Thursday, September 20, 2012

Markets vacilate, nervous about euro debt problems

Dow was up 18, decliners ahead of advancers 3-2 & NAZ lost 6. The Financial Index fell 1+ to 214. The MLP index slipped a fraction in the 403s while the REIT dropped 4 to the 265s. Junk bond funds eased back & Treasuries were steady. With late day buying, oil managed a tiny gain. Gold continues its sideways motion (but is still looking to top $1800).

AMJ (Alerian MLP Index tracking fund)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.106%
U.S. 2-year	0.258%
U.S. 10-year	1.779%

CLV12.NYM

...Crude Oil Oct 12

...92.05

...

0.07

(0.1%)

Household wealth in the US dropped in Q2 as stock prices declined, overshadowing a 2nd consecutive gain in home prices. Net worth for households & non-profit groups decreased $322B in Q2, or 0.5% from Q1 to $62.7T, according to the Federal Reserve (FED). The value of financial assets fell $742.5 B, while real estate values climbed $381.7B. The end of the housing slump paired with the recent rebound in stocks has the potential to bolster consumer confidence & spending (70% of the economy). Net worth remains below its pre-recession peak, one reason the FED pledged last week to take additional actions to spur expansion. The value of financial assets, including stocks & pension fund holdings, owned by American households decreased to $51.9T in Q2 from $52.7T. The S&P 500 declined 3.3%, more than $1T was erased from US equity values on concern about a worsening of Europe's debt crisis & a global slowdown. Since then, the index has since gained 7%.

Household Worth in U.S. Fell in Second Quarter as Stocks Dropped

Norfolk Southern Sees Profit Trailing Estimates as Volumes Drop

Photo: Bloomberg

Norfolk & Southern tumbled the most in more than 2 years after saying quarterly profit will fall short of estimates as volumes dwindle at the 2nd-largest eastern US railroad. NSC disclosure came after FedEx (FDX) cut in its annual earnings forecast, when the operator of the world’s largest cargo airline cited falling demand & a shift to cheaper delivery services. UPS (UPS) & Canadian National Railway (CHR) executives also said today that they see challenging economic conditions. Volume at NSC will decline about 2% in Q3 to 1.78M carloads, with coal dropping 13% & general merchandise down 1% NSC said. “The summer drought has dramatically changed the landscape of the U.S. grain market,” CFO John Rathbone said. The decline in utility coal volumes will probably “begin to moderate,” depending on the severity of winter weather and competition from cheaper natural gas, he said. EPS will be $1.18-$1.25 a share, short of the $1.63 estimate. The drop in shipments & reduced fuel-surcharge receipts will pare revenue by $200M. The stock plunged $6.70 (9%).

Norfolk Southern Profit Drop Echoes FedEx Slowdown Signal

Norfolk Southern (NSC)

Greek Prime Minister Samaras failed in a new bid to clinch agreement from his coalition on an €11.5B ($14.9B) budget cuts package that’s key to releasing international aid funds. Samaras received the 3rd refusal in less than 2 weeks from Democratic Left leader Kouvelis after talks with Pasok leader Venizelos about a plan that has already been criticized by inspectors from the European Commission (the Troka) as not going far enough. “The troika must stop attacking Greek society,” said Kouvelis, whose party is one of the 3 in the coalition. “The troika must understand there are limits.” The standoff leaves Samaras heading to a meeting in Rome tomorrow with his Italian, Spanish & Irish counterparts without any final political commitment on the package he has said is necessary to restore Greece’s credibility & keep the country in the euro. Finance Minister Stournaras said he was hopeful of an agreement “soon” & that talks were difficult. He’s due to meet with the troika again today, in a bid to identify the €2.5B in savings that have yet to be agreed with the intl lenders. Kouvelis said there was no final agreement on any measures. A new meeting of the coalition party leaders will be held next week, he said. Still stuck in the mud.

Samaras Gets New Rebuff From Coalition on Greek Budget Cuts

This was another day when it would have been just fine to take a long nap. Not much happened. But there were more warnings about a soggy US economy from shippers, the guys who should know. Q3 is winding down & these companies have a good feel for the pulse of the economy. Growing worries about the approaching fiscal cliff is making business execs jittery. But Dow has hardly moved from 13.6K (a 4 year high) reached at the end of last week.