Dow dropped 172, decliners over advancers 4-1 & NAZ fell 66. The MLP index tumbled 4+ to the 447s & the REIT index was off 4 to 294. Junk bond funds were mixed & Treasuries had a modest rise. Oil fell
for the 4th time in 5 days before gov data that may
show US crude inventories rose last week to the highest level
in more than 22 years. Gold slid back.
AMJ (Alerian MLP Index tracking fund)
The IMF is urging the Federal Reserve (FED) & other central banks to closely monitor their extraordinary efforts to jump-start economic growth, warning that the policies could inflate asset bubbles & destabilize financial markets. It said in a global stability report that the low interest rate policies, which are intended to spur borrowing, spending & investing, are providing "essential support" for economic growth & should continue. But it noted that the policies could have "adverse side effects," including excessive corporate debt, a stock market bubble & risky investments by pension funds but there are few signs of asset price bubbles yet. This warning echoes recent debates among FED policymakers, who have pursued aggressive measures intended to help lower still-high unemployment. The FED has said it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5%. It has been purchasing $85B monthly in Treasury & mortgage bonds to lower long-term rates & encouraging more borrowing. The effect on interest rates has also encouraged investors to shift money into stocks & other riskier holdings, & away from bonds. By driving up stock prices, the FED hopes the lower rates will create a "wealth effect" & encourage more consumer spending & economic growth.
IMF urges Fed, central banks to monitor stimulus AP
Photo: Bloomberg
BofA Misses Estimates as Mortgage Banking Weighs on Results
Photo: Bloomberg
Intel, another Dow stock, forecast Q2 sales that may exceed some estimates as strong demand for server chips helps make up for a slump in the PC market. Revenue in the current period will be as much as $13.4B, beating analyst predictions of $12.8B. Improving demand for powerful chips at the heart of corp networks will blunt the impact of falling PC sales & help boost revenue for the year, CFO Stacy Smith said. While a consumer shift to smartphones & tablets from PCs contributed to its 3rd straight decline in quarterly revenue, its server-chip sales have benefited from the increased internet traffic these mobile devices bring. INTC is sticking to its projection for 2013 revenue growth at a “low single-digit” percentage, Smith said. Most of that increase will be provided by a double-digit improvement in server-chip sales, he added. “A big chunk of that comes from the data center,” Smith said. “That alone gets us into the low single digits.” The stock lost 18¢.
Stocks are having another bad day. While there are plenty of excuses to justify selling, the simple fact is that the markets are VASTLY overbought with minimal (if any) economic data to support the buying. Oil had been heading for 100 at the start of Apr, but now is heading for 80. This is helpful on the inflation but does not suggest strong growth demanding more crude. Early earnings reports have not been inspiring. GDP will be reported at the end of next week & that is likely to disappoint. Bears are returning after a long vacation.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
BONDS
U.S. 3-month |
0.053% | |
U.S. 2-year |
0.228% | |
U.S. 10-year |
1.706% |
| CLK13.NYM | ...Crude Oil May 13 | ...87.79 |  ....0.93 | (1.1%) |
| GCJ13.CMX | ....Gold Apr 13 | .......1,386.00 | ...0.80 | (0.1%) |
The IMF is urging the Federal Reserve (FED) & other central banks to closely monitor their extraordinary efforts to jump-start economic growth, warning that the policies could inflate asset bubbles & destabilize financial markets. It said in a global stability report that the low interest rate policies, which are intended to spur borrowing, spending & investing, are providing "essential support" for economic growth & should continue. But it noted that the policies could have "adverse side effects," including excessive corporate debt, a stock market bubble & risky investments by pension funds but there are few signs of asset price bubbles yet. This warning echoes recent debates among FED policymakers, who have pursued aggressive measures intended to help lower still-high unemployment. The FED has said it plans to keep short-term interest rates at record lows at least until unemployment falls to 6.5%. It has been purchasing $85B monthly in Treasury & mortgage bonds to lower long-term rates & encouraging more borrowing. The effect on interest rates has also encouraged investors to shift money into stocks & other riskier holdings, & away from bonds. By driving up stock prices, the FED hopes the lower rates will create a "wealth effect" & encourage more consumer spending & economic growth.
IMF urges Fed, central banks to monitor stimulus AP
Photo: Bloomberg
Bank of America, a Dow stock, profit soared in Q1, helped by
mortgages & wealth management. But revenue fell & profits were below
expectations. The bank reported earnings of $2.3B, up nearly 7 times from depressed earnings of $328M last year. EPS amounted to 20¢, missing the
forecast of 22¢. Revenue was $23.9B after stripping out an accounting charge, down 8% from last year, but it beat the forecast of $23.3B. Lower mortgage banking income & declining gains from the sales of debt
securities weighed on results. The qtr included a $500M settlement of claims tied to faulty home loans. Last year’s Q1 profit
was reduced by $4.8B in pretax accounting charges. CEO Brian Moynihan has sold more than $60B in assets, settled more than $40B in mortgage claims & repaired the bank’s balance sheet since
taking over in 2010. He’s now focused on trimming $8B in annual
expenses while adding revenue. The stock sank 59¢.
BofA Misses Estimates as Mortgage Banking Weighs on Results
Bank of America (BAC)
Photo: Bloomberg
Intel, another Dow stock, forecast Q2 sales that may exceed some estimates as strong demand for server chips helps make up for a slump in the PC market. Revenue in the current period will be as much as $13.4B, beating analyst predictions of $12.8B. Improving demand for powerful chips at the heart of corp networks will blunt the impact of falling PC sales & help boost revenue for the year, CFO Stacy Smith said. While a consumer shift to smartphones & tablets from PCs contributed to its 3rd straight decline in quarterly revenue, its server-chip sales have benefited from the increased internet traffic these mobile devices bring. INTC is sticking to its projection for 2013 revenue growth at a “low single-digit” percentage, Smith said. Most of that increase will be provided by a double-digit improvement in server-chip sales, he added. “A big chunk of that comes from the data center,” Smith said. “That alone gets us into the low single digits.” The stock lost 18¢.
Intel (INTC)
Stocks are having another bad day. While there are plenty of excuses to justify selling, the simple fact is that the markets are VASTLY overbought with minimal (if any) economic data to support the buying. Oil had been heading for 100 at the start of Apr, but now is heading for 80. This is helpful on the inflation but does not suggest strong growth demanding more crude. Early earnings reports have not been inspiring. GDP will be reported at the end of next week & that is likely to disappoint. Bears are returning after a long vacation.
Dow Jones Industrials
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