Wednesday, March 21, 2012

Markets meander after strong rally in Q1

After being in the red all day, Dow made an attempt to rally but there was selling in the last hour.  Dow lost 45, advancers over decliners 5-4 & NAZ inched up 1.  Banks stocks rested, the Financial Index fell 1 to 213.

The MLP index was even  & the REIT index was off fractionally to the 251s.  Junk bond funds were mixed but Treasuries rallied, bringing the yield on the 10 year Treasury back below 2.3%.  Oil & gold were little changed.

JPMorgan Chase Capital XVI (AMJ)

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CLK12.NYM...Crude Oil May 12...107.19 ...Up 1.12  (1.1%)

Live 24 hours gold chart [Kitco Inc.]

  • <p>               Federal Reserve Board Chairman Ben Bernanke, right, and Treasury Secretary Timothy Geithner appear on Capitol Hill in Washington, Wednesday, March 21, 2012 to testify before the House Oversight and Government Reform Committee to examine the European debit crisis.  (AP Photo/J. Scott Applewhite)
Photo:    Yahoo

Ben Bernanke told a congressional panel that US banks could withstand shocks from Europe, even if the debt crisis there significantly worsened.  The US banking system remains exposed to Europe, but stress tests found most banks could weather a severe recession triggered by the debt crisis, Bernanke said.  "Although a blow up in Europe would be very costly to the American economy, I think we are in much better shape to meet those challenges than we were a few years ago," Bernanke told the committee.  Bernanke said US financial firms & money market funds have had time to adjust their exposures & hedge their risks.  While those exposures have been reduced, he said that roughly 35% of assets in US prime money market funds are European holdings.  He also noted developments that have minimized the danger overseas by pointing to bailout support that European leaders provided in exchange for deep budget cuts by the Greek gov & highlighted the agreement by private creditors to reduce Greece's debt.  Treasury Secretary Tim Geithner said the administration will not ask Congress for more money to help debt-laden European countries.  Congressional testimony rarely brings new thoughts to the table.


Photo:   Bloomberg

Hewlett Packard, a Dow stock, explained the change of its business model.  It will merge the printer & PC businesses, combining 2 of its largest divisions as CEO Meg Whitman tries to jump-start growth.  The new unit, with $65B in sales, will account for half of the company's revenue & will be headed by PC chief Todd Bradley.  The company is also planning to unify other functions, such as marketing & communications, across the business, to promote a stronger brand & improve efficiency.  "The result will be a faster, more streamlined, performance-driven HP that is customer-focused and poised to capitalize on rapidly shifting industry trends," Whitman said.  HPQ previously had a combined PC-printing unit under former CEO Carly Fiorina, but the 2 were split under the regime of Mark Hurd, who was ousted in 2010.  Last year HPQ considered a proposal to sell or spin off its PC systems group, following the company's announcement that it would get out of the business of making tablets with the failure of its TouchPad.  Hopefully this change will get the company back on the right path, although the PC business is maturing rapidly.  The stock lost 52¢.

Hewlett-Packard Merges PC, Print Units Under Bradley’s Lead

Hewlett-Packard Company (HPQ)

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Greece is beating some of its debt-reduction targets.  Its budget deficit for the first 2 months of 2012 had shrunk by more than half compared with the same period last year.  The deficit was €495M ($655M) in Jan & Feb this year, significantly lower than the €879M target set out in the budget & less than half the €1.1B in the same period last year.  The gov is expected to call general elections in a few weeks after successfully negotiating a massive debt deal for additional rescue loans from eurozone countries & the IMF & debt restructuring with banks & other private bond holders.  Conservatives are leading in opinion polls but have suffered a drop in popularity in recent weeks, stung by their participation in the governing coalition & the emergence of a splinter party.  A bit of goods news when that has been difficult to find in recent times.

Greek state budget deficit shrinks AP

Hartford to Halt Annuity Sales Following Paulson Pressure

Photo:    Bloomberg

Hartford Financial Services is exiting the annuity business so it can focus on its property & casualty insurance, group benefits & mutual funds.  The company said that it is also be looking to sell or pursue other options for its individual life, retirement plans & broker-dealer Woodbury Financial Services.  It is estimated that HIG could raise $2-3B by selling the businesses.  This comes after a hedge fund manager urged the company to spin off its property & casualty insurance business, saying that it could boost Hartford's value to shareholders by 40-60% because the breaking up would allow management of each new company to focus on what they do best, while making each new company more streamlined.  The stock rose 31¢.

Hartford Financial Services Group, Inc. (The) (HIG)

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The price for gas at the pump keeps rising, going over $3.86.

National Unleaded Average
Current Avg.$3.864$4.001$4.132$4.147$3.283$4.320
Yesterday Avg.$3.846$3.990$4.121$4.142$3.272$4.306
Week Ago Avg. $3.811$3.956$4.087$4.117$3.259$4.288
Month Ago Avg. $3.565$3.700$3.834$3.952$3.123$4.109
Year Ago Avg. $3.547$3.688$3.820$3.934$3.006$3.956

Source:   AAA

Last week, Dow finally charged over 13K in a convincing way.  But since then it has been stumbling.  This is shaping up as the best Q1 in 14 years & that follows an astounding 33 month rally which gives a double in 3 years.  The news is bland, to say the least, not good enough to bring out buyers.  But after 3 down days this week, Dow is down only 108, less than 1%.  Earnings season is a couple of weeks away & the early vibes are negative.

Dow Industrials

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