S&P 500 FINANCIALS INDEX
| Value | 220.31 | |
| Change | 1.75 (0.8%) |
The Alerian MLP Index rose 2½ to 272, probably helped by bullish sentiment for energy. 374 will bring a new record & reduce the yield on the index to 6%, taking it well into overbought territory. The REIT index is also hot, up 2+ to 231, just 2 below the interim high reached last week. Junk bond funds were fractionally higher while Treasuries were about even. The yield on the 10 year Treasury bond was flat at 3.35%, litttle changed in the last 3 months.
Treasury yields:
| U.S. 3-month | 0.14 | |
| U.S. 2-year | 0.55 | |
| U.S. 10-year | 3.34 |
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
10-Year Treasury Yield Index --- 2 weeks
Oil was flat but with the Mideast center stage anything is possible. Gold was struggling as technical selling & the need for cash overcame safe haven buying.
| CLH11.NYM | ...Crude Oil Mar 11 | ...89.50 | ..... 0.16 | (0.2%) |
| GCG11.CMX | ...Gold Feb 11 | ......1,330.70 | ... 10.00 | (0.8%) |
Gold Super Cycle Link! Click Here
Photo: Bloomberg
Americans spent at the fastest pace in 3 years in 2010, boosted by a strong finish in Dec. Consumer spending rose 0.7% in Dec, the 6th straight monthly increase according to the Commerce Dept. Households saw their incomes rise 0.4%, the same as Nov. For all of 2010, consumers boosted spending 3.5%, the best performance since a 5.2% rise in 2007 (prior to the the recession). Consumer spending rose at a 4.4% rate in Q3, the most since 2006 & helping retailers to the best holiday shopping season in that time. The cut in Social Security taxes are expected to lift Jan spending & income. In 2010, incomes rose 3% after falling 1.7% in 2009 (the 2nd-lowest annual pace in 8 years). The rise in incomes & faster increase in spending meant that the savings rate dipped slightly in Dec to 5.3% of after-tax incomes. The savings rate edged down slightly to 5.8%, from 5.9% in 2009. Still the 2010 figure is well above the low of 1.4% hit in 2005 at the height of the housing boom when rising home prices encouraged Americans to spend more. A slowly improving job market & a payroll tax cut are expected to boost spending further in 2011. However, the big question is whether the gains in consumer spending will be enough to offset weakness in the housing market & further cutbacks in gov spending. Fairly encouraging data which is not inspiring buyers today.
Consumer Spending in U.S. Rose More Than Estimated
Photo: Bloomberg
Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat, earned $9.25B in Q4, its most profitable qtr since the record Q3 in 2008. Net income grew 53% as it produced more oil to take advantage of higher prices. EPS was $1.85, above expectations of $1.62 & $1.27 in the prior year. Revenue increased 17% to $105B. XOM cranked up production by 19%. Its exploration & production operations posted income of $1.3B in the US & $6.2B overseas. Downstream operations, which include refineries & retail stations, reported earnings of $1.2B after losing money a year ago. The chemicals business reported profits of $1.1B. For the full year, XOM had EPS of $6.22, well above $3.98 in 2009. Annual revenue increased 32% to $383B. The stock was up 1 to almost $80. Its chart shows the stock price has been riding along with rising oil prices.
Exxon Mobil Profit Rises as Energy Prices Climb With Demand
Exxon Mobil --- 1 year
Intel (INTC), a Dow stock, said it found a design flaw in a recently released computer chip & will discontinue its production. It stopped shipment of the chip, codenamed "Cougar Point" & has developed a fix. This will reduce revenue by about $300M in Q1. Even though the flaw will mean lost revenue, the chip maker is raising its overall revenue outlook. Recent acquisitions are pushing overall revenue higher & INTC expects total revenue of $11.7B, plus or minus $0.4B. Its prior outlook was for $11.5B, plus or minus $0.4B. Revenue is expected to grow in the mid- to high teens in all of 2011 which compares with a previously expected a growth rate of about 10%. The stock slipped 34¢ after trading sideways for some time (despite div increases).
Intel Reduces First-Quarter Forecast Due to Cougar Point Chip-Design Error
Intel --- 1 year
Earnings news from the big oils are no great surprise. The goings on in Egypt are the focus of attention for traders & there is not way to predict how that will turn out. Gov officials are only making bland statements because nobody wants to back a loser in this volatile situation. Oil is a key part of this story, the Suez canal is a choke point for shipping a lot of oil. Dow began the month/year at 10,577, Jan should be an up month.
Dow Jones Industrials --- 2 weeks
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