Wednesday, September 30, 2015

Markets advance, after Q3 was the worst quarter in 4 years

Dow jumped up 235, advancers over decliners better than 3-1 & NAZ flew up 102.  The MLP index soared (I mean soared) 24+ to the 303s & the REIT index went up 2+ to 304.  Junk bond funds were mixed & Treasuries retreated.  Oil slid lower & gold sold off again, heading for 1100.

AMJ (Alerian MLP Index tracking fund)

CLX15.NYM....Crude Oil Nov 15....45.15 Down ...0.08  (0.2%)

Live 24 hours gold chart [Kitco Inc.]

A measure of factory activity in the upper Midwest region fell for a 6th straight month in Sep in a broad pullback, Marquette University & the Institute for Supply Management-Milwaukee.  Their index on manufacturing in the Milwaukee region dropped to 39.44 in September, its lowest level of the year.  The Aug reading was 47.67.  A reading below 50 indicates regional manufacturing activity is contracting.  Most components including new orders, production & employment fell sharply.  "There has been slowing demand from customers as the end of fiscal year is approaching," Marquette University & the Institute for Supply Management-Milwaukee said.  The survey's 6-month business outlook fell to 57.7 in Sep from 65.4 in Aug.

Midwest Manufacturing Slips into Contraction Territory

The Senate overwhelmingly passed legislation to avert a gov shutdown, sending the measure to the House just hours before funding for federal agencies runs out at midnight.  The bill would keep federal agencies funded at current levels thru Dec 11 & does not include a controversial provision to cut off money to Planned Parenthood that many conservative Reps had demanded.  The funding bill aims to give congressional negotiators & Obama about 10 weeks to work out a longer-term budget deal that lasts at least thru the new fiscal year ending Sept 2016.  But first, the House needs to approve the measure in time for Obama to sign it into law before a midnight deadline.  Timing for that vote was still uncertain but House Reps said they were aiming for a PM vote.  The House Rules Committee was expected to consider whether any allow amendments to the funding bill at a meeting late Wed morning.  Conservative Reps were making a last-ditch effort to amend the funding measure to restore a controversial provision that would cut off all federal funds to Planned Parenthood.  The 172-member Rep Study Committee's proposed amendement also would prohibit Obama from lifting anti-nuclear sanctions on Iran during the duration of the stopgap funding measure.

Senate Sends Bill to House to Avert Shutdown

Global growth will only modestly accelerate next year as the world grapples with the twin prospects of rising US interest rates & slowing expansion in China, IMF Managing Director Christine Lagarde said.  The likelihood that the Federal Reserve will tighten monetary policy, coupled with China’s slowdown, "are contributing to uncertainty and higher market volatility" in the global economy, Lagarde said.  The fund’s World Economic Outlook, to be released next week, will confirm that the global growth rate is expected to be weaker this year than in 2014, she said.  In Jul, the IMF projected world growth of 3.3% this year, down from 3.4% in 2014, & accelerating to 3.8% next year.  The IMF now expects only a "modest acceleration" in 2016, Lagarde said.  “We see global growth that is disappointing and uneven,” Lagarde added.  “The ‘new mediocre’ of which I warned exactly a year ago -- the risk of low growth for a long time -- looms closer.”  While emerging markets are generally better prepared for higher US rates than in the past, rising borrowing costs & a stronger dollar “could reveal currency mismatches, leading to corporate defaults -- and a vicious cycle between corporates, banks and sovereigns,” Lagarde said.  More broadly, most advanced economies should continue to keep monetary policy loose, while incorporating "spillover” risks into their decision making.  Emerging economies need to improve their monitoring of the foreign exchange exposures of major companies, while countries with room to raise public spending should try to boost growth by increasing investment, especially in infrastructure, she said.

IMF's Lagarde: Global Economy is Slowing

This was an unusually volatile day, even for the last day of the qtr.  Lost on many, the MLP index had a record rise (after being vastly oversold).  Oil is depressed.  Now Russia is making airstrikes in Syria, adding confusion to an unstable region.  The Reps may want to shut down gov tonight.  That will be resolved one way or the other around midnight, maybe later.  The US has the strongest economy in the world but it continues to give inconsistent data.  Then there is a likelihood of a rate hike in a couple of weeks.  Lots to worry about after Dow lost more than 1300 in Q3.
Dow Jones Industrials

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