Daily Data Flow: Wall Street Posts Stock Third Quarter; Watch out Taxpayers! Postal Service Prepares to Default

Wall Street posts best third quarter since 2010 (Reuters)

Wall Street closed its best third quarter since 2010, added by central banks sparking a rebound in equity markets. However, signs of weakness in the economy drove stocks lower on Friday. The S&P 500 climbed 5.9% in  the past three months, as central banks tried to boost liquidity to markets and aid weak economies. The moves lifted the benchmark index as much as 17% this year and recently lifted the S&P to its highest mark in five years.

US Postal Service to default on second $5B payment (San Francisco Chronicle)

Taxpayers beware! For the second time in less than three months, the U.S. Postal Service announced it would default on another huge obligation to fund its future retirees’ health care benefits. This time around, the amount of the default is $5.6 billion… last time, a mere $5.5 billion.

Each time the USPS defaults, it is breaking a law requiring it to prefund obligations like this for future retirees.  But it doesn’t look like Congress is in the  mood to get hard-nosed about this, as it’s simply turned the other cheek each time a default has been announced or a payment delayed. In Q2, 2012, the Post Office reported a $5.2 billion loss — blaming the shortcoming on a decline in first-class mail.  While the inability to make a total of $11.1 billion in prefunding won’t affect current mail service in the United States, the Service is considering cost-cutting measures such as the closure of hundreds of offices nation-wide or ending Saturday mail service.

Generation “M” – Forget China or Brazil, Look to Mexico for Next Profit Wave (Yahoo! Finance)

If you’re still enamored with the BRIC countries, don’t be.  There’s a new letter in town: “M” for Mexico…

So far this year, Mexico’s market has kept pace with the S&P 500 — gaining just over 8%.  And that’s a figure that blows away the returns of both the Shanghai Composite (Chinese market) and San Paolo Bovespa (Brazilian market). There are a number of reasons why this is happening:

First and foremost, companies worldwide are figuring out that Mexico is becoming the export engine of Latin America.  Next, the country currently sports a diversified economy, solid GDP growth, some of the best labor costs in the world, and unbeatable proximity to its biggest trading partner: the United States. Probably the biggest recent development to propel the Mexican economy and market higher has been it’s ability to take on China head-to-head when it comes to labor costs. But when you start factoring in other business tangibles, like shipping, Mexico crushes the China — making it much more attractive for companies operating under just-in-time inventories.