Dow went up 15, advancers & decliners were about equal & NAZ added 5. The MLP index was off 1+ to 464 & the REIT index slid 1+ to the 278s. Junk bond funds were lower but Treasuries rose. Oil is headed
for a 3rd weekly increase as US inventories tumbled & gold was flattish.
AMJ (Alerian MLP Index tracking fund)
Photo: Yahoo
Consumer Sentiment in U.S. Unexpectedly Declined in July
Photo: Bloomberg
Chinese Finance Minister Lou Jiwei signaled the economy may expand less than the gov target this year & that growth as low as 6.5% may be tolerable in the future. While the gov in Mar set a 2013 growth goal of 7.5%, Lou said he’s confident 7% can be achieved this year. Lou’s comments suggest China is prepared to allow a further slowdown from a rate that’s already at risk of falling to a 23-year low this year as Premier Li Keqiang focuses on policy changes to create more sustainable expansion. Li said that the gov should keep restructuring the economy as long as growth, employment & inflation stay within limits he didn’t specify. “We don’t think 6.5 percent or 7 percent will be a big problem,” Lou said at a press briefing. “It’s difficult to give you a limit. But from the data we have, we have the confidence.” He said, “please don’t forget that our expected GDP growth rate this year is 7 percent.” adding that “there won’t be much of a problem to meet our expectations this year.” Lou’s remarks may add to confusion over gov growth targets & tolerance levels. Li said in May that the nation seeks 7% annual expansion this decade. He had said at a Mar 17 press conference, his first after becoming premier, that China must average 7.5% growth thru 2020. But state-media transcripts of the briefing that day said Li gave a 7% figure.
China Can Endure Growth Slowdown to 6.5%, Finance Chief Says
Photo: Bloomberg
JPMorgan, a Dow stock & the largest US bank, reported Q2 profit that beat estimates as higher revenue from investment banking & trading overcame a drop in fees from mortgage lending. EPS rose to $1.60 from $1.21, in the same period a year earlier & beat the estimate of $1.45 adjusted for a one-time accounting item. CEO Jamie Dimon has led JPM to record earnings over the past 3 years as Federal Reserve (FED) stimulus boosted the economy & bank profits. Concern that the FED will pare bond purchases lifted long-term borrowing costs during Q2. Net interest margin narrowed to 2.2% from 2.37% in Q1. CFO Marianne Lake estimated that demand for mortgage refinancings could drop 30-40% in H2 & the bank may accelerate a job-cut program announced earlier in the year. Profit benefited from an improvement at the unit that lost $4.4B on wrong-way derivatives bets in last year’s Q2. Another contributor was the release of $1.39B in reserves that had been set aside to cover future loan losses. Total revenue rose 13% from a year earlier to $26B. The biggest unit, consumer & community banking, showed a 3% decline from a year ago to $12B, while corp & investment banking increased 10% to $9.88B. The bank also released about $550M of reserves from the credit-card unit as consumer delinquencies & charge-offs improved, a trend that will continue, Lake said. The quarterly div was increased form 30¢ to 38¢ & the stock rose 28¢.
JPMorgan Profit Rises 31% on Trading, Beats Estimates
Stocks are taking the initial Q2 reports with a sense of equanimity. Good news has already been baked in. Plus bank earnings are always difficult to understand with a mish-mash of numbers. Industrial & service companies will give a better idea of how economies around the world are doing. Europe is still mired in its recession & the news out of China is so-so at best. Stocks should remain little changed in the PM, waiting for more earnings next week.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.03% | |
U.S. 2-year |
0.32% | |
U.S. 10-year |
2.53% |
| CLQ13.NYM | ...Crude Oil Aug 13 | ...105.42 |  ...0.51 | (0.5%) |
| GCN13.CMX | ...Gold Jul 13 | .........1,276.30 | ...3.80 | (0.3%) |
Photo: Yahoo
Consumer sentiment
waned slightly in early Jul, as Americans were more optimistic about
current economic conditions than they have been in 6 years, but that
was offset by a decline in confidence over the recovery's prospects. The Thomson Reuters/University of Michigan's preliminary reading on
the overall index on consumer sentiment edged down to 83.9 from 84.1 in
Jun, shy of forecasts for 85. The barometer of current economic conditions accelerated to 99.7 from 93.8, the highest level since Jul 2007. But the gauge of consumer expectations slipped to 73.8 from 77.8. While sentiment improved among
lower income households, there was a decline in attitudes in those
making more than $75K a year as more consumers worried about higher interest rates to come. The one-year inflation expectation jumped to the highest level since
Feb to 3.3% from 3% as consumers were concerned
higher interest rates could slightly slow the pace of economic &
employment growth. The 5-10-year inflation outlook held steady at 2.9%. However, the recent higher rates
could benefit the housing sector as one in 5 households with incomes
in the top 1/3 said it was better to borrow before mortgage rates rise further.
Consumer Sentiment in U.S. Unexpectedly Declined in July
Photo: Bloomberg
Chinese Finance Minister Lou Jiwei signaled the economy may expand less than the gov target this year & that growth as low as 6.5% may be tolerable in the future. While the gov in Mar set a 2013 growth goal of 7.5%, Lou said he’s confident 7% can be achieved this year. Lou’s comments suggest China is prepared to allow a further slowdown from a rate that’s already at risk of falling to a 23-year low this year as Premier Li Keqiang focuses on policy changes to create more sustainable expansion. Li said that the gov should keep restructuring the economy as long as growth, employment & inflation stay within limits he didn’t specify. “We don’t think 6.5 percent or 7 percent will be a big problem,” Lou said at a press briefing. “It’s difficult to give you a limit. But from the data we have, we have the confidence.” He said, “please don’t forget that our expected GDP growth rate this year is 7 percent.” adding that “there won’t be much of a problem to meet our expectations this year.” Lou’s remarks may add to confusion over gov growth targets & tolerance levels. Li said in May that the nation seeks 7% annual expansion this decade. He had said at a Mar 17 press conference, his first after becoming premier, that China must average 7.5% growth thru 2020. But state-media transcripts of the briefing that day said Li gave a 7% figure.
China Can Endure Growth Slowdown to 6.5%, Finance Chief Says
Photo: Bloomberg
JPMorgan, a Dow stock & the largest US bank, reported Q2 profit that beat estimates as higher revenue from investment banking & trading overcame a drop in fees from mortgage lending. EPS rose to $1.60 from $1.21, in the same period a year earlier & beat the estimate of $1.45 adjusted for a one-time accounting item. CEO Jamie Dimon has led JPM to record earnings over the past 3 years as Federal Reserve (FED) stimulus boosted the economy & bank profits. Concern that the FED will pare bond purchases lifted long-term borrowing costs during Q2. Net interest margin narrowed to 2.2% from 2.37% in Q1. CFO Marianne Lake estimated that demand for mortgage refinancings could drop 30-40% in H2 & the bank may accelerate a job-cut program announced earlier in the year. Profit benefited from an improvement at the unit that lost $4.4B on wrong-way derivatives bets in last year’s Q2. Another contributor was the release of $1.39B in reserves that had been set aside to cover future loan losses. Total revenue rose 13% from a year earlier to $26B. The biggest unit, consumer & community banking, showed a 3% decline from a year ago to $12B, while corp & investment banking increased 10% to $9.88B. The bank also released about $550M of reserves from the credit-card unit as consumer delinquencies & charge-offs improved, a trend that will continue, Lake said. The quarterly div was increased form 30¢ to 38¢ & the stock rose 28¢.
JPMorgan Profit Rises 31% on Trading, Beats Estimates
J P Morgan Chase (JPM)
Stocks are taking the initial Q2 reports with a sense of equanimity. Good news has already been baked in. Plus bank earnings are always difficult to understand with a mish-mash of numbers. Industrial & service companies will give a better idea of how economies around the world are doing. Europe is still mired in its recession & the news out of China is so-so at best. Stocks should remain little changed in the PM, waiting for more earnings next week.
Dow Jones Industrials
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