Reports

US stock market daily report (January 31, 2012, Tuesday)

Contributed by Millennium Traders

Insider Trading is illegal in the United States but, of late, it has more publically been brought out that, the action is not so much illegal, for certain members of our government. The definition of Insider Trading is trading of a companies stock or other security by individuals with access to non-public information about the company. This news will certainly shock most Main Street Americans, to hear that after all these years, our government leaders have been allowed to profit in ways that send Main Street Americans - including Martha Stewart - to prison. Many government officials become aware of information regarding companies, well before the American public. These same trusted government officials take advantage of Insider Information and act, even if with the assistance of a third party, in a manner deemed 'illegal' by Main Street America. Illegal insider trading will raise the cost of capital for securities issuers, thus decreasing overall economic growth. In an effort to regain public trust, the Senate voted Monday to take up a bill that would prohibit members of Congress from trading stocks and other securities on the basis of confidential information they receive as lawmakers. The bill reads, “No member of Congress and no employee of Congress shall use any nonpublic information derived from the individual’s position as a member of Congress or employee of Congress, or gained from performance of the individual’s duties, for personal benefit.” While U.S. Federal Securities law does not explicitly exempt members of Congress, experts disagree on whether and when lawmakers may be found to have violated the law. The bill is meant to eliminate any ambiguity. The law additionally reads that lawmakers have “a duty arising from a relationship of trust and confidence” to Congress, the federal government and the citizens of the United States, a duty they clearly violate by trading on nonpublic information. The bill also requires members of Congress to disclose the purchase or sale of stocks, bonds, commodities futures and other forms of securities within 30 days of transactions. The information would be posted on the Web in a searchable format. The Senate was already writing such a bill however, the bill does not subject lawmakers to a second type of restriction suggested by President Obama, who said Congress should “limit any elected official from owning stocks in industries they impact.” From talking to other lawmakers, executive branch officials and business executives, members of Congress learn potentially valuable information about military contracts, economic policy and myriad federal programs before the information becomes public. In addition, they can write spending bills in ways that, for example, benefit their own real estate investments. The bill, known as the 'Stop Trading on Congressional Knowledge Act, or Stock Act' was drafted by Senator Joseph I. Lieberman, independent of Connecticut and Senator Susan Collins, Republican of Maine. Similar bills were introduced by Ms. Gillibrand and Senator Scott P. Brown, Republican of Massachusetts. “Send me a bill that bans insider trading by members of Congress,” Obama said. “I will sign it.”

In November, U.S. house prices dropped sharply, to mark the third straight drop. The S&P/Case-Shiller 20-city composite home price index dropped 1.3% to take the year-on-year drop to 3.7%. Phoenix, is the only city which managed a monthly gain. Detroit and Washington D.C. were only two cities to manage a gain, on a year-on-year basis. In Atlanta house prices fell 2.5% on the month to bring the annual drop to 11.8% to strike the worst of the 20 cities measured. New housing price lows were reached by Atlanta, Las Vegas, Seattle and Tampa reached new lows. On a seasonally adjusted basis the housing price index fell 0.7% November. The Case-Shiller data includes transactions from September and October, broadly tracking what other home-price gauges say. On a year-on-year basis, the Federal Housing Finance Agency’s index was down 1.8%, while CoreLogic reported a 4.3% drop.

The Conference Board reported consumer confidence fell to 61.1 in January, partly reversing substantial gains in the previous two months, as views on current business conditions and employment declined. "Recent increases in gasoline prices may have consumers feeling a little less confident this month," said Lynn Franco, director of the Conference Board's consumer research center, in a statement. Consumer expectations ticked lower in January on a lower outlook for income and business conditions. The December reading for confidence was revised to 64.8 from a prior estimate of 64.5. Confidence readings of at least 90 generally indicate the economy is growing at a good clip.

The Institute for Supply Management reported Chicago PMI for January fell 2 percentage points to 60.2, striking the second straight decline even though readings above 50 indicate expansion.