Friday, June 8, 2012

Markets waver on growing Spanish debt concerns

Buyers are slowly coming back into the markets took Dow up 8, advancers just ahead of decliners & NAZ gained 8.  The Financial Index was flat in the 187s.

The MLP index dropped 2 to 362 & the REIT index rose 2 to 251.  Junk bond funds eased back but Treasuries rose on increased worries over euro debts.  Oil & gold pulled back.

JPMorgan Chase Capital XVI (AMJ)

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CLN12.NYM....Crude Oil Jul 12...82.76 ....Down 2.06  (2.4%)

GCM12.CMX...Gold Jun 12....1,578.20 ...Down 8.40  (0.5%)

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  • <p>               Spain's Prime Minister Mariano Rajoy, speaks during a press conference after a meeting with Netherlands' Prime Minister Mark Rutte at the Moncloa Palace, in Madrid, Thursday, June 7, 2012. Spain's Prime Minister appeared Thursday to have abandoned his insistence that the country's troubled banking sector will not need an external bailout, as for the first time he avoided ruling out such an option.(AP Photo/Daniel Ochoa de Olza)
Photo:   Yahoo

Spain says it could decide this month on whether to request a bailout for its troubled banking sector.  Deputy Prime Minister Santamaria said the gov will not act until receiving evaluations from the IMF on Mon & then 2 independent auditors Spain has hired which are expected to be posted on its website by June 2.  So far, no decision on a bailout has been taken.  Commenting on reports that hat eurozone finance ministers will hold a conference call tomorrow about Spain, he said that "no meeting is planned" but would not confirm or deny whether some kind of contact would take place.  The country’s credit rating was cut 3 grades by Fitch yesterday after Prime Minister Rajoy said for the first time that he is discussing with European leaders how to help Spanish banks.  Bailout #4 in the Eurozone is coming because the economy is not going to turn around over the weekend..

Rajoy Holds Bank Talks With EU as Fitch Downgrades Spain

U.S. Trade Gap

Photo:   Bloomberg

The US trade deficit shrank in Apr, but only because a big drop in imports offset the first decline in exports in 5 months.  The Commerce Dept said that the trade deficit narrowed 4.9% in Apr to $50B.  Exports, which had hit a record the previous month, fell 0.8% to $183B.  Sales of everything from commercial jetliners to industrial machinery declined.  Imports, which also set a record in Mar, dropped an even faster 1.7% to $233B.  The trade gap remains wide & could weigh on growth in Q2.  A wider trade gap slows growth because it means the US is spending more on foreign-made products than it is taking in from sales of US made goods.  The slip in exports is especially troublesome because it shows the weaker global economy is dampening demand for American-made goods.  Export sales declined to Europe, China & Brazil.  Exports to the 27-nation EU dropped 11% as Europe's debt crisis has worsened in recent months (Europe accounts for almost one-fifth of US exports).  Growth has also slowed in emerging market countries as exports to Brazil fell 8.2$ & the trade deficit with China increased to $24.6B.  So far this year, the trade deficit is running at an annual rate of $603B, up 7.7% from last year's total imbalance of $560B.  This is not good news for the economy.

Trade Gap in U.S. Narrows as Imports Drop More Than Exports

McDonald’s May Sales Trail Estimates on Japan, China Declines

Photo:   Bloomberg

McDonald's, a Dow stock & Dividend Aristocrat, strength in the US & Europe drove up a key revenue figure in May, but warned that economic volatility around the world & rising expenses are pressuring its Q2 results.  Foreign currency translations are now expected to hurt Q2 earnings by 7-9¢.  For May, global sales at stores open at least 13 months rose 3.3%.  The figure was dragged down by results in the Asia-Pacific, Middle East & Africa region, where sales fell 1.7% from a year ago.  But it's working to improve results in the region with locally relevant menu options & "convenience enhancements," such as delivery in some Asian markets.  The drop was offset by a 4.4% jump in the US, where demand for the new blueberry banana walnut oatmeal & Cherry Berry Chiller boosted sales.  In Europe, the figure rose 2.9% driven by gains in the UK, Russia & France, with the company's ongoing restaurant renovations helping improve sales.  YTD, sales at stores open at least 13 months are up 5.6%, which includes a 6.8% jump in the US, a 4.2% jump in Europe & 3.1% increase in the region encompassing Asia Pacific, Middle East & Africa. The stock fell 1.48.

McDonald’s May Sales Trail Estimates on Asia Declines

McDonald's Corporation (MCD)

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Markets are having a quiet day with some traders taking a long weekend.  The Spanish debt mess drones on & is heading for another European bailout.  Greek elections are around the corner.  The US economy is not charging ahead as shown by the trade deficit data.  Growth for GDP in Q2 will not be bland & estimates for EPS at many companies are being reduced.  Dow is up about 350 this week, not impressive considering how oversold it was.

Dow Industrials

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