Thursday, January 19, 2012

Markets rise on improved bank earnings

Dow added 45, advancers over decliners 2-1 & NAZ was up 18.  The Financial Index rose 1+ to the 189s, matching the highs in late Oct.

The MLP index was up a fraction in the 393s (just below its recent record high of 396) & the REIT index rose 1+ to the 239s (a high since early Aug).  Junk bond funds were a tad higher while Treasuries slipped, taking the yield on the 10 year Treasury near 2%.  Oil drifted lower but remained above $100.  Gold fell $5 on profit taking.

JPMorgan Chase Capital XVI (AMJ)

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CLG12.NYM...Crude Oil Feb 12...100.04 ...Down 0.55  (0.6%)

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The € strengthened to a 2 week high ($1.29 vs a low of $1.27) as Spain raised more than its maximum target at a debt sale, boosting optimism the sovereign-debt crisis is being contained.  But Greece is headed into a 2nd day of talks with private creditors to reach an accord on lowering its debt levels.

Euro countries won't increase support for Greece if it fails to secure a bond-swap deal with private creditors.  Foreign Minister Venizelos's remarks came hours before he held a 2nd day of talks with banking negotiators to reach a deal aimed at slashing the country's debt by €100B ($130B) as Greece faces a renewed threat of defaulting on its debts with a €14.5B repayment looming in 2 months.  "If there is a (financing) gap, this would have to be covered by a larger contribution from the official sector — that means the eurozone countries, directly or indirectly. And at this point, I do not see any willingness or readiness to increase that contribution," Venizelos said.  "So there must be no gap, and the Private Sector Involvement is very important."  Talks between the gov & representatives of private investors broke down last Fri amid disagreements over the interest rate to be paid for the new, lower-valued bonds.  Talks restarted Wed with a new proposal, including on interest rates. The IIF, representing private bondholders, now suggests an interest rate below 4% that increases gradually until 2020.  How high the interest rate would go was not specified.

  • EBay sales & profit topped estimates, buoyed by a campaign to promote its expanded retail offerings & broader use of the PayPal online-payments service.  Q4 revenue rose 35% to $3.38 B, beating the forecast of  $3.32B.  Profit excluding certain items was 60¢, compared with 57¢ forecasted.  CEO Donahoe boosted spending for marketing 25% last year & upgraded technology to lure back users who defected to rivals.  EBay is also getting a lift as PayPal challenges traditional payment systems by persuading a larger pool of shoppers to use it more often & for bigger purchases.  The company benefited from a 15% gain in total holiday e-commerce spending, which rose to a record $37.2B.  At PayPal, its fastest-growing division, revenue rose 28% & registered users jumped to 106M.  The unit is expanding its roster of merchant partners, taking aim at Visa (V) & MasterCard (MA).  PayPal’s mobile payment volume will rise to $7B, up from $4B.  The stock rose 1.17 (4%).

    EBay Beats Fourth-Quarter Estimates on Holiday Sales, PayPal Unit’s Growth

    eBay Inc. (EBAY)

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    Consumer Prices in U.S. Little Changed

    Photo:   Bloomberg

    The CPI was little changed in Dec for a 2nd month as stores cut prices to boost holiday sales & fuel expenses fell.  The unchanged reading, from the Labor Dept, compared with a forecast of a 0.1% gain.  Excluding food & fuel costs, the core rose 0.1% (as projected).  Consumer prices increased 3% in the 12 months ended in Dec, the biggest annual gain since 2007.

    Consumer Prices in U.S. Little Changed in December as Fuel Costs Decreased

    Stocks had a tepid rise given fairly good earnings by banks & favorable economic reports.  I sense a lot of analysts are upgrading their forecasts for the new year (like they did a year ago).  There is talk about much more easing by the Federal Reserve, maybe coming within a week.  With the economy doing fairly well, not sure what it good it will do besides raising stock prices.  Housing needs help the most & record low mortgage rates are not bringing out buyers.  Dow is up 400 YTD with tailwinds even though there are worries, starting with Greece.  But the bulls are in charge.  What can I say?

    Dow Industrials

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