Wednesday, February 16, 2011

Strong stocks on strong earnings

Dow was strong all day, ending with a gain of 61 to 12,288 (last seen on Jun 13, 2008).  Advancers were 3-1 over decliners & NAZ added 21.  Bank stocks had a good day, taking the Financial Index to a high not seen since Nov 2008. 


Value230.92One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  1.31  (0.6%)

The Alerian MLP Index gained another fraction to the 377s, good enough to set a new record.  The REIT index was up almost 1 to 236, just below a new high reached in the AM.  Junk bond funds inched higher but Treasuries were flat.  The yield on the 10 year Treasury bond remained at 3.62%.

Treasury Yields:

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

Alerian MLP Index   ---   YTD

Dow Jones REIT Index   ---   YTD

10-Year Treasury Yield Index   ---   YTD

Oil was firmer on tensions in the Mideast & gold was marking time.

CLH11.NYM...Crude Oil Mar 11...84.98 ...Up 0.66  (0.8%)

GCG11.CMX...Gold Feb 11.......1,374.30 ...Up 0.70  (0.1%)

$$$ Gold Super Cycle $$$  

Federal Reserve Chairman Ben S. Bernanke

Photo:  Bloomberg

Federal Reserve (FED) officials are increasingly confident of the economic recovery but remain unsatisfied with the healing of the job market according to minutes of the Jan meeting.  "Participants generally expressed greater confidence that the economic recovery would be sustained," the FED said.  While officials believed downside risks to the recovery were dissipating, the minutes characterized the forecasts policymakers presented at the Jan 25-26 meeting as "not greatly changed."  Officials raised their 2011 growth forecast to a range of 3.4-3.9% from the Nov projection of 3.0-3.6%.  The  jobless rate was forecast to be in a range of 8.8-9.0% in Q4 of 2011, little changed from the earlier projection of 8.9-9.1%. Unemployment was seen declining only gradually over the 3 year forecast horizon.  "Overall, meeting participants continued to express disappointment in both the pace of and the unevenness of the improvements in labor markets," the minutes said.  OK, steady as she goes.

FOMC Saw Stronger U.S. Recovery, Disappointed on Jobs

Google (GOOG) unveiled a digital-content service that gives publishers a bigger cut of subscription sales than a competing program introduced yesterday by Apple (APPL). GOOG will keep about 10% of the fees charged by publishers compared to 30% kept by AAPL.  GOOG is also giving access to more information about users while AAPL is placing tighter limits on how much consumer data it shares with publishers, publishers said.  The GOOG service, called One Pass, will let publishers set their own terms & prices for digital content,.“You’ve got a very publisher-friendly approach; we basically don’t make any money on this,” said CEO Eric Schmidt. “The most important thing is to get the money to people who are producing high-quality content.”  GOOG’s cut will cover the costs of the service which will be available on tablets & smartphones, along with websites.  Nothing like competition from these 2 powerhouses but growing competition could squeeze high margins at APPL.  AAPL was up 3+ to 363, a fresh record high, while GOOG was flattish at 623.

Google Undercuts Apple With Cheaper Version of Content-Subscription Plan

Apple   ---   1 year

Google  ---   1 year

Markets continue red hot.  Tensions in the Mideast are ignored.  An unsatisfactory response to the enormous budget deficit gets little attention.  Since this leg up for the Dow began at the start of Sep, the only setback was in Nov.  Otherwise, the vast majority of days were up days.  Meanwhile new, high tech companies with minimal sales (let alone earnings), are getting valuations in the $Bs.  All troubles are getting little attention, so markets should continue to rise.  But I keep feeling that they will have to go over an enormous bump which could be painful.

Dow Jones Industrials   ---   YTD

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