It's The Economy Stupid: September 2013

Monday, September 30, 2013

It's The Economy Stupid: Market Close

There’s a whole lot of red in them there numbers! And there was no place safe to hide (money)! Global stocks dropped as the probability of a shutdown looms.

As Republicans and Democrats in the U.S. Congress seemed to harden their stances, global stocks fell, trimming the biggest quarterly gain since the start of 2012, before a potential U.S. government shutdown. Treasuries and the yen reversed early gains while crude oil traded near its lowest level in three months. The MSCI All Country World Index lost 0.8 percent in New York as the Standard & Poor’s 500 Index slipped 0.6 percent to 1,681.94, trimming an earlier 1 percent drop. The yield on 10-year U.S. Treasury notes was down one basis point at 2.62 percent after losing four basis points earlier. The yen fell against 10 of 16 major peers after rising versus all of them earlier. West Texas Intermediate oil fell as much as 1.8 percent before trimming its loss to 0.3 percent, still trading at the lowest on a closing basis since July 3.

Description	Ticker	Last	Change	% Chg Today	% Chg 1Year
STOCK MARKETS
Dow Jones Industrial Average	INDU Index	15129.670	-128.5700	-0.8426	12.5960
S&P 500 Index	SPX Index	1681.560	-10.1900	-0.6023	16.7269
NASDAQ 100 Index	NDX Index	3218.198	-12.1070	-0.3748	14.9688
NASDAQ Composite Index	CCMP Index	3771.479	-10.1150	-0.2675	21.0270
Russell 3000 Index	RAY Index	1011.550	-5.2500	-0.5163	19.1068
Russell 1000 Index (Large Cap)	RIY Index	939.500	-5.2800	-0.5589	18.3637
Russell 2000 Index (Small Cap)	RTY Index	1073.790	-0.4000	-0.0372	28.2214
Wilshire 5000 Total Market	W5000 Index	17982.430	-90.3100	-0.4997	19.5305
TREASURIES	% Yield
3 Month Treasury	0.0101		-0.0050	-50.0000
6 Month Treasury	0.0355		0.0000	0.0000
2 Year Treasury	0.3168	99.867	0.0313	0.0313
5 Year Treasury	1.3847	99.945	0.0703	0.0704
10 Year Treasury	2.6109	99.031	0.1094	0.1106
30 Year Treasury	3.6847	98.906	0.0156	0.0158
ENERGY
Crude Oil, Brent Index	Brent Crude	108.300	-0.3300	-0.3038	2.5957
Crude Oil, Louisiana Lt. Sweet	LA Lt Sweet	105.430	0.1100	0.1044	-6.0300
Natural Gas, Henry Hub Index	Nat Gas	3.553	-0.0360	-1.0031	-10.6811
PRECIOUS METALS
Spot Gold $/oz	GOLD	1327.960	-8.6900	-0.6501	-25.0499
Spot Silver $/oz	SILVER	21.689	-0.0960	-0.4407	-37.2134
CURRENCIES
Euro	EUR Curncy	0.739	-0.0002	-0.0270	-4.7171
Japanese Yen	JPY Curncy	98.310	0.0900	0.0916	-20.7096
British Pound	GBP Curncy	0.618	-0.0017	-0.2744	-0.3388
Swiss Franc	CHF Curncy	0.905	-0.0013	-0.1435	3.7475
Canadian Dollar	CAD Curncy	1.030	-0.0002	-0.0194	-4.6588
Chinese Renminbi	CNY Curncy	6.119	-0.0004	-0.0065	2.7226
FOREIGN INDICIES
FTSE 100 INDEX	UK	6462.220	-50.4400	-0.7745	12.5417
CAC 40 INDEX	FRANCE	4143.440	-43.3300	-1.0349	23.5071
DAX INDEX	GERMANY	8594.400	-67.1100	-0.7748	19.0995
NIKKEI 225 INDEX	JAPAN	14455.800	-304.2700	-2.0614	64.3356
HANG SENG INDEX	HONG KONG	22859.860	-347.1800	-1.4960	9.6902
SHANGHAI COMP INDEX	CHINA	2174.665	14.6380	0.6777	4.2421

	Last	Chg Today	% Chg Today	3 Mo Tot Ret	6 Mo Tot Ret	YTD Tot Ret
S&P 500 INDEX	1681.560	-10.190	-0.6023	5.2509	8.313	19.799
S&P 500 CONSUMER DISCRETION	480.300	-2.188	-0.4535	7.7922	15.130	29.119
S&P 500 CONSUMER STAPLES	410.240	-4.360	-1.0516	0.8054	1.313	16.082
S&P 500 ENERGY	604.860	-5.080	-0.8329	5.1510	4.760	15.412
S&P 500 FINANCIALS	268.370	-1.990	-0.7361	2.8689	10.328	22.926
S&P 500 HEALTH CARE	586.020	-1.550	-0.2638	6.8179	10.914	28.454
S&P 500 INDUSTRIALS	400.700	-2.510	-0.6225	8.9050	11.964	23.910
S&P 500 INFO TECHNOLOGY	519.260	-2.920	-0.5592	6.6185	8.412	13.391
S&P 500 MATERIALS	265.010	-1.050	-0.3946	10.3065	8.314	13.503
S&P 500 TELECOM SERVICES	149.300	-0.890	-0.5926	-4.3977	-3.440	5.689
S&P 500 UTILITIES	189.840	-0.230	-0.1210	0.1850	-2.554	10.134

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

It's The Economy Stupid: Shutdown & Default

People that know me know that I generally think in terms of probability. I don’t really think in absolutes, I don’t tend to think in either/or results. I generally think that there are a range of outcomes, with some more likely than others. The markets are facing some headwinds this morning. First, and foremost, a shutdown of the U.S. Government. The probability of a federal government shutdown greatly increased early Sunday morning as a defiant Republican-controlled House passed another short-term spending bill that requires a one-year delay in implementing the Affordable Care Act. The bill now goes to the Senate for approval, by all accounts a non-starter in the upper chamber, greatly increasing the probability of a government shutdown.

And then just to heap a little more worry on the markets, it appears that Detroit is going to default on its municipal bonds, and if it does it will be the largest such municipal bond default in at least 4 decades.

So stock prices are down and bond prices are down. Markets, and the investors whose money drives them, don’t like uncertainty.

Description	Ticker	Last	Change	% Chg Today	% Chg 1Year
STOCK MARKETS
Dow Jones Industrial Average	INDU Index	15129.540	-128.7000	-0.8435	12.5830
S&P 500 Index	SPX Index	1678.360	-13.3900	-0.7915	16.5145
NASDAQ 100 Index	NDX Index	3208.264	-22.0410	-0.6823	14.5781
NASDAQ Composite Index	CCMP Index	3753.325	-28.2690	-0.7475	20.4182
Russell 3000 Index	RAY Index	1009.000	-7.8000	-0.7671	18.7900
Russell 1000 Index (Large Cap)	RIY Index	937.680	-7.1000	-0.7515	18.1205
Russell 2000 Index (Small Cap)	RTY Index	1064.160	-10.0300	-0.9337	27.0727
Wilshire 5000 Total Market	W5000 Index	17935.070	-137.6700	-0.7618	19.2018
TREASURIES	% Yield
3 Month Treasury	0.0101		-0.0100	-100.0000
6 Month Treasury	0.0355		0.0000	0.0000
2 Year Treasury	0.3325	99.836	0.0000	0.0000
5 Year Treasury	1.4042	99.844	-0.0313	-0.0313
10 Year Treasury	2.6227	98.914	-0.0078	-0.0079
30 Year Treasury	3.6803	98.969	0.0781	0.0790
ENERGY
Crude Oil, Brent Index	Brent Crude	107.540	-1.0900	-1.0034	1.8852
Crude Oil, Louisiana Lt. Sweet	LA Lt Sweet	103.990	-1.3300	-1.2628	-7.3100
Natural Gas, Henry Hub Index	Nat Gas	3.523	-0.0660	-1.8390	-11.4350
PRECIOUS METALS
Spot Gold $/oz	GOLD	1326.680	-9.9700	-0.7459	-25.1278
Spot Silver $/oz	SILVER	21.552	-0.2330	-1.0695	-37.5622
CURRENCIES
Euro	EUR Curncy	0.739	-0.0005	-0.0676	-4.7429
Japanese Yen	JPY Curncy	97.720	-0.5000	-0.5091	-20.1822
British Pound	GBP Curncy	0.620	0.0000	0.0000	-0.0484
Swiss Franc	CHF Curncy	0.905	-0.0010	-0.1104	3.7475
Canadian Dollar	CAD Curncy	1.030	-0.0011	-0.1067	-4.5662
Chinese Renminbi	CNY Curncy	6.122	0.0020	0.0327	2.6806
FOREIGN INDICIES
FTSE 100 INDEX	UK	6462.380	-50.2800	-0.7720	12.5361
CAC 40 INDEX	FRANCE	4128.250	-58.5200	-1.3977	23.0480
DAX INDEX	GERMANY	8566.250	-95.2600	-1.0998	18.7291
NIKKEI 225 INDEX	JAPAN	14455.800	-304.2700	-2.0614	62.9711
HANG SENG INDEX	HONG KONG	22859.860	-347.1800	-1.4960	9.6902
SHANGHAI COMP INDEX	CHINA	2174.665	14.6380	0.6777	4.2421