Thursday, July 21, 2011

Rising bank stocks lead gains

Dow rose at the opening & remained near its highs for the rest of the day. Dow gained 152, advancers over decliners almost 4-1 & NAZ was up 20. Banks continue to lead the way higher.

S&P 500 Financials Sector Index

Value	207.00
Change	5.00 (2.5%)

MLPs marked time while REITs rose. The REIT index reached a new 2011 high before settling back to a gain of 2 in the 252s. Junk bond funds inched higher but Treasuries were weaker on a perceived solving of the European debt crisis. Oil rose to a one-month high after manufacturing in the Philadelphia area rebounded & on reports European Union officials have come up with a plan for the region’s debt crisis. Gold was essentially even, just below $1600.

Alerian MLP Index

Value	373.20
Change	-0.10 (-0.0%)

Treasury yields:

U.S. 3-month	0.035%
U.S. 2-year	0.399%
U.S. 10-year	3.010%

CLU11.NYM

...Crude Oil Sep 11

...99.27

...

0.87 (0.9%)

Click below for the latest market update:

The spokesman for President Obama & Speaker Boehner said there is “no deal” on raising the US debt limit as all sides said they still lack a consensus on spending cuts & increased taxes. OMB Director Jack Lew said, “There is no agreement.” “There is no progress to report,” the presidential spokesman said & added that the administration is “absolutely confident” an agreement to avert a default can be reached before an Aug. 2 deadline. That's what he's paid to say! Senators who seek a grand bargain haven’t produced details sought by leaders, making it harder to add their proposals to a plan to raise the debt ceiling. A bipartisan group of senators called the ‘Gang of Six’ outlined a $3.7T deficit-reduction plan & Obama embraced it this week. Some Republicans have endorsed it or signaled openness to considering it. But so far, all this is just TALK!

Obama Aide, Boehner Say No Debt-Limit Deal

Euro-area leaders redoubled efforts to end the 2 year sovereign bond crisis as they risked a temporary default to ease Greece's debt burden & erected a firewall around Spain & Italy. After a bond market selloff last week, leaders empowered their €440B ($633B) rescue fund to buy debt across stressed euro nations. The fund can also aid troubled banks & offer credit-lines to repel speculators. A €160B aid package was pledged for Greece, easing the terms of its existing loans & it cajoled bondholders into footing part of the bill. This is still not a done deal.

Euro-Area Leaders May Accept Greek Default

Sherwin Williams, a Dividend Aristocrat, reported Q2 profits slipped 1% as it dealt with higher raw material costs & increased expenses. SHW also cut the high end of 2011 earnings forecast & forecast for Q3. EPS was $1.66, compared with $1.64 last year (the per share amount was higher due to fewer shares outstanding). Revenue rose 10% to $2.35B, benefiting from price increases, favorable currency fluctuations, acquisitions & strong sales in the global finishes group. Revenue from stores open more than 12 months increased 4%. SHW expects 2011 earnings of $4.65-4.85, with revenue up in high single digits to low teen percentage from a year ago. The previous guidance called for EPS of $4.65 -$5.05. For Q3, EPS is guided at $1.65 -$1.75 & revenue should be 10-15% above the prior-year period. The stock plunged 3.83.

Sherwin-Williams 2Q profit dips on higher costs AP

Sherwin-Williams Company (The) (SHW)

Markets warmed to generally favorable earnings reports & the appearances of solving the European debt crisis. Of course, the latter is a mess with a quasi default for Greece. The Treasury debt crisis lumbers along with no resolution in sight. There is plenty of talk, but that's about it. Now there is the problem of leaving enough lead time so legislation can be written to avert a default (or a quasi default). But look at the chart for Dow below. It's less than 90 away from a new 2011 high, as if it didn't have a worry. The recovery is stumbling, the debt ceiling crisis is far from being resolved & potential reductions in gov spending are being ignored. The big picture does not look good.