Wednesday, January 25, 2012

Markets sllide on prolonged Greek debt negotiations

Dow dropped 56, decliners over advancers 4-3 but NAZ gained 12 on strong Apple (AAPL) earnings.  The Financial Index fell a faction to 190.

The MLP & REIT indices barely budged, similar to junk bond funds & Treasuries.  Oil pared losses after a gov report showed demand rose the most in more than 2 months.  Gold retreated for a 2nd day as investors await the outcome of a Federal Reserve meeting.

JPMorgan Chase Capital XVI (AMJ)

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CLH12.NYM...Crude Oil Mar 12...97.83 ...Down 1.12  (1.1%)

GCF12.CMX...Gold Jan 12.......1,668.20 ...Up 4.00  (0.2%)

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  • A view of a house for sale is seen in Los Angeles in this February 24, 2010 file photo.  REUTERS/Mario Anzuoni/Files
Photo;   Yahoo

Pending sales of existing US homes fell more than expected in Dec, pointing to a moderation in home sales after recent hefty gains.  The National Association of Realtors' Pending Home Sales Index (based on contracts signed in Dec) dropped 3.5% to 96.6 after surging to a 1½ high in Nov.  The forecast was for for sales to fall 1.0%.  Pending sales lead existing home sales by a month or 2.  In 2011, pending contracts were up 5.6% (not saying much considering the dismal base).  However a recovery may be emerging in the housing market, home resales have risen for 3 straight months.

Pending Sales of U.S. Existing Homes Fell in December From a 19-Month High

ECB Said to Remain Opposed to Losses on Its Greek Debt

German debt meter
Photo:   Bloomberg

A spokesman for the German gov rejected suggestions that the ECB take losses on its Greek debt holdings, backing the ECB in a dispute with the IMF.  Can you spell, "uh-oh?"  “I can’t imagine that European politicians would allow third parties to make such an indecent claim on our central bank,” Michael Meister, the deputy floor leader for the ruling party said. “That contradicts our philosophy.”  While the ECB faces pressure to join private-sector investors in accepting losses on Greek debt, the central bank sees any participation as risking damaging confidence in the institution.  The debt was acquired for monetary policy purposes & the ECB is firmly opposed to any restructuring.  Christine Lagarde, IMF’s managing director, said that European govs & other public holders of Greek debt may have to increase support if private creditors don’t go far enough.  ECB President Draghi said last week that the ECB is “not party” to ongoing discussions between the Greek gov & the private sector.  The ECB is in talks regarding a potential swap of its Greek bonds that would ease the country’s debt load & avoid losses at the central bank.  Greece hopes for a debt swap by this weekend, whatever that means.  Months ago I said the Greek drama plays on & it remains dead in the water!

  • <p>               FILE - In this Jan. 20, 2012 file photo, a Boeing 787 comes in for a landing at McConnell Air Force Base in Wichita, Kan. Fourth-quarter profits at Boeing jumped 20 percent as it delivered more planes. The strength in its commercial airplane unit helped to offset a flat quarter in defense.  (AP Photo/The Wichita Eagle, Travis Heying, File)
Photo:   Yahoo

Quicker deliveries of commercial airplanes helped Boeing, a Dow stock, report a 20% jump in Q4 profits & offset sluggish growth in its defense business. Q4 EPS was $1.84, which didn't include a tax benefit of 52¢, & handily beat expectations of $1.  Revenue was $19.6B, also better than expected.  128 commercial planes during were delivered, up from 116 last year.  Profits from commercial planes jumped 56% & revenue rose 31%.  Profits from defense rose 6% & revenue rose 4%.  BA said defense revenue will fall 5% in 2012.  EPS for 2012 was guided at $4.05-$4.25, which compares with a $4.90 projection by analysts. Not counting 83¢ in higher-than-expected pension expense & other one-time items, BA expects an adjusted profit of $5.06-$5.26.  Revenue was forecast at $78B-$80B.  It plans to deliver 585-600 commercial planes this year, up from 477 last year.  It delivered 3 of its new 787s last year & 9 of its new 747-8 superjumbo jets. Revenue from commercial planes will grow at least 31%in 2012. The stock fell $2.23 (3%).

Boeing Company (The) (BA)

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AAPL had a super qtr & the stock jumped $26 (6%).  It's basically an iPhone & iPad company, products which didn't exist in 2000.  Now they're global giants, although they face growing competition from Android by Google (GOOG).  The rest of the earnings news is mediocre.  The State of the Union speech did not inspire buyers & the Greek debt mess is going nowhere while the clock is ticking.  The FOMC meeting is getting little attention.  Unless QE3 is announced, the press release will only repeat what has already been said many times.

Dow Industrials

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