Thursday, October 10, 2013

Markets rally on hopes for a debt limit deal

The Dow jumped 196, advancers over decliners 6-1 & NAZ shot up 59.  The MLP index climbed 3 to 442 & the REIT index rose 4+ to the 269s.  Junk bond funds were higer & Treasuries pulled back.  Oil was slightly higher & gold slid below 1300.

AMJ (Alerian MLP Index tracking fund)

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CLX13.NYM...Crude Oil Nov 13...101.54 Down ...0.07  (0.1%)

GCV13.CMX...Gold Oct 13...1,297.50 Down ...9.40  (0.7%)

Republican Leaders Said to Offer 6-Week Debt-Cap Without Add-Ons

Photo:   Bloomberg

House Rep leaders will present to their members a proposal to raise the debt limit for 6 weeks without policy conditions, according to an official leaker.  The move would lessen the risk of a US default one week from a lapse in borrowing authority.  The proposal wouldn’t end the partial gov shutdown as Reps try to shift the debate back to spending issues.  Under the plan, the Treasury wouldn’t be able to use extraordinary measures to further extend borrowing authority, creating a hard 6-week limit.  The pres said he would accept a short-term increase in the debt limit without policy conditions & would negotiate on broader fiscal & health-care policy after the debt limit is raised & the shutdown ends.  Many Reps want to tie the debt-limit increase to party priorities such as cuts in entitlement programs.  It’s unclear whether rank & file members will agree to the leadership’s proposal.  Treasuries & stocks declined this month amid the standoff.  If the US doesn’t raise the debt limit by next Thurs, the gov will have $30B plus incoming revenue to pay its bills.  It would start missing scheduled payments, including benefits, salaries & interest, between Oct 22-31, according to the CBO.  

Republican Leaders Said to Offer 6-Week Debt Cap Without Add-Ons

  • U.S. Treasury Secretary Jack Lew testifies before the Senate Finance Committee on the U.S. government debt limit in Washington October 10, 2013. REUTERS/Gary Cameron
Photo:   Yahoo

Treasury Secretary Jack Lew said that gridlock in DC was hurting the economy & urged Congress to raise a cap on gov borrowing to keep America from defaulting on its debt.  The political dysfunction has already led the gov to partially shut down, which is sucking money out the economy by delaying payments to many federal workers.  The economic drag could grow much severe later in the month if the US begins to default on its obligations after it hits a $16.7T ceiling on its debt.  "We now face a manufactured political crisis that is beginning to deliver an unnecessary blow to our economy," Lew told a Senate hearing.  Lew said uncertainty over the possibility of default was already weighing on financial markets.  He also said it would be "irresponsible" for the gov to try to prioritize its payments so that bondholders would continue to be paid should DC not have enough money to pay all its bills.  He warned that after Oct 17 the gov might miss payments on pensions & health care for the elderly, as well as salaries for the nation's soldiers.

Global PV shipments fell in Q3, reaching their lowest level for the period since 2008, amid lackluster demand from students returning to school, according to Gartner.  In the 6th consecutive quarterly decline, unit sales fell 8.6% to 80M, Gartner said.  Growth in the US, where shipments climbed 3.5%, helped make up for weak volume in other regions.  Lenovo maintained its #1 spot in the worldwide market, followed by Hewlett-Packard (HPQ), which was the top seller in the US.  PC makers haven’t rolled out new products capable of winning back consumers who have been migrating to cheaper tablets to connect to the internet.  Consumer demand typically rises in Q3, boosted by back-to-school purchases.  “Consumers’ shift from PCs to tablets for daily content consumption continued to decrease the installed base of PCs both in mature as well as in emerging markets,” Gartner said.  “A greater availability of inexpensive Android tablets attracted first-time consumers in emerging markets, and as supplementary devices in mature markets.”  Researcher IDC, which also released its Q3 PC rankings, said the global market shrank 7.6% to 81.6M units, compared with its earlier prediction for a 9.5% contraction.  Business purchases & a boost from a coming update to Windows 8 accounted for the smaller-than-projected decline, IDC said.  “The third quarter was pretty close to forecast, which unfortunately doesn’t reflect much improvement in the PC market, or potential for near-term growth,” IDC said.  “The third-quarter results suggest that there’s still a high probability that we will see another decline in worldwide shipments in 2014.”  Shipments fell in 2012, & IDC forecasts a 9.7% drop in unit sales this year.  Lenovo held a 17.6% market share worldwide, helped by a 2.8% increase in shipments.  Gartner said. Hewlett-Packard (HPQ) retained its #2 spot after a 1.5% gain in unit sales, giving it a 17.1% share.  Dell (DELL) came in 3rd with a 11.6% share, & a 1% increase in Q3 shipments. Acer & Asustek (Asus) posted shipment declines of more than 20%, Gartner said.  While sales in the US may have “passed the worst declining stage,” according to Gartner’s, other regions posted double-digit percentage drops.  Asia-Pacific shipments fell 11.2%, while Europe, Middle East & Africa slid 13.7%.

PC Shipments Decline 8.6 Percent Amid Tepid Student Demand, Gartner Says

Stocks are having a good day, hoping that politicos in DC will come up with some magic to cure enormous financial problems.  The idea is to solve today's problems today, tomorrow will take care of itself.  This attitude has been & is a sloppy way to handle financial matters.  Chances are that a solution which kicks the can down the road for a few months will be agreed to.  Then we will have to go thru this agony all over again, as has been common in recent years.  So far, the stock market hasn't minded

Dow Jones Industrials

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