Thursday, November 3, 2011

Higher markets on hopes about Greek vote

Dow rose 96, advancers over decliners 2-1 & NAZ is up 17.  Bank stocks, however, are soft.

S&P 500 Financials Sector Index

Value 177.08 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    -0.80    (-0.5%)

The MLP & REIT indices were each down 1½.  Junk bond funds were little changed & Treasuries dropped, taking the yield on the10 year Treasury over 2%.  Oil gained & gold is up nicely.  Gold is on a run again, up over 100 in the last 2 weeks.  Safe haven qualities are attracting investors with all the turmoil coming from Europe.



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U.S. 3-month


U.S. 2-year


U.S. 10-year


CLZ11.NYM....Crude Oil Dec 11...93.01 .....Up 0.50  (0.5%)

GCX11.CMX...Gold Nov 11.....1,750.10 ...Up 21.40  (1.2%)

Get the latest market update below:

ECB Unexpectedly Cuts Rates as Risk of Greek Euro Ex

Photo:   Bloomberg

The European Central Bank (ECB) cut interest rates by a ¼ percentage point under new head Mario Draghi as it tries to boost a weakening economy that's reeling from a gov debt crisis that threatens to spread from Greece.  The debut move from Draghi, which comes earlier than expected.  European growth is expected to slow in Q4 & the rate cut is aimed at preventing an outright recession.  Uncertainty from the debt crisis is a factor as business & consumers are reluctant to spend & investors are worried of the potential for more financial turmoil if Greece defaults on its debts.  The current market turbulence is "likely to dampen the pace of economic growth in the second half of the year and beyond," said Draghi.  He also signaled that the ECB bond purchases, which have been keeping down borrowing rates for financially weak countries like Italy, are temporary & limited.  Markets had hoped that Draghi would indicate the bank was willing to be more aggressive with the bond purchases, but he said it was up to govs to fix their finances. "It is pointless to think sovereign bond rates could be brought down for an extended period of time by outside interventions."   Everybody is making it up as they go along but he sounds like he has a tough attitude.

Jobless Claims in U.S. Fall to One-Month Low

Photo:  Bloomberg

Jobless claims fell by 9K to 397K last week week, the fewest in a month, according to the Labor Dept & better than the forecast of 400K.  The 4-week moving average fell to 404K from 406K.  The number of continuing to receive jobless benefits dropped 15K to 3.68M.  The continuing claims figure does not include Americans receiving extended benefits under federal programs.  Those who’ve used up their traditional benefits & are now collecting emergency & extended payments increased by 39K to 3.49M in the lastest week.  Slight improvement is little consolation for those looking for work..

Jobless Claims in U.S. Fell to a One-Month Low Last Week

Photo:   Yahoo

Kellogg Q3 net income fell 14%, worse than expected, hurt by higher costs related to updating its supply chain & incentive compensation costs.  The world's largest cereal maker also lowered earnings guidance below expectations.  EPS was 80¢, below 90¢ last year & expectations of 89¢.  Money spent to improve the supply chain hurt net income by 8 percentage points, while incentive compensation costs hurt results by 12 percentage points.  The supply chain improvements will take several years & "improve the infrastructure and drive reliability and capability" of Kellogg, said CEO John Bryant.  Revenue rose 5% to $3.3B, analysts expected $3.4B.  In North America revenue rose 4% to $2.2B & Intl revenue rose 7% to $1.1B, boosted by the weaker dollar.  Results in Latin America were strong & Europe continued to improve.  Kellogg continues to expect revenue will grow 4-5% in 2011, but it lowered its net income guidance because of continued investment in its supply chain.  It now expects EPS of $3.35-$3.41, below prior guidance of $3.42-$3.49.  Analysts expect $3.48.  In 2012 the company expects revenue to rise 4-5% with net income, excluding currency fluctuation, up 2-4%.  The stock sank $4.48 (9%).

Kellogg Profit Falls 14% on Increased Spending to Improve Quality Controls

Kellogg Company (K)

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Markets remain in limbo awaiting new developments from Europe.  The rate hike by the ECB will probably do little.  The G-20 meeting meeting in France will likely accomplish little, that is the norm.  Earnings seem to be more of a mixed bag, not acknowledged by the the optimists.  Companies are struggling to balance off rising costs with prices hikes in a less than friendly economic environment.  The weekly jobs report was more of the same.  Tomorrow's will be the big one & expectations are low.

Dow Industrials (INDU)

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