Thursday, September 11, 2014

Markets fluctuate as oil rebounds from 8 month lows

Dow fell 19 (off the lows), advancers ahead of decliners 5-4 & NAZ crawled up 5.  The MLP index lost 1+ to the 535s & the REIT index was up pocket change in the 307s.  Junk bond funds were mixed & Treasuries gained ground.  Oil rebounded from an 8-month low as tension escalated between Russia & the West.  Gold fell to the lowest since Jan on speculation that the Federal Reserve will raise interest rates sooner than forecast, crimping demand for a hedge against inflation.

AMJ (Alerian MLP Index tracking fund)

CLV14.NYM....Crude Oil Oct 14....92.72 Up ...1.05 (1.2%)

Live 24 hours gold chart [Kitco Inc.]

President Vladimir Putin
Photo:   Bloomberg

The US joined the EU in stiffening sanctions on Russia over Ukraine, as the bloc offered to ease the restrictions once the Russia makes a good-faith effort to end the conflict.  The US will “deepen and broaden” measures against Russia’s financial, energy & defense industries, pres Obama said, adding that the sanctions will take effect tomorrow & details will be released then.  The EU said it would also enact its latest round of economic restrictions tomorrow.  Europe is acting against a peaceful solution in Ukraine, the Russian Foreign Ministry said.  The moves raise the level of confrontation & follow reprisals last month by Russian pres Putin with a ban on a range of food imports after an earlier round of US & European penalties.  Putin denies any involvement in the fighting that broke out after he annexed Crimea in Mar & says Russia’s Cold War adversaries are to blame for the standoff.  Russia will retaliate against an “unfriendly policy which doesn’t meet EU interests,” Foreign Ministry spokesman Alexander Lukashevich said in Moscow.  Russia's Economy Ministry drafted a list of goods that may be banned, state-run RIA Novosti reported, citing Kremlin economic aide Andrei Belousov.  Possible targets include automobile imports, particularly used cars, as well as textiles & clothing.  Russia was also weighing restrictions on overflights to the Asia-Pacific as retaliation for sanctions against Aeroflot’s low-cost unit Dobrolet.

Obama Says U.S. to Join EU in Tightening Russia Sanctions

The US budget narrowed 22% in the first 11 months of the fiscal year as accelerating economic growth boosted tax receipts, Treasury Dept figures showed.  The budget gap as a share of the economy is on a path to shrink this year to the lowest level since 2007, as falling unemployment & swelling corp profits help revenues grow faster than outlays, the CBO said 2 weeks ago.  The $589B shortfall from Oct-Aug compared with a $755B gap in the same period a year earlier, the Treasury said.  Last month the gov posted a $128B deficit, $19B less than the imbalance in Aug 2013.  The estimate projected a $130B Aug deficit.  The full-year shortfall for the current fiscal year is projected at $506B, or 2.9% of GDP, the CBO said last month.  In 2007, it was 1.1% of GDP.  Revenue over the first 11 months of the fiscal year rose 7.7% compared with a year earlier, while spending gained less than 1%.  Expenditures so far this year rose fastest in categories including Social Security, Medicaid & subsidies for health insurance under Obamacare & student loan costs, CBO said in on Mon (when it estimated the Aug gap at $129B).

U.S. Budget Deficit for 11 Months Shrinks 22% as Economy Grows

Home Depot, a Dow stock, was hacked with a malicious software program that plunders store registers while disguising itself as antivirus software, according to 2 security researchers.  The credit card-stealing program used in the attack is being dubbed FrameworkPOS, & differs significantly from the software used last year to hack Target (TGT is a Dividend Aristocrat).  The differences in the malware are strong indicators that the hacks are probably the work of 2 different groups.  The malware’s disguise was meant to keep HD security team from taking a deeper look even if the retailer wasn’t deploying security software products on its registers or elsewhere in its network.  The malware code is sprinkled with anti-American references, including a link to a Wikipedia entry on wars involving the US & a website promoting a book on American imperialism.  The references have no relation to the way the software functions & appear to be meant as a message from the hackers.  HD confirmed a breach of credit card information at its stores on Mon, after a security blogger reported signs of a hack on Sep 2.  POS stands for “point of sale” & in both cases, malware was designed to capture credit card numbers after customers swiped them at registers.  Major differences between the 2 pieces of code include how & where the malware installs itself, how it interacts with the operating system, & how the software hides (or scrambles) credit card numbers as they sit on the company’s network before they’re exfiltrated, or sent outside the system.  Also, the memory-scraping malware used against TGT didn’t mimic antivirus software.  HD stock slipped back pennies.  If you would like to learn more about HD, click on this link:

Home Depot’s Malware Details Hint Its Hackers Weren’t the Same as Target’s

Home Depot (HD)

Stock buyers have not given up.  The news was gloomy this AM with growing global tensions, but there was buying of stocks late in the day.  Dow closed 60 above the lows, not really a significant move, & remains within about 100 from its record high last Fri.  Times are becoming scary as a global economic war is taking place, not good for economies or companies.  Once again there is a major disconnect between the stock market & economic conditions.

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