Thursday, December 12, 2013

Markets fluctuate after retail sales and jobless data

Dow lost 104 closing near the lows, decliners over advancers almost 3-2 & NAZ slid 5.  The MLP index rebounded in the PM, finishing down only pennies to 437 & the REIT index was off almost 2 to the 259s.  Junk bond funds slipped lower & Treasuries were weak.  Oil managed a gain & gold capped the biggest drop in 10 weeks amid concern that the Federal Reserve will reduce its bond buying as a budget agreement was reached.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF14.NYM....Crude Oil Jan 14....97.66 Up ...0.22 (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Unemployment benefits for 1.3M in the US may end Dec 28 as Dems failed in a last-ditch effort to extend the jobless assistance before the House adjourns tomorrow.  Reps refused to keep the aid flowing to the long-term unemployed without agreement on budget cuts elsewhere.  Extending the benefits would cost $26B over 2 years, according to the CBO.  Senate Leader Harry Reid said the politicos won’t have a chance to act before leaving for the holiday recess.  It will be the first issue taken up when Congress reconvenes next month, Reid said, & they would try to make the benefits retroactive.  The failure of Congress to agree could put a dent in the economy.  The CBO estimates that extending the program would boost growth by 0.2% & add about 200K jobs.  “We still haven’t seen the type of employment improvement that would warrant allowing this program to expire,” said Chad Stone, the chief economist for the CBO, a group which supports programs that assist the poor.  “This means real hardship for real people -- but it’s also bad for the economy.”

Unemployment Benefits to Lapse as Congress Fails to Agree

JPMorgan, a Dow stock, expects to spend $2B in annual compliance costs starting in 2014, CEO Jamie Dimon said.  The spending is double what the bank previously projected & comes on the heels of several major settlements over alleged law & banking rules violations with regulators.  "The $2 billion for the most part is permanent," Dimon said at a Goldman Sachs conference.  "It's not going to go away."  The spending would go to hire compliance staff, conduct training, employ auditors & take other steps to ensure the largest banks by assets operate in line with the rules.  Dimon expects overall expenses to be lower in 2014 than in 2013, in spite of the higher compliance costs.  "So we will find a lot of efficiencies," he added.  JPM continues to face a number of significant civil & criminal probes ranging from its hiring of Asian staff to its sale of mortgage-backed securities ahead of the financial crisis.  Last month, the bank paid a record $13B to settle several civil lawsuits over its sale of mortgage-backed securities.  Earlier this fall, JPM also agreed to more than $1B in fines relating to various alleged violations stemming from the 'London whale' trading loss.  "We've got a lot of litigation... behind us," Dimon said.  "We've got more to go."  The stock went up 24¢.

JPMorgan compliance costs to double in 2014

J P Morgan (JPM)

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Instagram mobile photo-sharing application, from Facebook, will let users send photos & videos directly to their friends, as it steps up competition against upstart messaging services such as Snapchat.  The new feature, called Instagram Direct, will pop up in an icon on a user’s home feed.  The tool will let people send photos & videos directly to as many as 15 friends, who can then discuss them using familiar features such as comments & the like button.  The new services are available today.  “It’s like gathering people around a photo, a moment, and being able to have a conversation about them,” Kevin Systrom, CEO of Instagram, said.  Instagram is adding tools to fend off increasing competition which have garnered large user bases.  FB, whose social network has more than 1B members, purchased Instagram for about $700M last year, & it’s using the app to help it reach users on smartphones & tablets.  The company has been updating the service, including adding the ability to take videos.  In Oct, Instagram started letting advertisers deliver pictures to its 150M users.  Today, Systrom said it’s too early to talk about using direct messaging for advertising.  While Instagram may keep developing new capabilities, such as the ability to draw on photos, it’s unlikely to make messages disappear like Snapchat does, Systrom said.  Instagram’s service is more suited to being an archive, he said.  FB will join the S&P 500 after the market close on Dec 20.  The stock jumped 2.45 today & has been hot for months.

Facebook’s Instagram Adds Messaging Service With Startups Nipping at Heels

Facebook (FB)

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Stocks drifted lower, but without conviction.  Even the hardiest bulls are biting their lips, praying for a continuation of QE3.  Next week, the Fed will announce the next step in the bond buying program & there are growing expectations that stronger economic data will encourage bond tapering.  With a lack of negative word about the budget deal, it looks like it will be adopted tomorrow (the last day of the year in DC).  Dow is down 350 in Dec.

Dow Jones Industrials

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