Monday, December 30, 2013

Markets little changed on light volume

Dow added 25 with a tiny rally at the end, declines just ahead of advancers & NAZ slid back 2.  The MLP index rose 3+ to the 461s (near the high since Aug) & the REIT index was up a fraction to the 266s.  Junk bond funds were mixed to lower & Treasuries finally rallied, taking the yield on the 10 year Treasury below 3%.  Oil backed off from 100 while gold is hovering neat 1200 as it concludes its worst year in more than 3 decades.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG14.NYM...Crude Oil Feb 14....99.32 Down ...1.00  (1.0%)

Live 24 hours gold chart [Kitco Inc.]

Wells Fargo will pay $541M to Fannie Mae to settle claims over defective home loans, completing the gov-controlled mortgage company's efforts to have banks buy back troubled loans made before the financial crisis.  Fannie Mae has reached settlements worth roughly $6.5B over loan buybacks with 8 banks, including WFC, the nation's largest mortgage lender & 4th-largest bank.  The settlements include a $3.6B accord in Jan with Bank of America (BAC) & a $968M accord with Citigroup (C).  WFC will pay Fannie Mae $541M in cash after adjusting for credits from prior repurchases.  Before adjustments, the settlement totaled $591M, & the accord resolves substantially all repurchase claims over loans sold to Fannie Mae that were made before 2009.  WFC agreed in Sep to pay $780M to the smaller Freddie Mac to resolve similar repurchase claims & said it had set aside sufficient funds for the Fannie Mae settlement.  Banks can be forced to buy back home loans if representations & warranties concerning the underwriting & whether borrowers could afford to make payments prove false.  Fannie Mae & Freddie Mac own or guarantee 2/3 of US home loans.  The gov seized them in Sep 2008 & put them into a conservatorship.  As of last month, taxpayers had nearly broken even on the bailout.  There was no change in the stock today.

Wells Fargo to Pay Fannie Mae $591 Million to Resolve Claims

Wells Fargo (WFC)

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The Chinese joint venture of General Motors will recall 1.46M cars to replace defective fuel-pump brackets in China's biggest call back since a new law broadening manufacturer liability came into force.  GM’s passenger-car venture is recalling 1.22M Buick Excelle & 243K Chevrolet Sail cars, China’s General Administration of Quality Supervision said.  A Buick dealership owned by Beijing Capital Group estimates replacement costs at about 900 yuan ($150) to 1000 yuan for each Excelle.  China is stepping up protection for consumers as automakers from GM to Volkswagen seek to expand sales in the world’s largest auto market.  The new law, which came into force this year, allows the gov to order investigations & impose fines should manufacturers & importers fail to recall faulty vehicles in a timely manner.  A separate rule mandating minimum standards for warranties took effect in Oct.  3.76M vehicles have been recalled in China, on track for an annual record.  The defective bracket may crack after prolonged use, leading to fuel leaks in extreme cases.  The stock lost a quarter.

GM Recalls 1.46 Million Cars in China in Biggest Case Since New Law

General Motors (GM)

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Very little was going on today & tomorrow will be even quieter.  Trading will largely come from last minute adjustments to make portfolio balance sheets look prettier at year-end.  Gold had a terrible time this year as those traders sold to buy stocks.  Treasuries also had a tough year, their first loss since 2009.  But Dow is up 25% to a new record

Dow Jones Industrials

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