Wednesday, November 21, 2012

Markets rise after Gaza truce

Dow gained 49, advancers ahead of decliners 3-2 & NAZ was up 9.  The Financial Index slipped a smidgen to 210.  The MLP index rose 1+ to the 391s (a 9 day high) & the REIT index was off a fraction in the 256s.  Junk bond funds were mixed & Treasuries pulled back, taking the yield on the 10 year Treasury up to 1.69%.  Oil continued strong after the announcement of the truce & gold inched higher.

AMJ (Alerian MLP Index tracking fund)

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CLF13.NYM...Crude Oil Jan 13...87.22 ...Up 0.47 (0.5%)

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  • In this image made from Egyptian State Television, U.S. Secretary of State Hillary Rodham Clinton, left, and Egyptian Foreign Minister Mohammed Kamel Amr, right, give a joint news conference announcing a cease-fire between Israel and Hamas in Cairo, Egypt, Wednesday, Nov. 21, 2012. Egypt has announced a cease-fire agreement to end a week of fighting between Israel and Hamas militants in the Gaza Strip. Foreign Minister Mohammed Kamel Amr said the truce would take effect at 9 p.m. local time (2 p.m. EDT.) He made the announcement alongside visiting U.S. Secretary of State Hillary Rodham Clinton. (AP Photo/Egyptian State Television)
Photo:   Yahoo

Israel & Hamas agreed to a cease-fire to end 8 days of the fiercest fighting in nearly 4 years, promising to halt attacks on each other & ease an Israeli blockade constricting the Gaza Strip.  The deal was brokered by Egypt, solidifying its role as a leader in the quickly shifting MidEast after 2 days of intense shuttle diplomacy that saw Secretary of State Clinton race to the region.  Under the agreement, Egypt will play a key role in maintaining the peace.  Standing next to Clinton, Egypt's foreign minister, Mohammed Kamel Amr, announced the breakthrough & said the deal was set to take effect at 9 PM (2 PM. EST).  The agreement will "improve conditions for the people of Gaza & provide security for the people of Israel," Clinton said.  In Israel, the Prime Minister's office said the prime minister agreed to the cease-fire after consulting with President Obama.  Israel launched its offensive in Gaza on Nov 14 to stop months of intensifying rocket attacks.  But even after the deal was announced, air raid sirens continued to sound in southern Israel.

European financial leaders head into their 2nd confrontation this week saying they’re likely to fall short of agreement on a 7-year budget plan just as they failed to strike a deal on Greek debt.  German Chancellor Merkel told lawmaker that budget talks slated for a summit tomorrow may slide into next year.  France rejects cuts to farm subsidies & the UK demands a spending cut.  “There are deep divisions between the member states,”  Irish Prime Minister Enda Kenny said.  “There are fears that it will not be possible to get a deal.”  The 27 EU leaders are preparing to square off over the budget tomorrow after euro-region finance ministers’ efforts to agree on a debt-reduction plan for Greece foundered.  More than 11 hours of talks ended without a deal early this morning as a bloc of top-rated creditors led by Germany refused to write off a portion of their aid loans.  That stance meant the finance chiefs were unable to scrape together enough funds from other sources to help alleviate Greece’s debt burden, set to hit 190% of GDP in 2014.  German Finance Minister Schaeurble told German lawmakers that the issue of the Greek funding gap was solvable & possible solutions include reducing interest payments on its bailout loans, suspending payouts through 2020 on its 2nd rescue package, or having the ECB buy €9B ($11.5B) of the country’s Treasury bills.  Another option is for the EU bailout fund to finance Greek gov purchases of €10B of its own debt.  The debt mess keeps going & going & going.

European Leaders Head for a Budget Showdown After Failing to Help Greece

  • <p>               In this Aug. 31, 2011 photo, a flag displaying the John Deere logo flies at the John Deere farming equipment exhibit area during the Farm Progress Show in Decatur, Ill. Deere & Co., the world's largest maker of agricultural equipment, reported a bigger fourth-quarter profit Wednesday, Nov. 21, 2012, as it sold more equipment at higher prices, but results still missed analyst expectations. (AP Photo/Seth Perlman)
Photo:   Yahoo

Deere & Co. reported a bigger Q4 profit as it sold more equipment at higher prices, but results still missed expectations.  EPS was $1.75 & revenue rose 14% to $9.8B.  But analysts forecasted EPS of $1.88 per share.  A year ago, EPS was $1.62.  Revenue got a boost from a 4% increase in prices, although some of that gain was offset by unfavorable foreign currency exchange that hurt sales by 3.  Equipment sales rose to $9B, topping forecasts of $8.9B.  Sales were strong in the US & Canada, rising 26%.  Elsewhere, sales fell 2%.  Sales of agriculture & turf equipment rose 16%, while construction & forestry equipment sales rose 7%.  DE predicted that equipment sales would rise about 5% for the fiscal year that began this month, & would increase 10% in fiscal Q1.  It expects full-year 2013 net income of about $3.2B, a little more than analysts are expecting.  DE is in a good position to carry out its growth plans, but "present global economic and fiscal concerns warrant continued caution," CEO Allen said.  DE expects worldwide sales of agriculture & turf equipment to rise 4% in the upcoming year, boosted by high crop prices.  However, sales are expected to be flat in the US as livestock & dairy farmers remain cautious.  It expects full-year sales in Europe to be flat to down 5% & predicted 10% growth in South America.  DE expects worldwide growth of 8% for construction equipment, "due in part to modest improvement in U.S. economic conditions."  The stock fell $3.16 (4%).

Deere 4Q net income misses analyst expectationsAP

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The Gaza truce helped the markets, but there was no ringing endorsed with solid gains.  Light pre-holiday volume is partially responsible, but doubts remain about how much this really means.  There is an abundance of uncertainty involving all of Europe.  Speaking of uncertainty, the fiscal cliff has been put on hold while DC lawmakers went home for the holiday.  Dow has recovered the losses from the 3 day plunge last week, but that's not saying much.  Retail sales will be a driver in the markets next week, along with the usual mish-mash of stories out of DC & Europe.  The bears remain in command.  In the meantime:

Best holiday wishes!!!

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