Friday, October 11, 2013

Markets rally as debt talks continue

Dow rose 111 (closing at the highs), advancers ahead of decliners 5-2 & NAZ added 31.  The MLP index gained 3+ to the 443s (little changed for much of the year) & the REIT index went up 2+ to the 274s.  Junk bond funds rose about 1% & Treasuries were flattish.  Oil lost ground & gold is well below 1300.

AMJ (Alerian MLP Index tracking fund)

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Tresury yields:

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CLX13.NYM...Crude Oil Nov 13...101.57 Down ...1.44  (1.4%)

Live 24 hours gold chart [Kitco Inc.]

  • The Ohio Clock shown outside the Senate Chamber on Capitol Hill on Thursday, Oct. 10, 2013 in Washington. The Ohio Clock has stood watch over the Senate for 196 years. It stopped running shortly after noon Wednesday. Employees in the Office of the Senate Curator ordinarily wind the clock weekly. But they are among the thousands of federal employees furloughed under the partial shutdown. (AP Photo/ Evan Vucci)
Photo:   Yahoo

Officials say House Reps are offering to pass legislation to avert a default & end the partial gov shutdown as part of a package that includes cuts in benefit programs.  Senior aides to Speaker John Boehner & Majority Leader Eric Cantor outlined the proposal at a late-night White House meeting with senior administration officials.  In addition to ending the shutdown & increasing the debt limit, the proposal includes an easing of the across-the-board spending cuts that began taking effect a year ago, & replacing them with curbs in benefit programs that Obama has backed.  Among them is a plan to raise the cost of Medicare for better-off beneficiaries.

JPMorgan Chase & Co. Officer in New York

Photo:   Bloomberg

JPMorgan, a Dow stock, reported its first loss under CEO Jamie Dimon after taking a $7.2B charge to cover the cost of mounting litigation & regulatory probes.  The Q3 loss was 17¢ per share, compared with EPS of $1.40 a year earlier.  Dimon is grappling with regulatory investigations & tightening internal controls following a trading loss last year of more than $6.2B.  The legal costs contributed to a 54% surge in non-interest expenses to $23.6B, as revenue dropped 8% from a year earlier.  “This is very painful for the company,” Dimon said.  JPM has spent $8B on litigation & set aside $20B toward legal & regulatory costs since 2010.  Those expenses will remain elevated for the next year or 2.  “We would love to reduce the uncertainty around this for ourselves and for you, but it’s very, very hard to do,” Dimon said.  JPM said on Aug that its mortgage-bond sales practices were under criminal investigation by US prosecutors in California.  The company has been discussing a potential $11B deal with state & federal authorities to settle that case as well as other related investigations.  The stock was down pennies.

JPMorgan Posts First Loss Under Dimon After $7.2 Billion in Legal Expenses

J P Morgan Chase (JPM)

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The Treasury received $570M last month from the sale of General Motors (GM) shares as the gov continues winding down its investment.  Thru the end of Sep, the gov has recovered $36B of the $51B it spent to bail out & restructure GM.  Treasury said in a Sep report its GM stake had been reduced to 7.3%.  Following its 2009 bankruptcy, the automaker went public again in 2010, leaving the Treasury as its largest shareholder.  The gov began selling its stake in Dec when GM repurchased $5.5B of shares.  The Treasury said at that time it would sell the rest of its shares within 15 months.  The gov may complete selling its GM stake before the year is over, CEO Dan Akerson has said.  The gov is exiting GM as investor confidence has risen while the company introduces 18 new or redesigned vehicles in the US.  The product surge is transforming its lineup into one of the freshest in the industry from the one of the oldest.  Today, the Treasury desperately needs this money.

U.S. Receives $570.1 Million From September GM Share Sale

Don't let the rising stock market blur anybody's thoughts.  The chaos in DC has not gone away.  Politicos are just making it up as they go along.  Only their poker chips are measured in $Bs.  There will be plenty of hiccups over the weekend as negotiations continue.  Any final compromise, made by people who don't know how to compromise, will only postpone the next round of crisis bargaining.  Meanwhile, business execs have to make decision about investments for next year.  And the outlook for retail sales in the holiday season, only a few weeks away, doesn't look good.  This is a major blow to a sub par economic recovery. 

Dow Jones Industrials

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