Mel's Blog

April 19, 2011 Market News

April 19th, 2011 9:26 AM by Mel Samick

House Budget Committee Chairman, Paul Ryan R-Wisconsin, drafted a 10-YR plan to reduce the budget. The plan outlines changes to the tax code that would lower the top income tax rate for corporations and individuals by reducing tax breaks and preferences. It proposes to give vouchers to subsidize the purchase of private health insurance plans. Anyone 55 and older would continue with the current Medicare program. Everyone else would be on the new 'voucher plan'. They also want to reduce Domestic agency accounts even further. They have already cut those accounts by $38 billion this year and propose another $30 Billion in the next year. The Democratic-controlled Senate has yet to draft its plan. The Budget Committee Chairman, Sen. Kent Conrad, D-N.D., would like to see a bipartisan plan of both big spending cuts and a simplified tax code.

In market news, the trade deficit was larger than forecasted. Following the release of the trade data on Tuesday, some economists lowered forecasts for economic growth. Also released on Tuesday was a survey of small business owners. Small business economic conditions dropped to its lowest level in March.

Investors were greeted with good news Wednesday morning, paring Tuesday's losses. Retail sales increased again, for the ninth straight month. The improved sales environment led to lower than expected inventories. Inventories increased .5% but were expected to rise .8%.

Also helping to add to the gains on Wednesday was J.P. Morgan Chase & Co. earnings. They reported a 67% gain in quarterly profit.

The Beige Book was released on Wednesday as well. The Fed reported that economic activity improved in all districts and across many sectors. Most districts reported slight gains in consumer spending. New York reported 'robust' sales, while Boston reported mixed sales. Richmond reported weaker sales. Half of the Districts had pockets of weakening in the residential real estate markets while the others remained flat.

Jobless claims rose sharply on Thursday. PPI rose less than expected while Core PPI (which excludes food and energy) rose more than expected.

Friday was a good day for Stocks, Treasuries and Mortgage Rates. Mortgage Rates dropped by approximately five basis points in rate as Treasury prices continued their gains as worries about the European debt and the U.S. consumer-price index, excluding food and energy, increased less than expected. This relieved some fears that inflation would erode bond returns. Stocks also rose as consumer confidence data came in stronger than expected.

On-tap for this week, Housing Starts are scheduled to be released on Tuesday. On deck for Wednesday is Existing Home Sales, and Thursday comprises Jobless Claims, Leading Indicators, and the Philly Fed Report. Friday there are no reports in observance of Good Friday.

Mel

Information Provided by NYCB Capital Markets

Posted in:General
Posted by Mel Samick on April 19th, 2011 9:26 AM

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