Dow dropped 62, decliners ahead of advancers almost 2-1 & NAZ lost 11. The Financial Index was off 2+ to the 246s. The MLP index fell 1+ to 432 & the REIT index lost 1+ to the 282s. Junk bond funds were higher & Treasuries had a good day, taking the yield on the 10 year Treasury down to 1.96%. Oil rose & gold went above 1600, one of its highest levels in more than a month
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Apple is poised to boost its div by more than half based on estimates by analysts, providing investors hit by a share slump with one of the highest yields in the tech industry. The annual div could rise to $4.14 a share, for an annual payout of almost $16B. The resulting yield of 3.7% would be higher than 86% of the companies in the S&P 500 paying divs. AAPL could fund a payout with existing cash flow without using profit from overseas (subject to additional taxes). CEO Tim Cook, who a year ago this month reinstated a div & announced a $10B buyback, faces mounting pressure to take bolder steps to pay out more of Apple’s $137B in cash & investments. Investors are pushing for more money as growth slows & competition from rivals intensifies. The company approaches the anniversary of last year’s announcement, on Mar 19, when Cook reinstated divs after a 17-year hiatus, breaking with a pattern set by co-founder Steve Jobs, who sought to preserve capital. Div predictions range from $3.31 to $5.30. The stock gained 11 to 455 in anticipation of a div announcement.
The Federal Reserve (FED) will use its policy meeting next week to try to convince investors that it has no intention of slowing down or ending its ultra-loose monetary policy anytime soon. Even though the economy has reporting good data, it is unlikely there will a shift in monetary policy by the FED. Big Ben & his majority on the FED are concerned that markets may start to price in some tapering, & higher rates could harm the recovery. Since Dec, the FED has been buying $85B per month of Treasurys in an open-ended program that it said would continue until there was a substantial improvement in the labor market. It has held its short-term interest-rate target close to zero for more than 4 years. Relatively upbeat nonfarm-payroll & retail-sales reports, combined with the rise in the Dow to record highs, has sparked talk of a pullback from the central bank. But FED watchers believe this is premature & it will be many months before the central bank even contemplates a change in policy stance. The FED may be wary about the data because in the last few years the economy has looked good in the first few months of the year, only to fade after spring arrived. At its Jan meeting, the minutes noted that “a number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.” Some took this as a sign the FED was close to tapering the purchases. But the minutes fail to differentiate between the voters & non-voters.
Fed to Signal it Will Keep Punch Bowl Full
Hewlett-Packard, a Dow stock, rose to the highest price in 10 months after receiving an analyst upgrade on the potential for the company to return more cash to investors. The company may generate free cash flow of about $6.7B in the fiscal 2013, about 35% more than the company’s $5B forecast. As CEO Meg Whitman works to revive growth amid a slump in sales of PC, restructuring may result in $2.2B by next year. The core PC business is shrinking because of competition from lower-priced rivals & demand for mobile devices. Its enterprise business also is being undermined as companies look for more internet based cloud services. Whitman last Sep said the company planned to cut 29K jobs thru the end of the fiscal 2014. The stock has almost doubled since its low last Sep & was up 66¢ today.
Hewlett-Packard Rises as Cash Return Seen: San Francisco Mover
After falling 100 at the opening, Dow rallied & broke into the black by the early PM as it shook off worries about the Cyprus bailout. Then the sellers returned, taking the Dow lower to a significant loss. Cyprus is a small country, but its banks have a lot of foreign deposits including from Russian investors. A new tax will shake customers & add to worries that other countries with weak economies could resort to this tax. Dow has been rising this month as if it didn't have a care in the world. Even if it doesn't pay attention to goings on in DC, & they are very serious, there is one major worry coming from a very small country. Tomorrow will show if the bulls can regain command of the markets.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.079% | |
U.S. 2-year |
0.248% | |
U.S. 10-year |
1.959% |
| CLJ13.NYM | ...Crude Oil Apr 13 | ....93.83 | ... 0.38 | (0.4%) |
Photo: Bloomberg
Apple is poised to boost its div by more than half based on estimates by analysts, providing investors hit by a share slump with one of the highest yields in the tech industry. The annual div could rise to $4.14 a share, for an annual payout of almost $16B. The resulting yield of 3.7% would be higher than 86% of the companies in the S&P 500 paying divs. AAPL could fund a payout with existing cash flow without using profit from overseas (subject to additional taxes). CEO Tim Cook, who a year ago this month reinstated a div & announced a $10B buyback, faces mounting pressure to take bolder steps to pay out more of Apple’s $137B in cash & investments. Investors are pushing for more money as growth slows & competition from rivals intensifies. The company approaches the anniversary of last year’s announcement, on Mar 19, when Cook reinstated divs after a 17-year hiatus, breaking with a pattern set by co-founder Steve Jobs, who sought to preserve capital. Div predictions range from $3.31 to $5.30. The stock gained 11 to 455 in anticipation of a div announcement.
Apple (AAPL)
The Federal Reserve (FED) will use its policy meeting next week to try to convince investors that it has no intention of slowing down or ending its ultra-loose monetary policy anytime soon. Even though the economy has reporting good data, it is unlikely there will a shift in monetary policy by the FED. Big Ben & his majority on the FED are concerned that markets may start to price in some tapering, & higher rates could harm the recovery. Since Dec, the FED has been buying $85B per month of Treasurys in an open-ended program that it said would continue until there was a substantial improvement in the labor market. It has held its short-term interest-rate target close to zero for more than 4 years. Relatively upbeat nonfarm-payroll & retail-sales reports, combined with the rise in the Dow to record highs, has sparked talk of a pullback from the central bank. But FED watchers believe this is premature & it will be many months before the central bank even contemplates a change in policy stance. The FED may be wary about the data because in the last few years the economy has looked good in the first few months of the year, only to fade after spring arrived. At its Jan meeting, the minutes noted that “a number of participants stated that an ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the Committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred.” Some took this as a sign the FED was close to tapering the purchases. But the minutes fail to differentiate between the voters & non-voters.
Fed to Signal it Will Keep Punch Bowl Full
Hewlett-Packard, a Dow stock, rose to the highest price in 10 months after receiving an analyst upgrade on the potential for the company to return more cash to investors. The company may generate free cash flow of about $6.7B in the fiscal 2013, about 35% more than the company’s $5B forecast. As CEO Meg Whitman works to revive growth amid a slump in sales of PC, restructuring may result in $2.2B by next year. The core PC business is shrinking because of competition from lower-priced rivals & demand for mobile devices. Its enterprise business also is being undermined as companies look for more internet based cloud services. Whitman last Sep said the company planned to cut 29K jobs thru the end of the fiscal 2014. The stock has almost doubled since its low last Sep & was up 66¢ today.
Hewlett-Packard Rises as Cash Return Seen: San Francisco Mover
Hewlett-Packard (HPQ)
After falling 100 at the opening, Dow rallied & broke into the black by the early PM as it shook off worries about the Cyprus bailout. Then the sellers returned, taking the Dow lower to a significant loss. Cyprus is a small country, but its banks have a lot of foreign deposits including from Russian investors. A new tax will shake customers & add to worries that other countries with weak economies could resort to this tax. Dow has been rising this month as if it didn't have a care in the world. Even if it doesn't pay attention to goings on in DC, & they are very serious, there is one major worry coming from a very small country. Tomorrow will show if the bulls can regain command of the markets.
Dow Jones Industrials
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