Dow gained 85, advancers over decliners 5-2 & NAZ was up 31. The Financial Index rose 1+ to 203, another high since early May. The MLP index rose 2+ to the 395s (pretty much matching the peak in early May) & the REIT index was up 1+ to the 264s. Junk bond funds were mixed & Treasuries fell, pushing 30-year bond yields to the highest level since May, as data pointed to improvement in the US economy, damping demand for the safety of US debt. Oil climbed above $95 a barrel, the first time in 3 months, as US building permits reached a 4-year high, adding to optimism that faster economic growth will boost oil demand.
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Spain will receive an emergency disbursement from the €100B ($123B) bailout of its financial system because of restrictions the ECB imposed on bank borrowing. The ECB last month made a rule change that meant Spain had to ditch a plan for nationalized lender Bankia group to get a loan from the Frankfurt-based central bank. Bankia, formed in 2010 from the merger of Spain’s troubled savings banks, will get the first portion of the country’s EU cash imminently. The rescue program always included a €30B tranche to be paid out first & “mobilized in any contingency,” according to the agreement dated Jul 16. The ECB didn’t change the loan collateral rules with Bankia in mind & the lender never formally asked the central bank for such a loan. Bankia was hoping to get the loan to finance its liquidity plan announced in Jun. An prior proposal, scrapped a month earlier, would have involved recapitalizing Bankia using Spanish Treasury debt. Now Spain’s 10-year bonds yield 6.52% today, compared with the record-high 7.75% reached on Jul 25. This looks like a temporary, desperate fix to me.
Photo: Bloomberg
American builders took out more residential construction permits in Jul than at any time in the past 4 years as the market continues to improve. Applications, a proxy for future work, rose to an 812K annual rate, exceeding the highest estimate & the most since Aug 2008, according to the Commerce Dept. But housing starts fell 1.1% to a 746K rate in Jun (the strongest pace in more than 3 years). Permits were projected to rise to a 769K pace. While housing is on the mend, it remains far below "the good old days."
U.S. Residential-Building Permits Rose to Four-Year High in July: Economy
Wal-Mart Stores, a Dow stock & Dividend Aristocrat, forecast full-year earnings could fall short of expectations, even as it posted a bigger-than-expected jump in quarterly profit. Sales at the US stores open at least a year (same-store sales) rose 2.2% in Q2. The discount retailer has notched 4 consecutive qtrs of same-store sales growth in the US, by far its largest unit. This figure came in just ahead of expectations for a 2.1% increase. Same-store sales also rose at its intl division & Sam's Club warehouse chain. EPS was $1.18, up from $1.09 a year earlier & beat the forecast of $1.17. Consolidated net sales rose 4.5% to $113.5B. WMT raised & narrowed its full-year EPS forecast to $4.83-$4.93, versus a prior target of $4.72-$4.92. Analysts' target is $4.93. The stock fell 2.30.
Wal-Mart Declines After Full-Year Forecast Trails Some Analysts’ Estimates
Stocks continue to lumber along. But today the upward bias won out. The housing numbers look good because they are being compared with dreary numbers in the last year. But WMT is an important company in the US & its numbers did not satisfy. The news from Spain is a reminder that the Euro debt mess drones on while the biggies are away on holiday. Bulls are feeling good & that's what counts.
AMJ (Alerian MLP Index tracking fund)
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Treasury yields:
U.S. 3-month | 0.076% | |
U.S. 2-year | 0.285% | |
U.S. 10-year | 1.835% |
| CLU12.NYM | ...Crude Oil Sep 12 | ....95.69 | ... 1.36 | (1.4%) |
Spain will receive an emergency disbursement from the €100B ($123B) bailout of its financial system because of restrictions the ECB imposed on bank borrowing. The ECB last month made a rule change that meant Spain had to ditch a plan for nationalized lender Bankia group to get a loan from the Frankfurt-based central bank. Bankia, formed in 2010 from the merger of Spain’s troubled savings banks, will get the first portion of the country’s EU cash imminently. The rescue program always included a €30B tranche to be paid out first & “mobilized in any contingency,” according to the agreement dated Jul 16. The ECB didn’t change the loan collateral rules with Bankia in mind & the lender never formally asked the central bank for such a loan. Bankia was hoping to get the loan to finance its liquidity plan announced in Jun. An prior proposal, scrapped a month earlier, would have involved recapitalizing Bankia using Spanish Treasury debt. Now Spain’s 10-year bonds yield 6.52% today, compared with the record-high 7.75% reached on Jul 25. This looks like a temporary, desperate fix to me.
American builders took out more residential construction permits in Jul than at any time in the past 4 years as the market continues to improve. Applications, a proxy for future work, rose to an 812K annual rate, exceeding the highest estimate & the most since Aug 2008, according to the Commerce Dept. But housing starts fell 1.1% to a 746K rate in Jun (the strongest pace in more than 3 years). Permits were projected to rise to a 769K pace. While housing is on the mend, it remains far below "the good old days."
U.S. Residential-Building Permits Rose to Four-Year High in July: Economy
Photo: Bloomberg
Wal-Mart Stores, a Dow stock & Dividend Aristocrat, forecast full-year earnings could fall short of expectations, even as it posted a bigger-than-expected jump in quarterly profit. Sales at the US stores open at least a year (same-store sales) rose 2.2% in Q2. The discount retailer has notched 4 consecutive qtrs of same-store sales growth in the US, by far its largest unit. This figure came in just ahead of expectations for a 2.1% increase. Same-store sales also rose at its intl division & Sam's Club warehouse chain. EPS was $1.18, up from $1.09 a year earlier & beat the forecast of $1.17. Consolidated net sales rose 4.5% to $113.5B. WMT raised & narrowed its full-year EPS forecast to $4.83-$4.93, versus a prior target of $4.72-$4.92. Analysts' target is $4.93. The stock fell 2.30.
Wal-Mart Declines After Full-Year Forecast Trails Some Analysts’ Estimates
Wal-Mart (WMT)
Stocks continue to lumber along. But today the upward bias won out. The housing numbers look good because they are being compared with dreary numbers in the last year. But WMT is an important company in the US & its numbers did not satisfy. The news from Spain is a reminder that the Euro debt mess drones on while the biggies are away on holiday. Bulls are feeling good & that's what counts.
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