Dow inched up pennies, decliners over advancers 3-2 & NAZ lost 3. The Financial Index retreated 1+ to 230 from yesterday's yearly high. The MLP index pulled back 1 to the 412s, after its recent run, & the REIT index dropped 1 to the 273s. Junk bond funds were mixed & Treasuries saw selling. Oil lost ground & gold fell for the 2nd time in 3 days as inflation in China topped estimates,
increasing concern that officials may curb stimulus.
Photo: Bloomberg
Wells Fargo reported $5.1B in profit for Q4, a 24% increase, driven by the bank's lucrative mortgage business. Seizing on low-interest rates that have spurred refinancing activity, the bank again notched record profits. For the last 12 qtrs, profits at the bank have increased. EPS was 91¢, exceeding expectations of 89¢. WFC, unlike many of its rivals, has been able to increase its revenue which was $21.95, up 7% from a year earlier. Much of the revenue gains stemmed from the bank's consumer lending business, especially as borrowers jumped on record low interest rates to refinance their mortgages. WFC, the nation's largest mortgage lender, home mortgage applications profits fell to $152B from $157B last year. Profits in the community banking division, which spans the retail branches & mortgage business, increased 14% to $2.9B. The bank has benefited from sweeping federal stimulus initiates that buoyed the mortgage business. The Treasury Dept has helped spark Americans to refinance their mortgages. The stock fell 50¢.
Photo: Yahoo
The US trade deficit unexpectedly widened in Nov due to a surge in imports, pointing to a sharp slowdown in economic growth during Q4. Still, the trade gap's growth was driven by imports of consumer goods, a potentially positive sign for household spending if the gains in imports were not a one-time rebound following a disruptive storm. The trade deficit widened 16% to $48.7B, according to the Commerce Dept. Expectations were for the deficit to shrink to $41B. When a country imports more than it exports, cash is sucked out of its economy, subtracting from GDP. Economists were cutting forecasts for Q4 GDP growth after the economy grew at an above-trend 3.1% pace in Q3. The trade deficit was the widest since Apr as imports surged 3.8%, the biggest gain in 8 months. Imports of consumer goods rose $4.6B, while imports of petroleum products fell by $870M. Overall, exports rose 1%, held back by a 1.3% decline in exports to the EU, which continues to battle a sovereign debt crisis & recession.
Photo: Bloomberg
European policy makers are shifting focus from a financial crisis to an economic-growth crisis. “We are now back in a normal situation from a financial viewpoint, but we are not at all seeing an early and strong recovery,” ECB President Mario Draghi said. Luxembourg Prime Minister Juncker, who leads euro-area finance ministers, echoed that by saying, “the worst is over, but what we still have to do is difficult.” The next test for authorities will come if the economic slump reignites investor doubts about cash-strapped govs. Draghi’s change in language spurred the € to its biggest gain in 4 months. Spain’s 10-year borrowing costs, yesterday fell below 5% for the first time since Mar after a bond sale. “We spoke a lot about contagion when things go poorly, but I believe there is a positive contagion when things go well,” Draghi said. “That’s also what is in play now. There is a positive contagion.” We'll see.
Stocks are meandering again after WFC earnings did not get a warm reception. More big banks will report in the next few days & their results may not be well received. MLPs lost ground which was expected after their straight run up since Dec 28. Don't forget to watch DC where there is a lot going on (or not going on) that can influence the markets.
AMJ (Alerian MLP Index tracking fund)
| CLG13.NYM | ...Crude Oil Feb 13 | ...92.98 | ..... 0.84 | (0.9%) |
| GCF13.CMX | ...Gold Jan 13 | ......1,657.40 | ... 19.90 | (1.2%) |
Photo: Bloomberg
Wells Fargo reported $5.1B in profit for Q4, a 24% increase, driven by the bank's lucrative mortgage business. Seizing on low-interest rates that have spurred refinancing activity, the bank again notched record profits. For the last 12 qtrs, profits at the bank have increased. EPS was 91¢, exceeding expectations of 89¢. WFC, unlike many of its rivals, has been able to increase its revenue which was $21.95, up 7% from a year earlier. Much of the revenue gains stemmed from the bank's consumer lending business, especially as borrowers jumped on record low interest rates to refinance their mortgages. WFC, the nation's largest mortgage lender, home mortgage applications profits fell to $152B from $157B last year. Profits in the community banking division, which spans the retail branches & mortgage business, increased 14% to $2.9B. The bank has benefited from sweeping federal stimulus initiates that buoyed the mortgage business. The Treasury Dept has helped spark Americans to refinance their mortgages. The stock fell 50¢.
Wells Fargo (WFC)
Photo: Yahoo
The US trade deficit unexpectedly widened in Nov due to a surge in imports, pointing to a sharp slowdown in economic growth during Q4. Still, the trade gap's growth was driven by imports of consumer goods, a potentially positive sign for household spending if the gains in imports were not a one-time rebound following a disruptive storm. The trade deficit widened 16% to $48.7B, according to the Commerce Dept. Expectations were for the deficit to shrink to $41B. When a country imports more than it exports, cash is sucked out of its economy, subtracting from GDP. Economists were cutting forecasts for Q4 GDP growth after the economy grew at an above-trend 3.1% pace in Q3. The trade deficit was the widest since Apr as imports surged 3.8%, the biggest gain in 8 months. Imports of consumer goods rose $4.6B, while imports of petroleum products fell by $870M. Overall, exports rose 1%, held back by a 1.3% decline in exports to the EU, which continues to battle a sovereign debt crisis & recession.
Photo: Bloomberg
European policy makers are shifting focus from a financial crisis to an economic-growth crisis. “We are now back in a normal situation from a financial viewpoint, but we are not at all seeing an early and strong recovery,” ECB President Mario Draghi said. Luxembourg Prime Minister Juncker, who leads euro-area finance ministers, echoed that by saying, “the worst is over, but what we still have to do is difficult.” The next test for authorities will come if the economic slump reignites investor doubts about cash-strapped govs. Draghi’s change in language spurred the € to its biggest gain in 4 months. Spain’s 10-year borrowing costs, yesterday fell below 5% for the first time since Mar after a bond sale. “We spoke a lot about contagion when things go poorly, but I believe there is a positive contagion when things go well,” Draghi said. “That’s also what is in play now. There is a positive contagion.” We'll see.
Stocks are meandering again after WFC earnings did not get a warm reception. More big banks will report in the next few days & their results may not be well received. MLPs lost ground which was expected after their straight run up since Dec 28. Don't forget to watch DC where there is a lot going on (or not going on) that can influence the markets.
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