Wednesday, September 11, 2013

HIgher markets as US weighs Syrian options

Dow went up 135 (closing at the high), advancers ahead of decliners almost 3-2 & NAZ dropped 4.  The MLP index fell 1+ to the 441s & the REIT index went up 1+ to 269.  Junk bond funds were mixed & Treasuries continued strong.   Oil was about even & gold fell as safe haven demand ebbed.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

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CLV13.NYM...Crude Oil Oct 13....107.31 Down ...0.08  (0.1%)

Live 24 hours gold chart [Kitco Inc.]

Chinese Premier Li Keqiang

Photo:   Bloomberg

Chinese Premier Li Keqiang said the foundations of a growth rebound aren’t solid while cautioning that stimulus won’t help resolve deep-rooted issues in the economy.  “The foundation of an economic recovery is not solid yet with many uncertain factors,” Li said in a speech yesterday.  The nation is taking steps to stabilize growth & can achieve the main economic targets this year, Li said.  Policy makers have signaled they will defend a 7.5% expansion goal for 2013 & seek to ensure a pace of 7% in the coming years.  Li pledged reforms that will ripple throughout the financial system as Communist Party leaders prepare for a Nov meeting to lay out a blueprint for sustaining long-term growth.  “An important part of economic-system reform is financial reform,” Li said in a Q&A session after the speech.  “It is because it is such a complicated systematic project, it indicates China’s reform has entered a deep-water zone, or the most difficult phase.”   He also reiterated that China will push forward interest-rate & exchange-rate reforms & the internationalization of the while promoting the currency’s convertibility under the capital account.  Gov data on Sep 10 showed industrial production & aggregate financing, the nation’s broadest measure of new credit, rose more than estimated in Aug, in a sign leaders are committed to meeting economic goals even at the cost of adding financial risks.  The gov has used measures from tax cuts to extra spending on railways to respond to a growth slowdown.

Li Says China Rebound Not Yet on Solid Foundation

Travelers, the only property insurer in the Dow, spent a record amount on share repurchases in Q3 as it benefits from lower costs tied to the most severe natural disasters.  It bought back $633M in stock from Jul 1 thru yesterday, bringing the total this year to about $1.2B, CFO Jay Fishman said.  Catastrophe costs in Q3 have been about $30M after tax.  Travelers & other US property insurers are benefiting this year from calmer weather after tornadoes & other natural disasters caused claims costs to spike in recent years.  Humberto became the first hurricane of the Atlantic season today, missing by 3 hours the record for the tardiest such storm.  “The third quarter as everyone knows has been benign and quiet from a windstorm perspective,” Fishman said.  The insurer has bought back more than half its stock since the middle of 2006.  TRV typically limited repurchases in Q3, during the peak of the Atlantic hurricane season.  The last time it bought back more than $6M in Q3 was in 2010.  The total this period is the most in any qtr since Q4-2011, when it bought back $1.2B in stock.  Catastrophe costs at the insurer were $59M in last year’s Q3 & $394M in the period in 2011.  The Atlantic hurricane season runs from Jun 1 to Nov 30.  The stock rose 1.19.

Travelers Buybacks Set Third-Quarter Record as Natural Disaster Costs Fall

The Travelers Companies (TRV)

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House Republicans Said to Delay Spending Vote Until Next Week

Photo:   Bloomberg

House Reps postponed until next week a vote on their strategy for passing a US spending bill to allow time to seek support from members.  House Speaker John Boehner & Majority Leader Eric Cantor are lobbying their caucus to back a spending-bill strategy that would force the Dem-led Senate to vote on defunding Obamacare.  A number of House Reps oppose the plan because it would allow for passage of a spending bill even if the Senate voted to keep funds for the Act.  Those members insist on ending funds for the law.  Many Reps are calling for reductions in entitlement programs & an end to funding for the health-care law in exchange for the spending measure & raising the debt ceiling.  Funding for the federal gov runs out when the fiscal year ends Sep 30 & the US will reach its debt limit as early as mid-Oct.  This could get ungly.

House Republicans Delay Spending Vote Until Next Week

Dow is behaving as if Putin has made Syrian problems vanish.  I don't think so.  Market breadth was nothing to write home about & Dow is overbought with 7 straight up days.  One note of optimism, Linn Energy (LINE), an upstream MLP, has been on a wild ride this year.  The SEC gave a report today about its accounting practices & seems to have given LINE a passing grade.  Meetings are being scheduled for unit/stock holders to approve a merger with Berry Petroleum (BRY).  LINE & its companion stock, LinnCo (LNCO), shot up almost 15%.  NAZ was held back today by the a plunge of 27 at Apple (AAPL) after it launched 2 new iPhones yesterday.   

Dow Jones Industrials

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