Thursday, March 21, 2013

Markets decline on concerns over Europe and Oracle

Dow dropped 90, decliners over advancers 2-1 & NAZ was off 31.  The Financial Index slid 2 to the 244s.  The MLP index jumped an amazing 5 to the 442s, yet another new record, & the REIT index lost 1 to the 281s.  Junk bond funds rose as did Treasuries.  Oil slipped back as US oil demand in Feb fell to the lowest level for the month in 20 years as gasoline rose to the highest price for the time of year, the American Petroleum Institute reported.  Gold found some buying interest.

AMJ (Alerian MLP Index tracking fund)

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CLK13.NYM...Crude Oil May 13...92.65 ...Down 0.85  (0.9%)

Live 24 hours gold chart [Kitco Inc.]

A "for sale" sign is seen outside a home in New York June 19, 2012. REUTERS/Shannon Stapleton

Photo:   Yahoo

Home resales hit a 3-year high in Feb & prices jumped, adding to signs of an acceleration in the housing market recovery, even though the supply of properties on the market increased.  The National Association of Realtors said existing home sales increased 0.8% to an annual rate of 4.98M units last month, the highest level since Nov 2009.  The Jan sales pace was revised up a 4.94M units from the previously reported 4.92M.  Expectations were for home resales to rise to a 5M unit rate.  Homes took about 74 days to sell in Feb, down from 97 days from a year ago.  Last month, the inventory of unsold homes on the market increased 9.6% to 1.94M representing a 4.7 months' supply at the Feb sales pace, up from 4.3 months in Jan, the first increase since Apr.  Inventories typically rise in Feb.  Still, the months' supply remained below the 6.0 months that is normally considered as a healthy balance between supply & demand.

<p>               People wait to use the ATM of a closed branch of Laiki Bank in southern port city of Limassol, Thursday, March 21, 2013. The European Central Bank says it will keep emergency aid for Cyprus' troubled banks in place at least until Monday but will have to cut it off after that unless an international rescue program is drawn up. (AP Photo/Pavlos Vrionides)

Photo:    Yahoo

As politicians raced to find a new financial rescue plan ahead of a Mon deadline, one of the country's biggest banks put a cap on daily withdrawals after people rushed to get cash from ATMs.  Cyprus has been told it must raise €5.8B ($7.5B) if it is to receive €10B from its fellow eurozone countries & the IMF.  If it does not find a way by Mon, the ECB said it will cut off emergency support to the banks, letting them collapse.  That would throw the country into financial chaos &, ultimately, cause it to leave the eurozone, with unpredictable consequences for the region.  Pressure has grown since lawmakers yesterday rejected an earlier proposal to seize up to 10% of people's bank accounts.  Banks have been shut since last weekend to avoid a run & will not open until Tues at the earliest.  Uncertainty was growing as the deadline approached & reports spread that the country's 2nd largest bank would be restructured.  Queues of 40-50 formed at the ATMs of Cyprus Popular Bank which responded by capping daily withdrawals at €260 ($340) per person from €700 ($906).  Although ATMs have been functioning, many often run out of cash.  The central bank governor, Panicos Demetriades, urged lawmakers to vote immediately on a legal framework bill to rehabilitate Cyprus's banking sector.  Chaos rules in Cyprus.

Cyprus in race against time as bank concerns grow AP

Oracle CEO Larry Ellison

Photo:   Bloomberg

Oracle reported sales & profit that missed estimates as corp customers transitioning to Web-based programs bought less hardware & software.  Fiscal Q3 EPS excluding some items was 65¢ on adjusted sales of $8.97B versus an estimate of 66¢ on sales of $9.37M.  CEO Larry Ellison is being stymied by customers switching to internet-based cloud systems, curbing their reliance on servers, databases & related programs.  The shift in corp computing habits may have caused sales of hardware & new software tools to fall more than expected.  EPS was little changed at 52¢, compared with 49¢ a year earlier.  New software license & subscription sales, a closely watched indicator of future revenue, fell 1.8% to $2.33M.  Hardware revenue, including servers & storage gained in the 2010 acquisition of Sun Microsystems, declined 23% to $671M, below forecast.  For the current qtr, ORCL forecast EPS excluding some items of 85-91¢, compared with an average projection of 88¢.  Adjusted revenue will be $10.8-$11.4B, CFO Safra Catz said.  Analysts are predicting $11.5B.  Catz said revenue fell last qtr because some large contracts were delayed but many of those have already been signed in the current qtr.  The stock sank 3.46 (10%).

Oracle Tumbles as Sales, Profit Miss Analysts’ Estimates on Hardware Slump

Oracle (ORCL)

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The ECB gave Cyprus a new deadline as a freshly plan is sought for a bailout.  The siutation does not look good & that's putting it mildly.  Disappointing results for ORCL send a chilling signal about earnings season which begins in 3 weeks.  Dow is back to where it was 8 trading days ago.  Meanwhile the Alerian MLP Index is up a massive 69 YTD.  At another time, that wouldn't be a bad run for 2 years!  But Dow is looking tired & toppy.

Dow Jones Industrials

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