Dow reversed early losses & finished up 78 (near the highs), advancers over decliners 2-1 & NAZ added 13. The Financial Index was up 1½ to 199, a 2 month high. The MLP index roared ahead another 3 to 398 & the REIT jumped 2½ to 270, a new yearly high. The MLP index is up almost 50 from its lows 6 weeks ago & near the 411 record set in early Mar. Junk bond funds slipped but remain near their multi year highs & Treasuries backed off from their recent rally. Oil rose for a 5th day on speculation that oil inventories fell & a report showed US industrial production increased in Jun. Gold fell for a 2nd day as Chairman Bernanke refrained from discussing steps to boost the US recovery, while insisting the central bank will act if labor markets don’t improve.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Ben Bernanke said the US economy has weakened & repeated that the Federal Reserve (FED), as usual, is ready to take action to bolster growth if needed. However, he provided no clues about what steps the FED could take or whether any action was coming soon. He saId that progress in reducing unemployment is likely to be “frustratingly slow” & repeated that the central bank is ready to take further action to boost the recovery, while refraining from pledging any new policies. Bernanke said easing tools include further purchases of assets, such as mortgage-backed securities, reducing the interest rate that the FED pays on reserves banks keep with the FED & altering its communications on the outlook for interest rates. The FOMC is considering whether the economy will need additional stimulus to reduce a jobless rate stuck above 8% since Feb 2009. Last month, it decided to extend to the end of the year the program, known as Operation Twist, to lengthen maturities of assets on the Fed’s balance sheet. Operation Twist has been “effective in easing financial conditions and promoting strength in the economy,” Bernanke said. Large-scale asset purchases have “also contributed to economic growth.” At the same time, there are also “questions about side effects and risks that may be associated,” with those programs, Bernanke said. “Therefore they should be not be used lightly.” Nothing new. If there is any change at the FED, it could come at the Sep meeting.
Photo: Yahoo
The head of a party in Greece's new coalition gov said the country's recession made it "almost impossible" for it to achieve the €11.5B ($14.1B) in cuts over the next 2 years demanded by its rescue creditors. Former Finance Minister Venizelos made the comment in a day before he is to meet conservative Prime Minister Antonis Samaras to discuss the cuts. "It is very difficult, almost impossible for anyone to put cuts together worth €11.5 billion in 2013 and 2014," Venizelos said. "That difficulty has always been there, but the (situation) has deteriorated because the predictions for the recession in 2012." Debt inspectors from the EU, ECB & IMF are due to return to Athens next week to discuss the new round of proposed cuts. Greece has been relying on the emergency loans for just over 2 years, but harsh austerity measures designed to meet fiscal targets demanded creditors have left the country stuck in recession for a 5th year. "From the start, in 2010, the big problem in our relationship with the troika has been that all the projections, all the macroeconomic numbers — and the most important one, the recession — have not turned out to be correct," Venizelos said. "That means we keep having to make more adjustments, because as the gross domestic product goes down so does the (deficit-to-GDP) ratio gets worse and that brings trouble for the whole effort."
New Greek Cuts 'Almost Impossible'
Homebuilders are feeling more confident than they have in more than 5 years. Recent earnings reports from the big public builders have shown spikes in new orders for single family homes & competition from foreclosures has eased as banks try to modify more troubled loans. Homebuilder sentiment jumped 6 points in Jul, on a monthly index from the National Association of Home Builders, to.35 (the largest monthly gain recorded in more than a decade & the highest level since Mar 2007). But 50 is the line between positive & negative sentiment. "Combined with the upward movement we've seen in other key housing indicators over the past six months, this report adds to the growing acknowledgement that housing - though still in a fragile stage of recovery - is returning to its more traditional role of leading the economy out of recession ," wrote NAHB chief economist David Crowe in a press release. "This is particularly encouraging at a time when other parts of the economy have begun to show softness." This is a positive sign in the housing market which remains far below the heady days more than 5 years ago.
Homebuilder Confidence in U.S. Rises Most Since September 2002
Markets returned to their winning ways of the last 6 weeks although breadth was relatively slim. There is no special news accounting for the rise, although the lack of ugly news from Europe is viewed as "good." Goldman Sachs (GS) reported EPS was $1.78 in Q2, 7¢ below last year. It beat the estimate & the stock rose 65¢. This message will probably be repeated in many other reports. The US economy is muddling by & that is what the markets have gotten used to. But there is a risk that conditions could worsen, possibly bringing about another recession.
AMJ (Alerian MLP Index tracking fund)
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Treasury yields:
U.S. 3-month | 0.092% | |
U.S. 2-year | 0.234% | |
U.S. 10-year | 1.499% |
| CLQ12.NYM | ...Crude Oil Aug 12 | ...89.05 | ... 0.62 | (0.7%) |
Photo: Bloomberg
Ben Bernanke said the US economy has weakened & repeated that the Federal Reserve (FED), as usual, is ready to take action to bolster growth if needed. However, he provided no clues about what steps the FED could take or whether any action was coming soon. He saId that progress in reducing unemployment is likely to be “frustratingly slow” & repeated that the central bank is ready to take further action to boost the recovery, while refraining from pledging any new policies. Bernanke said easing tools include further purchases of assets, such as mortgage-backed securities, reducing the interest rate that the FED pays on reserves banks keep with the FED & altering its communications on the outlook for interest rates. The FOMC is considering whether the economy will need additional stimulus to reduce a jobless rate stuck above 8% since Feb 2009. Last month, it decided to extend to the end of the year the program, known as Operation Twist, to lengthen maturities of assets on the Fed’s balance sheet. Operation Twist has been “effective in easing financial conditions and promoting strength in the economy,” Bernanke said. Large-scale asset purchases have “also contributed to economic growth.” At the same time, there are also “questions about side effects and risks that may be associated,” with those programs, Bernanke said. “Therefore they should be not be used lightly.” Nothing new. If there is any change at the FED, it could come at the Sep meeting.
The head of a party in Greece's new coalition gov said the country's recession made it "almost impossible" for it to achieve the €11.5B ($14.1B) in cuts over the next 2 years demanded by its rescue creditors. Former Finance Minister Venizelos made the comment in a day before he is to meet conservative Prime Minister Antonis Samaras to discuss the cuts. "It is very difficult, almost impossible for anyone to put cuts together worth €11.5 billion in 2013 and 2014," Venizelos said. "That difficulty has always been there, but the (situation) has deteriorated because the predictions for the recession in 2012." Debt inspectors from the EU, ECB & IMF are due to return to Athens next week to discuss the new round of proposed cuts. Greece has been relying on the emergency loans for just over 2 years, but harsh austerity measures designed to meet fiscal targets demanded creditors have left the country stuck in recession for a 5th year. "From the start, in 2010, the big problem in our relationship with the troika has been that all the projections, all the macroeconomic numbers — and the most important one, the recession — have not turned out to be correct," Venizelos said. "That means we keep having to make more adjustments, because as the gross domestic product goes down so does the (deficit-to-GDP) ratio gets worse and that brings trouble for the whole effort."
New Greek Cuts 'Almost Impossible'
Homebuilders are feeling more confident than they have in more than 5 years. Recent earnings reports from the big public builders have shown spikes in new orders for single family homes & competition from foreclosures has eased as banks try to modify more troubled loans. Homebuilder sentiment jumped 6 points in Jul, on a monthly index from the National Association of Home Builders, to.35 (the largest monthly gain recorded in more than a decade & the highest level since Mar 2007). But 50 is the line between positive & negative sentiment. "Combined with the upward movement we've seen in other key housing indicators over the past six months, this report adds to the growing acknowledgement that housing - though still in a fragile stage of recovery - is returning to its more traditional role of leading the economy out of recession ," wrote NAHB chief economist David Crowe in a press release. "This is particularly encouraging at a time when other parts of the economy have begun to show softness." This is a positive sign in the housing market which remains far below the heady days more than 5 years ago.
Homebuilder Confidence in U.S. Rises Most Since September 2002
Markets returned to their winning ways of the last 6 weeks although breadth was relatively slim. There is no special news accounting for the rise, although the lack of ugly news from Europe is viewed as "good." Goldman Sachs (GS) reported EPS was $1.78 in Q2, 7¢ below last year. It beat the estimate & the stock rose 65¢. This message will probably be repeated in many other reports. The US economy is muddling by & that is what the markets have gotten used to. But there is a risk that conditions could worsen, possibly bringing about another recession.
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