Dow fell 59, decliners ahead of advancers 3-2 & NAZ was off 9. The Financial Index slid a tad to 198. The MLP index was up a fraction to 392 & the REIT gained a fraction to the 267s, a new yearly high. Junk bond funds are inching higher & Treasuries rose. Oil & gold hardly budged.
Photo: Yahoo
US retail sales fell for a 3rd straight month in Jun as demand slumped for everything from cars & electronics to building materials, a sign the economic recovery is flagging. Retail sales slipped 0.5% according to the Commerce Dept. It was the first time sales had dropped in 3 consecutive months since late 2008, when the economy was still mired in a deep recession. Expectations were for retail sales to rise 0.2%. The retail sales report raised hopes the Federal Reserve could launch another bond-buying program to help the economy. Job creation has slowed dramatically in the last few months as employers worry about a sagging global economy hurt by Europe's snowballing debt crisis. The factory sector also has shown signs of contraction due to the global slowdown. The retail data is worrisome because it suggests consumer spending, which drives about 2/3 of the economy, is also sagging, as retailers enter the important back-to-school season.
Photo: Bloomberg
Citigroup earned $2.9B in Q2 & exceeded forecasts, helped by lowering the amount it keeps aside for loan losses because more customers paid back loans on time. But net income was down 12% from a year ago. The bank took a loss of $424M from selling its stake in a Turkish bank, drew down loan loss reserves by $984M & took an accounting gain of $219M because the value of its debt decreased. Excluding those items, EPS was $1, exceeding the 89¢ expected. Revenue was $18.6B, down 10% from a year-ago. Analysts expected $18.8B. As more customers paid back loans on time, Citi kept aside less for future losses — $27.6B at the end of Q2 (compared with $34.4B in the prior year). CFO John Gerspach said that strength in the dollar hurt earnings for the intl operations. Over the weekend, Citi said it will not seek to increase its div this year but may seek permission to raise it in 2013. "I believe we will be in good shape and have the capital to be able to do that by the end of the year," CEO Vikram Pandit said. "That's a decision that will have to be taken with our regulators and we will have those conversations at the end of the year." The stock rose 45¢.
Citigroup Profit Exceeds Analysts’ Estimates on Investment Banking Revenue
The IMF cut its 2013 global growth forecast as Europe's debt crisis prolongs Spain's recession & slows expansions in emerging markets from China to India already facing weaker domestic demand. Growth worldwide will be 3.9% next year, less than the 4.1% estimate in Apr. It cut the growth forecast for China's slowing economy & said a "hard landing" was still possible. The China growth outlook for 2012 was reduced by 0.2% to 8% & for 2013 by 0.3% to 8.5%. While far stronger than the US & Europe, China's slowdown has dampened hopes it might make up for weak Western demand & drive global growth. China's Q2 growth fell to a 3-year low of 7.6% as exports, consumer spending and factory output weakened. A rebound might begin in H2 but could take longer & be weaker than previously expected. Premier Wen Jiabao warned a recovery was not stable & trouble may continue for some time. He promised tax breaks & other aid to companies hurt by slowing exports. "There are tail risks of a hard landing in China, where investment spending could slow more sharply, given overcapacity in a number of sectors," the IMF said in its latest World Economic Outlook. "Policies have been eased since, and this easing should gain traction in the second half of 2012," it said. "Nevertheless, concerns remain that potential growth in emerging market economies might be lower than expected." This is a very dismal story.
IMF Cuts Global Outlook as EU Ensnares Emerging Economies
Citi earnings were mildly encouraging although it's hard to tell what's really going on with the maze of contradictory numbers. But the macro story is weak as the global economy is just getting by even though China continues to grow. Dow failed to follow thru after the big rally on Fri, stuck in a trading range of 12½-13K. Earnings probably will not give the lift that bulls want to see.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.086% | |
U.S. 2-year | 0.222% | |
U.S. 10-year | 1.442% |
| CLQ12.NYM | ...Crude Oil Aug 12 | ...87.41 | ... 0.31 | ( | 0.4%) |
| GCN12.CMX | ...Gold Jul 12 | ........1,586.20 | .... 5.40 | (0.3%) |
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US retail sales fell for a 3rd straight month in Jun as demand slumped for everything from cars & electronics to building materials, a sign the economic recovery is flagging. Retail sales slipped 0.5% according to the Commerce Dept. It was the first time sales had dropped in 3 consecutive months since late 2008, when the economy was still mired in a deep recession. Expectations were for retail sales to rise 0.2%. The retail sales report raised hopes the Federal Reserve could launch another bond-buying program to help the economy. Job creation has slowed dramatically in the last few months as employers worry about a sagging global economy hurt by Europe's snowballing debt crisis. The factory sector also has shown signs of contraction due to the global slowdown. The retail data is worrisome because it suggests consumer spending, which drives about 2/3 of the economy, is also sagging, as retailers enter the important back-to-school season.
Citigroup earned $2.9B in Q2 & exceeded forecasts, helped by lowering the amount it keeps aside for loan losses because more customers paid back loans on time. But net income was down 12% from a year ago. The bank took a loss of $424M from selling its stake in a Turkish bank, drew down loan loss reserves by $984M & took an accounting gain of $219M because the value of its debt decreased. Excluding those items, EPS was $1, exceeding the 89¢ expected. Revenue was $18.6B, down 10% from a year-ago. Analysts expected $18.8B. As more customers paid back loans on time, Citi kept aside less for future losses — $27.6B at the end of Q2 (compared with $34.4B in the prior year). CFO John Gerspach said that strength in the dollar hurt earnings for the intl operations. Over the weekend, Citi said it will not seek to increase its div this year but may seek permission to raise it in 2013. "I believe we will be in good shape and have the capital to be able to do that by the end of the year," CEO Vikram Pandit said. "That's a decision that will have to be taken with our regulators and we will have those conversations at the end of the year." The stock rose 45¢.
Citigroup Profit Exceeds Analysts’ Estimates on Investment Banking Revenue
Citigroup (C)
The IMF cut its 2013 global growth forecast as Europe's debt crisis prolongs Spain's recession & slows expansions in emerging markets from China to India already facing weaker domestic demand. Growth worldwide will be 3.9% next year, less than the 4.1% estimate in Apr. It cut the growth forecast for China's slowing economy & said a "hard landing" was still possible. The China growth outlook for 2012 was reduced by 0.2% to 8% & for 2013 by 0.3% to 8.5%. While far stronger than the US & Europe, China's slowdown has dampened hopes it might make up for weak Western demand & drive global growth. China's Q2 growth fell to a 3-year low of 7.6% as exports, consumer spending and factory output weakened. A rebound might begin in H2 but could take longer & be weaker than previously expected. Premier Wen Jiabao warned a recovery was not stable & trouble may continue for some time. He promised tax breaks & other aid to companies hurt by slowing exports. "There are tail risks of a hard landing in China, where investment spending could slow more sharply, given overcapacity in a number of sectors," the IMF said in its latest World Economic Outlook. "Policies have been eased since, and this easing should gain traction in the second half of 2012," it said. "Nevertheless, concerns remain that potential growth in emerging market economies might be lower than expected." This is a very dismal story.
IMF Cuts Global Outlook as EU Ensnares Emerging Economies
Citi earnings were mildly encouraging although it's hard to tell what's really going on with the maze of contradictory numbers. But the macro story is weak as the global economy is just getting by even though China continues to grow. Dow failed to follow thru after the big rally on Fri, stuck in a trading range of 12½-13K. Earnings probably will not give the lift that bulls want to see.
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