Wednesday, April 10, 2013

Dow soars to a new record high

Dow shot up another 128, advancers ahead of decliners 5-2 & NAZ was up 50. The MLP is resting, off a tad from its record high, & the REIT index rose 1+ to the 296s.  Junk bond funds were mixed & Treasuries pulled back.  Oil & gold were lower.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLK13.NYM...Crude Oil May 13...93.93 Down ....0.27  (0.3%)

GCJ13.CMX....Gold Apr 13.......1,572.90 Down ...13.30  (0.8%)

Obama Proposes $3.77 Trillion Budget in Bid to Revive Debt Deal

Photo;   Bloomberg

The pres sentt a $3.77T spending plan to Congress that calls for reductions in Social Security & Medicare in a political gamble intended to revive deficit-reduction talks.  The budget for FY2014 proposes $50B for roads, bridges & other public works, $1B to spur manufacturing innovation & $1B for an initiative to revamp higher education.  It renews his request to raise $580B in revenues (that means taxes) by limiting deductions & closing loopholes for top earners.  Obama again seeks adoption of the Buffett rule, to impose a 30% minimum tax on households with more than $1M in annual income.  The administration projects the deficit for FY2014 would be $744B, or 4.4% of the economy. That would mark the first budget shortfall of less than $1T since Obama took office (but still a whopper size).  The revenue proposals have been previously rejected by Reps & party leaders yesterday indicated they’ve seen nothing that will change their minds.  At the same time, the plan to shrink the growth of entitlement spending is drawing fire from fellow Dems & their allies.  Nothing new, but the pres enjoyed a lavish party last night at the White House paid for by taxpayers.

Obama Proposes $3.77 Trillion Budget to Revive Debt Talks

File photo of a container ship being loaded at a terminal in the harbour of Hamburg September 23, 2012. The World Trade Organization slashed its forecast for global trade growth in 2013 to 3.3 percent from 4.5 percent April 10, 2013, and said 2012 saw only a 2.0 percent increase, the smallest annual rise since records began in 1981. REUTERS/Fabian Bimmer/Files

Photo:   Yahoo

The World Trade Organization slashed its forecast for trade growth in 2013, saying it feared protectionism was on the increase.  Itis forecasting global trade growth in 2013 will decline to 3.3% from 4.5% & said trade grew only 2.0% in 2012, the smallest annual rise since records began in 1981 & the 2nd weakest figure on record after 2009, when trade shrank.  WTO Director General Pascal Lamy warned that 2013 could turn out even weaker than expected, especially because of risks from the euro crisis, & countries might try to restrict trade further in a desperate attempt to shore up domestic growth.  "The threat of protectionism may be greater now than at any time since the start of the crisis, since other policies to restore growth have been tried and found wanting," he said.  He called the 2012 growth rate "sobering"  Despite the hope of quickening trade this year & a provisional forecast of 5.0% growth in 2014, the annual rises are expected to stay below the historical trend of long-term growth, which was 6.0% for the 20 years leading up to the financial crisis but now stands at 5.3%.  WTO forecasts are based on global GDP growth of 2.1% in 2013, a consensus estimate that the WTO said was unchanged from 2012.  "Risks to the forecast are firmly rooted on the downside and are mostly linked to the sovereign debt crisis in Europe," the WTO said.

General Motors plans to invest €4B ($5.24B) in European operations thru 2016 as it adds models to increase market share and restore profit in the region.  Spending will focus on developing 23 vehicles & 13 engines to reach a goal of breaking even in Europe by mid- decade, CEO Dan Akerson said.  “We’re more convinced than ever Opel will succeed” in its turnaround, Akerson said. “We are also more convinced than ever that GM must have a strong and successful presence throughout Europe, and especially here in Germany.”  GM’s European business, which consists primarily of Opel & its UK sister brand Vauxhall, has accumulated losses of $18B since 1999.  Its earnings-revival strategy for the region includes the new models, partly in cooperation with French carmaker Peurgot Citroen, as well as spending cuts through measures such as shutting Opel’s car factory in Bochum, Germany.  The stock went up 63¢.

GM to Spend 4 Billion Euros by 2016 on Europe Units’ Turn

General Motors (GM)

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Stocks continue to fly as if they didn't have a care in the world.  I like the reasoning that says hedge fund guys are buying because they're sorry they missed out on the rally in Q1.  But fundamentals are lacking.  GDP growth was drab in Q4 & they should continue weak in Q1 & probably into Q2 (at least) as federal budget cuts bite.  Bank stocks have been among the leaders, but their profit growth may slow to moderate levels.  Consumer spending is another potential headache.  So far, it has been strong, but higher taxes are a dark cloud that is not going away.  For the time being, Dow has its eyes on 15K.

Dow Jones Industrials

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1 comment:

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