Tuesday, September 28, 2010

Market waffle after weak consumer confidence report

Little is going on in stock markets today.  Dow was up 17, decliners marginally ahead of advancers & NAZ fell 1.  Banks stocks were essentially flat.


Value 194.21 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  -0.18  (-0.1%)

The MLP index fell a fraction in the 332s, continuing its sideways trading over the last 2 months & the REIT index was off 2+ to the 208s.  Junk bond funds were flat while the VIX, volatility index, gained a fraction to the 23s (little changed recently).  A weaker dollar sent the € up more than a penny to $1.36½.  Treasuries continue very strong.  The yield on the 10 year Treasury bond fell 4 basis points to 2.48%, very near its lows this month. 

Treasury yield

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerain MLP Index   ---   2 weeks

Dow Jones REIT Index   ---   2 weeks

VIX   ---   2 weeks

10-Year Treasury Yld Index   ---   2 weeks

Oil & gold were flattish, although gold topped 1300 earlier in  trading. 

CLX10.NYM...Crude Oil Nov 10...76.47  ...Down 0.05  (0.1%)

GCU10.CMX...Gold Sep 10...1,287.50 ...Down 3.60   (0.3%)

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Confidence for US consumers fell in Sep to the lowest level in 7 months.  The Conference Board’s confidence index declined to 48.5 from 53.2 in Aug, below the median estimate of 52.1. By way of comparison, the index averaged 53.7 during the recession that ended last year.  The measure of present conditions decreased to 23.1 from 24.9, the lowest level in 7 months. The share of consumers who said jobs are currently plentiful declined to 3.8 this month, the smallest this year & those who said jobs are hard to get increased to 46.1% from 45.5%.  The Conference Board’s gauge of expectations for the next 6 months dropped to 65.4 from 72, also the lowest since Feb. More gloomy data (shown in the graphs below) for the markets to digest!

U.S. Consumer Confidence Fell More Than Forecast

Confidence index - 1 year

One-Year Chart for Confidence (CONCCONF:IND)

Present conditions - 1 year

One-Year Chart for Situation (CONCPSIT:IND)

Expectations - 1 year

One-Year Chart for Expectations (CONCEXP:IND)

Photo:  Yahoo

Walgreen (WAG), A Dividend Aristocrat, net income rose 8% in fiscal Q4 on higher prescription drug sales.  The results were above expectations.  The flu shot season has been brisk, since the middle of Aug it has administered more than 2M flu shots & sprays (many of those sales are not included in Q4 results since the period ended Aug 31).  WAG expects to sell 15M flu shots this year, more than twice as many last year.  EPS was 49¢ per share in Q4 (beating expectations of 44¢), up from 44¢ last year. Revenue rose 7% to $16.9B.  Results included 4¢ in expenses related to the purchase of Duane Reade which closed in Aug & gave WAG 258 stores in the NYC area.  Sales at stores open at least a year rose 1.5% during Q4, while prescription sales at those stores rose 1.6%. Overall, the company said margins for non-pharmacy business benefited from pricing, promotion & other improved efficiencies, while pharmacy margins benefited from new generic introductions.  For FY2010, WAG had EPS of $2.12, up from $2.02 in the prior year. Revenue rose to $67.4B from $63.3B.  Last month it raised the div to 70¢.  The stock jumped 2.84 to 33.19

Walgreen's Profit Rises 7.8% as New Store Format Boosts Sales

Walgreen   ----   1 month

This is another boring day.  But signals about the economic recovery are not good.  The dreary data on consumer confidence is another example of problems with the recovery.  After Dow has had a nice rise from 10K at the start of Aug, it's been struggling in recent days.  Lower rates on Treasuries are sending strong negative signals for stock market investors.

Dow Jones Industrials   ---   2 weeks

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