Monday, May 6, 2013

Dow pauses after last week's new record

Dow was off 25, advancers ahead of decliners 5-4 & NAZ addded 6.  The MLP index dropped 2 to the 449s & the REIT index rose 1 to 306.  Junk bond funds were mixed to higher & Treasuries were flattish.  Oil pulled back after recent gains.  Gold rose for the 2nd time in 3 sessions on expectations that China will announce more stimulus measures to boost economic growth, increasing demand for the precious metal as a store of value.

AMJ (Alerian MLP  Index tracking fund)

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Treasury yields:

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U.S. 2-year


U.S. 10-year


CLM13.NYM...Crude Oil Jun 13...95.29 Down  ...0.32 (0.3%)

GCK13.CMX...Gold May 13....1,466.80 Up ....2.50 (0.2%)

France Declares Austerity Over as Germany Offers Wiggle Room

Photo:   Bloomberg

French Finance Minister Pierre Moscovici declared the era of austerity over after his German counterpart offered flexibility on deficit cutting amid renewed bickering between Europe's 2 biggest economies.  We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, Moscovici said yesterday on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.”  The gap between the French Socialist finance chief’s view & the election-year positioning of Germany’s Wolfgang Schaeuble underscores the divergence between their economies & the wrangling that has marked the crisis fight since Francois Hollande replaced Nicolas Sarkozy as French leader a year ago.  Coalition lawmakers in Germany are pushing back against the 2-year extension for France to meet EU.  “We made it clear to our government, the chancellor and finance minister that in the case of France a one-year delay to 2014 to fulfill the euro’s deficit rules is the absolute limit for us,” Norbert Barthle, budget-policy spokesman for Schaeuble’s Christian Democratic Union, said on Fri. “France must show that it’s willing to tackle structural reforms.”  With German Chancellor Angela Merkel campaigning for a 3rd term in a Sep 22 vote, policy making among Europe’s elected leaders has ground to a crawl, with ECB Mario Draghi set to take the initiative.  The risk is that they’ll back off policies needed to spur competitiveness and restore growth.

France Declares Austerity Over as Germany Offers Wiggle Room

Demise of Online Advantage Seen Exaggerated With Congress

Photo:   Bloomberg

Retailers & state govs are on the verge of winning US Senate passage of a bill today that would let states tax out-of-state retailers, providing up to $23B a year in new revenue.  But that may lose momentum in the Rep House, where the issue won’t get a vote quickly.   Retailers say the legislation would level the playing field between brick- and-mortar stores & their online competitors.  The largest Internet-based retailer, Amazon (AMZN) also supports the legislation as it expands into more states to speed delivery, which means it will pay taxes anyway.  They are opposed by a coalition of direct marketers, online auction company EBay (EBAY), anti-tax groups & lawmakers from states without sales taxes.  These groups say businesses may be subjected to multiple audits & higher compliance costs.  Stay tuned on this important development.

House Action on Online Tax Seen Less Urgent Than Senate

General Motors, the largest foreign automaker in China, reported sales growth accelerated last month, while Toyota (TM) saw its deliveries extend their slump in the world’s biggest car market.  GM sales climbed 15% to 261K units in Apr, after a 13% increase the preceding month.  TM reported sales fell 6.5% to 76K units, the 9th drop in 10 months.  GM saw sales of Buick & Chevrolet vehicles rise more than 20% as the company seeks to keep its lead in China among foreign automakers for a 9th-straight year at the expense of Japanese automakers, who are still coping with the fallout of a territorial dispute that flared in Sep.  For GM, Cadillac sales surged 99% to a record 4K units, helped by the recently-introduced XTS model.  GM has made sales of its luxury Cadillac brand a priority, with the aim of selling 100K units annually in 2015 & gaining 10% of the premium segment market share by 2020.  Overall, GM is “cautiously optimistic” that sales in China may reach 3M units this year, Bob Socia, head of operations in the country, said.  The company sold 2.84M vehicles in China last year & targets to sell 5M in the world’s biggest auto market by 2015.  GM stock was off pennies.

GM China April Sales Accelerate as Toyota Deliveries Extend Drop

General Motors (GM)

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Stocks are meandering with little going on in the markets after markets extended that fabulous run last week.  Buyers may return from long weekends later today, which could take Dow into new record territory.  Dow is up almost 3K from its lows less than a year ago.  How long will that run continue? 

Dow Jones  Industrials

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