Tuesday, December 10, 2013

Markets waffle as traders watch budget negotiations

Dow slid 17, advancers barely ahead of decliners & NAZ inched up a fraction.   The MLP index was up pennies in the 443s & the REIT index rose fractionally in the 268s.  Junk bond funds were mixed & Treasuries inched higher.  Oil rose to a 6 week high on projections of a 2nd consecutive drop in US inventories.  Gold had for the biggest advance since mid-Oct as the dollar weakened, boosting the appeal of the precious metal as an alternative investment.

AMJ (Alerian MLP Index tracking fund)

stock chart

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF14.NYM...Crude Oil Jan 14..............98.30 Up ....0.96 (1.0%)

ZGG14.CBT....Gold 100 oz. Feb 14...1,259.40 Up ...25.20 (2.0%)

Job openings in the US climbed to a 5 year high in Oct, indicating employers were confident about demand even as  the budget impasse in DC shuttered the federal gov.  The number of positions waiting to be filled rose 42,K to 3.925M, the highest since May 2008, from a revised 3.883M in Sep, according to the Labor Dept.  The pace of hiring decreased.  Gains in the job market could drive wage growth & boost consumer spending.  Employers added 188K workers per month on average from Jan thru Nov, up from an average of 179K in the same period last year.  The Job Openings & Labor Turnover report is among data monitored by the Federal Reserve (FED) officials.  Today’s report showed the number hired decreased to 4.51M in Oct from 4.63M in the prior month.  The hiring rate fell to 3.3% from 3.4% in Sep.  The gauge calculates the number of hires during the month divided by the number of employees who worked or received pay during that period.  The number of total dismissals, which excludes retirements & those who left their job voluntarily, slumped to 1.47M from 1.76M in Sep.  2.385M quit their jobs in Oct, up from 2.327 in the prior month.  The quits rate, which shows the willingness of workers to leave their jobs, was little changed from the prior month at 1.7%, & down from a 2.1% reading when the recession started almost 6 years ago.  Job openings increased in professional & business services, construction & manufacturing.  In the 12 months ended Oct, the economy created a net 2M jobs, representing 53M hires & 51M separations.  Considering the 11.3M who were unemployed, today’s figures indicate there were almost 2.9 people vying for every opening, up from about 1.8 when the last recession.

Job Openings in U.S. Increased in October to Five-Year High

China’s industrial output rose less than estimated in Nov while retail sales unexpectedly accelerated, giving a mixed picture of growth as leaders gather in Beijing to set economic policies for the coming year.  Factory production rose 10% from a year earlier, according to the National Bureau of Statistics, compared with a projection of 10.1%.  Retail sales advanced 13.7%, while fixed-asset investment excluding rural households showed a slowdown.  The latest data failed to match the strength of export numbers released this week, muddying the outlook just as Chinese leaders meet to discuss targets including next year’s growth goal.  Fixed-asset investment grew 19.9% in the first 11 months of the year, less than estimated.  The value of property sales rose 30.7% in the Jan-Nov period.  China’s passenger-vehicle sales rose 16% in Nov as Japanese automakers extended their recovery, according to the state-backed China Association of Automobile Manufacturers.

China’s Industrial Production Slows as Retail Sales Pick Up

An emerging budget deal could fall apart amid opposition from Reps who don’t trust plans for future savings & Dems who say it punishes federal workers by requiring they contribute more to pension plans.  Lawmakers are seeking to ease the $100-$200B in automatic spending (sequestration), which includes reductions in defense funding.  An agreement would mark a reprieve in 3 years of fiscal standoffs &, if Congress passes it, would stave off the risk of another gov shutdown for at least a year or 2.  It is believed that there is just a 50-50 chance of reaching a deal that can pass both chambers.  Speaker John Boehner has said the lack of an agreement won’t alter his plan to adjourn this week for a holiday break.  At least 30 House Reps oppose any deal that trades the scheduled spending cuts that may fail to materialize & House Dems are fighting proposals to increase employee contributions to their pension plans.  Negotiators have yet to reach a final budget deal.

Bipartisan U.S. Budget Draws Lawmaker Ire Before Deal

This is a good day to take a nap because not much will get done in the markets.  The budget battles drags on.  Good intentions to come a compromise with limited objectives is getting less than a mixed response by the guys who count.  This is one more reminder than raising the debt ceiling next month will bring an even tougher fight.  Then there are worries than stronger economic signals (like today's data) will give the FED courage to start its tapering. 

Dow Jones Industrials

stock chart

No comments: