Wednesday, August 31, 2011

Another gain brings Dow into the black for 2011

Stocks began the day higher & then had to struggle to hold onto those gains. Dow finsished up 53, advancers over decliners 2-1 & NAZ was up just 3. Banks had another winner day, the Financial Index has risen about 20 off the lows on Aug 22.

S&P 500 Financials Sector Index

Value	179.83
Change	2.16 (1.2%)

The MLP index is up 39 from its lows in early Aug & the REIT index gained 2½ to the 229s. Junk bond funds finished mixed after a tough month & Treasuries pulled back. Oil & gold were also flattish but gold had the biggest monthly gain in 2 years, on speculation that the Federal Reserve will take more action to spur growth.

Alerian MLP Index

Value	355.12
Change	2.68 (0.8%)

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Treasury yields:

U.S. 3-month	0.010%
U.S. 2-year	0.192%
U.S. 10-year	2.211%

CLV11.NYM

...Crude Oil Oct 11...

89.04

...

0.14

(0.2%)

Fed Officials Weighed Steps to Boost Growth

Photo: Bloomberg

Federal Reserve officials debated ways to stimulate the recovery & hiring, potentially laying the groundwork for action at the next gathering Sep 20-21. A few members of the FOMC favored a “more substantial move” at the last meeting beyond the pledge adopted to hold rates at record lows for 2 years. A range of tools was discussed, including buying more gov bonds & lengthening the average maturity in its portfolio, without coming to an agreement on what they might do should the economy weaken further. The consensus was the FED could still have a net positive effect” on the economy.

Fed Prepared Ground for Possible Easing as Officials Considered Stimulus

Brown-Forman, a Dividend Aristocrat, with strong overseas sales overseas, had a 6% increase in fiscal Q1 profit. BF/B also sees improvement in liquor consumption at US bars & restaurants. Out-on-the-town drinking, a key segment of business, has been staggered in recent years by the struggling economy. "It's not roaring back, but it's better for sure, in my view, than it was a couple of years ago," CEO Paul Varga said. The company reaffirmed its full-year earnings projection & said it expects to benefit from brand development & wider distribution to help fuel improved net sales growth. The flagship Jack Daniel's lineup was its top performer, posting a 15% revenue gain, on a constant currency basis, in fiscal Q1 ending Jul 31. Sales for its core Jack Daniel's grew 16% across intl markets & 2% in the US. But overall, the brands had a mixed performance in Q1. The company got a lift from a weaker dollar in its intl markets. About 55% of sales were in markets outside the US. Economic uncertainties remain a concern as the spirits industry heads toward its crucial holiday period. Q1 EPS was 81¢, up from 76¢ last year & sales rose 13% to $840M. For the full year, BF/B expects EPS of $3.45-$3.85 & analysts expect $3.70 . The stock fell $1.83.

Brown-Forman posts higher 1Q profit AP 12:57

Brown Forman Corporation (BF/B)

U.S. Files Antitrust Complaint to Block AT&T, T-Mobile Deal

Photo: Bloomberg

The DOJ is seeking to block the AT&T (T), a Dow stock, takeover of T-Mobile because it would violate US antitrust law. AT&T proposed purchase of T-Mobile in Mar to create a new market leader ahead of #1 Verizon Wireless. “AT&T’s elimination of T-Mobile as an independent, low- priced rival would remove a significant competitive force from the market,” the gov said in court papers. AT&T was surprised by the suit & said it will ask for an expedited hearing in the matter. “We have met repeatedly with the Department of Justice and there was no indication from the DOJ that this action was being contemplated,” Wayne Watts, AT&T’s general counsel, said. AT&T intends to fight the litigation. The stock fell $1.14.

U.S. Files Complaint to Block AT&T, T-Mobile Merger

AT&T Inc. (T)

Dow is back in the black YTD, not the way many analysts were forecasting late last year. Even with a strong finish, Dow lost 540 in Aug, its worst month in a couple of years. The week prior to Labor Day is not considered significant with many away on holiday, but Dow is on a 4 day winning streak & would like to extend it thru Fri (when the jobs report comes out). We'll see.