Monday, April 25, 2011

Markets slip on earnings disappointments

Dow was off 26 after trading in the red all day, decliners ahead of advancers 5-4 & NAZ gained 5. Bank stocks slipped back as the Financial Index has been stuck in a sideways trading range for months:

S&P 500 FINANCIALS INDEX

Value	216.56
Change	-0.30 (-0.1%)

MLPs had another great day, taking the index closer to 400, & the REIT index rose 1½ to 243, a multi year high. Junk bond funds were little changed as were Treasuries. There was modest buying in the 10 year bond, the yield fell to 3.36%, but it has been largely sideways for months. Oil was flattish on an assortment of rumors, remaining near its highest levels since the heady days of 2008. Gold also has been trading sideways in the last 3 days (green line is today), but is in new record territory above $1510.

ALERIAN MLP INDEX

Value	387.45
Change	2.28 (0.6%)

Treasury yields:

U.S. 3-month		0.05%
U.S. 2-year		0.64%
U.S. 10-year		3.36%

CLM11.NYM

...Crude Oil Jun 11

...112.18

...

0.11

(0.1%)

Procter & Gamble (PG), a Dow stock & Dividend Aristocrat, raised US prices because of rising costs for pulp, oil & gas. Shoppers will see higher prices for Pampers diapers, Charmin toilet paper & Bounty paper towels. Retailers will decide how much of the increases to pass along to shoppers. List prices for Pampers are up 7%, Pampers wipes up 3% & Charmin & Bounty products up 5%. The stock was up 4 pennies & has done nothing during the market rise over the last year.

P&G raising some prices for retailers- AP

Procter & Gamble Company (The) (PG)

Johnson Controls (JCI) fiscal Q2 earnings climbed 29% on higher revenue as each of its main business segments reported double-digit sales increases amid a recovering global economy. But JCI forecast Q3 earnings & revenue below expectations. Higher climate control sales will be offset by auto production cuts due to the earthquake & tsunami in Japan. EPS was a record 51¢ in Q2 ending Mar 31, up from 40¢ last year. Excluding acquisition & restructuring costs, the JCI earned 56¢, beating the 55¢ estimate. Revenue rose 22% to $10.1B from $8.3B a year ago. JCI raised its revenue forecast for the full year fiscal 2011 $1B to $39.5B, up 15% over 2010, due mainly to higher growth in the building efficiency operations, partially offset by lower auto production in the Q3 because of the devastating earthquake & tsunami in Japan. The stock fell 1.13 & has been flat in the last 6 months.

Johnson Controls posts 29 pct rise in 2Q earnings AP 27

Johnson Controls, Inc. (JCI)

Price at the pump went over $3.86 yesterday. Higher prices are becoming serious for the economic recovery.

12onth Average

Source: AAA

Earnings reports turned sour today & price hikes are getting a lot more attention. Gold traders are very aware about the implications for inflation, with gold well above 1500. Jitters in the economy are not bothering MLP investors as that index reached a new record high. Besides earnings, the FOMC meeting in the next 2 days will be watched closely. Low interest rates are baked into their thinking. But the statement about the economic recovery & thoughts on exiting from QE2 in Jun are eagerly awaited.