Dow rose 32, advancers ahead of decliners 4-3 & NAZ went up 12. The Financial Index slipped fractionally to the 208s. The MLP index was up a fraction in the 394s & the REIT index inched up to 260, a new high since late 2008. Junk bond funds & Treasuries were little changed. Oil & gold also barely moved.
Photo: Yahoo
The US economy grew more slowly in Q1 as govs spent less & businesses cut back on investment. However consumers spent at the fastest pace in more than a year. The result suggests that the economy will continue to expand, slowly but steadily. The Commerce Dept estimated that the economy grew at an annual rate of 2.2% in Q1, compared with a 3% pace in Q4 2011. But growth is expected to rebound to around 3% for all of 2012 as stronger job growth spurs more consumer spending. Consumer spending accelerated to an annual rate of 2.9% from continued of growth in auto purchases. But the disappointing GDP figure adds to doubts about the pace of job creation. The 2.2% growth rate is associated with a gain of only 100K jobs a month. Back to so-so news on the economy.
Growing concerns that Spain will have to provide further fiscal support to the banking sector as the economy contracts prompted S&P to cut its sovereign credit rating to BBB+ from A (hardly a surprise). Spain's short-term rating was lowered to A-2 from A-1, while the outlook on the long-term rating is negative. The nation's 10-year borrowing costs have climbed about 70 basis points this year as Prime Minister Rajoy struggles to convince investors he can control public finances with soaring unemployment & a contracting economy. Banks threaten to disrupt his efforts as bad loans reach the highest levels in almost 2 decades. "Spain's budget trajectory will likely deteriorate against a background of economic contraction," S&P said. "At the same time, we see an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector. As a consequence, we believe there are heightened risks that Spain's net general govern debt could rise further." This is the 2nd downgrade of Spain by S&P this year. The firm cut Spain along with France & other European nations on Jan 13. Since then, the yield on Spain's 10-year bonds have risen to 5.83% from 5.22%. Spain's yields are up from about 4.13% in Jan 2009, when S&P stripped it of its top AAA rating. This is another looming European debt disaster.
Spain crisis deepens with jobless rise, downgrade AP
Photo: Yahoo
Procter & Gamble, a Dow stock & Dividend Aristocrat, is rolling back some price increases & focusing on introducing new products in developed markets as it seeks to reignite market share growth. Guidance was also below expectations for the fiscal year as it its Q3 net income dropped 16%, hurt by restructuring charges & continued high costs for items like diesel fuel & packaging. PG said its overall market share slipped 0.2 points, including a decline of 0.6 points in North America, which has seen stagnant growth. About 55% of its categories lost market share. PG has focused on emerging markets for more growth & says emerging markets will account for 37% of its annual sales by the end of the fiscal year. P&G said it is rolling back prices in six categories & price controls introduced in Venezuela sent prices down in that region 25%, hurting EPS by 3¢. But most price increases have stuck. "We do not currently expect a broad scale reversal of the price increases we implemented over the past five quarters or those we're implementing right now," said CFO Moeller. EPS was 82¢, below 96¢ last year. Excluding costs related to a cost-cutting plan, EPS amounted to 94¢, a penny per share higher than expected. Revenue rose 2% to $20.2B versus a forecast of $20.35B. The stock dropped $2.15.
P&G Cuts Full-Year Earnings Forecast
Expectations for the GDP report were modest & that's how it came out. Consumers are the biggest part of the economy & they are contributing to growth. But other parts are not doing so well, i.e. govs & inventory building. The Spanish debt mess is getting uglier with little hopes of it being resolved soon. Another bailout will be needed & eventually the ECB will run out of money. But Dow is feeling good & only a few points away from its highs since the financial meltdown in 2008. Some traders are away for a long weekend, PM trading will probably be quiet.
JPMorgan Chase Capital XVI (AMJ)
Treasury yields:
U.S. 3-month | 0.086% | |
U.S. 2-year | 0.262% | |
U.S. 10-year | 1.940% |
| CLM12.NYM | ...Crude Oil Jun 12 | ...104.25 | .... 0.30 | (0.3%) |
| GCK12.CMX | ...Gold May 12 | .......1,664.50 | ... 4.90 | (0.3%) |
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The US economy grew more slowly in Q1 as govs spent less & businesses cut back on investment. However consumers spent at the fastest pace in more than a year. The result suggests that the economy will continue to expand, slowly but steadily. The Commerce Dept estimated that the economy grew at an annual rate of 2.2% in Q1, compared with a 3% pace in Q4 2011. But growth is expected to rebound to around 3% for all of 2012 as stronger job growth spurs more consumer spending. Consumer spending accelerated to an annual rate of 2.9% from continued of growth in auto purchases. But the disappointing GDP figure adds to doubts about the pace of job creation. The 2.2% growth rate is associated with a gain of only 100K jobs a month. Back to so-so news on the economy.
Growing concerns that Spain will have to provide further fiscal support to the banking sector as the economy contracts prompted S&P to cut its sovereign credit rating to BBB+ from A (hardly a surprise). Spain's short-term rating was lowered to A-2 from A-1, while the outlook on the long-term rating is negative. The nation's 10-year borrowing costs have climbed about 70 basis points this year as Prime Minister Rajoy struggles to convince investors he can control public finances with soaring unemployment & a contracting economy. Banks threaten to disrupt his efforts as bad loans reach the highest levels in almost 2 decades. "Spain's budget trajectory will likely deteriorate against a background of economic contraction," S&P said. "At the same time, we see an increasing likelihood that Spain's government will need to provide further fiscal support to the banking sector. As a consequence, we believe there are heightened risks that Spain's net general govern debt could rise further." This is the 2nd downgrade of Spain by S&P this year. The firm cut Spain along with France & other European nations on Jan 13. Since then, the yield on Spain's 10-year bonds have risen to 5.83% from 5.22%. Spain's yields are up from about 4.13% in Jan 2009, when S&P stripped it of its top AAA rating. This is another looming European debt disaster.
Spain crisis deepens with jobless rise, downgrade AP
Procter & Gamble, a Dow stock & Dividend Aristocrat, is rolling back some price increases & focusing on introducing new products in developed markets as it seeks to reignite market share growth. Guidance was also below expectations for the fiscal year as it its Q3 net income dropped 16%, hurt by restructuring charges & continued high costs for items like diesel fuel & packaging. PG said its overall market share slipped 0.2 points, including a decline of 0.6 points in North America, which has seen stagnant growth. About 55% of its categories lost market share. PG has focused on emerging markets for more growth & says emerging markets will account for 37% of its annual sales by the end of the fiscal year. P&G said it is rolling back prices in six categories & price controls introduced in Venezuela sent prices down in that region 25%, hurting EPS by 3¢. But most price increases have stuck. "We do not currently expect a broad scale reversal of the price increases we implemented over the past five quarters or those we're implementing right now," said CFO Moeller. EPS was 82¢, below 96¢ last year. Excluding costs related to a cost-cutting plan, EPS amounted to 94¢, a penny per share higher than expected. Revenue rose 2% to $20.2B versus a forecast of $20.35B. The stock dropped $2.15.
P&G Cuts Full-Year Earnings Forecast
Procter & Gamble Company (The) (PG)
Expectations for the GDP report were modest & that's how it came out. Consumers are the biggest part of the economy & they are contributing to growth. But other parts are not doing so well, i.e. govs & inventory building. The Spanish debt mess is getting uglier with little hopes of it being resolved soon. Another bailout will be needed & eventually the ECB will run out of money. But Dow is feeling good & only a few points away from its highs since the financial meltdown in 2008. Some traders are away for a long weekend, PM trading will probably be quiet.
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