Wednesday, January 16, 2013

Markets slip lower after JPMorgan earnings

Dow fell 40, decliners ahead of advancers 2-1 & NAZ was up 3, helped by a rise in Apple (AAPL) stock.  The Financial Index was down slightly, just above 230.  The MLP index was fractionally higher to the 415s, a new record, & the REIT index lost a fraction to the 275s.  Junk bond funds were lower & Treasuries gained with the yield on the 10 year Treasury at the lowest this year.  Oil & gold are marking time.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG13.NYMCrude Oil Feb 1393.47 Up 0.19 (0.2%)

GCF13.CMX...Gold Jan 13...1,682.60 ...Down 0.80  (0.1%)

Industrial Production in U.S. Climbs 0.3%

Photo:   Bloomberg

US factory production rose in Dec for the 2nd straight month, buoyed by more output of autos, electronics & business equipment.  The Federal Reserve said that factory output increased 0.8% compared with Nov following a 1.3% rise in Nov (which partly reflected a rebound from Superstorm Sandy). Total industrial production increased 0.3% in Dec from Nov.  That followed a 1% rise in Nov.  Production slowed last month mostly because utility output dropped 4.8%, reflecting unseasonably warm weather.  Factory output is the most important component of industrial production.  Many factories have been hurt by a slowdown in consumer spending & weaker global growth that has dampened demand for US exports.  One exception has been the auto companies, which boosted production sharply last year to meet the best sales since 2007.

A man walks past JPMorgan Chase & Co's international headquarters on Park Avenue in New York July 13, 2012. REUTERS/Andrew Burton

Photo:   Yahoo

JPMorgan Chase Q4 net income jumped 53% & EPS for 2012 set a record.  Q4 results were helped by increased mortgage lending profits & a decline in the costs for bad loans.  The board said the bank's strong results were a key reason to give Dimon a bonus, but the London trading losses cut into his compensation.  Q4 EPS was $1.39, up from 90¢ a year earlier . Results for both periods included special items.  Revenue from mortgage production, excluding losses on repurchases of past loans, increased 51% to $1.6B.  JPM has benefited from being a middleman in the Federal Reserve's drive to channel inexpensive money to borrowers to support the housing market and the economy.  Revenue from making home loans has eased the squeeze on bank profit margins that has come with low interest rates.  The provision for credit losses plunged 70% to $656M.  "We continued to see favorable credit conditions across our wholesale loan portfolios and strong credit performance in our credit card portfolio," Dimon said.  He said Q1 2013 was "probably okay" for the mortgage business.  As the mortgage refinancing boom runs its course, some worry that lending for new purchases will not rise fast enough to offset the decline.  The stock fell 17¢ on what was basically a good report.

JPMorgan Profit Beats Estimates With 53% Increase as Mortgage Fees Climb

JPMorgan (JPM)

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Confidence among US homebuilders remained unchanged in Jan from Dec,the highest level in nearly 7 years, but builders are feeling slightly less optimistic about their prospects over the next 6 months.  The National Association of Home Builders/Wells Fargo builder sentiment index held steady at 47, the highest reading since Apr 2006, just before the housing bubble burst.  Readings below 50 suggest negative sentiment about the housing market.  The last time the index was at that level or higher was in Apr 2006. It began trending higher in Oct 2011, when it stood at 17.  A measure of traffic by prospective customers increased, while a gauge of current sales conditions remained unchanged from the Dec reading.  An outlook of sales in the next 6 months declined.  Housing continues on the mend.

US homebuilder confidence steady near 7-year high AP

Stocks are wandering, looking for direction.  JPM should have given the market a boost, but it didn't.  The inabiity & unwillingness to raise the debt ceiling is weighing on the markets.  Credit downgrades for US debt may be aournd the corner, not helping matters.  More earnings reports are coming & banks are usually the first ones out with numbers. Like at JPM, favorable numbers may not be enough to overcome doubts about the US debt mess.

Dow Jones Industrials

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