Dow added 152, advancers over decliners 3-1 & NAZ gained 35. The MLP index jumped 3+ to go over 460, yet another record, & the REIT index went up 2 to 300. Junk bond funds were higher & Treasuries were flattish. Oil finished even & gold slipped after a modest recovery.
AMJ (Alerian MLP Index tracking fund)
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Photo: Bloomberg
Spain's recession eased in Q1 as Prime Minister Rajoy prepares plans to foster growth while reducing the country’s budget deficit. GDP shrank 0.5% from Q4, when it dropped 0.8%, the most since 2009, the Bank of Spain said. That’s the 7th quarterly contraction. Rajoy is seeking more time from the EU to reorder public finances in the euro-area’s 4th largest economy after a banking-sector bailout propelled Spain’s deficit last year to the largest in the region. The yield on Spain’s 10-year bonds fell 23 basis points to 4.264%, narrowing the spread with German debt of similar maturity to 3.05 percentage points after met its maximum target of €3B ($3.9B) in a bills sale. The IMF last week cut its outlook for Spain, predicting the economy to shrink 1.6% this year before growing 0.7% in 2014. Spain “needs more time,” the IMF said. “We do not see a need to do upfront, heavy-duty fiscal consolidation as was initially planned.” Spain’s export growth was also held back by the euro-area recession during Q1, the Bank of Spain said. Eurostat reported yesterday that Spain’s 2012 deficit widened to 10.6% of GDP from 9.4% in 2011, more than 3 times the 3% limit of GDP imposed by the EU on all members. Excluding aid to banks, the 2012 budget deficit was 7.1%. The weakness of income from tax receipts & contributions to the pensions & unemployment benefits system point to a difficulty of reducing the budget deficit in a context of economic crisis, the Bank of Spain said.
Spain’s Recession Eases as Rajoy Prepares Growth Plan
Photo: Bloomberg
China's manufacturing is expanding at a slower pace this month on weakness in global & domestic demand, fueling concern that the world’s 2nd-biggest economy is faltering. The preliminary reading of 50.5 for a Purchasing Managers' Index released by HSBC Holdings & Markit Economics compared with a final 51.6 for Mar. The number was also below the median 51.5 estimate (a reading above 50 indicates expansion). In DC, central bank Governor Zhou Xiaochuan said on Sat that a 7.7% Q1 expansion was reasonable & “normal,” highlighting reduced expectations after 10%+ rates during the past decade. Officials are grappling with constraints on export demand, property-market overheating, the risks associated with a surge in so-called shadow banking, & weakness in consumption because of a campaign to rein in official perks such as spending on banquets. The Shanghai Composite Index fell 2.6%, the biggest decline in 3 weeks.
Coach reported fiscal Q3 results that beat expectations as it saw sales increase in its flagship North American market, as well as overseas. The company also raised its annual div 15¢ to $1.35. COH announced that Reed Krakoff, its pres & executive creative director, will not renew his contract next year so he can focus exclusively on his namesake brand & the company is seeking a successor. As part of its efforts to branch out to other products, COH has been building its men's business, which is expected to double to more than $600M this year. The company's new footwear assortment, which launched during Mar in over 170 stores in North America & 60 directly-operated stores internationally, has been well-received by shoppers. Intl sales rose 6% to $382M, or 14% when stripping out the impact of foreign currency exchange rates. In China, where the company has 118 locations, sales rose 40% & sales at stores open at least a year rose at a "double-digit rate," the company said. EPS was 84¢ compared with 77¢ last year & revenue rose 7% to $1.19B. Analysts expected EPS of 80¢ on sales of $1.18B. The stock took off, up 4.96 to 55.55 after being under pressure for more than a year.
Coach Profit Tops Estimates as North American Sales Advance
Stocks had another good day because earnings were well received. Travelers (TRV), a Dow stock, had good earnings & increased the annual div to $2. The stock gained almost $2. But Europe is still fighting off the effects of its recession & China is adjusting to slower growth, not good for the global economy. More earnings are coming & the big GDP report on Fri will give the market a better idea of how the US economy is coping with higher taxes. While Dow has it eyes on a new record, needing another 150, Treasury yields are at their lows for this year (buyers are betting against the market).
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.048% | |
U.S. 2-year |
0.228% | |
U.S. 10-year |
1.694% |
| CLM13.NYM | Crude Oil Jun 13 | 89.21 |  0.02 (0.0%) |
Photo: Bloomberg
Spain's recession eased in Q1 as Prime Minister Rajoy prepares plans to foster growth while reducing the country’s budget deficit. GDP shrank 0.5% from Q4, when it dropped 0.8%, the most since 2009, the Bank of Spain said. That’s the 7th quarterly contraction. Rajoy is seeking more time from the EU to reorder public finances in the euro-area’s 4th largest economy after a banking-sector bailout propelled Spain’s deficit last year to the largest in the region. The yield on Spain’s 10-year bonds fell 23 basis points to 4.264%, narrowing the spread with German debt of similar maturity to 3.05 percentage points after met its maximum target of €3B ($3.9B) in a bills sale. The IMF last week cut its outlook for Spain, predicting the economy to shrink 1.6% this year before growing 0.7% in 2014. Spain “needs more time,” the IMF said. “We do not see a need to do upfront, heavy-duty fiscal consolidation as was initially planned.” Spain’s export growth was also held back by the euro-area recession during Q1, the Bank of Spain said. Eurostat reported yesterday that Spain’s 2012 deficit widened to 10.6% of GDP from 9.4% in 2011, more than 3 times the 3% limit of GDP imposed by the EU on all members. Excluding aid to banks, the 2012 budget deficit was 7.1%. The weakness of income from tax receipts & contributions to the pensions & unemployment benefits system point to a difficulty of reducing the budget deficit in a context of economic crisis, the Bank of Spain said.
Spain’s Recession Eases as Rajoy Prepares Growth Plan
Photo: Bloomberg
China's manufacturing is expanding at a slower pace this month on weakness in global & domestic demand, fueling concern that the world’s 2nd-biggest economy is faltering. The preliminary reading of 50.5 for a Purchasing Managers' Index released by HSBC Holdings & Markit Economics compared with a final 51.6 for Mar. The number was also below the median 51.5 estimate (a reading above 50 indicates expansion). In DC, central bank Governor Zhou Xiaochuan said on Sat that a 7.7% Q1 expansion was reasonable & “normal,” highlighting reduced expectations after 10%+ rates during the past decade. Officials are grappling with constraints on export demand, property-market overheating, the risks associated with a surge in so-called shadow banking, & weakness in consumption because of a campaign to rein in official perks such as spending on banquets. The Shanghai Composite Index fell 2.6%, the biggest decline in 3 weeks.
Coach reported fiscal Q3 results that beat expectations as it saw sales increase in its flagship North American market, as well as overseas. The company also raised its annual div 15¢ to $1.35. COH announced that Reed Krakoff, its pres & executive creative director, will not renew his contract next year so he can focus exclusively on his namesake brand & the company is seeking a successor. As part of its efforts to branch out to other products, COH has been building its men's business, which is expected to double to more than $600M this year. The company's new footwear assortment, which launched during Mar in over 170 stores in North America & 60 directly-operated stores internationally, has been well-received by shoppers. Intl sales rose 6% to $382M, or 14% when stripping out the impact of foreign currency exchange rates. In China, where the company has 118 locations, sales rose 40% & sales at stores open at least a year rose at a "double-digit rate," the company said. EPS was 84¢ compared with 77¢ last year & revenue rose 7% to $1.19B. Analysts expected EPS of 80¢ on sales of $1.18B. The stock took off, up 4.96 to 55.55 after being under pressure for more than a year.
Coach Profit Tops Estimates as North American Sales Advance
Coach (COH)
Stocks had another good day because earnings were well received. Travelers (TRV), a Dow stock, had good earnings & increased the annual div to $2. The stock gained almost $2. But Europe is still fighting off the effects of its recession & China is adjusting to slower growth, not good for the global economy. More earnings are coming & the big GDP report on Fri will give the market a better idea of how the US economy is coping with higher taxes. While Dow has it eyes on a new record, needing another 150, Treasury yields are at their lows for this year (buyers are betting against the market).
Dow Jones Industrials
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