S&P 500 FINANCIALS INDEX
| Value | 192.50 | |
| Change | -6.10 (-3.1%) |
Profit taking hit red hot MLPS, as the index fell 1 to the 323s. The REIT index fell 3½ to the 193s. Junk bond funds were a little higher & the VIX, volatility index, rose 2 to the 27s, halting its 2 week slide. Treasuries were back in demand. The yield on the 10-year Treasury bond fell 3 basis points to 2.95%, getting nearer the recent lows of 2.90%. The € continued to climb, approaching $1.29½.
Alerian MLP Index -- 2 weeks
Dow Jones REIT Index -- 2 weeks
VIX Index -- 2 weeks
10-Year Treasury Yld Index -- 2 weeks
Oil sold off & gold plunged following weak stock markets.
| CLQ10.NYM | ...Crude Oil Aug 10 | ...75.70 | ... 0.92 .......(1.2%) |
| GCN10.CMX... | Gold Jul 10 | ...1,186.70 | ... 21.40 .......(1.8%) |
China's holdings of US Treasuries fell $32½B to $867.7B as reported by the Treasury. The drop in China's holdings & the weak showing overall was a surprise. A sizable gain was expected because it was thought foreign investors would seek the safety of US Treasury debt, responding to fears over the European debt crisis. But total foreign holdings edged up $5.8B to $3.96T. Interesting that $5.8B is referred to as "edged up." Japan, the world's 2nd-largest holder of Treasury securities, also cut its holdings in May, to $786.7B, a drop of 1.1% from Apr. However, the UK, the 3rd-largest holder, posted a 9% increase to $350B. Foreign holdings of US debt are closely watched because they can provide signals on the direction of US interest rates.
Bank of America (BAC), Dow stock, said its Q2 net income rose 15% to $2.78B as improvements in the company's consumer loan businesses made up for a drop in trading revenue. The results beat expectations & provided further evidence that losses from failed loans at the nation's big banks may have peaked in H1 of 2010. BAC says its reserves to cover losses from loans fell 17% from Q1 & 39% last year. Brian Moynihan, CEO, said the company's "credit quality improved even faster than we expected." Q2 EPS was 27¢ compared to 33¢ last year & beat estimates of of 22¢. Revenue totaled nearly $30B. Revenue in the trading business, which includes the Merrill Lynch operation, fell 42% from a year ago to $6B because of the steep dive the stock market took during the spring. The stock dropped 1.14 on the news.
Bank of America Slides as 2nd-Quarter Profit, Revenue Drop
Bank of America --- 2 years
General Electric (GE), Dow stock, reported a 16% increase in quarterly profits, ending a streak of 9 down quarters, but it also posted revenue that fell short of expectations. The largest US conglomerate said that orders rose 8%, with equipment used in oil & gas production & by hospitals particular bright spots. But revenue for the qtr dropped 4.3%. "GE's economic environment continues to improve," said CEO Jeff Immelt. "We expect to grow earnings and dividends in 2011 and beyond." GE said net earnings attributable to common shareholders rose to $3.03B in Q2 (30¢ per share), from $2.61B last year. GE is in the process of pruning GE Capital, which Immelt says he allowed to grow too big, in order to focus on financing equipment purchases, commercial lending & investing in real estate. Profit increased 93% at GE Capital (off a low base) as credit losses & impairments declined through the qtr. Earnings at the company's technology infrastructure arm fell 11%, hurt by weak demand for railroad locomotives. The stock was off 48¢.
GE Profit Beats Estimates as Health Care, Finance Improve
General Electric --- 2 years
The payroll at Google (GOOG), powering my blog, is swelling as it is doing its part to stimulate the economy which has also been a drag on earnings. Net income & revenue rose 24% from the previous year, but that didn't impress investors because earnings missed the estimate. GOOG has hired nearly 2K workers in H1, putting it on pace to add the most people to its payroll since 2006. The European debt crisis also worked against GOOG in Q2 because about one-third of the company's revenue comes from Europe & customer payments made with the € translated into fewer dollars than a year ago. Without making specific projections, GOOG management left little doubt substantially more people will be joining the company in the months ahead as it pursues long-term opportunities. GOOG EPS was $5.71 per share, in Q2, up 24% from $$4.66 last year. If not for expenses covering employee stock compensation, GOOG would have made $6.45 per share, but below the average estimate of $6.52. Revenue climbed 24% to $6.82B. The stock dropped 24+ taking it below 470.
Google Falls After Costs of Research, Marketing Crimp Profit
Google --- 2 years
Earnings season began with high hopes, but those hopes are fading. Banks are coming off depressed results last year, muting the large gains shown. In addition, raising divs based on higher earnings is not being done after they were burned so badly last year. Caution is the dominant theme in the earnings reports so far. But MLPs remain on fire & I worry when I see excessive enthusiasm.
Dow Jones Industrials -- 2 weeks
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