Thursday, January 31, 2013

Markets drift lower awaiting unempolyment report

Dow fell 49, advancers just ahead of decliners & NAZ slid pennies.  The Financial Index slipped a fraction in the 233s.  The MLP index rose 4+ to over 430, another new record, & the REIT index dropped 2 to the 276s.  Junk bond funds were lower & Treasuries went up.  Oil slid 52¢ from its almost 9 month high & gold fell $16 to $1664, the biggest decline in 4 weeks.

AMJ (Alerian MLP Index tracking fund)

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Live 24 hours gold chart [Kitco Inc.]

UPS 2013 Forecast Trails Analysts’ Estimates on Sluggish Economy

Photo:   Bloomberg

UPS forecast profit for this year trailed estimates as a weak global economy weighs on shipping.  EPS will be $4.80-$5.06 which compares with a projection by analysts of $5.13.  Growth is constrained by a sluggish worldwide economy & disputes over the US debt ceiling that erode shipping demand & confidence, CEO Scott Davis said.  Analysts use the company as an economic gauge because it handles goods as varied as auto parts & pharmaceuticals.  EPS for Q4 was $1.32 a share, below a $1.38 average estimate.  EPS was curbed by 6¢ for costs from superstorm Sandy & expenses from the pursuit of  TNT Express (TNTE).  UPS fell $1.94.

UPS 2013 Earnings Forecast Trails Analysts’ Estimates on Sluggish Economy


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Dell chairman and CEO Michael Dell

Photo:   Bloomberg

Michael Dell set up a family office in 1998 that diversified his wealth beyond stock in the computer maker he had started 14 years earlier.  Now, as he seeks to take his company Dell private, the same investment firm may provide pivotal financing for what would be the largest buyout since 2007.  It wouldn’t be the first time that Dell has relied on MSD Capital to increase his holdings in the computer company.  Between 2006 & 2011, he bought $625M of Dell stock with cash provided by MSD Capital.  Dell’s fortune is key to pulling off the LBO & he’s expected to contribute about half of the estimated $8-$9B in equity needed for the deal, with private-equity firm Silver Lake Management & Microsoft (MSFT), a Dow stock, each contributing $1-$2B.  The stock lost a dime.

Michael Dell Keeps Leveraged Buyout Funding in the Family With MSD Capital

Dell (DELL)

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Stocks meandered all day.  Earnings are coming out mixed & traders are anxious to learn the jobless numbers for Jan.  New jobs data has been cheerless in recent months.  Enough jobs were created to reduce the unemployment rate below 8%, but some of that decline is attributable to people giving up looking for work.  Tomorrow's figure will be helpful to understand how much the increase in Social Security taxes is affecting consumers & businesses they buy from.  For the month, Dow rose 750, hardly chump change.  The Alerian MLP Index gained 51 since Dec 28, a record gain in such a short time.  But all markets are way overbought.

Dow Jones Indutsrials

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