The Dow jumped 109 (but off the highs), advancers over decliners 3-1 & NAZ advanced a very big 71. The MLP index rose 2 to the 359s & the REIT index was up 4 to the 272s. Junk bond funds went up & Treasuries were flattish. Oil rose
to the highest level in 4 weeks after data showed the US economy expanded as Americans’ spending climbed. Gold sank as stocks rose.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Consumer spending that rose at the fastest pace in 3 years helped the US economy grow at a 3.2% pace in Q4, overcoming gov cutbacks & laying the foundation for a stronger expansion. The rate of growth in the economy followed a 4.1% advance in the prior 3 months, according to the Commerce Dept. Household purchases climbed at a 3.3% pace, the best performance since the end of 2010. The pickup in demand was broad based as business investment & exports also accelerated, overshadowing the damage from the partial shutdown of federal agencies & budget cuts. Diminishing fiscal restraint this year & progress in the labor market will probably sustain economic growth, which explains why the Federal Reserve decided to pare stimulus.
House Reps are considering insisting that the Dem-led Senate act first on a debt limit increase the Treasury Department said will be needed by the end of Feb. “We’d like to see their plan put forward,” Rep Pat McHenry, a North Carolina Rep. McHenry said. “I’d like to see if Harry Reid can assemble his Democrat majority to produce a plan,” McHenry added. “Then we’ll be happy to receive it in the House, consider it and start negotiations.” Many Reps say they don’t want to take the same hard-line debt & budget approach they did last year that led to a gov showdown. By allowing the Democratic-led Senate to act first, House Reps would signal they’re willing to let Dems take the lead. Senator Ted Cruz vowed to use a debate over raising the federal debt limit as leverage to extract a new round of spending cuts, even as House Speaker John Boehner said that defaulting would be “the wrong thing” for the country. Cruz, the Texas Rep who led the fight to defund Obamacare that contributed to the shutdown in Oct, said he wouldn’t give in to Dem demands to raise the debt limit without conditions. “We should not raise the debt ceiling without significant structural reforms that address the out of control spending and out of control debt in Washington,” Cruz said. “The debt ceiling is the natural lever point to address the out-of-control spending and debt. It has historically been the most effective lever point to doing so.”
House Republicans May Want Senate to Take Up Debt Limit
Visa posted fiscal Q1 profit that beat estimates as card spending climbed. EPS rose to $2.20 from $1.93 a year earlier. The estimate was for adjusted EPS of $2.16. CEO Charlie Scharf is seeking ways to increase business outside the US, where Visa gets more than half its revenue, amid a global shift to electronic payments from cash. The firm has returned almost $17B to investors since the 2008 IPO & last year was the 6th-best performer in the Dow,gaining 47%. “We feel very good about the strong financial performance,” Scharf said. “Holiday spending in the U.S. was better than reported.” Marketing expenses are expected to increase in Q2 & Q3 as Visa spends more on promotions surrounding the Winter Olympics & World Cup soccer tournament. Net operating revenue increased 11% to $3.2B from a year earlier. Card spending increased 11% to $1.16T, adjusted for currency fluctuations, & cross-border volume, a measure of spending by consumers traveling abroad, also rose 11%. Processed transactions on Visa networks climbed 13% to $16B. Visa repurchased 5.5M shares in fiscal Q1 & had $4.2B remaining for buybacks as of Dec 31. The stock gained 3.84 & is close to recent record highs.
Visa Profit Beats Analysts’ Estimates as Consumers Boost Spending on Cards
Dow had pretty much its best day this month. Of course after losing more than 800, that's not saying much. Earning reports were better, but many of the previous ones were not pretty. Reps are cranking up the heat on raising the debt ceiling & that could bring another ugly fight with little accomplished beyond kicking the can down the road again. However, the compromise on funding the federal gov for 2 years may indicate meaningful legislation is possible. Tomorrow is the last day of the month & much of today's buying may come from financial managers making their portfolios look better.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.02% | |
U.S. 2-year |
0.35% | |
U.S. 10-year |
2.69% |
| CLH14.NYM | ....Crude Oil Mar 14 | ....98.25 |  ...0.89 | (0.9%) |
Consumer spending that rose at the fastest pace in 3 years helped the US economy grow at a 3.2% pace in Q4, overcoming gov cutbacks & laying the foundation for a stronger expansion. The rate of growth in the economy followed a 4.1% advance in the prior 3 months, according to the Commerce Dept. Household purchases climbed at a 3.3% pace, the best performance since the end of 2010. The pickup in demand was broad based as business investment & exports also accelerated, overshadowing the damage from the partial shutdown of federal agencies & budget cuts. Diminishing fiscal restraint this year & progress in the labor market will probably sustain economic growth, which explains why the Federal Reserve decided to pare stimulus.
House Reps are considering insisting that the Dem-led Senate act first on a debt limit increase the Treasury Department said will be needed by the end of Feb. “We’d like to see their plan put forward,” Rep Pat McHenry, a North Carolina Rep. McHenry said. “I’d like to see if Harry Reid can assemble his Democrat majority to produce a plan,” McHenry added. “Then we’ll be happy to receive it in the House, consider it and start negotiations.” Many Reps say they don’t want to take the same hard-line debt & budget approach they did last year that led to a gov showdown. By allowing the Democratic-led Senate to act first, House Reps would signal they’re willing to let Dems take the lead. Senator Ted Cruz vowed to use a debate over raising the federal debt limit as leverage to extract a new round of spending cuts, even as House Speaker John Boehner said that defaulting would be “the wrong thing” for the country. Cruz, the Texas Rep who led the fight to defund Obamacare that contributed to the shutdown in Oct, said he wouldn’t give in to Dem demands to raise the debt limit without conditions. “We should not raise the debt ceiling without significant structural reforms that address the out of control spending and out of control debt in Washington,” Cruz said. “The debt ceiling is the natural lever point to address the out-of-control spending and debt. It has historically been the most effective lever point to doing so.”
House Republicans May Want Senate to Take Up Debt Limit
Visa posted fiscal Q1 profit that beat estimates as card spending climbed. EPS rose to $2.20 from $1.93 a year earlier. The estimate was for adjusted EPS of $2.16. CEO Charlie Scharf is seeking ways to increase business outside the US, where Visa gets more than half its revenue, amid a global shift to electronic payments from cash. The firm has returned almost $17B to investors since the 2008 IPO & last year was the 6th-best performer in the Dow,gaining 47%. “We feel very good about the strong financial performance,” Scharf said. “Holiday spending in the U.S. was better than reported.” Marketing expenses are expected to increase in Q2 & Q3 as Visa spends more on promotions surrounding the Winter Olympics & World Cup soccer tournament. Net operating revenue increased 11% to $3.2B from a year earlier. Card spending increased 11% to $1.16T, adjusted for currency fluctuations, & cross-border volume, a measure of spending by consumers traveling abroad, also rose 11%. Processed transactions on Visa networks climbed 13% to $16B. Visa repurchased 5.5M shares in fiscal Q1 & had $4.2B remaining for buybacks as of Dec 31. The stock gained 3.84 & is close to recent record highs.
Visa Profit Beats Analysts’ Estimates as Consumers Boost Spending on Cards
Visa (V)
Dow had pretty much its best day this month. Of course after losing more than 800, that's not saying much. Earning reports were better, but many of the previous ones were not pretty. Reps are cranking up the heat on raising the debt ceiling & that could bring another ugly fight with little accomplished beyond kicking the can down the road again. However, the compromise on funding the federal gov for 2 years may indicate meaningful legislation is possible. Tomorrow is the last day of the month & much of today's buying may come from financial managers making their portfolios look better.
Dow Jones Industrials
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