Dow went up 23, advancers over decliners 2-1 & NAZ had a better day off a lower base, up 18. The Financial Index was flattish in the 208s as increased regulation weighed on the stocks. The MLP index was up 2 to the 396s (up 15 in 3 weeks) & the REIT index rose almost 2 to the 261s, a new high since the pre-Lehman days. Junk bond funds were mixed to higher & Treasuries rose. Oil & gold had minor gains.
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The largest US banks told the Federal Reserve (FED) that a limit on their credit exposure is unnecessary & “fundamentally flawed.” The FED’s proposed rules on single-counterparty credit limits would have a negative impact on banks, their customers & the US economy. In Dec the FED proposed tougher standards to supervise the largest banks whose collapse could jeopardize the economy by setting a limit of 10% for credit risk between a company considered systemically important & counterparty when each has more than $500B in total assets. The proposed rules would set triggers for regulatory enforcement for systemic firms & require boards of directors to oversee & approve plans for limiting liquidity risk. The 10% credit risk limit is more restrictive than that contained in the Dodd-Frank financial overhaul law, which allowed for a 25% limit. The focus of the complaints are on the proposal on the single-counterparty exposure limit. They argue it goes too far without justification from the FED for its change. Further, they disagree with the central bank on its proposed formula for determining counterparty exposure. More gov interference is not a plus in any market.
Largest U.S. Banks Resist Federal Reserve’s Credit Limits
Photo: Yahoo
North America propped up Ford profits in Q1, which otherwise took a beating from plummeting European sales & higher taxes. Net income fell 45% from a year earlier (although Q1 2011 was its best Q1 since 1998). However that beat expectations & its outlook was upbeat. Ford expects improvement in H2 as more plant capacity opens. It's also hoping a new plan to offer lump-sum pension payments to retirees will wipe $M in liabilities off its books. The first payments will be offered to 90K US white-collar retirees & former employees, the largest such offer in US history. EPS was 35¢, down from 61¢ last year. Nearly half the decrease was due to paying a higher tax rate. At the end of last year, the company moved tax credits & other assets back onto its books, after moving them off in 2006 when it wasn't making a profit. Ford is now paying a 32.5% tax rate, compared with 8% a year ago. Revenue fell 2% to $32.4B. Without one-time items, including buyouts of almost 2K US. factory workers, EPS was 39¢, better than predictions of 35¢ on revenue of $32.3B. Ford lost money in Europe, where sales fell 60K vehicles, & Asia, where sales fell 25K as China's appetite for new cars slowed. But in North America, it recorded the highest quarterly profit since 2000 with pretax profit rising 17% to $2.1B (even as its US market share fell to 15.2%, from 16% last year). The company cut production costs & is making more money on each vehicle because buyers are choosing more expensive options, like its MyFord Touch touch-screen dashboard system. TrueCar.com said US buyers paid an average of $31.7K for Ford cars & trucks in Q1, up more than $1.2K from last year. The stock fell 26¢.
Ford Profit Falls on Losses in International Operations
Photo: Bloomberg
Stellar quarterly results for Amazon are helping convince skeptics intense spending is beginning to pay off for an Internet retailer trying to transform itself into a technology company. CEO Jeff Bezos has tried to convince investors to stick with the company for the long term as it flirted with losses in recent qtrs. He is trying to transform Amazon from an online version of a big-box retailer into a provider of technology services. But some argue that its valuation over 70 times forward earnings is justified because AMZN is on track for enormous margin expansion as it expands into more-profitable services from hosting websites in the cloud to providing an online marketplace connecting buyers & sellers. Seems like I've heard that line of reasoning before. Amazon is trying to be "not a bookseller or a retailer, but a company that uses technology & (now) its scale to transform whole value chains" from retail to publishing & video distribution. Heavy spending has pressured profit margins in recent qtrs. But in Q1, gross margins rose 120 basis points to about 24%. That surprise increase in gross margins prompted a flurry of price target increases by analysts. It is believed that faster growth at its online marketplace business & cloud unit Amazon Web Services, along with sales of digital goods, drove the improvement in margins. Amazon's 34% revenue increase to $13.2B also beat expected revenue of $12.9B. During Q1, 9 of the 10 top-selling products on Amazon.com were digital products, including Kindle e-books, movies, music & apps. Analysts at a bunch of firms raised their price target on the stock & one upgraded it to "buy" from "neutral. The stock shot up $31 to $227.
Amazon’s First-Quarter Revenue Tops Estimates on Kindle Sales; Shares Jump
Markets took a bit of a breather after 3 up days. Dow inched over its 2012 high of 13,264 by 2 but couldn't hold that level. Earnings continue to be somewhat muddy. Starbucks (SBUX) fell $3 on a report that was good, but not good enough. We've seen a lot of that in this earnings season. Soggy European business hurt, another common theme in Q1 reports. Dow is up 500 in the last 2½ weeks, I guess it was more impressed with earnings than I was. Next week will be the test to see if breaks thru to new 2012 highs.
JPMorgan Chase Capital XVI (AMJ)
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Treasury yields:
U.S. 3-month | 0.086% | |
U.S. 2-year | 0.258% | |
U.S. 10-year | 1.930% |
| CLM12.NYM | Crude Oil Jun 12 | 104.94 |  0.39 (0.4%) |
The largest US banks told the Federal Reserve (FED) that a limit on their credit exposure is unnecessary & “fundamentally flawed.” The FED’s proposed rules on single-counterparty credit limits would have a negative impact on banks, their customers & the US economy. In Dec the FED proposed tougher standards to supervise the largest banks whose collapse could jeopardize the economy by setting a limit of 10% for credit risk between a company considered systemically important & counterparty when each has more than $500B in total assets. The proposed rules would set triggers for regulatory enforcement for systemic firms & require boards of directors to oversee & approve plans for limiting liquidity risk. The 10% credit risk limit is more restrictive than that contained in the Dodd-Frank financial overhaul law, which allowed for a 25% limit. The focus of the complaints are on the proposal on the single-counterparty exposure limit. They argue it goes too far without justification from the FED for its change. Further, they disagree with the central bank on its proposed formula for determining counterparty exposure. More gov interference is not a plus in any market.
Largest U.S. Banks Resist Federal Reserve’s Credit Limits
North America propped up Ford profits in Q1, which otherwise took a beating from plummeting European sales & higher taxes. Net income fell 45% from a year earlier (although Q1 2011 was its best Q1 since 1998). However that beat expectations & its outlook was upbeat. Ford expects improvement in H2 as more plant capacity opens. It's also hoping a new plan to offer lump-sum pension payments to retirees will wipe $M in liabilities off its books. The first payments will be offered to 90K US white-collar retirees & former employees, the largest such offer in US history. EPS was 35¢, down from 61¢ last year. Nearly half the decrease was due to paying a higher tax rate. At the end of last year, the company moved tax credits & other assets back onto its books, after moving them off in 2006 when it wasn't making a profit. Ford is now paying a 32.5% tax rate, compared with 8% a year ago. Revenue fell 2% to $32.4B. Without one-time items, including buyouts of almost 2K US. factory workers, EPS was 39¢, better than predictions of 35¢ on revenue of $32.3B. Ford lost money in Europe, where sales fell 60K vehicles, & Asia, where sales fell 25K as China's appetite for new cars slowed. But in North America, it recorded the highest quarterly profit since 2000 with pretax profit rising 17% to $2.1B (even as its US market share fell to 15.2%, from 16% last year). The company cut production costs & is making more money on each vehicle because buyers are choosing more expensive options, like its MyFord Touch touch-screen dashboard system. TrueCar.com said US buyers paid an average of $31.7K for Ford cars & trucks in Q1, up more than $1.2K from last year. The stock fell 26¢.
Ford Profit Falls on Losses in International Operations
Ford Motor Company (F)
Stellar quarterly results for Amazon are helping convince skeptics intense spending is beginning to pay off for an Internet retailer trying to transform itself into a technology company. CEO Jeff Bezos has tried to convince investors to stick with the company for the long term as it flirted with losses in recent qtrs. He is trying to transform Amazon from an online version of a big-box retailer into a provider of technology services. But some argue that its valuation over 70 times forward earnings is justified because AMZN is on track for enormous margin expansion as it expands into more-profitable services from hosting websites in the cloud to providing an online marketplace connecting buyers & sellers. Seems like I've heard that line of reasoning before. Amazon is trying to be "not a bookseller or a retailer, but a company that uses technology & (now) its scale to transform whole value chains" from retail to publishing & video distribution. Heavy spending has pressured profit margins in recent qtrs. But in Q1, gross margins rose 120 basis points to about 24%. That surprise increase in gross margins prompted a flurry of price target increases by analysts. It is believed that faster growth at its online marketplace business & cloud unit Amazon Web Services, along with sales of digital goods, drove the improvement in margins. Amazon's 34% revenue increase to $13.2B also beat expected revenue of $12.9B. During Q1, 9 of the 10 top-selling products on Amazon.com were digital products, including Kindle e-books, movies, music & apps. Analysts at a bunch of firms raised their price target on the stock & one upgraded it to "buy" from "neutral. The stock shot up $31 to $227.
Amazon’s First-Quarter Revenue Tops Estimates on Kindle Sales; Shares Jump
Amazon.com, Inc. (AMZN)
Markets took a bit of a breather after 3 up days. Dow inched over its 2012 high of 13,264 by 2 but couldn't hold that level. Earnings continue to be somewhat muddy. Starbucks (SBUX) fell $3 on a report that was good, but not good enough. We've seen a lot of that in this earnings season. Soggy European business hurt, another common theme in Q1 reports. Dow is up 500 in the last 2½ weeks, I guess it was more impressed with earnings than I was. Next week will be the test to see if breaks thru to new 2012 highs.
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