Dow rose 11, decliners over advancers 3-2 & NAZ fell 10. The MLP index retreated a very large 5+ to the 453s & the REIT index fell 1 to the 299s. Junk bonds were mixed & Treasuries rose with the yield on the 10 year bond sharply below 2%+ in early Mar. Both oil & gold pulled back, along with most stocks.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
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Spanish Prime Minister Rajoy sought a 2-year extension to meet EU deficit rules, as he lowered his growth forecast & predicted little relief from a record 27% unemployment rate. The cabinet today approved a plan to cut the shortfall of 10.6% of GDP back within the EU limit of 3% by 2016 instead of 2014 as demanded by euro-area govs & the European Commission endorsed the plan. This is “a balanced, but still ambitious fiscal consolidation path, given the difficult economic environment,” the commission said. With the euro area in its 2nd year of recession, euro officials are backing away from their austerity-first policies amid criticism from institutions including the IMF. Spanish output has contracted for 7 straight qts & remains 6.5% below its 2008 peak. Last year Rajoy won a one-year extension until 2014 to meet the 3% target.
Spain Says Deficit Target Must Wait 2 More Years Amid Slump
Photo: Yahoo
Amazon shares fell the most in almost 3 months after forecasting operating profit that missed estimates as the company invests in warehouses & digital content. AMZN predicted an operating loss of $340M to a profit of $10M, compared with projections for a profit of $165M. EPS in Q1 fell to 18¢ from 28¢ a year ago. CEO Jeff Bezos is pouring money into new warehouses & digital content to lure new customers & outside sellers who can generate extra income. Even as spending climbed, growth in the number of items sold slowed. Unit growth decelerated to 30% in Q1 from 49% last year. Even as unit growth slows, AMZN is making progress in trimming distribution costs. Bezos added 20 shipment hubs last year to attract customers by offering faster delivery times with a massive selection of products that eclipses what retail stores can offer. The initiative is also designed to attract new merchants willing to sell their wares through Amazon’s storefront and use the e-commerce company to complete orders. Products sold by 3rd parties made up 40% of total sales, CFO Thomas Szkutak said. Digital-content sales are increasing at a “much faster” pace than physical products, Szkutak said. The 10 best-selling items on the website were digital products or sales related to Kindle tablets & electronic-book readers, he said. Its high flying stock tumbled 19+ to 255.
Amazon Falls on Operating Profit Forecast Miss
Starbucks fiscal Q2 profit met the estimate as US customer traffic improved while sales stagnated in Europe. EPS was 51¢, up from 40¢ last year. Excluding certain items, EPS was 48¢, matching the average estimate. CEO Howard Schultz has sought to boost US sales by opening more cafes & expanding beyond coffee with the company’s own juice, baked goods & tea. The company last year began closing locations in Europe, mostly in the UK, as a sovereign debt crisis & a weakening currency has weighed on consumers there. Comparable-store sales rose 6% in the Americas while declining 2% in Europe, the Middle East & Africa. The company gets about ¾ of revenue from the Americas & plans to open 600 stores in its fiscal 2013. In the US, Starbucks can maintain “healthy” customer traffic and comparable-store sales growth in “quarters to come,” CFO Troy Alstead said. Holiday gift-card redemptions & the company’s loyalty program helped sales during the qtr, he said. The company raised its forecast for fiscal 2013 EPS excluding some items to as much as $2.18 from as much as $2.15 while analysts project $2.17. EPS in fiscal Q3 will be as much as 53¢. Revenue advanced 11% to $3.56B versus an estimate of $3.58B. The stock lost 49¢.
Starbucks Profit Matches Analysts’ Estimates as U.S. Store Traffic Gains
Stocks were generally lower, but only 9 Dow stocks dropped. When all is said & done, Dow gained 165 this week & is just 150 below its record highs. The MLPs are finally seeing profit taking but the index is still up 100 in less than a year. With all the mess in DC, raising the debt ceiling has been pushed to a backburner. It looks like the Treasury can keep juggling which will extend that deadline. But its remains another tough problem to solve. The last time they raised the debt ceiling, the pres came up with the brilliant idea of sequester! That's how DC solves complex fiscal problems.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.048% | |
U.S. 2-year |
0.217% | |
U.S. 10-year |
1.668% |
| CLM13.NYM | Crude Oil Jun 13 | 93.11 |  0.53 (0.6%) |
Photo: Yahoo
Spanish Prime Minister Rajoy sought a 2-year extension to meet EU deficit rules, as he lowered his growth forecast & predicted little relief from a record 27% unemployment rate. The cabinet today approved a plan to cut the shortfall of 10.6% of GDP back within the EU limit of 3% by 2016 instead of 2014 as demanded by euro-area govs & the European Commission endorsed the plan. This is “a balanced, but still ambitious fiscal consolidation path, given the difficult economic environment,” the commission said. With the euro area in its 2nd year of recession, euro officials are backing away from their austerity-first policies amid criticism from institutions including the IMF. Spanish output has contracted for 7 straight qts & remains 6.5% below its 2008 peak. Last year Rajoy won a one-year extension until 2014 to meet the 3% target.
Spain Says Deficit Target Must Wait 2 More Years Amid Slump
Photo: Yahoo
Amazon shares fell the most in almost 3 months after forecasting operating profit that missed estimates as the company invests in warehouses & digital content. AMZN predicted an operating loss of $340M to a profit of $10M, compared with projections for a profit of $165M. EPS in Q1 fell to 18¢ from 28¢ a year ago. CEO Jeff Bezos is pouring money into new warehouses & digital content to lure new customers & outside sellers who can generate extra income. Even as spending climbed, growth in the number of items sold slowed. Unit growth decelerated to 30% in Q1 from 49% last year. Even as unit growth slows, AMZN is making progress in trimming distribution costs. Bezos added 20 shipment hubs last year to attract customers by offering faster delivery times with a massive selection of products that eclipses what retail stores can offer. The initiative is also designed to attract new merchants willing to sell their wares through Amazon’s storefront and use the e-commerce company to complete orders. Products sold by 3rd parties made up 40% of total sales, CFO Thomas Szkutak said. Digital-content sales are increasing at a “much faster” pace than physical products, Szkutak said. The 10 best-selling items on the website were digital products or sales related to Kindle tablets & electronic-book readers, he said. Its high flying stock tumbled 19+ to 255.
Amazon Falls on Operating Profit Forecast Miss
Amazon (AMZN)
Starbucks fiscal Q2 profit met the estimate as US customer traffic improved while sales stagnated in Europe. EPS was 51¢, up from 40¢ last year. Excluding certain items, EPS was 48¢, matching the average estimate. CEO Howard Schultz has sought to boost US sales by opening more cafes & expanding beyond coffee with the company’s own juice, baked goods & tea. The company last year began closing locations in Europe, mostly in the UK, as a sovereign debt crisis & a weakening currency has weighed on consumers there. Comparable-store sales rose 6% in the Americas while declining 2% in Europe, the Middle East & Africa. The company gets about ¾ of revenue from the Americas & plans to open 600 stores in its fiscal 2013. In the US, Starbucks can maintain “healthy” customer traffic and comparable-store sales growth in “quarters to come,” CFO Troy Alstead said. Holiday gift-card redemptions & the company’s loyalty program helped sales during the qtr, he said. The company raised its forecast for fiscal 2013 EPS excluding some items to as much as $2.18 from as much as $2.15 while analysts project $2.17. EPS in fiscal Q3 will be as much as 53¢. Revenue advanced 11% to $3.56B versus an estimate of $3.58B. The stock lost 49¢.
Starbucks Profit Matches Analysts’ Estimates as U.S. Store Traffic Gains
Starbucks (SBUX)
Stocks were generally lower, but only 9 Dow stocks dropped. When all is said & done, Dow gained 165 this week & is just 150 below its record highs. The MLPs are finally seeing profit taking but the index is still up 100 in less than a year. With all the mess in DC, raising the debt ceiling has been pushed to a backburner. It looks like the Treasury can keep juggling which will extend that deadline. But its remains another tough problem to solve. The last time they raised the debt ceiling, the pres came up with the brilliant idea of sequester! That's how DC solves complex fiscal problems.
Dow Jones Industrials
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