Dow shot up 84, advancers ahead of decliners 3-1 & NAZ gained 18. The Financial Index was flat at 231, its yearly high, on drab earnings from the big banks. The Alerian MLP vaulted another 3 to a new peak in the 417s & the REIT index was up 1 to the 276s, matching its previous 4+ year high. Junk bond funds were higher & Treasuries dropped, pushing 10-year note yields higher for the first time in 5 days from signs the economic recovery is strengthening. Oil was up over 95 & gold advanced (negative bets on the recovery).
AMJ (Alerian MLP Index tracking fund)
Photo: Bloomberg
IMF chief Christine Lagarde said that the threat of financial collapse in the global economy appears to have eased. But warned that developed economies still need to follow through on financial reforms and debt reduction. "We stopped the collapse. We should avoid the relapse. And it's not time to relax," she said at a conference on the outlook for 2013. Lagarde said that big economic powers had taken important steps to shore up their financial systems but have a lot of work left to do. She warned that there are signs of a waning commitment to regulate the financial sector, despite the severe problems that began with the collapse of US financial institutions in 2008. She said that reforms have been delayed & diluted, and she worries that banks are pushing back against necessary reforms. On the US Lagarde said any budget cuts should be aimed at allowing time for an economic recovery to play out. "They should clearly touch on entitlements, among other things," she said. In Europe, Lagarde said she sees a lot of progress on reform. She said the EU has a lot of new tools to deal with financial crisis. "And yet, firewalls have not yet proven operational," she said. She added that the EU still has work to do on its banking union in order to prevent future problems. On Greece Lagarde said recent reforms appeared to have restored confidence. "This time it's different," she said.
IMF's Lagarde sees improved world economic outlook AP
Photo: Bloomberg
Citigroup, the 3rd-biggest US. bank by assets, reported a profit increase that was less than expected as litigation costs rose & benefits from releasing loan-loss reserves declined. EPS rose to 38¢ from 31¢ a year earlier. EPS adjusted for one-time items including restructuring costs were 69¢, below the 96¢ forecast, with some items Citi didn’t include. CEO Michael Corbat announced plans to eliminate about 11K employees & pull back from some emerging markets, undoing part of the expansion strategy of his predecessor. Litigation costs included $305M from a settlement between US banks & federal regulators, who were probing claims that lenders improperly seized homes. Corbat’s plans to overhaul the bank’s operations include the appointment of Jamie Forese & Manuel Medina-Mora as co- presidents. Forese is now in charge of all institutional businesses, including trading & investment banking, while Medina-Mora continues to run consumer banking. Forese oversaw a rebound in trading & underwriting revenue as investors sought out some riskier assets with greater potential returns during Q1. The stock fell $1.24.
Citigroup Shares Decline After Earnings Fall Short of Analysts’ Estimates
Dow tried for a new 4+ year closing high, above 13610 (last Oct). But selling into the close cost Dow the claim of a new high. MLPs are flying to new heights & REITs are doing well, although not to same degree as MLPs. High yields continue to be in demand. But earnings season has just begun & the early signals are bland at best. The DC debt mess remains & in a few weeks, that will be getting center attention when earnings season is in full bloom. Happy bulls will attempt to extend today's rally & try to take the Dow to a new high. Prospects for next week are unclear.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month | 0.071% | |
U.S. 2-year | 0.258% | |
U.S. 10-year | 1.875% |
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif) |
Photo: Bloomberg
Manufacturing in the Philadelphia region unexpectedly contracted in Jan, an indication companies are becoming more concerned about across-the-board gov spending cuts that could slow growth. The Federal Reserve Bank of Philadelphia’s general economic index dropped to minus 5.8 from 4.6 in Dec. Readings lower than zero signal contraction in the area covering eastern Pennsylvania, southern NJ & Delaware. The forecast was -5.6. The report follows New York Fed data released earlier this week showing factory activity shrank for a 6th straight month & raises the risk manufacturing, once a pillar of the recovery, will again weaken in early 2013. Looming changes in federal spending & stagnant prices give companies little reason to expand inventories, which may hurt manufacturers. All is not well in the US economy.
IMF chief Christine Lagarde said that the threat of financial collapse in the global economy appears to have eased. But warned that developed economies still need to follow through on financial reforms and debt reduction. "We stopped the collapse. We should avoid the relapse. And it's not time to relax," she said at a conference on the outlook for 2013. Lagarde said that big economic powers had taken important steps to shore up their financial systems but have a lot of work left to do. She warned that there are signs of a waning commitment to regulate the financial sector, despite the severe problems that began with the collapse of US financial institutions in 2008. She said that reforms have been delayed & diluted, and she worries that banks are pushing back against necessary reforms. On the US Lagarde said any budget cuts should be aimed at allowing time for an economic recovery to play out. "They should clearly touch on entitlements, among other things," she said. In Europe, Lagarde said she sees a lot of progress on reform. She said the EU has a lot of new tools to deal with financial crisis. "And yet, firewalls have not yet proven operational," she said. She added that the EU still has work to do on its banking union in order to prevent future problems. On Greece Lagarde said recent reforms appeared to have restored confidence. "This time it's different," she said.
IMF's Lagarde sees improved world economic outlook AP
Photo: Bloomberg
Citigroup, the 3rd-biggest US. bank by assets, reported a profit increase that was less than expected as litigation costs rose & benefits from releasing loan-loss reserves declined. EPS rose to 38¢ from 31¢ a year earlier. EPS adjusted for one-time items including restructuring costs were 69¢, below the 96¢ forecast, with some items Citi didn’t include. CEO Michael Corbat announced plans to eliminate about 11K employees & pull back from some emerging markets, undoing part of the expansion strategy of his predecessor. Litigation costs included $305M from a settlement between US banks & federal regulators, who were probing claims that lenders improperly seized homes. Corbat’s plans to overhaul the bank’s operations include the appointment of Jamie Forese & Manuel Medina-Mora as co- presidents. Forese is now in charge of all institutional businesses, including trading & investment banking, while Medina-Mora continues to run consumer banking. Forese oversaw a rebound in trading & underwriting revenue as investors sought out some riskier assets with greater potential returns during Q1. The stock fell $1.24.
Citigroup Shares Decline After Earnings Fall Short of Analysts’ Estimates
Citigroup (C)
Dow tried for a new 4+ year closing high, above 13610 (last Oct). But selling into the close cost Dow the claim of a new high. MLPs are flying to new heights & REITs are doing well, although not to same degree as MLPs. High yields continue to be in demand. But earnings season has just begun & the early signals are bland at best. The DC debt mess remains & in a few weeks, that will be getting center attention when earnings season is in full bloom. Happy bulls will attempt to extend today's rally & try to take the Dow to a new high. Prospects for next week are unclear.
Dow Jones Industrials
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