Dow rose 115, advancers over decliners 5-2 (could have been better) & NAZ was up 29. Bank stock were up after 2 big banks reported (see below) up a fraction in the 187s.
The MLP index rose 2½ after its recent decline & the REIT index was up 2½ to the 236s. Junk bond funds were mixed as were Treasuries. Oil rose for the first time in 4 days as German investor confidence jumped the most on record & as France pushed for faster enforcement of the EU proposed ban on oil imports from Iran. Gold is flying again with all the turmoil in the world's financial markets (up more than $100 this year).
Photo: Yahoo
Citigroup's (C) loan portfolio improved late last year, partly because customers were better about paying down credit card debt. But choppy financial markets hurt its investment banking profits & the bank missed expectations. Profit fell 11% in Q4. Besides making less money on investment banking, the bank lost money because of an accounting rule related to the value of its corp bonds. EPS was 38¢ on revenue of $17.2B, short of 54¢ estimated. Last year it made $1.3B on revenue of $18.4B. At year end, Citi held $33.4B in debt issued by European countries & loans to businesses in countries such as Greece, France, Belgium & Ireland. "Europe remains a dark cloud," John Gerspach, Citi's CFO said. But he added the bank had hedged its bets well & was "highly confident" that the losses would be contained. Its broad intl profile helped results. Business & consumer loans grew 14% to $465B, with most of the growth coming from Latin America & Asia. For all 2011, income was $11.3B on revenues of $78.4B, compared to net income of $10.6B on revenues of $86.6B for the prior year. The stock dropped 1.64 (5%).
Photo: Yahoo
The MLP index rose 2½ after its recent decline & the REIT index was up 2½ to the 236s. Junk bond funds were mixed as were Treasuries. Oil rose for the first time in 4 days as German investor confidence jumped the most on record & as France pushed for faster enforcement of the EU proposed ban on oil imports from Iran. Gold is flying again with all the turmoil in the world's financial markets (up more than $100 this year).
JPMorgan Chase Capital XVI (AMJ)
Treasury yields:
U.S. 3-month | 0.025% | |
U.S. 2-year | 0.217% | |
U.S. 10-year | 1.860% |
| CLG12.NYM | ...Crude Oil Feb 12 | ...99.99 | .... 1.29 | (1.3%) |
| GCF12.CMX | .... | Gold Jan 12 | ......1,650.70 | ... 20.30 | (1.3%) |
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Citigroup's (C) loan portfolio improved late last year, partly because customers were better about paying down credit card debt. But choppy financial markets hurt its investment banking profits & the bank missed expectations. Profit fell 11% in Q4. Besides making less money on investment banking, the bank lost money because of an accounting rule related to the value of its corp bonds. EPS was 38¢ on revenue of $17.2B, short of 54¢ estimated. Last year it made $1.3B on revenue of $18.4B. At year end, Citi held $33.4B in debt issued by European countries & loans to businesses in countries such as Greece, France, Belgium & Ireland. "Europe remains a dark cloud," John Gerspach, Citi's CFO said. But he added the bank had hedged its bets well & was "highly confident" that the losses would be contained. Its broad intl profile helped results. Business & consumer loans grew 14% to $465B, with most of the growth coming from Latin America & Asia. For all 2011, income was $11.3B on revenues of $78.4B, compared to net income of $10.6B on revenues of $86.6B for the prior year. The stock dropped 1.64 (5%).
Citigroup Inc. (C)
Wells Fargo posted record profit for Q4 & a full year that beat estimates as mortgage financing improved. EPS was 73¢, up from 61¢ last year & ahead of the 72¢ estimate. But revenue declined 4% to $20.6B, better than the $20B forecast. For the year, net income climbed 28% to $15.9B. “I’m extremely pleased with Wells Fargo’s performance in 2011,” Wells Fargo CEO Stumpf said, citing growth in deposits & loans. The bank plans on “returning even more capital to our shareholders.” New mortgages rose 35% to $120B from Q3, the biggest US home lender, while dropping 6% from a year earlier. Net interest margin climbed to 3.89% from 3.84% in Q3, but fell short of the 4.16% last year. WFC set aside $2.04B for credit losses & reported $2.64B in net loan writedowns, leading to a reserve release of $600M (adding to earnings). The stock gained 32¢ (1%).
Wells Fargo Posts Record Quarterly Profit, Boosted by Mortgage Lending
Wells Fargo & Company (WFC)
Spanish borrowing costs dropped at auction as investors ignored downgrades by S&P to snap up bonds across Europe. They feel the economic outlook may be improving. Spain paid an average 2.049% to sell 12-month debt compared with 4.05% a month ago. It sold 18-month paper at 2.399%, down from 4.226% last month. The euro region’s bailout fund also sold bonds, with investors bidding for 3.1X the amount available. Europe’s debt crisis has stabilized for the moment even after S&P cut the ratings on 9 euro-region members over the weekend. Bond yields have since slipped in a situation reminiscent of the rally in US Treasuries after S&P downgraded US debt in Aug. The yield on France’s 10-year gov bond has declined 7 basis points to 3.029% since Fri (not really meaningful) & the yield on Spain’s equivalent security has slipped 12 basis points to 5.069%. Conditions for bond investors may have been helped by the ECB decision to pump longer-term emergency liquidity into the financial system. Under the terms, banks can borrow 3-year cash from the ECB at 1% & use it to buy bonds at debt auctions. Unfortunately banks are parking that money.
Spain’s Borrowing Costs Fall at First Auction Since S&P Rating Downgrade
Credit downgrades didn't bother the markets, but they did in Asia. Those sold off on Mon but recovered Tues on hopes easing from China. Its economy expanded at the slowest pace in 10 quarters as Europe's debt crisis curbed export demand & the property market weakened, sustaining pressure to ease monetary policy. ECB buying bonds more aggresively, adds to a sense of better conditions in European debt markets. Bank earnings are not coming in good even though they are being helped by reversing provisions for debt losses (i.e. not ongoing earnings). For what it's worth, Carnival (CCL) dropped $4.76 (14%) after its disaster last week.
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