Tuesday, October 16, 2012

Markets rise on earnings reports

Dow jumped 110, advancers ahead of decliners almost 3-1 & NAZ added 19.  The Financial Index rose 2 to the 217s (within 1 of its Sep 14 yearly high). The MLP index was up 1 to 410 & the REIT index gained 1+ to the 265s.  The junk bond funds were mixed to higher & Treasuries sold off.  Oil was flattish & gold regained lost ground from yesterday.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLX12.NYM...Crude Oil Nov 12...91.46 ....Down 0.39  (0.4%)

GCV12.CMX...Gold Oct 12......1,744.40 ...Up 8.40 (0.5%)

US industrial production. rose more than forecast in Sep, partially reversing the prior month’s slump, indicating manufacturers are regaining their footing.  Output at factories, mines & utilities rose 0.4% after a 1.4% decline in Aug that was the biggest since Mar 2009, according to the Federal Reserve.  The estimate called for production to rise 0.2%.  Manufacturing, which makes up 75% of the total, was up 0.2%.  The biggest 2 month gain in retail sales in almost 2 years may mean demand from American consumers is making up for slowing sales overseas & declining business investment as the fiscal cliff approaches.  The prior month was previously reported as a decline of 1.2%.  Manufacturing accounts for about 12% of the economy.  Capacity utilization, which measures the extent to which plants are achieving their full potential output, rose to 78.3% from 78%.  Call this mildly good news.

Industrial Production in U.S. Rises in Sign of Stabilization

Vikram Pandit

Photo:   Bloomberg

In a stunning move Citigroup just announced that CEO Vikram Pandit & COO John Havens were resigning effective immediately.  The departures come just one day after the big bank reported what was generally regarded as a strong qtr, sending the stock up 5%.  Pandit also stepped down from the Board of Directors.  This departure marks the end of a controversial & often troubled tenure.  Pandit first came on the scene at Citi in Jul of 2007.  Named CEO in Dec 2007, Pandit steered Citi through the worst financial crisis in decades & the company's stock has fallen 90% since he took over, underperforming most of the industry.  The circumstances surrounding the abrupt exit are murky, at best.  Pandit was far from beloved in the industry or by investors, but he was hardly seen as someone who's job was on the line.  There is speculation about what the real story may be.  The best guess is that Pandit & Havens are leaving over issues of compensation. The stock gained 41¢.

Pandit Abruptly Resigns as Citigroup CEO, Director; Corbat Named Successor

Citigroup (C)

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Coca-Cola Third-Quarter Profit Advances as Europe Improves

Photo:   Bloomberg

Coca-Cola, a Dow stock & Dividend Aristocrat, reported a 3.9% increase in Q4 profit as sales volume in Europe improved.  EPS was 50¢, up from 48¢ a year earlier.  Revenue advanced less than 1% to $12.3B, trailing the $12.4B estimate.  CEO Kent has been adjusting prices & introducing new products to cope with weaker demand in European nations facing a persistent debt crisis & slowing growth in China & Brazil.  Sales volume in Europe increased 1%, compared with a 4% drop in Q2.  Excluding some items, profit was 51¢, matching the average estimate.  Global volume sales rose 4%, helped by a 2% boost in North America.  In emerging markets, Thailand posted a 19% volume gain while India reported a 15% increase. China’s 2% volume sales growth trailed the 6% pace set for the first 3 qtrs combined.  Volume growth came “despite continued volatility in the worldwide economy,” Kent said.  The stock fell 44¢.

Coca-Cola Third-Quarter Profit Advances as Europe Improves

Coca-Cola (KO)

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The first batch of earnings reports is going over fairly well.  The sudden shake up at Citi is also being taken in stride.  But Dow is still back to only 13½K where it's been for more than a month  as the fiscal cliff keeps getting nearer. 

Dow Jones Industrials

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