Friday, June 21, 2013

Markets waver after largest sell off in 2 years

Dow was flattish, advancers barely ahead of decliners & NAZ lost 23.  The MLP index recovered 2+ to the 438s & the REIT index was up 3 to 267.  Junk bond funds were higher but there was more selling in Treasuries.  Oil was weak & gold rebounded, if you can call a meager rise rebounding.  

AMJ (Alerian MLP Index tracking fund)

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Treasury Yields:

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CLX13.NYM.....Crude Oil Nov 13...93.87 Down ...0.44  (0.5%)

GCM13.CMX....Gold Jun 13.......1,290.70 Up ...4.80 (0.4%)

The euro area & the IMF said Greece is assured of its next aid payment as long as it presses ahead with an economic-overhaul program.  Jeroen Dijsselbloem, Dutch head of the group of euro-area finance ministers, said experts intend to wrap up their latest review of Greece’s budget-cutting progress in Jul.  The austerity is a condition for fresh payouts of aid under a €130B ($172B) program.  “We have discussed the state of play on the Greek program, also on financing, and we once again concluded that financing is guaranteed for another year,” Dijsselbloem said.  “Further disbursements will be decided on the basis of the review to be finalized in July.”  The assurances came amid further political fallout in Greece resulting from the gov June 11 decision to shut down public broadcaster ERT, suspend 2600 jobs to create a new, smaller company.  One coalition partners yesterday rejected his proposals for revamping ERT & today decided to withdraw from the gov.  Among the conditions for the loans, Greece has to reduce the number of workers on the state payroll by 15K by the end of 2014.  The Greek drama plays on.

Euro Area, IMF Say Greek Funding Assured

Oracle Sales Miss Estimates Amid Cloud Shift; Dividend Doubled

Photo:   Bloomberg

Oracle fell the most in 3 months after sales missed estimates for a 2nd straight qtr as customers shifted spending to competitors’ Web-based business tools.  Fiscal Q4 sales were $11B, missing the estimate of $11.1B.  While EPS excluding some items of 87¢ matched estimates, the profit forecast for the current period trailed some projections.  The div was doubled, $12B was added in share buybacks & it applied to list on the NYSE.  Customers are choosing online applications instead of ORCL databases, human-resources tools & financial-management software, prompting CEO Larry Ellison to acquire cloud-computing companies to catch up.  Still, new software license sales missed estimates.  The shift in corporate-computing habits is making it harder to compete with cloud providers.  Sales of new software licenses & cloud subscriptions, a closely watched indicator of future revenue, increased 1% to $4.03B, short of estimates.  Revenue from new licenses & cloud subscriptions in the current fiscal Q1 will range from unchanged to an 8% increase from a year ago, excluding the effect of currency fluctuations.  EPS excluding some items will be 56-59¢ & currency rates will lower earnings by about 2¢.  Analysts were predicting 56-62¢ with an average of 58¢.  Hardware-systems sales, including products gained in the 2010 acquisition of Sun Microsystems, declined 13% to $849M.  The quarterly div was jumped to 12¢ but the stock slumped 2.74.

Oracle Sales Miss Estimates in Cloud Shift; Dividend Doubled

Oracle (ORCL)

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Fed Seen by Economists Trimming QE in September, 2014 End

Photo:   Bloomberg

The Federal Reserve (FED) will trim its monthly bond purchases to $65B in Sep & end buying in Jun 2014, according to the plurality of estimates in a Bloomberg survey.  The survey followed Big Ben's press conference in which he mapped out a timetable for ending one of the most aggressive easing strategies in history.  His remarks prompted economists to predict a faster reduction in bond purchases from $85B per month: 44% see a tapering in Sep compared with 27% 2 weeks earlier.  Bernanke, speaking on Jun 19 after the FOMC meeting, said the FED may begin dialing down its unprecedented bond buying this year and end it in mid-2014 if the economy achieves objectives.

Fed Seen by Economists Trimming QE in September, 2014 End

Dow is pausing, taking time to catch its breath after 2 horrible days.  But negative sentiment has not gone away & Treasuries continue to slide, bringing higher interest rates.  The bulls received a major blow to the stomach.  Now they have to figure out how to bring back buyers.  Dow is 660 below its record high on May 28 & will need a major positive story to bring it back a bullish undertone. 

Dow Jones Industrials

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