Friday, March 15, 2013

Dow's 10 day winning streak ends

Dow fell 25, decliners over advancers 5-4 & NAZ lost 9.  The Financial Index rose a fraction to 249, another post Lehman collapse high.  The MLP index was off a fraction in the 433s & the REIT index was even at 284.  Junk bond funds retreated (with big losses of more than 2%) & Treasuries rose, taking the yield on the 10 year bond back below 2%.  Oil went up & gold was flattish.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLJ13.NYM...Crude Oil Apr 13....93.44 ...Up 0.41 (0.4%)

Live 24 hours gold chart [Kitco Inc.]

The pres, in his annual economic message to Congress, said the “top priority” of his 2nd term is job creation, fueled by an effort to make the US a magnet for manufacturing.  “After years of grueling recession, our businesses have created over six million jobs,” Obama said in his Economic Report.  The economy is adding jobs, yet too many can’t find full-time employment.  “Our top priority must be to do everything we can to grow our economy and create good, middle-class jobs,” Obama said.  The annual report typically offers a menu of economic growth forecasts for the current year & next, as well as the outlook for the unemployment rate & inflation.  Those weren’t included today, delayed until he presents the fiscal 2014 budget proposal to Congress the week of Apr 8.  Instead, Obama previewed some of the priorities that will drive his budget.  The report outlines plans for manufacturing hubs designed to foster technology jobs & says the tax code needs to be rewritten to make the US more competitive in global markets.  He will ask Congress to spend more on research & technology, as well as education & public works projects, such as roads & bridges.  There were no details.  “These steps will help entrepreneurs and small business owners expand and create new jobs,” Obama said.  This is the usual air out DC.

Obama’s Budget Preview Says Job Creation Is Top Priority

Intl purchases of US stocks, bonds & other financial assets slowed for the first time in 4 months in Jan as private investors sold Treasuries & agency bonds during the stock market’s best month in more than a year.  Net buying of long-term financial assets totaled $25.7B, down from net purchases of $64.2B in Dec, the Treasury Dept said.  The projection was for net buying of $40B.  The US continues to remain attractive as the Dow extended the longest rally since 1996 yesterday.  The Dow gained 5.8% in Jan, its biggest monthly gain in more than a year.  Including short-term securities such as stock swaps, foreigners bought a net $111B in Jan, up from net purchases of $22B in the previous month.  China remained the biggest foreign owner of Treasuries after its holdings rose $44B to $1.26T.  Japan, the 2nd-largest holder, was little changed at $1.1T in holdings.  Net sales by private investors in Treasury notes & bonds totaled $21B & agency selling amounted to $900M.  Official purchases of US notes & bonds totaled $53B, compared with $8B the previous month.  Foreigners bought a net $32B of Treasuries in Jan, up from $30B in the prior month.

Foreign Demand for U.S. Assets Slows on Treasuries, Agency Sales

House Reps won’t wait for the pres to issue a decision on the Keystone XL pipeline.  They plan to vote by the end of May on legislation that would sidestep the administration & offer congressional approval to the TransCanada project.  The House & Commerce Committee Chairman, Fred Upton, said today that the bill would be on the House floor by Memorial Day.  The measure is being designated HR 3, using one of the numbers held in reserve by Rep leadership for their top-priority bills.  “There is no reason for us to not only refine that oil, but also to keep most of it in the U.S.,” Upton said.  The project would cross 6 states & link the oil from Alberta, Canada, to Texas refineries along the Gulf Coast.  It requires a presidential permit because it crosses an intl border.  In Jan 2012 the administration rejected a proposed route for the pipeline after concerns were raised about the impact of the project on an ecologically sensitive area in Nebraska.  The route now under consideration was submitted in May 2012.  Backers of the pipeline say that Congress has the authority to effectively deem the pipeline approved without Obama’s action.  Obama told Rep senators earlier this week he planned to make a decision on the revised application by the end of the year.

With the Dow up an incredible 1.4K this month, today's pause does not even make a dent in that advance.  The economy has been turning out good numbers & jobless claims have declined.  But they haven't fallen enough to have a meaningful impact on the unemployment rate.  And business execs are watching DC closely to see developments on the budget battle.  Its outcome will have a major effect on the economy & presently there is no resolution in sight.  Today's decline in the markets was largely due to traders starting the weekend early because they have a lot of money to spend (burn).

Dow Jones Industrials

stock chart

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