Friday, February 17, 2012

Markets waver ahead of Greek bailout decision

The Dow was up 45, advancers ahead of decliners 3-2 & NAZ fell 8.  The Financial Index rose 1+ to 199, another new high since late Jul.  The MLP index cooled down a bit with an increase of "only" 1½ to 48, but good enough for a new record close.  The REIT index & junk bond funds were flattish & Treasuries sold off.  Oil continues strong while gold is drifting after its gains in Jan.

JPMorgan Chase Capital XVI (AMJ)

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CLH12.NYM...Crude Oil Mar 12...103.45 ...Up 1.14  (1.1%)

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Index of Leading Economic Indicators in U.S. Climbs 0.4%

Photo:   Bloomberg

The index of leading indicators rose in Jan   The 0.4% increase in the Conference Board’s gauge of the outlook for the next 3-6 months followed a 0.5% rise in Dec, the strongest back-to-back gains.  The median forecast for the leading index was 0.5% & 7 of the 10 indicators contributed to the pickup, helped by a gain in the factory workweek & higher stock prices.

Germany's Chancellor Angela Merkel

Photo:   Bloomberg

Europe is closer to a deal on the €130B ($171B) bailout for Greece.  Germany, the biggest contributor to the rescue, signaled that finance ministers may be ready to back Greece’s 2nd bailout in 2 years when they meet on Feb 20.  Chancellor Merket's gov indicated it aims to avoid splitting the timetable of the aid & a writedown of Greek debt to private bondholders & agree to the deal as one package.  Germany has led pressure on Greece to enforce austerity, stoking recrimination between Europe’s southern countries & northern creditors.  In focus over the weekend will be the role of the ECB as it holds talks with Greece over exempting Greek bonds in national central banks’ investment portfolios from a debt restructuring.  Who really knows what's going on with the Greek debt bailout?

Greek Bailout Deal Nearer After Germany Signals Backing at Feb. 20 Meeting

General Mills lowered is fiscal 2012 adjusted earnings forecast, saying it experienced softer volumes in the US in Dec & Jan.  While General Mills remains one of the most popular food brands in grocery stores, it has struggled with higher costs from ingredients to labor.  As a result, if has raised its prices.  GIS now expects full-year adjusted EPS of $2.53-$2.55, below its prior guidance of $2.59-$2.61.  Analysts are forecasting $2.60.  For fiscal Q3, GIS expects EPS of 54-to 56¢ (similar 56¢ in the prior year).  The stock fell 1.47 & has been weak when the general market rallied in 2012.

General Mills cuts fiscal 2012 adj. profit outlookAP

General Mills, Inc. (GIS)

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Coca-Cola, a Dow stock & now a Double Dividend Aristocrat, raised its quarterly div 8.5% to 51¢ ($2.04 annualized).  It has increased the annual div for 50 consecutive years.

Coca Cola raises dividend to 51 centsAP

Coca-Cola Company (The) (KO)

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Once again, not a lot going on in the markets while waiting for the outcome of bailout II.  Congress is getting serious about passing the tax cut extension & won't wait until the last minute this time.  However, rising gas prices are getting more attention.  Unfortunately the outlook for crude is even higher prices as long as Iran is rattling its sabers.  This will be a long weekend in the US, but the biggies in Europe will be working hard to come up with an agreement on refinancing Greek's debts.  The €, a proxy for the sentiment of what's going on, was even.  Chances are the gut reaction in US markets on Tues will be to rally.

Dow Industrials

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