Dow went up 128, advancers over decliners 3-2 (down from the AM reading) & NAZ went up 49. The MLP index gained 2+ to the 454s & the REIT index lost 1 to 279. Junk bond funds pulled back about 1% & Treasuries sold off badly, taking the yield on the 10 year Treasury up a very big 13 basis points. Oil soared, nearing its yearly high & gold marked time.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
ECB President Mario Draghi said economic indicators signal the euro region is past the worst of its longest-ever recession, while reiterating that interest rates will stay low for the foreseeable future. “Confidence indicators have shown some further improvement from low levels and tentatively confirm the expectation of a stabilization in economic activity,” Draghi said after the ECB kept its benchmark rate at 0.5%. “The Governing Council confirms that it expects the key ECB interest rates to remain at present or lower levels for an extended period of time.” Draghi added that even as the economy improves, money-market prices signaling that rates will rise are “unwarranted.” He is trying to assure investors that the central bank won’t tighten policy too soon, as it did in 2011. While euro-area manufacturing expanded for the first time in 2 years in Jul & business confidence improved for a 3rd month, lending to companies & households fell the most on record in Jun. The ECB last month took the unprecedented step of giving investors forward guidance on its rate policy, joining other central banks in trying to provide a clearer picture of its thinking. While Draghi said today that policy makers didn’t discuss defining the guidance in terms of fixed time horizons or economic targets, he went a step further than last month & warned money markets against betting on rate increases any time soon. “Current expectations of rate hikes in money markets are, according to our assessment, unwarranted,” he said. “Developments have to be significantly better than our current baseline scenario for our outlook for price stability in order for us to change guidance.”
Photo: Yahoo
Exxon 2Q Profit Lowest Since Early 2010
Procter & Gamble, another Dow stock & Dividend Aristocrat, posted fiscal Q4 profit that topped estimates, giving CEO AG Lafley breathing room as he works to turn around the company he rejoined 2 months ago. EPS slid to 64¢, from a year earlier, when it benefited from the sale of the Pringles business. Excluding items such as restructuring costs, EPS was 79¢, above the 77¢ forecast. Lafley returned in May, almost 4 years after stepping down, to help PG regain customers in key categories such as detergents & beauty. He announced no major changes to the company’s strategy, & PG forecast profit that was in line with estimates. Profit excluding some items in the current fiscal year will rise 5-7%, the company said today, which implies EPS of $4.25-$4.33. Analysts are forecasting EPS of $4.32. Fiscal Q4 sales rose 2.2% to $20.7B, topping the $20.5B estimate. Sales volumes increased 5% in the company’s health care segment & 6% in its home care business. Foreign-currency fluctuations will lower sales growth this year by about 2% & EPS by 6 percentage points. The stock rose 1.34.
P&G Profit Tops Analysts’ Estimates as CEO Lafley Returns
Dow has been much range-bound since the end of May when it reached a new record of 15½K. Today it surged ahead & looks likes it wants to reach new heights, starting with 16K. As long as Big Ben cooperates & does not reduce monthly bond purchases, the bulls may get their way. But yield sensitive securities, starting with junk bonds, munis & REITs, have seen their prices pull back already as investors are demanding higher yields.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yiels:
U.S. 3-month |
0.04% | |
U.S. 2-year |
0.33% | |
U.S. 10-year |
2.71% |
| CLU13.NYM | ...Crude Oil Sep 13 | ...107.71 |  ...2.68 | (2.6%) |
Photo: Bloomberg
ECB President Mario Draghi said economic indicators signal the euro region is past the worst of its longest-ever recession, while reiterating that interest rates will stay low for the foreseeable future. “Confidence indicators have shown some further improvement from low levels and tentatively confirm the expectation of a stabilization in economic activity,” Draghi said after the ECB kept its benchmark rate at 0.5%. “The Governing Council confirms that it expects the key ECB interest rates to remain at present or lower levels for an extended period of time.” Draghi added that even as the economy improves, money-market prices signaling that rates will rise are “unwarranted.” He is trying to assure investors that the central bank won’t tighten policy too soon, as it did in 2011. While euro-area manufacturing expanded for the first time in 2 years in Jul & business confidence improved for a 3rd month, lending to companies & households fell the most on record in Jun. The ECB last month took the unprecedented step of giving investors forward guidance on its rate policy, joining other central banks in trying to provide a clearer picture of its thinking. While Draghi said today that policy makers didn’t discuss defining the guidance in terms of fixed time horizons or economic targets, he went a step further than last month & warned money markets against betting on rate increases any time soon. “Current expectations of rate hikes in money markets are, according to our assessment, unwarranted,” he said. “Developments have to be significantly better than our current baseline scenario for our outlook for price stability in order for us to change guidance.”
Photo: Yahoo
Exxon Mobil, a Dow stock & Dividend Aristcorat, reported its lowest quarterly profit in
more than 3 years, as the energy giant again struggled to boost
production & results from its refining operations weakened. Net income fell 57% in Q2, although last year included a gain from the sale of a Japanese lubricants
division & other assets. Excluding those year-ago gains, net
income fell 19%. EPS was $1.55, below the forecast of $1.90. Revenue fell 16% to $106.5B from $127.4B a year earlier. The company last posted earnings of less than $7B in Q1-2010, when oil prices averaged $79 per barrel. In this year's Q2, prices averaged $94 per barrel. Lower earnings reflected higher drilling costs at a time of
flat or declining production. Oil & gas
production fell 1.9%, making it the 9th straight
qtr production has declined compared from a year earlier. Refining operations suffered because
oil prices rose faster than wholesale gasoline prices. That narrows the
profit refiners make because input costs were rising faster than prices
refiners were getting for fuel. Narrower margins reduced refining profit $510M. The company also manufactured
less fuel because refineries were undergoing maintenance, reducing
earnings $370M. The stock fell 1.02 & has largely traded sideways in the last year while the averages have been in a rally mode
Exxon 2Q Profit Lowest Since Early 2010
Exxon Mobil (XOM)
Procter & Gamble, another Dow stock & Dividend Aristocrat, posted fiscal Q4 profit that topped estimates, giving CEO AG Lafley breathing room as he works to turn around the company he rejoined 2 months ago. EPS slid to 64¢, from a year earlier, when it benefited from the sale of the Pringles business. Excluding items such as restructuring costs, EPS was 79¢, above the 77¢ forecast. Lafley returned in May, almost 4 years after stepping down, to help PG regain customers in key categories such as detergents & beauty. He announced no major changes to the company’s strategy, & PG forecast profit that was in line with estimates. Profit excluding some items in the current fiscal year will rise 5-7%, the company said today, which implies EPS of $4.25-$4.33. Analysts are forecasting EPS of $4.32. Fiscal Q4 sales rose 2.2% to $20.7B, topping the $20.5B estimate. Sales volumes increased 5% in the company’s health care segment & 6% in its home care business. Foreign-currency fluctuations will lower sales growth this year by about 2% & EPS by 6 percentage points. The stock rose 1.34.
P&G Profit Tops Analysts’ Estimates as CEO Lafley Returns
Procter & Gamble (PG)
Dow has been much range-bound since the end of May when it reached a new record of 15½K. Today it surged ahead & looks likes it wants to reach new heights, starting with 16K. As long as Big Ben cooperates & does not reduce monthly bond purchases, the bulls may get their way. But yield sensitive securities, starting with junk bonds, munis & REITs, have seen their prices pull back already as investors are demanding higher yields.
Dow Jones Industrials
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