Monday, October 14, 2013

Lower markets on DC chaos

Dow dropped 65, decliners over advancers 5-2 & NAZ fell 13.  The MLP index fell 2+ to the 441s & the REIT index lost 1+ to the 273s.  Junk bond funds were lower & Treasuries were flattish.  Oil slipped & gold rose, but remains below 1300.
AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX13.NYM...Crude Oil Nov 13...101.50 Down ......0.52  (0.5%)

GCV13.CMX...Gold Oct 13........1,282.50 Up ...14.50 (1.1%)

Budget Battle

Photo:   Bloomberg

Senate leaders have yet to reach an agreement on how to end the fiscal impasse amid mounting concern in financial markets 3 days before the gov borrowing authority lapses.  Harry Reid said yesterday that he had a “productive conversation” with Mitch McConnell without reaching a conclusion on a plan to send to the Dem controlled chamber for a vote.  “The discussions were substantive and we’ll continue those discussions” Reid said as the parties remained divided over federal spending levels.  “I’m optimistic about the prospects for a positive conclusion.”  While optimism also was expressed by Dem & Rep senators, there was little evidence to support their words as the partial shutdown entered its 3rd week.  In simple terms, this is called "dead in the water.""

Debt Accord Elusive as Senate Leaders Seek Shutdown End

Shipping Containers in Shanghai

Photo:   Bloomberg

China exports unexpectedly fell in Sep, signaling the constraints of global demand on the nation’s recovery & highlighting distortions caused by fake invoices that have yet to be eliminated from trade data.  Overseas shipments dropped 0.3% from a year earlier, the General Administration of Customs said, trailing estimates.  Imports rose a more-than-forecast 7.4%.  The release of Sep inflation data today will provide further indication of the strength of domestic demand.  The trade report may add to Premier Li Keqiang's challenges in defending the gov’s 7.5% expansion goal for this year.  The IMF cut its global growth outlook last week as capital outflows further weaken emerging markets & warned that a US gov default could “seriously damage” the world economy.

China’s Unexpected Export Drop Underscores Global Demand Threat

Stocks are selling off as the reality of a debt default becomes more apparent to the faithful.  Comments are meaningless today.  All we can do is wait to see what Scotch Tape solution the politicos come up with.  And that won't come before the last minute!  

Dow Jones Industrials

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