Wednesday, December 28, 2011

Watch out 2012


Reuters) - U.S. stocks fell more than 1 percent on Wednesday after a hefty year-end rally and the S&P 500 erased gains for the year on renewed concerns about the euro zone's financial health.
The selloff followed the euro's slide to an 11-month low against the U.S. dollar as regional debt worries prompted a wave of selling, with thin trading exacerbating volatility.
"It seems like the weakness in euro, breaking that $1.30 level, really made investors push that 'sell' button," said Ryan Detrick, senior technical strategist with Schaeffer's Investment Research in Cincinnati.
"But it's somewhat of an exaggerated move, considering that there isn't much volume, and this could end in a one-day selloff."
A recent rally on Wall Street had been supported by a series of positive U.S. economic data that encouraged investors to shift their focus from fears about Europe's debt crisis sparking a global recession to optimism that the U.S. economy was on track to recovery.
But "with no domestic economic news to guide the action, much of the focus was on Europe," WhatsTrading.com options strategist Frederic Ruffy said.
U.S. stock index futures had advanced earlier in the session after an Italian debt auction where short-term borrowing costs were halved, potentially a good sign for a sale of longer-dated bonds on Thursday.
But those gains were short-lived, as the euro fell to a session low of $1.2938, its lowest since January, before rising back to trade at $1.2949.
The Dow Jones industrial average .DJI fell 139.94 points, or 1.14 percent, to 12,151.41 at the close. The Standard & Poor's 500 Index .SPX dropped 15.79 points, or 1.25 percent, to 1,249.64. The Nasdaq Composite Index.IXIC lost 35.22 points, or 1.34 percent, to 2,589.98.
After a 5 percent rally last week that helped Wall Street post its best quarter in over a year, the S&P 500 pulled back below its 200-day moving average, a closely watched indicator of market strength it has struggled to hold this year.
Investors concentrated on 2012, with Europe's debt crisis as well as a slowdown in Asia and the impact of Europe's recession on a U.S. recovery on the agenda.
"There are clearly some major hurdles on the horizon," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey. "Looking into next year, there is more apprehension about the risks associated with the current climate."
The biggest gaining sectors over the last five days, in cyclical areas like materials and energy, led the market lower on Wednesday, sparked by a drop in commodity prices. The S&P materials sector index .GSPM fell 2.2 percent.
Gold sank, tracking industrial metals, on concerns about the prospects for global economic growth next year. It was gold's biggest one-day drop in two weeks. <MKTS/GLOB>
For the year, the Dow is up 5 percent, while the S&P is down 0.6 percent, and the Nasdaq is off 2.4 percent.
For the quarter, the S&P 500 is up 10.5 percent.
Medicis Pharmaceutical Corp (MRX.N) fell 1.2 percent to $33.35 a day after cutting its fourth-quarter earnings outlook.
Citigroup Inc (C.N) shed 2.9 percent to $26.13 after U.S. regulators won a delay in a securities fraud lawsuit against the bank. The U.S. Securities and Exchange Commission is seeking to appeal a judge's decision to reject its $285 million settlement with the bank.
Volume was light in the post-Christmas period and ahead of the New Year's Day holiday. Composite volume on the New York Stock Exchange, the Nasdaq and Amex was 4.31 billion shares, well below the year's daily average of around 7.9 billion shares.
On both the NYSE and the Nasdaq, about four stocks fell for every one that rose.
(Reporting By Angela Moon; Editing by Jan Paschal)
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Friday, December 16, 2011

Recovery Calling? Do not count your chickens yet!

NEW YORK (MarketWatch) — U.S. stocks ended the week down between roughly 2.5% and 3.5% amid continuing worries about the ongoing crises in Europe, which this week trumped emerging signs of a slowly but steadily improving U.S. economy.

The Federal Reserve on Tuesday made it three years of interest rates at near-zero levels as the central bank refrained from new action with recent signs of improvement in the economy.

The decision leaves the Fed's key interest rate at an historic low range of 0% to 0.25%, and the central bank kept its guidance that it intends to keep rates near zero until mid-2013 given its expectations for the economy
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Good News For Shoppers


(Reuters) - Consumer prices were flat in November as Americans paid less for cars and gasoline, a further sign of a cooldown in inflation that could give the Federal Reserve more room to help a still-weak economy.

The Labor Department said on Friday the Consumer Price Index was unchanged last month. Economists had expected an increase of 0.1 percent.

Prices rose 3.4 percent in the 12 months through November. That is off from the 3-year high of 3.9 percent clocked in September, and Friday's report backs the view that the spike in inflation is subsiding.

This is "an inflation report that leaves the Fed ample cover for any additional monetary policy accommodation they may see warranted in the New Year," said Ian Lyngen, a bond strategist at CRT Capital Group in Stamford, Connecticut.

However, some of the data in the report could give pause to policymakers still concerned about inflation. Outside food and energy, prices climbed 0.2 percent.

These so-called core prices rose 2.2 percent in the 12 months through November, up from 2.1 percent in October.

But dragging down the overall index, gasoline fell 2.4 percent and prices for new vehicles were down 0.3 percent.

Economists and investors see inflation slowing over the coming months, which could help convince the Federal Reserve to do more to bring down the country's 8.6 percent unemployment rate.

The dollar pared losses against the euro following the inflation report, while prices for U.S. government debt erased losses. U.S. stock index futures held steady at higher levels.

Earlier in the week, the Fed warned that turmoil in Europe presents a big risk to the U.S. economy, and policymakers left the door open to further steps to boost growth.

Despite aggressive moves by the Fed to boost the economy, some Fed officials view the central bank's aggressive efforts as bordering dangerously on an invitation to inflation.

Prices for food rose 0.1 percent during November. Within the core index, prices for apparel jumped 0.6 percent.

Most economists have said the Fed's next meeting on January 24-25 would be the more likely occasion for any new moves to bring down borrowing costs and help growth.

The U.S. central bank has held overnight interest rates near zero since December 2008 and has bought $2.3 trillion in government and mortgage-related bonds in a further attempt to stimulate a robust recovery.

(Reporting by Jason Lange; Editing by Neil Stempleman)


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Thursday, December 15, 2011

Not a good sign for 2012


Fitch cuts Goldman, Deutsche, five other large banks

Thu Dec 15, 2011 8:47pm EST
(Reuters) - Fitch Ratings, the third-biggest of the major credit rating agencies, on Thursday downgraded Goldman Sachs, Deutsche Bank and five other large banks based in Europe and the United States, citing "increased challenges" in the financial markets.
Fitch cut long-term ratings on Barclays Plc (BARC.L) and Credit Suisse AG (CSGN.VX) by two notches to 'A' from 'AA-'.
The agency cut by one notch its long-term ratings on Bank of America Corp (BAC.N), BNP Paribas (BNPP.PA), Citigroup (C.N), Deutsche Bank AG (DBKGn.DE) and Goldman Sachs Group (GS.N).
The financial market challenges the banks face "result from both economic developments as well as a myriad of regulatory changes," Fitch said in an announcement issued shortly after regular market hours in New York.
In a separate announcement about the downgrade of Citigroup, Fitch cited "policy momentum" against using taxpayer money to support banks during a crisis.
Fitch's actions follow downgrades by Standard & Poor's of several major banks at the end of last month. S&P's moves came as part of an overhaul of its ratings methods to incorporate lessons learned in the financial crisis. Moody's also issued downgrades recently.
Jerry Dubrowski, a spokesman for Bank of America, which has had ratings cut by all three agencies, said in an email, "This decision is driven more by concerns about the global economy than the specific credit quality of Bank of America. We continue to maintain strong liquidity levels and to build capital."
Fitch on Thursday also affirmed its long-term 'A' ratings on JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N) and UBS AG (UBSN.VX), as well as its 'A+' rating on Societe Generale (SOGN.PA).
(Reporting by David Henry and Walter Brandimarte in New York and Rick Rothacker in Charlotte, North Carolina; Editing by Steve Orlofsky and Richard Chang)
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Saturday, December 10, 2011

TAXES could be going up! OUCH


Gingerly, GOP Contenders Address Payroll Tax Cut

White House press secretary Jay Carney speaks Monday during his daily press briefing, as a clock counting down the expiration of the payroll tax cut benefit looms in the background.
EnlargeAlex Wong/Getty Images
White House press secretary Jay Carney speaks Monday during his daily press briefing, as a clock counting down the expiration of the payroll tax cut benefit looms in the background.
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December 6, 2011
At the end of this month, a payroll tax cut is set to expire that the White House says would result in a tax increase of about $1,000 per year on most middle-class families. The benefit is popular with the American people, which may be one reason President Obama has been relentlessly promoting it.
The president argues that extending the payroll tax "holiday" through 2012 is vital to the economy. Republicans in Congress are divided over that, but they strongly disagree with the president's plan to pay for it with a surtax on millionaires.
For their part, the GOP presidential candidates have addressed the issue only glancingly.
On a conservative radio program Monday, former Massachusetts Gov. Mitt Romney enthusiastically endorsed the renewal. "I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now," he told talk show host Michael Medved.
That's a stronger position than he took in Nashua, N.H., last month, when he said, "Modest proposals are not going to get America's economy going again."
Texas Rep. Ron Paul supports extending the tax cut too, according to a spokesman. And so does former Utah Gov. Jon Huntsman, who told PBS he thinks the payroll tax cut "is a good thing. I think it helps a whole lot of people, and I think it's something that would serve to stimulate this economy going forward."
Other candidates are less enthusiastic. A spokesman for Rick Perry says the Texas governor does not support what he called "short-term gimmicks."

Does The GOP Candidate Favor Extending The Payroll Tax Cut Into 2012?

Mitt Romney (Yes)
"I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now — middle-class Americans are having a hard time," Romney told conservative radio host Michael Medved on Monday.
Newt Gingrich (Maybe)
The Gingrich campaign told NPR the former House speaker wants to phase out the payroll tax cut but did not specify how soon. Bloomberg Television reports that in a September interview, Gingrich backed an extension, saying: "I am against tax increases in the middle of a depression."
Ron Paul (Yes)
The Texas congressman supports extending the payroll tax cut as long as it's not tied to any tax increases, a spokesman told NPR.
Jon Huntsman (Yes)
The former Utah governor supports extending the tax cuts but thinks it should be tied to broader tax reform, a spokesman told NPR.
Rick Perry (Maybe)
A spokeswoman did not give a direct "yes" or "no" answer but implied the Texas governor does not support an extension: "Gov. Perry believes we need long-term fundamental tax reform, not short-term gimmicks for a bigger problem."
Michele Bachmann (No)
The Minnesota congresswoman opposed the tax breaks last year in Congress and says she cannot support an extension this year. "Why would we continue something that isn't working and that is taking $111 billion away from senior citizens when they need that money in the Social Security trust fund?" she said Sunday on CNN's State of the Union.
Rick Santorum (Unclear)
The former Pennsylvania senator's campaign did not respond to NPR requests for the candidate's position on the issue.
— Natalie Friedman
The Newt Gingrich campaign says the former House speaker plans to phase out the payroll tax cut but did not specify when.
And Minnesota Rep. Michele Bachmann told CNN that since the tax cut didn't create jobs, it should end. "This payroll tax deduction didn't do what President Obama promised," she said. "Why would we continue something that isn't working?"
For candidates who support renewing the benefit, the trickier question is how to pay for it. None of the campaigns gave an exact accounting of where the money would come from. Almost all of them say how they would notfund the extension: As Romney put it in Nashua, "I don't want to raise taxes on anybody."
Michael Franc, vice president for government studies at the conservative Heritage Foundation, says it's not surprising that candidates are reluctant to wade into the details of this debate. Would-be presidents would rather focus on the big picture.
"What they're trying to do with the voters is say, 'Here's my value system, here's how I would apply it, here's what I would do,' whether it's to the tax code or to entitlement programs or to spending trajectories in general," Franc says.
So many of the candidates quickly shift from talking about the payroll tax cut to the bigger issue of fundamental tax reform — overhauling the system to make it cleaner and simpler, with fewer loopholes and patches.
Franc says the real problem is that a record number of provisions in the U.S. tax code now have expiration dates.
"It's kind of like in your household budget," he says. "If you had to renegotiate your cable contract or your budget every month, that would pretty much preclude you from dealing with longer-term family budgetary issues or investment decisions."
Leaders of both parties agree that this is a major issue, so a fundamental tax overhaul is on everybody's to-do list. But when Congress can't even agree on how to resolve these short-term tax debates, solutions to the long-term issues seem more unattainable than ever.
 
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Can good on the MIDDLE Class!


At the end of this month, a payroll tax cut is set to expire that the White House says would result in a tax increase of about $1,000 per year on most middle-class families. The benefit is popular with the American people, which may be one reason President Obama has been relentlessly promoting it.
The president argues that extending the payroll tax "holiday" through 2012 is vital to the economy. Republicans in Congress are divided over that, but they strongly disagree with the president's plan to pay for it with a surtax on millionaires.
For their part, the GOP presidential candidates have addressed the issue only glancingly.
On a conservative radio program Monday, former Massachusetts Gov. Mitt Romney enthusiastically endorsed the renewal. "I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now," he told talk show host Michael Medved.
That's a stronger position than he took in Nashua, N.H., last month, when he said, "Modest proposals are not going to get America's economy going again."
Texas Rep. Ron Paul supports extending the tax cut too, according to a spokesman. And so does former Utah Gov. Jon Huntsman, who told PBS he thinks the payroll tax cut "is a good thing. I think it helps a whole lot of people, and I think it's something that would serve to stimulate this economy going forward."
Other candidates are less enthusiastic. A spokesman for Rick Perry says the Texas governor does not support what he called "short-term gimmicks."

Does The GOP Candidate Favor Extending The Payroll Tax Cut Into 2012?

Mitt Romney (Yes)
"I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now — middle-class Americans are having a hard time," Romney told conservative radio host Michael Medved on Monday.
Newt Gingrich (Maybe)
The Gingrich campaign told NPR the former House speaker wants to phase out the payroll tax cut but did not specify how soon. Bloomberg Television reports that in a September interview, Gingrich backed an extension, saying: "I am against tax increases in the middle of a depression."
Ron Paul (Yes)
The Texas congressman supports extending the payroll tax cut as long as it's not tied to any tax increases, a spokesman told NPR.
Jon Huntsman (Yes)
The former Utah governor supports extending the tax cuts but thinks it should be tied to broader tax reform, a spokesman told NPR.
Rick Perry (Maybe)
A spokeswoman did not give a direct "yes" or "no" answer but implied the Texas governor does not support an extension: "Gov. Perry believes we need long-term fundamental tax reform, not short-term gimmicks for a bigger problem."
Michele Bachmann (No)
The Minnesota congresswoman opposed the tax breaks last year in Congress and says she cannot support an extension this year. "Why would we continue something that isn't working and that is taking $111 billion away from senior citizens when they need that money in the Social Security trust fund?" she said Sunday on CNN's State of the Union.
Rick Santorum (Unclear)
The former Pennsylvania senator's campaign did not respond to NPR requests for the candidate's position on the issue.
— Natalie Friedman
The Newt Gingrich campaign says the former House speaker plans to phase out the payroll tax cut but did not specify when.
And Minnesota Rep. Michele Bachmann told CNN that since the tax cut didn't create jobs, it should end. "This payroll tax deduction didn't do what President Obama promised," she said. "Why would we continue something that isn't working?"
For candidates who support renewing the benefit, the trickier question is how to pay for it. None of the campaigns gave an exact accounting of where the money would come from. Almost all of them say how they would notfund the extension: As Romney put it in Nashua, "I don't want to raise taxes on anybody."
Michael Franc, vice president for government studies at the conservative Heritage Foundation, says it's not surprising that candidates are reluctant to wade into the details of this debate. Would-be presidents would rather focus on the big picture.
"What they're trying to do with the voters is say, 'Here's my value system, here's how I would apply it, here's what I would do,' whether it's to the tax code or to entitlement programs or to spending trajectories in general," Franc says.
So many of the candidates quickly shift from talking about the payroll tax cut to the bigger issue of fundamental tax reform — overhauling the system to make it cleaner and simpler, with fewer loopholes and patches.
Franc says the real problem is that a record number of provisions in the U.S. tax code now have expiration dates.
"It's kind of like in your household budget," he says. "If you had to renegotiate your cable contract or your budget every month, that would pretty much preclude you from dealing with longer-term family budgetary issues or investment decisions."
Leaders of both parties agree that this is a major issue, so a fundamental tax overhaul is on everybody's to-do list. But when Congress can't even agree on how to resolve these short-term tax debates, solutions to the long-term issues seem mounattainable than ever.
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Friday, December 9, 2011

Good News for Businesses


(Reuters) - Consumer sentiment rose to its highest level in six months in early December as Americans adopted an improved economic outlook while the trade deficit narrowed in October, pointing to gathering momentum in the economy.
The Thomson Reuters/University of Michigan's preliminary reading on their index of consumer confidence climbed for a fourth straight month to 67.7, beating expectations as it rose from 64.1 in November.
"U.S. consumers appear to be ending the year in a better mood," said Paul Dales, an economist at Capital Economics in London.
Improved confidence could lead Americans to spend more readily, which would add to the recent momentum from retail sales and factory output. At the same time, the narrowing in the trade deficit showed more of the purchases U.S. businesses and consumers are making were produced within the country.
Employment has also made gains in recent months, although some economists expect the pace of improvement will be too slow for consumers to ramp up spending for long.
"Although the recent increase may provide that little bit of support to spending
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