Market Musings With CNBC Market Maven Robert Hum
Recap: Dow 308.41 ( 2.35%) at 13412.55, S&P 36.23 ( 2.54%) at 1462.42, Nasdaq 92.75 ( 3.07%) at 3112.26
Stocks surge on first trading day of 2013 on relief over "fiscal cliff" deal and beginning-of-year optimism
S&P 500, Nasdaq post best day in over a year; Dow has best day in nearly 7 months
S&P 500 closes at 3.5-month high, just 3 points away from closing at a 5-year high
Russell 2000 closes at historic high
Extremely broad rally: nearly 2,400 advancing stocks at the NYSE, the most since October 2008
382 new 52-week highs at the NYSE today, the most since November 2010
Crude oil settles above $93 for first time in 3.5 months
The Word on the Street Tonight
Behind Today's Rally: It Wasn't Just a 'Cliff' Deal/CNBC – Justin Menza: "Not everyone thinks Wednesday's big stock rally was simply due to a "Fiscal Cliff" deal. While most observers said Congress's last-minute agreement was the main driver behind the global rally, some pros think it had more to do with new money coming into the market and prospects for more central bank easing. UBS's Art Cashin, for one, said the fiscal cliff resolution cleared the way for fund managers to begin their traditional stock buying at the start of the year. "It's new money for the new year," Cashin told CNBC. "It's going on globally. It's not just a flight from safety if you look at the percentage moves, many of them are identical so to me, it's assets coming in."
US has been let down by its leadership/FT Op-Ed - Nouriel Roubini: "The deal reached in Washington on New Year's day prevented the US economy from falling off the so-called fiscal cliff. However, given the dysfunctional nature of the American political system, it won't be long before there is another crisis. Two months, in fact. If no action is taken by March 1, $110bn of spending cuts will commence. At about the same time, the US will hit its statutory debt limit, known colloquially as the debt ceiling. That is only the beginning. Later in 2013, and not before time, a bigger debate on medium-term fiscal consolidation will begin. This will lead to another dispute between Republicans, who want to shrink the size of the federal government, and Democrats, who want to maintain it but are unsure how to pay for it. So expect a big fight about entitlements, and a series of little fights over tax reform: should the US introduce a value added tax? A flat tax? Higher (or lower) income taxes? A carbon tax? Should we close corporate tax loopholes to raise more revenue? It'll soon get messy. "
CEOs pan fiscal cliff deal, vow to continue debt fight/Reuters: "U.S. executives largely panned the congressional deal to steer America away from the "fiscal cliff," saying Washington wasted an opportunity to address the nation's long-term debt, but said they would continue to agitate for a better budget plan. While CEOs expressed relief that $600 billion in tax hikes and spending cuts will not kick the fragile economy in the gut, their gratitude was salted with insults. "I think this deal's a disaster," said Peter Huntsman, chief executive of chemical producer Huntsman Corp. "We're just living in a fantasy land. We're borrowing more and more money. This did absolutely nothing to address the fundamental issue of the debt cliff."
Honeywell CEO Warns of 'Debt Ceiling Debacle'/WSJ – Kate Linebaugh: "…David Cote, the Honeywell International Inc. CEO who put himself in the middle of the back and forth between lawmakers and the White House, isn't joining the party. "We shouldn't be sitting here slapping ourselves on the back for a great job," Mr. Cote said in an interview. "All it did was address the fiscal cliff problem and set us up for a debt ceiling debacle."
How corporate tax credits got in the 'cliff' deal/Washington Examiner – Tim Carney: "The "fiscal cliff" legislation passed this week included $76 billion in special-interest tax credits for the likes of General Electric, Hollywood and even Captain Morgan. But these subsidies weren't the fruit of eleventh-hour lobbying conducted on the cliff's edge -- they were crafted back in August in a Senate committee, and they sat dormant until the White House reportedly insisted on them this week. The Family and Business Tax Cut Certainty Act of 2012, which passed through the Senate Finance Committee in August, was copied and pasted into the fiscal cliff legislation, yielding a victory for biotech companies, wind-turbine-makers, biodiesel producers, film studios -- and their lobbyists. So, if you're wondering how algae subsidies became part of a must-pass package to avert the dreaded fiscal cliff, credit the Biotechnology Industry Organization's lobbying last summer. Some tax lobbyists mostly ignored the August bill "because they thought it would be just a political document," one K Streeter told me. "They were the ones that got bit in the butt."
This Could Be the Year Bonds Start to Deflate/CNBC – Patti Domm: "Like a balloon with a slow leak, bonds may lose altitude in 2013, lagging stocks and other asset classes as a long-term bull market starts to wane. "I think rates will creep higher during the course of the year on the back of 'growth's okay, Europe's not going to fall apart, inflation's not going down anymore,'" said Bob Doll, chief equity strategist for Nuveen Asset Management. Interest rates move inversely to prices. But first, the tenacity of investors will be tested when Congress takes on the debt ceiling debate, which is expected to be more contentious than the "fiscal cliff" drama. That could drive investors into the relative safety of bonds, as lawmakers clash in February and March over the thorny issue of tax reform and entitlement spending cuts."
Al-Jazeera to Buy Current TV/WSJ: "Al-Jazeera, the pan-Arab news network owned by the government of Qatar, is buying Current TV, the struggling current-affairs channel co-founded by Al Gore and Joel Hyatt, according to people familiar with the matter. The deal could give al-Jazeera its first access to national cable distribution in the U.S., a goal it has campaigned hard for over the past several years."
More Bad News for Paulson: According to a court filing. ACA Financial Guaranty Corp. wants to add hedge fund Paulson & Co. as a defendant in a lawsuit against Goldman Sachs Group Inc.. In a statement to CNBC a rep for Paulson says: " We firmly believe that any proposed amendment by ACA to include Paulson as a defendant is completely without merit. As the SEC said back in 2010, Paulson was not the subject of the SEC's ABACUS investigation, made no misrepresentations, and was not the subject of any charges. As there is no basis in law or fact for the proposed amendment, Paulson will defend itself against this baseless action if the amendment is allowed."
There's No Avoiding Google /WSJ – Amir Afrati: "Google Inc. is gaining ground against Facebook Inc. thanks to a controversial tactic: requiring people to use the Google social network. Google over the past year has boosted the Google operation by integrating it with the company's top-tier properties, including its Web search engine, Gmail, YouTube, business listings and the Android mobile-operating system. People using Google to search for photos or customer reviews of a restaurant, for example, automatically are steered to the restaurant's Google page. In the fall, Google began requiring people who want to post their reviews of restaurants or other businesses to use their Google profiles to do so. The same rule applies for reviews of physical goods or mobile apps obtained through Google"
Starbucks reveals $1 reusable cup to curb trash/USA Today – Wendy Koch: "Amid public pressure to curb trash from disposable cups, Starbucks is rolling out a novel possible solution Thursday: a $1 reusable tumbler. The Seattle-based coffee giant will start selling the plastic cups, bearing its logo and resembling the paper version, at all its company-owned stores in the USA and Canada in a bid to get customers to kick their throwaway habit. It will give a dime discount for each refill so the cup pays for itself after 10 uses. The $1 tumbler is the latest effort to address criticism that food and beverage retailers need to reduce the amount of disposable cups and containers that ends up in landfills or litters streets and waterways. Thousands of people have signed petitions on Change.org, a website promoting social change, urging companies to promote reusable options and abandon polystyrene foam packaging, which is rarely recycled."
Twitter Is Now Trading At $11 Billion On The Private Markets/Forbes – Abram Brown: "A report by Greencrest Capital, an outfit that studies soon-to-IPO businesses and produced some of the better analysis on that aforementioned group of tech stocks, suggests Twitter's preparations for its public debut may begin this year, and an offering could come in 2014. … A rough valuation for Twitter can be established through where its shares trade in online secondary markets. Though a firm figure is difficult. "Using the secondary market for shares to mark enterprise value is a very difficult and opaque process. It is a rumor rich and special share class soup," says Greencrest's Max Wolff. "That said, Twitter is up since the Facebook IPO and is now valued at northward of $11B. This makes sense as growth in users and new monetization efforts are both yielding fruit and pointing toward a good 2013 for Twitter." Speculation about an acquisition by Apple bakes in something of a premium, but all in, Wolff says, Twitter's valuation today looks better than Facebook's did when it went public."
Q: First Quiz of 2013: What does Cave Idus Martius mean?
A: Cave Idus Martius = Beware the Ides of March:
Liked the fiscal cliff? You'll love these coming attractions/Marketwatch: "So, the fiscal cliff brawl is finished. Washington is breathing easy, right? Wrong. Three more budget-related battles are looming just over the horizon, meaning lawmakers and the White House – not to mention the markets — are already buckling up for the next bumpy ride.First off, the U.S. debt ceiling. The government reached its $16.4 trillion borrowing limit on Monday, and Treasury Secretary Timothy Geithner has begun taking what he calls extraordinary measures to delay further borrowing. But he can only do that until late February or early March. http://cnb.cx/10QpIZI