S&P 500 FINANCIALS INDEX
| Value | 199.46 | |
| Change | -0.32 (-0.2%) |
The MLP index rose 1½ to the 358s & the REIT index was up 1+ to 214. Junk bond funds were pretty much even, but down a 5% from the highs before last week's sell-off. Treasuries found some buying (from the Federal Reserve) today, taking the yield on the 10 year Treasury bond down 2 basis points to 2.88%.
Treasury yields:
| U.S. 3-month | 0.13% | |
| U.S. 2-year | 0.50% | |
| U.S. 10-year | 2.88% |
Alerian MLP Index --- YTD
Dow Jones REIT Index --- YTD
10-Year Treasury Index --- YTD
Oil prices, like the stock markets, have had a tough time in Nov, falling about 10%. Gold consolidated its gains as China took more steps to stem inflation. It was down only marginally but about 2% lower for the week (its 2nd weekly loss).
| CLZ10.NYM | ....Crude Oil Dec 10 | ...81.60 | ..... 0.25 (0.3%) |
| GCX10.CMX | ...Gold Nov 10 | ......1,346.10 | .... 6.80 | (0.5%) |
$$$ Gold Super Cycle $$$
The central bank of China will likely have to raise interest rates further. The People’s Bank of China yesterday ordered a 50 basis point increase in the amount of money that lenders must set aside, just 2 days after the cabinet announced measures to tackle inflation. Stock markets fell on concerns that Chinese efforts to cool the nation’s fastest rise in consumer prices in 2 years may cause growth to falter. Concern that rising consumer prices will undermine the economy spurred a cabinet meeting this week. The measures contemplated by the State Council range from a crackdown on speculation in agricultural goods to the imposition of price caps on “daily necessities” if needed. The meeting came amid concern at the threat increased food costs pose to the poorest people in the world’s most populous nation. More than 81M people in disaster-affected areas may need food assistance this winter. The dispute between the US & China over the value of Chinese currency drags on at the same time China has been a leading critic of the QE2 which they view as injurious to their economy.
China Will `Inevitably' Raise Rates in Battle Against Inflation
Dell (DELL) posted earnings that beat predictions. EPS was 45¢ in Q3 that topped the 32¢ estimate. DELL benefited from cheaper prices for parts & spending from companies that are updating aging personal computers & servers. Profit margins were helped by “pricing discipline” that kept DELL from cutting product prices too much. Components costs such as computer memory & hard drives have dipped which also shored up profitability. Sales rose 19% to $15.4B, below projections of $15.7B. Full year sales growth will be near the midpoint of a 14-19% range set earlier this year, indicating sales of about $61.6B, short of the $62.2B predicted. The stock gained 26¢ as it tries work its way back to $14.
Dell Rises as Third-Quarter Profit Tops Estimates, Component Prices Slide
Dell --- 1 year
Cisco (CSCO), a Dow stock, added as much as $10B to its stock repurchase program after the shares fell 17% last week. “Today’s decision to increase Cisco’s stock repurchase program is part of our continued commitment to return cash to shareholders,” Chief Financial Officer Frank Calderoni said. “We are confident in our strategy, product portfolio and ability to capture and lead new markets.” The company’s board had already authorized as much as $72B in stock buybacks. In Sep CSCO announced it would issue the first dividend & is looking at a dividend yield of 1-2%. The company faced a “challenging economic environment” last qtr. CSCO blamed the slump on lower gov spending in developed countries & competition which has forced CSCO to cut prices & seek acquisitions to maintain growth. The stock was flat today after taking a beating last week.
Cisco Adds $10 Billion to Its Share Repurchase Plan Following Stock Slump
Cisco --- 1 year
Higher prices in the latter half of the week limited damage from earlier selling. Markets are confused. Intl issues are center stage again. China & European debt concerns are the major issues which will drive the markets next week (shortened for the holiday). Typically this is a quiet week, but foreign countries do not celebrate the holiday & may create sparks. Look for a bailout package for Ireland from the European powers with protests from the countries with stronger economies. China is always unpredictable. Dow is just below the former Apr high of 10.2K. Next week's major test will to see if it can blast thru it to resume its upward march.
Dow Jones Industrials --- YTD
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