S&P 500 FINANCIALS INDEX
| Value | 220.51 | |
| Change | -3.17 (-1.4%) |
The MLP index fell 3½ to the 368s, profit taking finally hit MLPs. REITs also sold off, taking the index down 2 to the 225s. Junk bond funds were a tad lower while Treasuries were flattish. The yield on the 10 year Treasury bond slipped 1 basis point to 3.35%..
Treasury Yields:
| U.S. 3-month | 0.15% | |
| U.S. 2-year | 0.58% | |
| U.S. 10-year | 3.35% |
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
10-Year Treasury Yield Index --- 2 weeks
Oil fell for a 2nd day as a bigger-than-forecast drop in US housing signaled the economic recovery may be slowing. However, oil is just below its recent highs in the 92s. Gold prices were clawing their way higher as moderate buying continued, but prices were still trapped in a tight range.
| CLG11.NYM | ...Crude Oil Feb 11 | ...90.86 | ... 0.52 | (0.6%) |
| GCF11.CMX | ...Gold Jan 11 | .......1,371.90 | ... 3.80 | (0.3%) |
Gold Super Cycle Link!! Click Here
Photo: Bloomberg
Construction of new homes in the US fell 4.3% in Dec as builders completed their 2nd worst year on modern record. Housing starts fell to an annualized rate of 529K, the lowest since Oct 2009 according to the Commerce Dept. In 2010, housing starts rose 6.1% to an annual pace of 588K but builders were coming off their worst year when housing starts totaled just 554K. At the peak of pre-recession housing boom, starts rose to as high as 2.07M in 2005. New construction has averaged more 1M units annually since the record keeping began in 1959. New construction of single-family homes, which account for 75% of the housing market, dropped 9% in Dec to an annualized rate of 417K.
Permits for new construction, a more accurate gauge of home building, leaped 16.7% in Dec to an annualized rate of 635K, the highest rate since last Mar, when a federal tax credit temporarily spurred home buying & building. The surge in permits mainly centered on condominiums and apartment buildings with five or more units. Permits rose to an annualized rate of 172K, the highest level since January 2009. Single-family-home permits, meanwhile, rose 5.5% to an annual rate of 440K. While new construction is projected to increase this year from 2010’s low level, it could take years before the industry fully recovers, especially if foreclosures accelerate. The widespread availability of existing homes at lower prices would dampen demand for new ones. Prepare for another dreary year in housing, a severe drag on economic recovery & making it difficult for the unemployment rate to post a significant drop.
Housing Starts in U.S. Decreased in December to One-Year Low
Goldman Sachs (GS) posted a 53% decline in Q4 profit as revenue from fixed income tumbled, dashing hopes that the largest investment bank might buck a volatile climate that has hurt rivals. Quarterly profit roughly matched Wall Street expectations, while revenue fell short. Bond trading revenue, including commodities & currencies, fell 39% from Q3, reflecting what GS called "generally low client activity levels." During Q4, a steep increase in US bond yields left many banks flat-footed. While revenue from customer trading fell, the bank made more money from trading for its own account. Revenue from its investing & lending business rose 45% & accounted for more than 20% of overall revenue. The stock dropped 5 to 170, although it has had a nice recovery from the early months of last year when it was under a lot of gov pressure.
Goldman Sachs's Earnings Drop 52%, Matching Estimates
Goldman Sachs --- 1 year
Photo: Yahoo
Wells Fargo (WFC), one of the largest consumer lenders, reported Q4 profit shot up, as its customers payment habits improved & it was able to lower the amount of reserves set aside to cover souring loans. EPS was 61¢ in Q4 (matching estimates), up from a depressed 8¢ last year when results were hurt by a large preferred div paid to the gov. CEO John Stumpf said all bank business segments contributed to earnings as the economy started to gain strength. The bank reported a notable improvement in the performance of its outstanding loans. Total loans it had to write off as uncollectable fell to $3.8B, down from $5.9B last year. Loans considered past due & likely to default declined for the first time since Wells Fargo bought Wachovia in late 2008, ending the qtr at $32.4B. Wells Fargo wrote off 29% fewer uncollectable loans than last year & released $850M from loan-loss reserves, the money set aside to cover soured lending. The stock fell 40¢.
Wells Fargo Reports Record Profit on New Loans, Reserve Release
Wells Fargo --- 1 year
Earnings season is not inspiring confidence which would bring out buyers. In particular, bank earnings are sluggish at best. They are being helped by reduced provisions for loan losses. This sounds good, but it will not last very long. MLPs & REIT also saw selling, maybe related to the recent run up in Treasury rates which narrows the premium between 2 sets of yields. Optimism about the economic recovery is not taking stocks higher in Jan (generally an up month), after just about everybody agreed that 2011 would extend the markets' winning streaks to 3 years.
Dow Jones Industrials --- 2 weeks
Find out what's inside Trend TV!
Get your favorite symbols' Trend Analysis TODAY!
No comments:
Post a Comment