Dow lost 32, advancers & decliners were equal & NAZ slipped 4. The Financial Index added a fraction in the 209s. After 2 days of whopper gains, the MLP index was off chump change in the 389s & the REIT index was up pocket change in the 255s. Junk bond funds inched higher & Treasuries sold off. Oil gained on MidEast tensions but gold gold pulled back.
Photo: Bloomberg
Hewlett-Packard, a Dow stock, said that a British company it bought for $9.7B last year lied about its finances, resulting in a massive write-down of the value of the business. CEO Meg Whitman avoided calling it a fraud, but said that there were "serious accounting improprieties, disclosure failures & outright misrepresentations at Autonomy Corporation PLC." HPQ is taking an $8.8B charge in its latest qtr largely to align the accounting value of Autonomy with its real value. The revelation is another blow for HPQ which is struggling to reinvent itself as PC & printer sales shrink. Its shares hit a 10-year low in morning trading. Acquiring it was part of an attempt to strengthen its portfolio of high-value products & services for corp & gov agencies. The case has been referred to the SEC the UK's Serious Fraud Office, she said. The company will also try to recoup some of the cash it paid thru lawsuits. The HPQ net loss per share for the fiscal Q4, amounted to 3.49, substantially worse than EPS of 12¢ last year. It was the 2nd mammoth loss in a row for HPQ. Excluding the charges in the latest qtr, EPS was $1.16, just above the average analyst forecast of $1.14. Revenue was $30B, down 7% from last year & below expectations at $30.5B. The company stuck to its previously given earnings forecast for the fiscal year that just started, but it issued a forecast for this qtr that was well below analyst expectations. It now expects EPS, excluding items, to be 68-71¢, while analysts were looking for 85¢. The stock plunged $1.56 to its lowest price in years.
Hewlett-Packard Profit Forecast; $8.8 Billion Charge
Greek Prime Minister Antonis Samaras.
Photo: Bloomberg
European finance ministers will try to plug a €15B ($19B) hole in Greece's finances & win over the IMF in the latest installment of 3 years of debt-crisis brinkmanship. Recycling ECB profits on Greek bonds, charging Greece lower interest rates & extending repayment deadlines are among the options under consideration today for filling the new gap in Greece’s accounts. European govs tore open the hole last week, by giving Greece 2 extra years to cut its budget deficit. The required extra financing provoked a clash with the IMF, since it would add to Greece’s debt load instead of reducing it. “There are good chances that we will come to a conclusive mutual solution, but I can’t be entirely sure,” Luxembourg Prime Minister Jean-Claude Juncker said (before chairing today’s meeting of finance ministers in Brussels). He said “a sufficient number of bridge-building elements” are being explored to placate the IMF. It;s difficult to see anything conclusive coming out the meeting.
Photo: Bloomberg
US home builders started construction in Oct on the most homes & apartments since Jul 2008, more evidence that the housing recovery is gaining momentum. The Commerce Dept said that builders broke ground on homes in Oct at an annual rate of 894K, a 3.6% gain from Sep. Single-family home construction dipped 0.2% to an annual rate of 594K, down from a 4-year high in the previous month. Apartment construction, more volatile, rose 10% to an annual rate of 285K. Applications for building permits, a sign of future construction, fell 2.7% to 866K, after jumping 12% in Sep to a 4-year high. Still, permit applications to build single-family homes rose to their highest level since Jul 2008. Housing starts are 87% above the annual rate of 478K in Apr 2009, the recession low. But that's still short of the 1.5M annual rate considered healthy. Superstorm Sandy had minimal impact on the Oct figures.
Housing Starts in U.S. Increase to Four-Year High
Markets need time to digest the gains in the last 2 days. They were propelled by hopes for resolution on the fiscal cliff mess. There may a growing realization that these talks can drag on for weeks with DC so widely divided. Even MLPs, which have been the hottest sector in this rise, are seeing some selling today. Then there's the Greek debt mess which is being played out today. Again while talk is cheap, it's difficult to see a solution. Dow remains well below the 13K floor it had learned to live above for most of the year. The bears are still in charge.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.086% | |
U.S. 2-year |
0.250% | |
U.S. 10-year |
1.627% |
| CLF13.NYM | ...Crude Oil Jan 13 | ...88.42 | ... 0.86 | (1.0%) |
| GCX12.CMX | ...Gold Nov 12 | ...1,730.60 | ... 3.40 | (0.0%) |
Photo: Bloomberg
Hewlett-Packard, a Dow stock, said that a British company it bought for $9.7B last year lied about its finances, resulting in a massive write-down of the value of the business. CEO Meg Whitman avoided calling it a fraud, but said that there were "serious accounting improprieties, disclosure failures & outright misrepresentations at Autonomy Corporation PLC." HPQ is taking an $8.8B charge in its latest qtr largely to align the accounting value of Autonomy with its real value. The revelation is another blow for HPQ which is struggling to reinvent itself as PC & printer sales shrink. Its shares hit a 10-year low in morning trading. Acquiring it was part of an attempt to strengthen its portfolio of high-value products & services for corp & gov agencies. The case has been referred to the SEC the UK's Serious Fraud Office, she said. The company will also try to recoup some of the cash it paid thru lawsuits. The HPQ net loss per share for the fiscal Q4, amounted to 3.49, substantially worse than EPS of 12¢ last year. It was the 2nd mammoth loss in a row for HPQ. Excluding the charges in the latest qtr, EPS was $1.16, just above the average analyst forecast of $1.14. Revenue was $30B, down 7% from last year & below expectations at $30.5B. The company stuck to its previously given earnings forecast for the fiscal year that just started, but it issued a forecast for this qtr that was well below analyst expectations. It now expects EPS, excluding items, to be 68-71¢, while analysts were looking for 85¢. The stock plunged $1.56 to its lowest price in years.
Hewlett-Packard Profit Forecast; $8.8 Billion Charge
Hewlett-Packard (HPQ)
Greek Prime Minister Antonis Samaras.
Photo: Bloomberg
European finance ministers will try to plug a €15B ($19B) hole in Greece's finances & win over the IMF in the latest installment of 3 years of debt-crisis brinkmanship. Recycling ECB profits on Greek bonds, charging Greece lower interest rates & extending repayment deadlines are among the options under consideration today for filling the new gap in Greece’s accounts. European govs tore open the hole last week, by giving Greece 2 extra years to cut its budget deficit. The required extra financing provoked a clash with the IMF, since it would add to Greece’s debt load instead of reducing it. “There are good chances that we will come to a conclusive mutual solution, but I can’t be entirely sure,” Luxembourg Prime Minister Jean-Claude Juncker said (before chairing today’s meeting of finance ministers in Brussels). He said “a sufficient number of bridge-building elements” are being explored to placate the IMF. It;s difficult to see anything conclusive coming out the meeting.
Photo: Bloomberg
US home builders started construction in Oct on the most homes & apartments since Jul 2008, more evidence that the housing recovery is gaining momentum. The Commerce Dept said that builders broke ground on homes in Oct at an annual rate of 894K, a 3.6% gain from Sep. Single-family home construction dipped 0.2% to an annual rate of 594K, down from a 4-year high in the previous month. Apartment construction, more volatile, rose 10% to an annual rate of 285K. Applications for building permits, a sign of future construction, fell 2.7% to 866K, after jumping 12% in Sep to a 4-year high. Still, permit applications to build single-family homes rose to their highest level since Jul 2008. Housing starts are 87% above the annual rate of 478K in Apr 2009, the recession low. But that's still short of the 1.5M annual rate considered healthy. Superstorm Sandy had minimal impact on the Oct figures.
Housing Starts in U.S. Increase to Four-Year High
Markets need time to digest the gains in the last 2 days. They were propelled by hopes for resolution on the fiscal cliff mess. There may a growing realization that these talks can drag on for weeks with DC so widely divided. Even MLPs, which have been the hottest sector in this rise, are seeing some selling today. Then there's the Greek debt mess which is being played out today. Again while talk is cheap, it's difficult to see a solution. Dow remains well below the 13K floor it had learned to live above for most of the year. The bears are still in charge.
Dow Jones Industrials
1 comment:
Theirs no hope for the euro zone. I cannot believe that theirs those in the investment community that think the debt problem in Italy spain and greece can be solved. Their is no way out of this fiscal mess in the euro zone or in the united states. A domino of defaults by sovereign governments is inevitable. Or a hyper inflation caused by excessive money printing by world central banks will occur. It will happen its just a question of when. This whole thing seems like a bad nightmare. Only problem is its not a nightmare its real.
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