped 26¢.

Microsoft Fined $731 Million by EU Over Browser Accord

Microsoft (MSFT)

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This has to be a disappointing day for the bulls following a rather weakish rally yesterday when the Dow hit a new record high.  The S&P 500 hardly budged & NAZ pulled back, hardly inspiring confidence.  The budget mess in DC continues.  Next week they will discuss how to modify Medicare which will  revolve around setting a minimum age for those who will not be affected by changes (reduced benefits).  Then they will begin the tougher part, how much & what to cut.  Today's approval of gov funding for the rest of the year gives agency heads more leeway to decide how to trim budgets.  Now they are using the standard method which has been in place since year 1, cut the most painful way to taxpayers.  A corollary is all agencies are cut the same, so the Dept of Waste will be hit the same as all other agencies.  The concept of reducing waste is only a vague concept in DC because it does not apply to pet projects.  In the absence of leadership, confusion continues in DC.

Dow Jones Industrials

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