S&P 500 FINANCIALS INDEX
| Value | 188.59 | |
| Change | -1.38 (-0.7)% |
MLPs continue flying, with the index up a fraction to 326. Their out-performance is becoming scary for the believers as they worry about "the other shoe dropping." The REIT index rose a fraction to 194. Junk bond funds were flat to lower & the VIX, volatility index, is up a fraction to 26. Treasuries gained. The yield on the 10-year Treasury bonds fell 3 basis points to 2.93% taking it very close to its recent lows. More attention should be paid to implications of the low yield. The 2 year Treasury yields a paltry 58 basis points, very depressing for the stock market! The € is still above $1.29 despite worries about the European bank stress test report due later this week.
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
VIX --- 2 weeks
10-Year Treasury Yld Index --- 2 weeks
Oil & gold are hanging in there while stocks are sliding. It probably doesn't mean a lot, but it sounds like there's underlying strength.
| CLQ10.NYM | ...Crude Oil Aug 10 | ...76.60 | ... 0.06 .......(0.1%) |
| GCN10.CMX | ...Gold Jul 10 | ...1,181.50 | ... 0.20 .......(0.0%) |
Home construction plunged last month to the lowest level since Oct. Driving the Jun decline was a more than 20% drop in condominium & apartment construction, making up a small but volatile portion of the housing market. Construction of single-family homes, the largest part of the market, was down slightly (0.7%). Overall, construction of new homes & apartments fell 5% in Jun from a month earlier to an annual rate of 549K, the Commerce Dept said. May's figure was revised downward to 578K. One bright area was an increase in building permit applications, a sign of future activity. They rose 2.1% from a month earlier to an annual rate of 586K (driven by apartment construction). In this difficult economy developers must compete against foreclosed homes selling at deep discounts.
U.S. Housing Starts Drop to Lowest Level Since October
Construction of new homes - 1 year
Building permits - 1 year
IBM (IBM), Dow stock, beat earnings expectations in Q2 & raised its guidance for 2010, but also disclosed a reduction in the value of services contracts so revenues fell short. Its new guidance for 2010 calls for EPS of at least $11.25, an increase of a nickel per share over the previous estimate but short of the $11.27 per share that analysts were expecting. That just wasn't good enough. The stock dropped 5 to the 124s & the 1 month chart shows the severity of the sell-off.
•IBM lifts 2010 forecast but economic worries loom
AP
IBM --- 1 month
Goldman Sachs (GS) said Q2 net income dropped 83% & revenue fell short of expectations. It was hurt when trading revenue fell & it booked a charge ($550M) for its settlement of civil fraud charges with the SEC & also by a one-time $600M charge tied to a new tax on bonuses in Britain. Excluding the one-time costs, EPS came to $2.75, topping the $2.08 forecast. Revenue fell 36% to $8.84B. The stock took the news well, up 1 to the 146s.
Goldman Sachs Profit Drops 82%, Missing Analysts' Estimates
Goldman Sachs --- 1 month
Photo: Yahoo
Johnson & Johnson (JNJ), Dow stock & Dividend Aristocrat, reduced its 2010 profit forecast for EPS by 15¢ because of the recalls of tens of millions of bottles of Tylenol & other well-known brands along with the long-term closure of the suburban Philadelphia factory that made then plus unfavorable currency exchange rates. EPS in Q2 rose to $1.23, up from $1.15 last year almost entirely due to a lower tax bill. Excluding a one-time gain from settling litigation, earnings would have been $1.21 (matching the forecast). JNJ now expects EPS for 2010 of $4.65-4.75, down from the Apr forecast of $4.80-4.90. The stock dropped 1.50.
J&J Lowers Annual Forecast on Impact of Drug Recalls
Johnson & Johnson -- 1 month
The opening was dreary but buyers have returned to reduce losses. There is a major disconnect between the low yield on Treasuries while stocks are still sloshing around in a sideways trading range. The disconnect is more extreme for the MLPs which are in their own lofty world, unconcerned with a drearier outlook for the economic recovery. I don't know!
Dow Jones Industrials --- 2 weeks
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