Dow dropped 138, decliners over advancers 5-2 & NAZ fell 29. The MLP index fell an enormous big 8+ to the 448s & REIT index was down 2+ to 302. Junk bond funds were weak & Treasuries continued in a rally mode. Commodities also sold off.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
The Federal Reserve (FED) stood by its extraordinary efforts to stimulate the economy because unemployment remains high at 7.6%. The FED said the economy & job market have been improving only moderately, held back by gov spending cuts & tax increases. It maintained its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5% & said it will continue buying $85B a month in Treasury & mortgage bonds to keep long-term borrowing costs down. The FED made clear that it could increase or decrease bond purchases depending on the performance of the job market & inflation. It was explicit for the first time that tax increases & federal budget cuts are "restraining economic growth." Several reports in recent weeks have signaled the economy has weakened since the start of the year, highlighted by GDP growing at an annual rate of 2.5% in Q1. The FED has been joined by other major central banks in seeking to strengthen growth & reduce high unemployment.
Fed Maintains QE Pace, Prepared to Alter as Economy Evolves
Photo: Bloomberg
Ford (F), General Motors (GM) & Chrysler Group reported US sales increases for Apr, building on their first sweep of market share gains in Q1 of any year in 2 decades. Ford sales rose 18%. GM & Chrysler deliveries each increased 11%. The better-than-projected results follow Ford, GM & Chrysler all gaining US market share in Q1 for the first time since 1993 (when Clinton was the newly elected pres). America’s automakers also outpaced their Japanese rivals last month, as Toyota (TM) & Nissan Motor reported sales that missed estimates. Honda’s growth also trailed the 3 US companies, which took advantage of rising demand for full-size pickups as the economy rebounds. US light-vehicle sales probably climbed 11% in Apr to 1.3M. The annualized industry sales rate may have risen to 15.2M from 14.1M last year. That would keep the market on pace for its best year since 2007. TM sales slipped 1.1% & Nissan’s rose 23% (both short of estimates). Honda sales rose 7.4%, just above the estimate. GM forecasted a 15M industry sales pace for Apr. Chrysler predicted a 15.4M industry sales pace for the month.
Time Warner Q1 sales missed estimates as advertising dropped in part because of a later schedule for college basketball’s biggest event. Revenue slid less than 1% from a year earlier to $6.93B & below the $7.12B estimate. The NCAA tournament extended later into Q2 than it typically does, with the championship game on Apr 8, dragging TV ad revenue down 1% to $1.08B compared to a year earlier, when it was held on Apr 2. CEO Jeffrey Bewkes has focused the company’s growth strategy on its TV business, which accounts for more than 70% sales. He announced plans in Mar to spin off magazine publisher Time, the company’s worst-performing division, after unsuccessful talks to merge the unit with Meredith Corp (MDP). Excluding some items, Q1 EPS was 82¢, surpassing the 74¢ predicted. Affiliate fees from the pay-TV companies gained 5%, helping total revenue in the cable-network unit rise 2.6% to $3.7B. The Warner Bros sales declined 4% to $2.7B on lower box-office business & TV-licensing revenue. Time Inc’s sales dropped about 5% to $737M. TWX in Q1 boosted its div 11% & a stock buyback program started in Jan will be worth as much as $4B. For 2013, TWX reiterated that EPS will grow at a rate in the “low double digits” from $3.28 in 2012, excluding some items. That includes the effect of a $60M restructuring at Time. The stock has been strong but gave back 30¢ today.
Time Warner Beats Profit Estimates on Higher Sales to Cable
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.053% | |
U.S. 2-year |
0.202% | |
U.S. 10-year |
1.638% |
| CLM13.NYM | ...Crude Oil Jun 13 | ...90.90 |  ....2.56 | (2.7%) |
Photo: Bloomberg
The Federal Reserve (FED) stood by its extraordinary efforts to stimulate the economy because unemployment remains high at 7.6%. The FED said the economy & job market have been improving only moderately, held back by gov spending cuts & tax increases. It maintained its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5% & said it will continue buying $85B a month in Treasury & mortgage bonds to keep long-term borrowing costs down. The FED made clear that it could increase or decrease bond purchases depending on the performance of the job market & inflation. It was explicit for the first time that tax increases & federal budget cuts are "restraining economic growth." Several reports in recent weeks have signaled the economy has weakened since the start of the year, highlighted by GDP growing at an annual rate of 2.5% in Q1. The FED has been joined by other major central banks in seeking to strengthen growth & reduce high unemployment.
Fed Maintains QE Pace, Prepared to Alter as Economy Evolves
Photo: Bloomberg
Ford (F), General Motors (GM) & Chrysler Group reported US sales increases for Apr, building on their first sweep of market share gains in Q1 of any year in 2 decades. Ford sales rose 18%. GM & Chrysler deliveries each increased 11%. The better-than-projected results follow Ford, GM & Chrysler all gaining US market share in Q1 for the first time since 1993 (when Clinton was the newly elected pres). America’s automakers also outpaced their Japanese rivals last month, as Toyota (TM) & Nissan Motor reported sales that missed estimates. Honda’s growth also trailed the 3 US companies, which took advantage of rising demand for full-size pickups as the economy rebounds. US light-vehicle sales probably climbed 11% in Apr to 1.3M. The annualized industry sales rate may have risen to 15.2M from 14.1M last year. That would keep the market on pace for its best year since 2007. TM sales slipped 1.1% & Nissan’s rose 23% (both short of estimates). Honda sales rose 7.4%, just above the estimate. GM forecasted a 15M industry sales pace for Apr. Chrysler predicted a 15.4M industry sales pace for the month.
Time Warner Q1 sales missed estimates as advertising dropped in part because of a later schedule for college basketball’s biggest event. Revenue slid less than 1% from a year earlier to $6.93B & below the $7.12B estimate. The NCAA tournament extended later into Q2 than it typically does, with the championship game on Apr 8, dragging TV ad revenue down 1% to $1.08B compared to a year earlier, when it was held on Apr 2. CEO Jeffrey Bewkes has focused the company’s growth strategy on its TV business, which accounts for more than 70% sales. He announced plans in Mar to spin off magazine publisher Time, the company’s worst-performing division, after unsuccessful talks to merge the unit with Meredith Corp (MDP). Excluding some items, Q1 EPS was 82¢, surpassing the 74¢ predicted. Affiliate fees from the pay-TV companies gained 5%, helping total revenue in the cable-network unit rise 2.6% to $3.7B. The Warner Bros sales declined 4% to $2.7B on lower box-office business & TV-licensing revenue. Time Inc’s sales dropped about 5% to $737M. TWX in Q1 boosted its div 11% & a stock buyback program started in Jan will be worth as much as $4B. For 2013, TWX reiterated that EPS will grow at a rate in the “low double digits” from $3.28 in 2012, excluding some items. That includes the effect of a $60M restructuring at Time. The stock has been strong but gave back 30¢ today.
Time Warner Beats Profit Estimates on Higher Sales to Cable
Time Warner (TWX)
The bulls have been reminded that stocks don't just go straight up. While Apr ended on an up note, Dow spent much of earnings season month sloshing around, not sure where to go. Lost as the Dow has been climbing to new heights, Treasuries have also been in rally mode. By mid Mar, the yield on the 10 year Treasury was around 2.05%. Since then it has dropped more than 40 basis points & may even have its eyes on the record low of 1.4% made last year. This money is betting against rising stock prices!
Dow Jones Industrials
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