Thursday, March 14, 2013

Dow posts another record on improving economic data

Dow rose 83 for another record close, advancers over decliners 2-1 & NAZ gained 13. The Financial Index was up 1+ to 248.  The MLP index gained pennies in the 434s & the REIT index gained almost 2 to 284.  Junk bond funds sold off & Treasuries retreated.  Oil was up & gold hardly budged.

AMJ (Alerian MLP Index tracking fund)

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U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX13.NYM...Crude Oil Nov 13...92.55 ...Up 0.18 (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Wholesale prices in the US rose in Feb by the most in 5 months, pushed higher by more expensive gas & pharmaceuticals.  Outside those increases, inflation was mild.  The PPI grew 0.7% in Feb from Jan, according to the Labor Dept, up from 0.2% in the previous month.  Wholesale gas prices increased 7.2%.  Even with the increase, wholesale prices have risen just 1.7% in the past 12 months, below the Federal Reserve's (FED) 2% inflation target.  Mild inflation gives the FED more latitude to continue with its aggressive policies to spur more economic growth.  Excluding food & energy costs, core wholesale prices rose only 0.2% last month.  In the past 12 months, core prices have increased 1.7%.  Higher pharmaceutical costs accounted for 20% of the increase in core prices last month.  Car & pickup truck prices also rose.  Wholesale food prices fell 0.5% last month, led by an 18% drop in vegetable costs, the most in nearly 2 years.  The price of broccoli, cauliflower & lettuce all fell sharply.  Gas prices have soared this year after falling at the end of 2012.  The national average price for a gallon of gas jumped from $3.42 on Jan 31 to $3.78 on Feb 28.  Since then, however, gas prices have come down a bit.  They averaged $3.70 a gallon yesterday.

US wholesale prices rise 0.7 pct. on gas spike AP

The US current account trade deficit narrowed in Q4-2012.  But that didn't prevent the deficit for the entire year from climbing to the highest level in 4 years.  The Commerce Dept reported that the current account deficit in Q4 narrowed to $110.4B, down 1.8% from Q3.  The improvement reflected gains in Americans' earnings on their foreign investments & stronger earnings on service trade, a category that covers such things as airline travel.  For the year, the current account deficit widened to $475B, a 1.9% increase from 2011.  The current account is the broadest gauge of trade.  It tracks not only the sale of goods & services but also investment flows.  The current account shows how much the US must borrow from foreigners & could widen slightly in 2013 as a small pickup in global growth helps US export sales.  But these gains are outpaced by rising demand in the US for imports.  The current account deficit hit an all-time high of $800B in 2006.  Then it shrank after a deep recession reduced US demand for foreign goods by a greater amount that export sales diminished.  The trade deficit has been widening again after the US recession ended in Jun 2009.

US current account trade deficit narrows AP

<p>               President Barack Obama speaks at the Organizing for Action dinner in Washington, Wednesday, March 13, 2013.  (AP Photo/Manuel Balce Ceneta)

Photo:    Bloomberg

Reuniting with supporters & top-tier donors who fueled his re-election victory, the pres told a grass-roots group springing out of his campaign that they can play an equally powerful role in helping his ambitious 2nd-term agenda come to fruition.  Addressing the fledgling group Organizing for Action for the first time, Obama sought to temper concerns among Reps & good-governance groups that questioned whether the group was really seeking to help Dems recapture the House in 2014.  Obama, who hours earlier held a rare meeting with House Reps aimed at laying the groundwork for compromise, said he senses a genuine desire among Reps to get things done.  Many of those in the opposing party are just as weary of grinding gridlock that has stymied progress on major fiscal issues, he said.  "Members sometimes are scared about making the right decisions," Obama said, telling the group that they could make the difference in marshaling support that would help lawmakers come to the right decision.  He said that Organizing for Action can ensure the voices of those who elected him are heard now that the election is over & the tough work of policymaking has resumed.  Unlike most of his campaign & White House events, the pres spoke without a teleprompter.  These are not the words of compromise. 

Obama to group: Activate people for my agenda AP

Stocks are being priced to perfection.  All news is viewed as good news & that is drawing out buyers.  Dow has risen for 10 consecutive days, one of it longest streaks in history. However DC remains deeply divided.  That is not good news for solving the very troubling budget debt mess.  After speaking to Reps yesterday (& getting nowhere), the pres makes a big speech to party faithful, telling them to keep the faith & follow him on the road of more spending.  Dow keeps going up as if it didn't have a care in the world.  I dunno!

Dow Jones Industrials

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