Thursday, September 12, 2013

Markets ease lower as investors weigh Syrian options

Dow slipped 25, decliners over advancers 2-1 & NAZ lost 9.  The MLP index fell 2+ to the 439s & the REIT index was off 2+ to 267.  Junk bond funds were mixed & Treasuries lost some of the gains in the AM.  Oil was flattish & gold had a rough day, going back to the low 1300s.

AMJ (Alerian MLP Index tracking fund)

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

Live 24 hours gold chart [Kitco Inc.]

Russian President Vladimir Putin

Photo:   Bloomberg

Syrian President Bashar al-Assad set what may be unacceptable conditions for the US in negotiating a chemical-weapons deal, saying it must be a “two-way street” in which the Obama administration drops its military threats & stops arming Syrian rebels.  Assad set out his terms as John Kerry told top Syrian opposition figures that the option of a US military strike remains on the table & that the US will continue to stand by the rebels.  Assad commented in an interview broadcast today by Russia’s state news channel as Kerry opened talks in Geneva with his Russian counterpart.  The diplomatic initiative by Russia has led Obama to put off moves toward military strikes on Syria even as he & other officials have said they are uncertain whether the talks will be successful.  While Obama said today that he’s hopeful talks will “yield a concrete result,” Assad’s comments highlight the obstacles to an agreement under which intl monitors would take control of Syria’s chemical-weapons arsenal until those arms can be destroyed.  “First of all, the U.S. needs to stop its policy of threats against Syria,” Assad said.  “It also depends on whether Russia’s proposal is accepted. When we see that the U.S. really wants stability in our region and stops threatening and moving towards strikes, and also stops supplying weapons to terrorists, then we will see that we complete the necessary processes and they’ll be acceptable to Syria.”  Syria today submitted to the UN a document to begin the process of joining the Chemical Weapons Convention.  The intl accord bans the use of chemical weapons & requires the disclosure & elimination of such arms.  Syria would start providing information on its chemical weapons about a month after it signs the accord, Assad said.  The former head of the KGB & #1 player in this mess is shown above.

Assad Sets Conditions as U.S.-Russia Geneva Talks Open

FILE - In this Friday, Aug. 2, 2013, file photo, members of Congress walk down the steps of the House of Representatives on Capitol Hill in Washington. The Treasury reports on the budget deficit for August on Thursday, Sept. 12, 2013. (AP Photo/J. Scott Applewhite, File)

Photo:   Yahoo

The US gov posted a narrower budget deficit in Aug compared with a year ago, keeping the annual gap on track to be the smallest in 5 years.  The deficit was $147.9B (that used to be considered a whopper annual deficit), the Treasury reported.  The annual budget gap thru the first 11 months was $755B, or 35% lower than the nearly $1.2T in red ink last year.  The CBO projects the gov will run a surplus this month, lowering the annual deficit to $642B.  That would be the first annual deficit below $1T in 5 years.  Steady economic growth has put more people back to work & boosted corp profits.  And Social Security taxes rose at the beginning of the year, along with income tax rates on wealthier Americans raised tax revenue.  In Aug, the gov collected $185B in taxes, up 4% from 2012.  At the same time, gov spending cuts that took effect in Mar have lowered spending.  The gov spent $333B in Aug, down 10% from a year earlier.  Each deficit contributes to the national debt, currently $16.7T.

U.S. Budget Deficit Narrows as Stronger Growth Boosts Revenue

Disney Planning to Repurchase Up to $8 Billion of Shares

Photo:   Bloomberg

Walt Disney plans to buy back $6-$8B of stock starting next year, stepping up efforts to increase investor returns as capital spending winds down. DIS will borrow to finance some of the repurchases CFO Jay Rasulo said today.  The company intends to maintain its debt ratings, he added.  The buyback comes as outlays shrink from a peak of $3.8B in fiscal 2012.  In recent years, it has expanded parks in California & Florida, built cruise ships & developed a resort in Hawaii.  A new destination in Shanghai is scheduled to open at the end of 2015.  “Based on the investment we have been doing, we will see an increase in cash flow,” Rasulo said.  “We just worked our way through a huge capital cycle.”  DIS will continue spending on projects and make acquisitions.  “We want to invest in our businesses either through organic growth initiatives or to grow our company through acquisitions,” Rasulo said.  DIS is a regular buyer of its stock.  The company repurchased $800M of shares in the recently completed Q3 & $3.2B YTD.  Disney also spent $1.8B on its parks, resorts & other properties during that period.  The company has also increased its div, with the 2012 annual payout boosted 25% to 75¢.  Debt totaled $15B as of Jun 29.  After a summer movie season that saw one of its biggest financial flops ever, DIS plans to limit the budgets on motion pictures to limit risks.  The stock rose 1.55.

Disney to Buy Up to $8 Billion of Stock Starting Next Year

Walt Disney (DIS)

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Reality is starting to hit home after 7 up days for the Dow (worth more than 500).  Nothing was behind it except for dreams that the Syrian problem will vanish after its best friend, Russia, says some kind words.  Not so.  The Sep 30 deadline is approaching when the fiscal year for the gov ends.  Funding for the next fiscal year has not begun.  But Dow has been ignoring these problems.  They may get more attention soon.  Plus next week is the big FOMC meeting.

Dow Jones Industrials

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