Wednesday, September 25, 2013

Markets slide lower as Senate votes on Obamacare

Dow fell 61, advancers just ahead of decliners & NAZ lost 7.  The MLP index rose 1+ to 444 & the REIT index was up 1 to 271.  Junk bond funds were higher & Treasuries rallied.  Oil fell for a 5th day, heading for the longest losing streak since Dec, as inventories unexpectedly rose & demand slipped.  There was buying for gold in the PM.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

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U.S. 10-year


CLX13.NYM...Crude Oil Nov 13...102.49 Down ...0.64  (0.6%)

Live 24 hours gold chart [Kitco Inc.]

US household net worth jumped $1.3T in the spring, fueled by gains in home & stock values.  The Federal Reserve said that net worth rose to $74.8T in Q2, up 1.8% from Q1.  Home prices & stock markets have risen further since then, suggesting that Americans' net worth is now even higher.  The gains in wealth haven't been evenly distributed.  Home ownership has declined since the recession, particularly among lower-income Americans.  And the wealthiest 10% of households own about 80% of stocks.  Americans' wealth bottomed at $57.2T in 2008.  Since then it has risen $17.6T.  Household wealth, or net worth, reflects the value of assets like homes, stocks & bank accounts minus debts like mortgages and credit cards.  Greater net worth can boost consumers' willingness & ability to spend.  That could accelerate economic growth.  Some say higher household wealth enabled Americans to spend more this year despite higher Social Security taxes & higher income taxes on wealthier Americans that took effect at the start of the year.  Home values rose $525B in Q2, stock & mutual fund portfolios $300B. 

Household Net Worth in U.S. Increases by $1.3 Trillion

J.C. Penney Co. Store

Photo:   Bloomberg

JCPenney, trying to reverse $1.6B of losses in the past year, sank the most in almost 7 months after Goldman Sachs (GS) said its liquidity will be strained in Q3.  Since taking over in a 2nd stint as CEO in Apr, Mike Ullman has borrowed money to shore up the finances, & re-introduced discounts & brought back merchandise to help recover from his predecessor’s failed attempt to transform the company.  The retailer has taken out a $2.25B loan, arranged by Goldman, & drawn down $850M from its credit revolver.  The chain is in talks to raise more cash.  It doesn’t have immediate cash needs & is exploring fundraising amid shareholder pressure to take advantage of cheap financing.  Another report from Cleveland Research said Q3 looks “more difficult than initially expected.”  The return to more promotions doesn’t appear to be generating better sales or store visits, the firm said.  The stock plunged 1.78 (15%).

J.C. Penney Plummets as Goldman Raises Liquidity Concerns

J.C. Penney (JCP)

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Roku Steps Up Apple Competition With New Movie Store, Hardware

Photo:   Bloomberg

Roku, the maker of set-top boxes that connect TVs to the internet, introduced new & upgraded devices that make it easier for viewers to rent or buy movies online.  The boxes provide access to an online store called M-GO, letting consumers use a single sign-up & log-in to order films & TV shows from different studios, Roku said.  Roku will also collect a cut of the sales.  The company is adding features & content to stay ahead of Apple (AAPL), its nearest competitor.  The company also vies with game consoles.  Roku makes the most popular streaming products used by consumers to watch films & TV shows from subscription services.  With M-GO, Roku will be offering sales & rentals as well.  “We want to give our viewers a one-click access to anything that’s available,” CEO Anthony Wood said.  Roku will get a cut of video download revenue, as it does with other partners.  Roku, which has sold more than 5M boxes in the US, makes 4 models that retail for $50-$100 & has 37% of the market, compared with 24% for the Apple TV product priced at $99.  “Roku users spend more time streaming content than owners of other streaming boxes or video-game consoles,” Wood said.

Roku Steps Up Apple Competition With New Set-Top Boxes, Download Store

Stocks peaked one week ago & have been slipping & sliding since then.  The Dow set a record on Sep 18 & fell 400 in the last week on no special news.  But there also was no special news for the prior rally in Sep.  Vibrations coming out of DC are ominous.  If it comes to it, gov will not shut down on Oct 1.  The high priced help in DC will have to decide how to allocate the money coming in to pay bills.  As I said before, they will make it as painful as they can because it pains them to see any gov employees laid off.  And the first earnings are just a couple of weeks away.

Dow Jones Industrials

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