Thursday, April 7, 2011

Markets rattled by another Japanese earthquake

Japan's northeastern coast was hit by another strong earthquake. A tsunami warning for a wave of up to one meter for a coastal area has been issued to the area already ravaged by last month's tsunami. Stocks sold off. Dow fell 48, decliners ahead of advancers 3-2 & NAZ dropped 3. Bank stocks had been in the black but pulled back into the red.

S&P 500 FINANCIALS INDEX

Value	224.56
Change	-0.06 (-0.0%)

The MLP Index fell a fraction in the 381s, remaining near 383+ needed for a new record, & the REIT index fell 2+ to the 234s. Jujnk bond funds continued mixed at their high levels & Treasuries were weaker. The yield on the 10 year Treasury bond went up 1 basis point to 3.56%, still near a 2 month high. Crude rose to a 30-month high after a report that fewer Americans filed for jobless benefits, signaling fuel demand will grow. For the 3rd day in a row gold hit a new record high, rising to $1,466 & expectations are for it to climb over $1,550 in the near term.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.05%
U.S. 2-year		0.81%
U.S. 10-year		3.55%

CLK11.NYM

...Crude Oil May 11...

108.98

...

0.15

(0.1%)

GCJ11.CMX

....Gold Apr 11

.........1,460.30

....

2.60 (0.2%)

Jobless Claims in U.S. Fell 10,000 Last Week to 382,000

Photo: Bloomberg

New claims for unemployment benefits fell slightly more than expected last week. They slipped 10K to 382K according to the Labor Dept (below the forecast of 385K). Claims have now held below the 400K level that is generally associated with steady job growth for 4 weeks in a row, with the 4 week average below that mark for the 6th straight week. The number still receiving benefits under regular state programs fell 9K to 3.72M, the lowest level since Oct 2008 (just after the Lehman collapse). The number on emergency unemployment benefits dropped 25K to 3.56M & 8.52M in total were claiming unemployment benefits.

Initial Jobless Claims in U.S. Fell 10,000 Last Week to 382,000

RPM (RPM), a Dividend Aristocrat but not a member of the S&P 500, reported a profit for its fiscal Q3 versus a loss in the prior year, beating expectations & raised guidance for the year. CEO Frank Sullivan said RPM was pleased with its performance during the typically weak Q3 even as it faced higher raw materials costs. "Nearly all of our business units generated strong sales increases and substantially stronger growth in earnings," Sullivan said. EPS was a penny per share compared with a net loss of 7¢ in 2010. Revenue rose to $679M from $667M a year earlier. Analysts expected a loss of 5¢ on revenue of $627M. Sullivan said that the commercial construction segment is seeing improvement in the US & Europe after 2 years of depressed demand. RPM raised guidance for the fiscal year based on the strong Q3 performance, expecting revenue growth of 7-8% to $3.35B & EPS of $1.40-1.45. Previously the company predicted sales growth of 4-5% to $3.25B. Analysts expect EPS of $1.38 on revenue of $3.27B. The stock gained 1.10.

RPM International reverses loss in fiscal 3Q AP

RPM International Inc. (RPM)

The European Central Bank (ECB) raised its benchmark interest rate by 25 basis points to 1.25%. This is a rare move for the conservative bank. The bank said it always does what is necessary to deliver price stability over the medium term. 2 more increases to 1.75% are expected by the end of the year as inflation accelerates & Germany's economy booms. But the risk is that higher borrowing costs will boost the € & exacerbate the sovereign debt crisis, which last night forced Portugal to follow Greece & Ireland in seeking a European Union bailout. The € fell half a penny to $1.42½. Inflation breached the ECB’s 2% limit in Dec & accelerated to 2.6% last month, the fastest pace in more than 2 years. The ECB acknowledged that surging energy & food prices are largely to blame & is worried that workers will demand higher wages in compensation, entrenching faster inflation.

Trichet Leaves Door Open to Further Rate Moves

Trading this week continued to lumber along but news from Japan is unsettling. The jobless data is encouraging although the slow steady pace of improvement is not making a big impact on the unemployment picture, especially while housing remains in its 5 year depression. Today news from Japan will by the prime driver for stocks.