Monday, June 11, 2012

Markets tumble after Spanish bailout is seen as a temporary fix

Dow sank 142 (closing near the lows), decliners over advancers 4-1 & NAZ was off 48.  Bank stocks led the selling, taking the Financial Index down 3½ to the 186s (where it was on May 30).  

The MLP index slipped pocket change in the 363s & the REIT index fell 5½ to 247.  Junk bond funds were mixed & Treasuries edged higher.  Oil fell on the realization that a short-term fix in Spain won't offer a long-term solution to Europe's debt crisis.  Gold continued sloshing around, under $1600.

JPMorgan Chase Capital XVI (AMJ)

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CLN12.NYMCrude Oil Jul 1282.75 Down 1.35 (1.6%)

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  • <p>               FILE- In this Wednesday, March 7, 2012, file photo, Apple CEO Tim Cook announces a new iPad during an Apple announcement in San Francisco. Apple CEO Tim Cook is expected to show off new iPhone software, updated Mac computers and provide more details on future releases of Mac software when he kicks off the company's annual conference for software developers on Monday, June 11, 2012. (AP Photo/Paul Sakuma)
Photo:   Yahoo

Apple introduced a laptop with a super-high resolution "Retina" display, setting a new standard for screen sharpness.  The new MacBook Pro will have a 15" screen & 4 times the resolution of previous models. AAPL already uses "Retina" displays, with individual pixels too small to be distinguished by the naked eye, in its latest iPhones & iPads where this is a standard feature.  But on the MacBook, it's an expensive upgrade.  The new MacBook will cost $2199 & up, $400 more than the non-Retina MacBook with the same-sized screen.  The new MacBook is part of a general revamp of the personal computer line announced.  The new version of its Mac operating system, Mountain Lion, will go on sale next month for $20.  The update brings features from AAPL phone & tablet software, like the iMessage texting application, to the Mac.  Mountain Lion will also bring dictation to Macs.  Users will be able to input text by talking to the computer, in any program. already a feature on Windows software from Microsoft (MSFT).  The stock fell $9.15 in what has been a bad qtr.

Apple Updates MacBook to Make Laptops Faster Ahead of Microsoft Unveilings

Apple Inc. (AAPL)

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J&J Said to Pay $2.2 Billion to End Risperdal Sales Probes

Photo:   Bloomberg

Johnson & Johnson, a Dow stock & Dividend Aristocrat, agreed to pay as much as $2.2B to settle US probes of the marketing of its Risperdal antipsychotic drug & other medications.  The settlement, which could be announced this week, will include a misdemeanor plea & criminal penalty of as much as $600M, according to unidentified sources.  The accord also would resolve civil claims that JNJ paid kickbacks to Omnicare (OCR), a company that dispenses drugs at nursing homes.  The agreement, which doesn’t end claims by some states, would be the gov’s 2nd-biggest settlement with a pharmaceutical company, behind a $2.3B accord that Prizer, another Dow stock, entered in 2009 to resolve investigations of improper marketing of its painkiller & other drugs.  JNJ said on Fri that the company was setting aside $600M to increase its reserves for potential settlements of lawsuits over its marketing campaigns for Risperdal & other drugs & added that the reserve also covered a possible settlement of the Omnicare kickback claims.  In Aug 2011 JNJ reached an agreement to settle a misdemeanor criminal charge related to Risperdal marketing, the criminal fine comes in connection with that agreement.  The settlement won’t resolve suits brought by 3 states, where judges or juries have ordered JNJ to pay about $1.8B in damages & fines over Risperdal marketing campaigns.  The stock fell 86¢ after a lackluster 12 months.

J&J Said to Pay $2.2 Billion to Settle U.S. Drug Marketing Investigations

Johnson & Johnson (JNJ)

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Prime Minister Mariano Rajoy

Photo:   Bloomberg

Prime Minister Rajoy's surrender to European officials on taking a bailout for Spain’s banks may weaken his political authority & his credibility in financial markets.  His request on Sat for as much as €100B ($125B) after stating 2 weeks ago that Spain wouldn’t need a rescue marks a swift reversal for the premier who won the biggest majority in 30 years in Nov.  It may fuel skepticism he can meet his deficit-cutting promises.  He is trying to persuade regional leaders & voters to accept austerity, & convince bond investors the cuts will deliver the deficit goals he has pledged.  Should he fail, he may have to return for a larger rescue bailout, potentially draining the euro area’s financial ammunition.  Spanish gov bonds fell the most in almost a month with the yield on 10-year debt rising 30 basis points to 6.52%.  Part of his challenge is to bring regional govs in line after their mismanagement caused the country to miss its deficit-reduction targets last year.  Regions also allowed the cajas, or savings banks, under their sway to run amok during the credit boom, leaving lenders loaded with real estate losses.  His fumbling of the Spanish banking crisis reinforced investors’ perceptions that European officials are still struggling to get a handle on the scale of the debt crisis almost 3 years after Greece confessed its budget deficit was higher than it had previously admitted.  After a European summit in Mar, Rajoy announced that Spain would miss its deficit target without warning his counterparts.  Spain has made at least 4 attempts to clean up its banks since the collapse of the real estate boom in 2008.  But the IMF said the country’s “gradual approach” had allowed weak banks to undermine financial stability.  It looks like nobody is in charge & Spain could need another bailout.

Dow finished down over 200 from its highs at the open & down around 350 from the futures trading last night.  The news about the Spanish bailout sounded good until traders examined what it involved.  After an excellent Q1, stocks are having a very bad Q2.  AAPL had been a market leader, charging ahead until Q2.  Today's announcements about new products did not excite investors, another negative sign for the stock market. 

Dow Industrials (INDU)

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