Dow slipped 14, decliners just ahead of advancers & NAZ inched up 1. The Financial Index lost a fraction in the 216s. The MLP index rose 2+ to the 410s & the REIT index fell 1+ to the 262s (where it has been for a month). Junk bond funds were higher & Treasuries pulled back. Oil & gas are resting with little price movement.
Photo: Bloomberg
Greece is spiraling into the kind of decline the US & Germany endured during the 1930s, showing the scale of the challenge involved in attempting to regain competitiveness thru austerity. The economy shrank 18.4% in the past 4 years & the IMF forecasts it will contract another 4% in 2013 as Greece struggles to reduce debt in exchange for its $300B rescue programs. That’s the biggest cumulative loss of output of a developed-country economy in at least 3 decades, coming within spitting distance of the 27% drop in the US economy in 1929-1933. But Greece’s restructured bonds have benefited amid speculation that creditors are poised to release more bailout funds. Bonds maturing in 2023, which yielded more than 30% at the end of May, now yield about 16.4%. The next block of aid is slated to total €31B ($40.5B), mostly to recapitalize the nation’s banks. The economic situation can only be described as ugly.
Greece Austerity Diet Risks 1930s-Style Depression: Euro Credit
Photo: Yahoo
Caterpillar, a Dow stock, cut its profit & revenue guidance, saying the world's economic conditions "are weaker than we had previously expected." The company is closely watched as a sign of where the broader economy is headed. CAT said dealers want to reduce inventory, so they're ordering fewer products than end users want. As a result, CAT has reduced production, resulting in temporary shutdowns & layoffs. The lower production levels will continue until orders from dealers & inventories line up with deliveries to end customers. The company expects 2012 revenue of $66B, with EPS of $9-$9.25. Analysts expect revenue of $67.2B, with EPS of $9.41. It expects 2013 revenue to be about the same as this year, in a range of +5% to -5%. "We're not expecting rapid growth, and we're not predicting a global recession," CEO Doug Oberhelman said. EPS in Q3 rose 49% to $2.54, compared to $1.71 a year earlier. Revenue rose 4.6% to $16.5B. The results included a gain of 27¢ per share, from selling a majority interest in a logistics business. Analysts had been expecting EPS of $2.21 on revenue of $16.6B. The economy this year "has been a disappointment," CAT said, with growth lower than expected in the US & China, with much of Europe in recession. This is called negative guidance from a prominent company. But the stock rose 1.41.
Photo: Bloomberg
Angela Merkel said Ireland is a "special (SPEC) case,” seeking to calm concern sparked by her comments last week ruling out retroactive bank recapitalizations by the European rescue fund. Merkel & Irish Prime Minister Enda Kenny spoke yesterday by phone about the “unique circumstances behind Ireland’s banking and sovereign debt crisis, and Ireland’s plans for a full return to the markets.” “They reaffirmed the commitment from June 29 to task the euro group to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well-performing adjustment program,” their statement said. “They recognize in this context, that Ireland is a special case, and that the euro group will take that into account.” The Irish state has pledged or injected €64B ($84B) into the financial system, making it the world’s costliest banking rescue since the Great Depression, & has been campaigning for some form of retrospective recapitalization of its financial system. Irish Finance Minister Michael Noonan said after Merkel’s comments on Oct 19 that the chancellor was answering a question specifically in relation to Spain & not Ireland. Ireland is aiming to exit its bailout program at the end of 2013, having already partly returned to long-term intl credit markets in the wake of the Jun 29 commitment. There's a lot going on in the world of bailouts.
Merkel Says Ireland a ‘Special Case,’ Seeking to Calm Concern on Financing
Earnings are not inspiring confidence so markets have a wait & see outlook. But the stream of warnings coming from some of the biggest companies have to represent a dark cloud over the markets. The Europe debt crisis is lumbering along. A lack of truly good news has to bother even the strongest of the bulls. More earnings are coming this week, they could drag markets lower. Dow is hanging in there, close to the 13½K trend line it has been near for weeks.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.091% | |
U.S. 2-year |
0.307% | |
U.S. 10-year |
1.794% |
| CLX12.NYM | ...Crude Oil Nov 12 | ...89.94 | .... 0.11 | (0.12%) |
| GCV12.CMX | ...Gold Oct 12 | .......1,723.20 | ... 0.40 | (0.0%) |
Photo: Bloomberg
Greece is spiraling into the kind of decline the US & Germany endured during the 1930s, showing the scale of the challenge involved in attempting to regain competitiveness thru austerity. The economy shrank 18.4% in the past 4 years & the IMF forecasts it will contract another 4% in 2013 as Greece struggles to reduce debt in exchange for its $300B rescue programs. That’s the biggest cumulative loss of output of a developed-country economy in at least 3 decades, coming within spitting distance of the 27% drop in the US economy in 1929-1933. But Greece’s restructured bonds have benefited amid speculation that creditors are poised to release more bailout funds. Bonds maturing in 2023, which yielded more than 30% at the end of May, now yield about 16.4%. The next block of aid is slated to total €31B ($40.5B), mostly to recapitalize the nation’s banks. The economic situation can only be described as ugly.
Greece Austerity Diet Risks 1930s-Style Depression: Euro Credit
Caterpillar, a Dow stock, cut its profit & revenue guidance, saying the world's economic conditions "are weaker than we had previously expected." The company is closely watched as a sign of where the broader economy is headed. CAT said dealers want to reduce inventory, so they're ordering fewer products than end users want. As a result, CAT has reduced production, resulting in temporary shutdowns & layoffs. The lower production levels will continue until orders from dealers & inventories line up with deliveries to end customers. The company expects 2012 revenue of $66B, with EPS of $9-$9.25. Analysts expect revenue of $67.2B, with EPS of $9.41. It expects 2013 revenue to be about the same as this year, in a range of +5% to -5%. "We're not expecting rapid growth, and we're not predicting a global recession," CEO Doug Oberhelman said. EPS in Q3 rose 49% to $2.54, compared to $1.71 a year earlier. Revenue rose 4.6% to $16.5B. The results included a gain of 27¢ per share, from selling a majority interest in a logistics business. Analysts had been expecting EPS of $2.21 on revenue of $16.6B. The economy this year "has been a disappointment," CAT said, with growth lower than expected in the US & China, with much of Europe in recession. This is called negative guidance from a prominent company. But the stock rose 1.41.
Caterpillar (CAT)
Angela Merkel said Ireland is a "special (SPEC) case,” seeking to calm concern sparked by her comments last week ruling out retroactive bank recapitalizations by the European rescue fund. Merkel & Irish Prime Minister Enda Kenny spoke yesterday by phone about the “unique circumstances behind Ireland’s banking and sovereign debt crisis, and Ireland’s plans for a full return to the markets.” “They reaffirmed the commitment from June 29 to task the euro group to examine the situation of the Irish financial sector with a view to further improving the sustainability of the well-performing adjustment program,” their statement said. “They recognize in this context, that Ireland is a special case, and that the euro group will take that into account.” The Irish state has pledged or injected €64B ($84B) into the financial system, making it the world’s costliest banking rescue since the Great Depression, & has been campaigning for some form of retrospective recapitalization of its financial system. Irish Finance Minister Michael Noonan said after Merkel’s comments on Oct 19 that the chancellor was answering a question specifically in relation to Spain & not Ireland. Ireland is aiming to exit its bailout program at the end of 2013, having already partly returned to long-term intl credit markets in the wake of the Jun 29 commitment. There's a lot going on in the world of bailouts.
Merkel Says Ireland a ‘Special Case,’ Seeking to Calm Concern on Financing
Earnings are not inspiring confidence so markets have a wait & see outlook. But the stream of warnings coming from some of the biggest companies have to represent a dark cloud over the markets. The Europe debt crisis is lumbering along. A lack of truly good news has to bother even the strongest of the bulls. More earnings are coming this week, they could drag markets lower. Dow is hanging in there, close to the 13½K trend line it has been near for weeks.
Dow Jones Industrials
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