Dow shot up 162, advancers over decliners 6-1 & NAZ was up 30. The Financial Index rose 3+ to the 196s to a 1 week high. The MLP index added another 2+ to 290 & the REIT index was up 2+ to 266, matching its yearly highs. Junk bond funds inched up & Treasuries retreated after their recent rise. Oil rose for a 3rd day, the longest winning streak in a month, as slowing growth in China fueled stimulus speculation. Gold is also having a very good day.
Photo: Yahoo
Producer prices rose only slightly in Jun as energy costs dropped, suggesting inflation pressures remain muted & leaving the door open for more easing by the Federal Reserve. The Labor Dept said its PPI rose 0.1%, which compares with an expected drop of 0.5%. The increase was driven by gains in consumer goods like household appliances, light trucks & pet food. While wholesale prices of finished goods rose, costs for intermediate & crude goods fell, suggesting less inflation pressure down the road. Energy prices dropped 0.9%, dragged down by a record drop in prices for residential electric power, which fell 2.1%. Diesel fuel prices sank 8.8%. The fall in energy prices is likely to help the economy as lower costs for fuels & other input prices leave companies more money to spend on other things, such as equipment or even hiring.
Photo: Bloomberg
Consumer sentiment cooled again in early Jul to its lowest level in 7 months as Americans took a dim view of their finances & job prospects. The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment fell to 72.0 from 73.2 in Jun, frustrating expectations for a slight gain to 73.4 & was the lowest level since last Dec. Only 19% of consumers expected to be financially better off in the coming year, the lowest proportion recorded by the survey. Americans were also gloomy about their longer-term prospects with 39% anticipating their situation would be better in five years. "The greatest concern to consumers is that wage and job growth will remain depressed over the foreseeable future, and that these meager gains are likely to be further diminished in the years ahead by rising taxes and benefit cutbacks," survey director Richard Curtin said. The gauge of consumer expectations slipped to 64.8 from 67.8, also the lowest since last Dec. While there was widespread recognition of an economic slowdown, that did not have a large impact on consumers' economic outlook, & the barometer of current economic conditions rose to 83.2 from 81.5. News of job losses was mentioned twice as frequently as job gains, the opposite of what was seen in the first 6 months of the year. But buying plans improved with the measure of buying conditions for vehicles & household durables rising to 131 from 125. The one-year inflation expectation fell to its lowest level since Oct 2010 at 2.8% from 3.1%. Consumer confidence remains wishy-washy.
Photo: Yahoo
JPMorgan Chase, a Dow stock, said that a bad trade had cost the bank $5.8B, almost triple its original estimate, & raised the prospect that traders had improperly tried to conceal the blunder. "This has shaken our company to the core," CEO Jamie Dimon said. The bank said managers tied to the bad trade had been dismissed without severance pay & that it planned to revoke 2 years' worth of pay from each of those executives. JPM lost $4.4B because of the trade in Q2 & its chief financial officer said the bank had lost an additional $1.4B in Q1. The bank said an internal investigation had called into question the values that traders placed on certain bets & that the traders may have been seeking to mask losses. Speaking broadly about the trading loss, Dimon said: "We don't take it lightly" & added: "We're not making light of this error, but we do think it's an isolated event." The bank said that it was reducing its net income for Q1 by $459M because it had discovered information that "raises questions about the integrity" of values placed on certain trades. The division responsible for the bad trade has been closed. Overall EPS was $1.21 in Q2 (which includes the trading loss on May 10). Expectations were for EPS of 76¢. The stock rose when as investors were cheered to hear that the bank might resume its plan to buy back its stock. JPM has lost about 15% of its market value since the loss came to light. Today the stock was up $1.20.
JPMorgan $4.4 Billion Trading Loss Pushes Second-Quarter Profit 9% Lower
Jamie Dimon has a winning way & convinced analysts that the horrible debt mess is pretty much over. The bank is clawing back pay from execs responsible (of course, they are already multi-millionaires). While rumors about Chinese stimulus brought out buyers, fundamental problems have not evaporated. In particular the Europe debt mess drones on while the US economy is just getting by. Even with today's rally, Dow is still down more than 200 from its highs last week.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.096% | |
U.S. 2-year | 0.258% | |
U.S. 10-year | 1.513% |
| CLQ12.NYM | ...Crude Oil Aug 12 | ...86.43 | ...... 0.35 | (0.4%) |
| GCN12.CMX | ...Gold Jul 12 | .......1,585.40 | ... 20.50 | (1.3%) |
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Producer prices rose only slightly in Jun as energy costs dropped, suggesting inflation pressures remain muted & leaving the door open for more easing by the Federal Reserve. The Labor Dept said its PPI rose 0.1%, which compares with an expected drop of 0.5%. The increase was driven by gains in consumer goods like household appliances, light trucks & pet food. While wholesale prices of finished goods rose, costs for intermediate & crude goods fell, suggesting less inflation pressure down the road. Energy prices dropped 0.9%, dragged down by a record drop in prices for residential electric power, which fell 2.1%. Diesel fuel prices sank 8.8%. The fall in energy prices is likely to help the economy as lower costs for fuels & other input prices leave companies more money to spend on other things, such as equipment or even hiring.
Consumer sentiment cooled again in early Jul to its lowest level in 7 months as Americans took a dim view of their finances & job prospects. The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment fell to 72.0 from 73.2 in Jun, frustrating expectations for a slight gain to 73.4 & was the lowest level since last Dec. Only 19% of consumers expected to be financially better off in the coming year, the lowest proportion recorded by the survey. Americans were also gloomy about their longer-term prospects with 39% anticipating their situation would be better in five years. "The greatest concern to consumers is that wage and job growth will remain depressed over the foreseeable future, and that these meager gains are likely to be further diminished in the years ahead by rising taxes and benefit cutbacks," survey director Richard Curtin said. The gauge of consumer expectations slipped to 64.8 from 67.8, also the lowest since last Dec. While there was widespread recognition of an economic slowdown, that did not have a large impact on consumers' economic outlook, & the barometer of current economic conditions rose to 83.2 from 81.5. News of job losses was mentioned twice as frequently as job gains, the opposite of what was seen in the first 6 months of the year. But buying plans improved with the measure of buying conditions for vehicles & household durables rising to 131 from 125. The one-year inflation expectation fell to its lowest level since Oct 2010 at 2.8% from 3.1%. Consumer confidence remains wishy-washy.
JPMorgan Chase, a Dow stock, said that a bad trade had cost the bank $5.8B, almost triple its original estimate, & raised the prospect that traders had improperly tried to conceal the blunder. "This has shaken our company to the core," CEO Jamie Dimon said. The bank said managers tied to the bad trade had been dismissed without severance pay & that it planned to revoke 2 years' worth of pay from each of those executives. JPM lost $4.4B because of the trade in Q2 & its chief financial officer said the bank had lost an additional $1.4B in Q1. The bank said an internal investigation had called into question the values that traders placed on certain bets & that the traders may have been seeking to mask losses. Speaking broadly about the trading loss, Dimon said: "We don't take it lightly" & added: "We're not making light of this error, but we do think it's an isolated event." The bank said that it was reducing its net income for Q1 by $459M because it had discovered information that "raises questions about the integrity" of values placed on certain trades. The division responsible for the bad trade has been closed. Overall EPS was $1.21 in Q2 (which includes the trading loss on May 10). Expectations were for EPS of 76¢. The stock rose when as investors were cheered to hear that the bank might resume its plan to buy back its stock. JPM has lost about 15% of its market value since the loss came to light. Today the stock was up $1.20.
JPMorgan $4.4 Billion Trading Loss Pushes Second-Quarter Profit 9% Lower
JPMorgan (JPM)
Jamie Dimon has a winning way & convinced analysts that the horrible debt mess is pretty much over. The bank is clawing back pay from execs responsible (of course, they are already multi-millionaires). While rumors about Chinese stimulus brought out buyers, fundamental problems have not evaporated. In particular the Europe debt mess drones on while the US economy is just getting by. Even with today's rally, Dow is still down more than 200 from its highs last week.
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