Thursday, October 10, 2013

Markets soar on hopes to delay a Treasury default

Dow shot up 323, advancers over decliners 6-1 & NAZ gained 82.  The MLP index was up 1 to 440 & the REIT index jumped 6+ to the 272.  Junk bond funds rose about 1% (modest for stocks with high yields) & Treasuries pulled back.  Oil went up & gold fell to a one-week low on speculation that the US will avert a default, eroding demand for the precious metal as a haven.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX13.NYM...Crude Oil Nov 13...103.17 Up ...1.56 (1.5%)

Live 24 hours gold chart [Kitco Inc.]

The White House says John Boehner's proposal for a short-term deal to increase the nation's borrowing limit is an "encouraging sign."  Spokesman Jay Carney says the pres prefers a longer agreement to lift the debt ceiling & wants Reps to pass a spending bill to reopen the federal gov.  But he did not specifically say the pres would reject a proposal, like Boehner's, that does not also open the gov.  Carney says the White House has not seen a specific plan from the House GOP.  Boehner & other members of his caucus are scheduled to meet with the pres in the PM.  This situation remains fluid to say the least.

White House: GOP debt cap proposal 'encouraging' Associated Press

Jobless Claims Surge on California Switch, U.S. Federal Shutdown

Photo:   Bloomberg

Claims for jobless benefits jumped last week to the highest level in 6 months, providing the first statistical warning that the damage from the partial federal shutdown is starting to ripple thru the economy.  While half the increase came from California as the state worked thru a backlog following a switch in computer systems, another 15K reflected the furlough of non-federal workers from employers losing gov business.  Applications for unemployment insurance benefits surged 66K in the latest week to 374K, the most since late Mar, according to the Labor Dept.  Last week’s surge in the number of jobless claims was the biggest since the aftermath of superstorm Sandy in Nov.  The forecast projected an increase to 311K from the prior week’s 308K.

Jump in Jobless Claims Flashes Warning on U.S. Shutdown: Economy

Draghi Says ECB Guidance Incorporates `Easing Bias'

Photo:   Bloomberg

ECB President Mario Draghi said policy makers’ pledge to keep interest rates low explicitly allows for cuts in borrowing costs if market volatility resumes.  “The Governing Council has unanimously agreed to incorporate an easing bias that explicitly provides for further rate reductions, should the volatility in money market conditions return to the levels observed in early summer,” Draghi said in New York.  ECB policy makers are seeking to prevent volatility in market rates from derailing a euro-area economic recovery that Draghi said was subdued, uneven & fragile.  To that end, they pledged in Jul to keep official interest rates at or below current levels for “an extended period.”  Borrowing costs had risen after the Federal Reserve said it was considering tapering its stimulus later this year.  “The path of the policy rates remains conditional on the outlook for inflation,” said Draghi.  “It will be reviewed over time against our analytical framework.”  ECB officials considered a rate cut at their meeting last week & decided against it.  Draghi said at a press conference that the central bank is ready to use “all available” tools to contain market rates, a comment reiterated today in its monthly bulletin.

Draghi Says ECB Guidance Allows Rate Cuts on Volatility

Drama & chaos in DC continue.  Nobody has a clue what is going on, but everybody is taking a position to protect his or her position.  The politicos will come up with a half baked measure to buy a little more time.  That time will be used to starting planning for the next deadline which will only be weeks away.  Meanwhile, the holiday shopping season approaches & consumers are becoming nervous.  Layoffs will crimp spending (even though gov workers will get back pay when this mess is over).  As has been the case for the last 2 years, Dow is behaving as if manna were falling from heaven.  It's puzzling why stocks rose so sharply in a time of increased uncertainty.

Dow Jones Industrial

stock chart

 I’m a huge fan of INO, and from what I have seen so far, their service Marketclub!  This isn’t a stripped down version, everything in MarketClub is available to you. I don’t want to give everything away, but you’ll have unlimited access to my favorite three tools: Trade Triangles, Smart Scan, and Alerts!  The best part is that the MarketClub customer support team will be providing UNLIMITED support!  You can call or email for an instant response to any question, comment or concern.

Here’s that link:

I’d recommend you jump on this now.

No comments: