Wednesday, November 16, 2011

Markets vacillate, awaiting developments in Europe

Dow fell fell 40 (but off the lows which took it below 12K), decliners ahead of advancers 2-1 & NAZ was off 6.  Bank stocks were weak,but again, off the early morning lows.  The Financial Index has been going sideways in the 170s for more than a month.

S&P 500 Financials Sector Index

Value 173.69 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change     -1.20    (-0.7%)

The MLP & REIT indices were only fractionally changed & junk bond funds were about even along with Treasuries.  Oil cracked thru $100 ( 6 month high) while gold took a tumble.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLZ11.NYM....Crude Oil Dec 11...101.60 ...Up 2.23  (2.2%)

GCX11.CMX...Gold Nov 11.......1,777.50 ...Down 4.20  (0.2%)

Click below for the latest daily market update:

Dell Misses Sales Estimates

Michael Dell
Photo:   Bloomberg

Dell is likely to be hampered for months by an industry-wide shortage of storage drives resulting from the recent flooding in Thailand.  It predicted full-year revenue near the low end of the guidance issued in Aug, which called for revenue growth of 1-5% over 2010 & was in turn a reduction from a previous forecast because of the uncertain economy, as well as the disk drive shortage.  The shortages come as the personal computer industry already is dealing with decreased demand.  Sales have slowed, particularly in the US & Europe, because debt & unemployment fears & the growing popularity of tablet computers have led many consumers delay replacing PCs.  Q3 EPS rose 9% though revenue remained flat from last year as DELL continued pruning less profitable parts of its business.  EPS was 49¢, above 42¢ in 2010.  Excluding one-time items, EPS was 54¢, 8¢ higher than what was expected.  Revenue was flat at $15.4B, below $16.2B expected.  Revenue from large corps rose 4% to $4.5B, while revenue from consumers fell 6% to $2.8B.  Revenue from the public sector fell 2% to $4.4B & revenue from small-medium-sized businesses inched up 1% to $3.7B.  The stock fell 35¢.

Dell’s Sales Miss Estimates as Company Sidesteps Low-End PCs

DELL   Dell Inc.

  • <p>               This Nov. 15, 2011 photo, shows customers outside a Target store, in Miami. Target Corp. is reporting a 3.7 percent increase in third-quarter profits Wednesday, Nov. 16, 2011, helped by solid spending and improvement in its credit card business. (AP Photo/Wilfredo Lee)
Photo:   Yahoo

Target, a Dividend Aristocrat, reported a 3.7% increase in Q3 profits, helped by solid spending & improvement in its credit card business.  EPS was 82¢, ahead of 74¢ last year.  Revenue rose 5.4% to $16B but analysts were expecting 74¢ on revenue of $16.3B.  Revenue at stores opened at least a year rose 4.3% in Q3. "We're very pleased with our third-quarter financial results," said CEO Gregg Steinhafel.  "We're confident that we have the right strategy and team in place to drive continued strong performance this holiday season and well into the future."  TGT took a hit when the economy went into free fall because about 40% of sales come from essentials such as groceries.  But sales have rebounded as its expanded its offerings of food & emphasized its low prices in advertising.  It's also wooing shoppers with a 5% discount program launched in Oct 2010 for customer who pay with TGT branded cards.  Q3 average receivables for the credit card segment declined 9.9% to $6.2B in 2011 from $6.9B last year.  Bad debt expense was $40M, down from $110M in 2010.  TGT expects EPS for Q4 to be $1.43-$1.53 (analysts expect $1.47).  The stock gained 66¢.

TGT  Target Corp.

  • <p>               Italy's premier-designate Mario Monti speaks to the media after finishing his meetings with Italian political leaders and civil society organizations' representatives at the Senate, in Rome, Tuesday, Nov. 15, 2011. Monti will submit his list for a new government to the Italian president Giorgio Napolitano on Wednesday. (AP Photo/Gregorio Borgia)
Mario Monte
Photo:   Yahoo

Former European Union Commissioner Mario Montiwill lead an unelected gov & serve as finance minister in a bid to prevent the euro area’s 3rd- biggest economy from succumbing to the debt crisis.  Restoring confidence in Italy's financial future is crucial because it would be too expensive for the eurozone to rescue.  A debt default by Rome would threaten the € & shake the global economy.  Parties that have pledged absolute support for Monti to keep Italy from going down the disastrous path of debt-plagued Greece voiced optimism.  A Monti government is "an historic and significant turn of events," said Francesco Rutelli, a leader of a small, centrist grouping, who said his forces will give the economist "carte blanche."  "We're not asking anything from him, but we're asking the big parties to give him strength" to carry out the reforms, Rutelli said.  Rutelli predicted the new gov would win a confidence vote on tomorrow in the Senate & go on to last until the end of the legislature in spring 2013.  "I hope so," Rutelli said, because "the economic crisis won't be solved in a brief time."  He claimed Italians were behind Monti, noting the popularity of an anagram of Mario Monti's name — "rimontiamo," which in Italian means "let's make a comeback."  Good luck Italy!

Monti to Take Role of Finance Minister in Italian Government He Will Lead

This is turning out to be another day when the markets slosh around. The politicos in DC are trying to work out a solution to the the massive deficits that the gov is running & the deadline is about a week away.  No solution means spending cuts will kick in, which could get ugly.  Chances are they will come up with a Scotch-Tape approach which is just good enough to limp along.  The market will likely accept that, but that doesn't say much for market strength.  Dow would like to hold above the 12K floor after holding near 12K for a few weeks.  But it won't take much selling for it to crash thru.

Dow Jones Industrial Average

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