Thursday, September 19, 2013

Markets slip lower after rethinking Federal Reserve actions

Dow dropped 40, decliners over advancers almost 3-2 & NAZ added 5.  The MLP index soared another 9 to 449 & the REIT index lost pocket change to the 278s.  Junk bond funds were mixed & Treasuries retreated.  Oil fell for the 4th time in 5 days as Libya’s oil output increased & Syrian President Assad said he will provide intl inspectors access to chemical weapons facilities.  Gold rose a whopping 61, negative bets on extending the bond buying program by the Fed.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

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CLV13.NYM...Crude Oil Oct 13....106.50 Down ...1.57  (1.5%)

Live 24 hours gold chart [Kitco Inc.]

The IMF chief says she sees subdued global growth ahead even with signs of recovery in major economies such as the US & Europe.  Christine Lagarde spoke to the US Chamber of Commerce, saying that advanced economies are in a better place than they were 6 months ago, with US growth picking up & Europe emerging from a long recession.  But developing countries that helped keep the global economy afloat during the recent economic crisis are now slowing down.  “For now, let me say that while we are seeing some signs of recovery, global growth remains subdued,” Lagarde said.  The fund will release its new predictions Oct 8, 3 months after cutting its global forecasts to 3.1% this year & 3.8% in 2014.  Since then, developed economies such as the US have become growth engines while some of their emerging-market counterparts decelerate, the fund staff.  Lagarde also said the US economy growth rate would be below 2% this year, & about one percentage point more next year.  But the country must fix its public finances, amid political uncertainty about the budget & the debt ceiling.

Lagarde Sees Subdued Global Growth as IMF Reviews Forecasts

House Speaker John Boehner says the House won't vote to increase the debt limit without including spending cuts to reduce the deficit.  He added that an increase in the debt limit without deficit reduction, quote, "isn't going to cut it."  Congress faces 2 financial deadlines in the coming weeks.  Funding for the gov is set to run out at the end of Sep, & the gov will reach the limits of its borrowing authority a few weeks later.  Boehner told reporters the Rep-led House will pass a bill tomorrow to keep the gov running while gutting funding for the pres's health care law.  The health care provisions are sure to die in the Dem-controlled Senate, setting up a showdown that could lead to a partial gov shutdown.

Boehner: No debt limit increase without cuts Associated Pres

Fuel consumption in the US slipped in Aug as crude-oil production surged to the highest level for the month in 25 years, according to the American Petroleum Institute (API).  Total deliveries of petroleum products, a measure of demand, slipped 0.7% from a year earlier to 19.1M barrels a day, the lowest level for Aug since 2009.  YTD consumption has averaged 18.7M barrels a day, up 0.4% from 2012.  Demand for gasoline dipped 0.9% to 9.05M barrels a day last month.  Consumption of jet fuel slipped 0.3% from a year earlier to 1.46M barrels a day & demand for residual oil, used for commercial & industrial heating, electricity generation & ship propulsion, dropped 3.8% to 340K barrels a day.  “August saw a continuation of trends that have been building for quite some time,” John Felmy, chief economist with API, said.  “The incredible rise in American energy production, helped in part by softening demand, has allowed the US to dramatically increase energy exports & reduce its energy imports.”  Consumption of distillate fuel, the category that includes diesel & heating oil, gained last month.  Diesel demand rose 3% to 3.66M barrels a day while ultra-low-sulfur diesel use climbed 2.2% to 3.63M.  Heating oil use declined 11% to 164K barrels a day.  US crude-oil production increased 20% to 7.59M barrels a day.  A combination of horizontal drilling & hydraulic fracturing has unlocked supplies in shale formations in North Dakota, Texas & other states.  Production of natural gas liquids, which are a byproduct of gas drilling, surged 6% to 2.51M barrels, a record for Aug & the 3rd-highest monthly level ever.  Total oil & fuel imports dropped 10% to 9.81M barrels a day, an 18-year low for the month.  Fuel exports climbed 16% to 3.5M barrels a day, the highest Aug level ever & 42K barrels short of the record in Jun.

U.S. Fuel Use Slid in August as Oil Output Rose, API Says

Stocks had a big run yesterday & are took it easy today.  But Dow is still up an enormous 5K in less than 2 years, largely thanks to Big Ben & his aggressive program which has bought an enormous amount of federal debt.  Now another part of the federal gov is getting attention as the fiscal year comes to its last few days & the debt ceiling deadline nears.  The sides have drawn deep lines in the sand, hard to see how they can come up with last minute (really, after the last minute) solutions.  Last time, the pres came up with the idea of sequester to allow for an increase in the debt ceiling.  Not many rabbits left to pull out of a hat.

Dow Jones Industrials

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