Thursday, August 9, 2012

Markets tread water, awaiting news from Europe

Dow slid 10, advancers over decliners 5-4 & NAZ added 7.  The Financial Index was off fractionally to below 201.  The MLP index rose 1 to the 389s & the REIT was off pocket change in the 262s.  Junk bond funds were mixed & Treasuries generally declined.  Oil & gold hardly budged.

AMJ (Alerian MLP Index tracking fund)

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CLU12.NYM...Crude Oil Sep 12....93.52...Up 0.17  (0.2%)

Live 24 hours gold chart [Kitco Inc.]

China's passenger-vehicle sales trailed estimates for the first time in 5 months, as demand slowed with the economy & some consumers held back purchases in anticipation of gov stimulus measures.  Wholesale deliveries gained 11% to 1.12M units last month according to the China Association of Automobile Manufacturers.  That compares with the 1.16M estimate.  Auto sales are slowing in the world’s largest vehicle market as the economy expanded at the weakest pace in 3 years.  Consumers are postponing vehicle purchases in anticipation that the gov will introduce subsidies to encourage demand.  In the first 7 months, passenger-vehicle deliveries rose 7.5% to 8.74M units, the association said.  Sales of vehicles, including trucks & buses, increased 8.2% to 1.38M units in Jul.  Sport utility vehicle deliveries gained 30%, the best- performing segment.  General Motors (GM), the largest foreign carmaker in China, said sales in the nation gained 15% last month to 199K units, led by demand for its Wuling-branded mini commercial vehicles.  Honda's Jul vehicle sales rose 1.3% to 52k.  Toyota’s (TM) deliveries fell 5% to 78K.  Inventory is building up at carmakers in China & TM cut back on production in the country around spring.  At Nissan, sales slid 2% last month to 98K units.  Passenger-vehicle sales growth will probably accelerate in H2, rising 15% to 8.48M units, driven by demand from first-time buyers & assuming the economy rebounds.  Full-year deliveries may increase 11% to 16M units.  US deliveries are only expected to be above 14M.

China July Car Sales Trail Forecasts as Buyers Await Incentives

Home Prices Increase in Most U.S. Metropolitan Areas

Photo:   Bloomberg

Prices for single-family homes climbed in 75% of US cities & values nationally jumped the most since 2006 as real estate markets stabilized.  The median sales price increased in Q2 from a year earlier in 110 of 147 metropolitan areas measured, the National Association of Realtors.  In Q1, 74 areas had gains.  US housing prices are beginning to lift off the bottom after the worst housing slump since the 1930s as buyers compete for a tight supply of available properties.  At the end of Jun, 2.4M previously owned homes were available for sale, 24% fewer than a year earlier, the Realtors said.  But one threat to home values is the shadow inventory of delinquent properties that have yet to enter the market.  US foreclosure starts rose 6% last month from Jul 2011 RealtyTrac said.  The national median existing single-family home price was $181K in Q2, up 7.3% from the same period last year, the strongest annual increase in 6 years.  Distressed properties, including discounted foreclosures & short sales, in which the price is less than the mortgage balance, accounted for 26% of Q2 deals, down from 33% a year earlier.  The share of all-cash home purchases was 29% in Q2, down from 30% in Q2 2011.  The housing industry is mending, but slowly.

Home Prices Rise in 75% of U.S. Cities in Second Quarter

Hewlett-Packard, a Dow stock, said that it will take a massive charge against earnings for the latest qtr, leading to a record loss of nearly $9B.  The charge is the result of a writedown of the value of its services business, a bookkeeping measure reflecting that the company overpaid for when it bought Electronic Data Systems in 2008 for $13B.  CEO Meg Whitman has spent much of her first 11 months on the job cleaning up some of the mess left behind by previous management.  She said HPQ problems might not be completely fixed until 2016.  As part of the fix, HP is in the process of eliminating 27K jobs (8% of its workforce).  The latest blow will require a non-cash charge of $8B in the qtr that ended in Jul.   The company said that charges for other accounting adjustments will lead to a loss for EPS of $4.31-$4.49, the 2nd quarterly loss during the past 15 years.  An early retirement program is meeting with unexpectedly high acceptance.  As a result, the company will register a charge of $1.5-$1.7B for severance payments in Q3, rather than the $1B it expected.  The job cuts are expected to be completed by 2014.  Excluding the charges, HPQ expects to report fiscal Q3 EPS of $1, up from a previous range of 94-97¢ & near the forecast by.analysts of 97¢.  While the stock was even, it's near an 8 year low!

HP to absorb record quarterly loss of nearly $9B AP

Hewlett-Packard (HPQ)

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Markets continue to look for direction.  Economic news from China has become more important when there has been little news from Europe (still trying to manage enormous problems).  The US economy is plodding along, growing but below its recovery progress during previous recessions.  MLPs had a nice run in Jul, then went sideways.  The Index remains 21 below its 411 record, far better than almost all other indices.  REIT, while still below its record highs, remains within spitting distance of its 2012 highs.  Dow will need another 250 to reach a more than 4 year high.

Dow Jones Industrials

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