Thursday, May 26, 2011

Markets creep higher, helped by Tiffany's strong earnings

Dow started down, went into the black in the PM but selling in the last hour limited gains. Dow finished up 8 , advancers over decliners better than 2-1 & NAZ gained 21. Bank stocks muddled along with the Financial Index near its multi month lows, a negative sign for the markets where bank stocks are supposed to be leaders.

S&P 500 FINANCIALS INDEX

Value	209.35
Change	1.01 (0.5%)

The MLP index was up 1 & the REIT index rose 3 to the 245s (5 below the 2011 highs). Junk bond funds had modest gains (money flowing away from European bonds) & Treasuries rose on concern the IMF may withhold aid for Greece next month & a report showed the US economic growth is losing momentum. The yield on the 10 year Treasury bond fell to a new 5 month low, now it will test if 3% can hold. Oil fell from a 2-week high as the US economy grew less than forecast in Q1 while gold slipped below 1520.

ALERIAN MLP INDEX

Value	366.20
Change	1.12 (0.3%)

Treasury yields:

U.S. 3-month	0.046%
U.S. 2-year	0.488%
U.S. 10-year	3.057%

CLN11.NYM

...Crude Oil Jul 11

...100.20

...

1.12

(1.1%)

Giving a high dose of niacin to people with heart disease who are already taking a cholesterol-lowering statin does nothing more to prevent heart attacks & strokes according to a gov study. The clinical trial was stopped 18 months early because there was no sign that high-dose niacin reduced heart problems in people on statins whose low-density lipoprotein, or LDL, the so-called "bad" cholesterol, was already well-controlled. Patients were treated with Niaspan from Abbott (ABT) & Zoxor from Merck (MRK). Researchers said niacin raised levels of high-density lipoproteins, or HDL, the "good" cholesterol, but that did not translate into fewer fatal & non-fatal heart problems. "Although we did not see the expected clinical benefit, we have answered an important scientific question about treatment for cardiovascular disease," Dr. Susan Shurin, acting director of the National Heart, Lung, and Blood Institute, said. ABT fell 83¢ & MRK was down 31¢.

Abbott’s Cholesterol Therapy Fails to Protect Heart

Abbott Laboratories (ABT)

Merck & Company, Inc. (MRK)

Tiffany (TIF) sales in Japan did much better than expected after the Mar earthquake & sales soared in its other markets during Q1. The company now only expects a modest decline in sales for the year in Japan where it gets 18% of total sales. Sales in Japan, with 57 stores, rose 7% during the qtr. Excluding the impact of the strong ¥, sales fell 3% after TIF initially forecast they would fall 15%. There has been no "meaningful resistance" from customers over paying higher prices put in place to mitigate rising gold, silver & diamond costs, Tiffany said. EPS rose to 63¢ (qtr ending Apr 30) from 50¢ last year. Excluding one-time items, EPS was 67¢, beating forecasts of 57¢. TIF raised full-year profit outlook by 10¢, now expecting EPS of $3.45-$3.55 in the fiscal year that ends Jan 2012 (higher than forecasts of $3.33). The stock rose $6.00 to a new record.

Tiffany reports net inventories at April 30 17% above prior yearat Reuters

Tiffany & Co. (TIF)

The average price for gas is bottoming out & could be ready for a small increase given recent trends in crude prices.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.813	$3.952	$4.080	$4.032	$3.257	$4.287
Yesterday Avg.	$3.814	$3.958	$4.085	$4.041	$3.270	$4.303
Week Ago Avg.	$3.905	$4.048	$4.175	$4.093	$3.298	$4.340
Month Ago Avg.	$3.869	$4.008	$4.138	$4.139	$3.271	$4.305
Year Ago Avg.	$2.771	$2.941	$3.048	$3.034	$2.222	$2.924

Source: AAA

Little was decided today on very low volume. Low volume means just a few modest size trades can be the difference between being up or down. European problems drag on while the IMF is electing a new leader. Greece is rebellious, not a good sign. MLPs are muddling along. It's good the 350 resistance held for the index, but after last week's bounce it has gone nowhere. New issues were mixed, Freescale Semiconductor (FSL) was up 33¢ (from a lowered offering price) & Spirit Airlines fell 45¢. IPOs for internet companies are in demand but ordinary companies will have to struggle selling their shares. Tomorrow should bring even lower volume.