Tuesday, November 15, 2011

Markets advance on Italian hopes

Dow rose 17, advancers ahead of decliners 3-2 & NAZ went up a bigger 28.  Bank stocks were hesitant.  The Financial Index was up only a fraction in the 174s.

The MLP index fell 1+ to 367 & the REIT index rose 3+ to the 226s.  Junk bond funds edged higher while Treasuries were about even.  Oil approached $100 a barrel after US retail sales increased more than projected in Oct, bolstering optimism that the economy will expand.  Gold was up fractionally.

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CLZ11.NYM...Crude Oil Dec 11...99.59 ...Up 1.45  (1.5%)

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Italy's Prime Minister-designate Mario Monti

Photo:   Bloomberg

Prime Minister-designate Monti of Italy said he is ready to present his new gov to the president after winning wide backing (and important pledges of sacrifices) from political, business & union leaders during 2 days of intense meetings.  Monti still has to put the final touches on his Cabinet & economic program, which he will outline to President Napolitano tomorrow.  His gov must receive votes of confidence in both houses of Parliament, expected this week, to take office and begin the task of steering the eurozone's 3rd-largest economy through its debt crisis.  Monti expressed his "serenity" & "conviction" in Italy's ability to overcome the difficult phase in its history.  "I was impressed by the sense of responsibility and willingness to back social growth," Monti said. "Everyone offered concrete contributions of possible partial sacrifices in exchange for a more general positive outcome."  Monti, a respected economist & former European commissioner, is under pressure to quickly reassure financial markets that Italy will avoid a default that could tear apart the 17 countries that use the euro currency & push the global economy back into recession.  The EU & the ECB have outlined measures Italy must take, many of them reforms blocked in the past by special interests.  This is another work in progress that market bulls have to "believe" in.

Monti Confident Italy Can Overcome Crisis

The US. Postal Service lost $5.1B last year as a weak economy & increased internet use drove down mail volume.  But the bleak financial report for the fiscal year ending Sep 30 was not as high as the $10B in losses previously estimated because an annual payment of $5.5B the post office owed the federal gov has been deferred.  Postal officials called the financial situation "dire" & say the Postal Service will not be able to make the $5.5B payment due on Fri due to low cash flow.  Postmaster General Donahoe has warned of a postal shutdown next year unless there is congressional action to address the agency's long-term money problems.  This is just one of many problems the super committee has to deal with in the report due next week.

    • <p>               Greek public sector employees protest against the austerity measures outside the Greek parliament in Athens, on Tuesday, Nov. 15, 2011. The Greek parliament continued a debate on Tuesday on a closely watched confidence vote in new Prime Minister Lucas Papademos' government.(AP Photo/Petros Giannakouris)
    Photo:   Bloomberg

    Greece's finance minister urged lawmakers to ratify a new debt deal with "maximum possible speed" to avoid default & a collapse in living standards to levels seen half a century ago.  Evangelos Venizelos said "sensitive talks" were under way to secure cross-party backing in Greece to the €130B agreement sealed in late Oct after months of hard bargaining among European nations.  "It is not to be taken for granted that the funds in the Oct. 26 plan will always be available. ... We must move with the maximum possible speed in a totally targeted way" Venizelos said.  "We are taking measures that would have been inconceivable a few months or a few years ago. ... This is a very harsh but necessary way to prevent the real crisis which would be a return to the situation we had in the 1960s or the 1950s."   The new gov, headed by technocrat Lucas Papademos, a former VP of the ECB, was sworn in last week after a severe political crisis that brought the country's continued participation in the European joint currency into question.  The new gov will face an early gauge of public acceptance on Thurs when unions will join an annual march to mark the anniversary of an anti-dictatorship uprising in Greece in 1973.  Fearing violence, 7K police will be deployed in Athens.  Conditions in Greece remain unsettled.

    Greece: Debt deal needs 'maximum possible speed' AP

    • <p>               FILE - In this May 17, 2011 file photo, a Staples sign is displayed on the front of a Staple store, in Portland, Ore. Staples Inc. said Tuesday, Nov. 15, 2011, that its profit climbed 13 percent in the third quarter, helped in part by improved sales of office and break room supplies to businesses as well as promotional products. (AP Photo/Rick Bowmer)
    Photo:    Yahoo

    Profits at Staples climbed 13% in Q3, helped in part by improved sales of office & break room supplies to businesses.  But overall revenue came in short of expectations & it cut its adjusted earnings forecast for the full year as its international performance weakened.  Office suppliers have suffered during the recession & its aftermath, as consumers and small businesses continue to hold back on spending, something that is not likely to change soon, CEO Ron Sargent said.  "We don't see a lot of change in the economy versus our outlook last quarter," he said in a call with analysts. "I think we remain in a slow growth economy for business in North America and that's really driven by high unemployment and fear of the future."   EPS was 47¢in Q3, up from 40¢ last year.  Revenue rose 1% to $6.57B.  Its North American retail unit revenue was flat at $2.7B, with revenue at stores open at least a year down 1% on a slight decline in customer traffic & flat average order size.  Intl revenue slipped 1.9% to $1.3B or 7% on a local currency basis.  Revenue at European stores open at least a year dropped 12%, with sales also soft in Australia.  For the full year, the company anticipates EPS of $1.35-$1.39, excluding a tax refund of about $21M in Q2.  Q4 EPS is guided to be 39-43¢, with flat to low single-digit sales growth.  The stock fell 56¢.

    Staples 3Q profit rises, lowers 2011 outlook AP

    Staples Inc.

    Italy is trying to get its finance squared away but Spain is another disaster waiting in the wings.  With all the mixed messages coming from Europe Dow is up about 150 in Nov, surprising strength.  Retail sales numbers were pretty good giving hopes for a decent holiday shopping season, critical for retailers to make much of their profits.  But eyes are looking east to see what is happening in Europe.  Little has been accomplished & hopes remain high as does anxiety.  The VIX, volatility index, is above 30, where its been for almost 4 months.

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