Wall Street pullback on fiscal worries?

Investors may be tempted to shy away from stocks in the next week or two as the latest version of the fiscal follies plays out in Washington.

"Uncertainty will probably rise ahead of these events, but we think this is likely to be short-lived and probably less severe than some other recent episodes," said a Goldman Sachs research note.

In fact, the current episode could prove to be an empty threat, like the so-called "fiscal cliff," last December. After weeks of dire predictions of big tax hikes and draconian spending cuts if no deal was reached, lawmakers came to a last-minute accord, and the market kicked into high gear for 2013. The S&P 500 is up more than 22 percent year to date on a total return basis, including re-invested dividends.

"While we could get a pullback on worries about the debt ceiling and the continuing resolution, my guess is it will go the same way as the fiscal cliff went - a bunch of sound and fury signifying nothing," said Jeffrey Saut, chief investment strategist at Raymond James Financial in St. Petersburg, Florida.

"If the market pulls back on (Washington) worries, I think it's a buy," said Saut.

http://www.4-traders.com/news/US-stocks-neednt-fret-about-a-government-shutdown--17284849/?countview=0

China August vehicle sales up 10.3 percent year-on-year - industry group

Vehicle sales in China rose 10.3 percent in August from a year earlier, according to the China Association of Automobile Manufacturers (CAAM), pointing to a recovery in the world's biggest automobile market.

During the first eight months of the year, vehicle sales rose 11.8 percent, putting the industry on track to reach the 7 percent annual growth forecast made by CAAM in January.

U.S. automakers are taking market share from their Japanese rivals, whose sales in China have been hit by a territorial dispute which flared anti-Japanese sentiment last September.

http://www.4-traders.com/HONDA-MOTOR-CO-LTD-6492457/news/China-August-vehicle-sales-up-103-percent-year-on-year-industry-group-17253271/

Multiples Growing Fastest Since Dot-Com Bubble as Rally Ages

Price gains of stocks in the Standard & Poor’s 500 Index (SPX) are outpacing profits by the fastest rate in 14 years as the bull market extends beyond the average length of rallies since Harry S. Truman was president.

Bears say the failure of earnings to keep up with prices signals the bull market is in its last stages, as companies from Caterpillar Inc. and Danaher Corp. (DHR) forecast slower profit growth and the Federal Reserve prepares to reduce stimulus. Optimists point to expanding multiples as proof individual investors are growing confident enough in the economy to return to stocks. History shows the final phases of rallies have provided some of the biggest gains.
http://www.bloomberg.com/news/2013-08-25/multiples-expanding-fastest-since-dot-com-bubble-as-rally-ages.html

Germany’s Second-Quarter Growth Led by Investment Rebound

Germany’s economic growth in the second quarter was driven by consumption and a rebound in investment as a recovery in the 17-nation euro area, its biggest trading partner, bolstered confidence.

Investment in plant and machinery climbed 0.9 percent in the second quarter, the first increase since 2011, today’s report showed. Construction output surged 2.6 percent. Household spending gained 0.5 percent and government consumption was up 0.6 percent. Domestic demand added 0.5 percentage point to growth, while net trade contributed 0.2 percentage point. Exports rose 2.2 percent and imports advanced 2 percent.

Manufacturing growth, record exports, looser bank lending and a housing recovery are raising the odds that the U.S. economy, the world’s largest, will accelerate after GDP rose at a 1.7 percent annualized rate in the second quarter. The Chinese economy, the second-biggest, may be strengthening after a two-quarter slowdown. A gauge of the nation’s factory output this month showed a return to growth after the biggest decline in more than a year.

“Global demand is advancing and if the domestic economies in struggling euro counties stabilize further, we will embark on a stable growth path,” said Alexander Koch, an economist at UniCredit Group in Munich. “We’ve already seen a recovery in German exports, which should continue in the coming months, and domestic consumption isn’t doing too bad either.”

http://www.bloomberg.com/news/2013-08-23/germany-s-second-quarter-growth-led-by-investment-rebound.html

More trouble in store for UK banks

HSBC has already been fined £1.2bn for breaching money-laundering rules and Royal Bank of Scotland and Barclays hit with major penalties for rigging Libor, but over the past two weeks Britain's major banks have warned shareholders of the wide range of investigations they still face that could lead to even more fines.

In many instances the banks are unable to quantify, as yet, the impact of ongoing cases – although RBS provided the most detailed warning of potential future fines by setting aside £385m to cover legal costs associated with unspecified regulatory actions.

http://www.theguardian.com/business/2013/aug/11/trouble-in-store-britains-banks

BoJ to keep monetary policy on hold as economy improves

Since the BOJ's last meeting there have been improvements in the economy, including the first rise in core consumer prices in more than a year, the first increase in summer bonuses in three years and a decline in the jobless rate to a 4-1/2-year low.

The BOJ is widely expected to keep monetary policy steady by maintaining its pledge of increasing base money, or cash and deposits with the central bank, at an annual pace of 60 trillion to 70 trillion yen ($600 billion-$700 billion).

Faced with inconclusive data, some policymakers may reserve judgment on their outlook for the economy until the release next week of April-June gross domestic product and machinery orders, which is a leading indicator of business spending.

http://www.4-traders.com/news/BOJ-to-keep-monetary-policy-on-hold-as-economy-improves--17161644/

Now Is Time to Sell on Surge

Private-equity managers from Fortress Investment Group LLC (FIG) to Blackstone Group LP (BX), which made billions by buying low and selling high, say now is the time to exit investments as stocks rally and interest rates start to rise.

“With credit markets hot and equities strong, this is a better time for selling assets than for buying,” James said on call with media on July 18. “Activity levels seem to be shifting from the U.S., which has been our focus over the last couple of years, to Europe, where there’s more distress, and Asia and emerging markets, where liquidity issues are arising.”

“It’s a difficult environment to find really attractive things when the markets are robust as they are,” Fortress’s Edens said yesterday.

Global stocks have gained 11 percent this year, led by a 20 percent rally in the S&P 500, which rose above 1,700 for the first time yesterday.

http://www.bloomberg.com/news/2013-08-01/fortress-to-blackstone-say-now-is-time-to-sell-on-rally.html