Thursday, April 21, 2011

Earnings reports boost stock markets

Dow gained 52, advancers over decliners 2-1 & NAZ added 17 propelled by Apple's rise of 8. While bank stocks participated in the higher markets, they did not lead.

S&P 500 FINANCIALS INDEX

Value	216.86
Change	1.21 (0.6%)

The MLP index hit a new record & the REIT index finished at a new multi year high. Junk bond funds were flattish near their multi highs & Treasuries continued little changed. The 10 year Treasury bond has been hugging a 3.4% yield for 4 months. Oil climbed for a 3rd day as better-than-estimated earnings boosted confidence in the strength of the economic rebound. Gold rose to a record for the 5th straight session, settling above $1,500 for the first time, as a weaker dollar & debt concerns boosted demand for an alternative investment.

ALERIAN MLP INDEX

Value	385.17
Change	2.04 (0.5%)

Treasury yields:

U.S. 3-month		0.05%
U.S. 2-year		0.66%
U.S. 10-year		3.40%

CLM11.NYM

...Crude Oil Jun 11

...112.20

...

0.75

(0.7%)

The index of leading indicators in the US increased for a 9th month in Mar & Americans’ confidence rose for a 4th week. The Conference Board’s gauge of the outlook for the next 3-6 months rose 0.4% after a revised 1% gain in Feb (larger than previously estimated). 6 of the 10 indicators in the leading index contributed to the gain, led by the spread, or difference between the overnight federal funds rate & the yield on the 10-year Treasury note, which boosted the measure by 0.34 point. Building permits & a gauge of supplier delivery times also contributed positively to the index. The leading index “continues to point to sustained economic growth through year end,” the Conference Board said. At the same time, “global disruptions, including unrest in the Middle East, rising oil prices & the Japan earthquake, may have some repercussions.” In addition, the Bloomberg Consumer Comfort Index climbed to -42.6 in the period to Apr 17, the best reading since the end of Feb.

Economic Outlook Brightens on Leading Indicators, Confidence

A sharp drop in bond trading revenues & deep losses at a Japanese investment led to a 48% decline in Q1 income at Morgan Stanley (MS) as it booked $655M in losses from its 40% stake in a Japanese joint venture, Mitsubishi UFJ Morgan Stanley Securities. The venture lost more than $1B from bets in the fixed income markets, while operating expenses soared. MS is replacing the leadership & has started a "thorough and strategic risk management review" there. Mitsubishi is also converting its $7.8B convertible preferred shares into MS common shares (pending a review by US regulators) aimed at saving $784M in annual divs & give Mitsubishi a 22.4% stake in MS. EPS was 50¢, compared with 99¢ last year & beat estimates of 40¢. Revenue fell 16% to $7.6B. The stock rose 44¢.

Morgan Stanley Profit Beats Estimates as Trading Revenue Jumps

Morgan Stanley (MS)

The average price for gas at the pump was up to $3.84 yesterday, closing in on the $4.11 record set in 2008. This is negatively affecting consumer consumption of everything.

Source: AAA

Dow is breaking thru to new high territory as earnings for the last few days have been encouraging to the bulls. The MLP index is at a new record, taking the yield below 5.9% (very low by historical standards). Stock exchanges are closed tomorrow, traders will have more time to enjoy profits. But problems around the world are not going away soon.