Wednesday, August 7, 2013

Lower markets on Fed concerns

Dow dropped 71, decliners over advancers 3-1 & NAZ was off 24.  The MLP index plunged 9 to to 443 & the REIT index was off 1+ to the 274s.  Junk bond funds were mixed & Treasuries had modest gains.  Oil & gold were flattish.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLU13.NYM....Crude Oil Sep 13...104.83 Down ...0.47  (0.5%)

GCQ13.CMX...Gold Aug 13.......1,284.70 Up ...1.50 (0.1%)

Freddie Mac, the mortgage financier, will pay $4.4B to the Treasury Dept after continued housing-market improvements allowed the company to post a 7th consecutive profitable qtr.  The company, which has operated under federal conservatorship since it was seized in 2008, had net income of $5B in Q2.  “Clearly our outstanding financial results continue to benefit from the turnaround in the housing market as well as our work to minimize losses and build a strong new book of business,” CEO Donald Layton said.  It finished Q2 with net worth of $7.4B & is required to pay everything above $3B to Treasury in return for the taxpayer aid it has received under conservatorship.  The company & Fannie Mae were sustained by drawing almost $190B in assistance after they were seized amid soaring losses during the subprime mortgage crisis.  The 2 gov-sponsored enterprises returned to profitability as the housing market rebounded & have paid the Treasury $132B in divs, which count as a return on the US investment in the firms & not repayment of their debt to taxpayers.  The  good part of the news is that this helps reduce the deficit, even if it has only a small efffect.

Freddie Mac to Pay Treasury $4.4 Billion on Quarterly Profit

<p> FILE - In this Jan. 3, 2008 file photo, the Time Warner Center is shown in New York. Time Warner Cable Inc. reports quarterly earnings on Wednesday, Aug. 7, 2013. (AP Photo/Mark Lennihan, file)

Photo:   Yahoo

Time Warner Q2 net income jumped 87%, boosted by better results at its film & TV businesses.  The results beat predictions & the company boosted full-year profit outlook.  CEO Jeff Bewkes credited the company's investments in quality programing at its Turner & HBO networks with helping to draw in viewers, advertisers & affiliates.  Revenue at the company's networks division increased 7% to $3.84B.  He noted that Time Warner's TNT & TBS networks ended Q2 as 2 of the top advertising-supported networks for viewers ages 18-49, helped by shows such as "Falling Skies," ''Major Crimes" & "CougarTown," along with another strong NBA playoff season.  In addition, ratings at CNN jumped 70% among its target audience & HBO viewership remained strong, helped by its popular "Game of Thrones" series & the Liberace biopic "Behind the Candelabra."  Meanwhile, revenue at the film & TV entertainment division increased 13% to $2.94B.  Those gains more than offset losses more than offset lower profit at the  publishing division.  TWX plans to spin off the Time magazine unit by the end of this year.  Revenue at the publishing division fell 3% to $833M on lower subscription & advertising sales.  EPS rose to 81¢, up from 42¢ a year ago.  Excluding items, EPS was 83¢, beating the 76¢ estimate.  Revenue rose 10% to $7.44B from $6.74B.  Analysts expected $7.1B in revenue.  For the full year, the company expects to post an EPS percentage increase in the "mid-teens."  The stock shot up 1.20 to a new record.

Time Warner Beats Profit Estimates as Ad Revenue Increases

Time Warner (TWX)

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Second-Half U.S. Rebound Intact Even After Hiring Cools: Economy

Photo:  Bloomberg

GDP should climb at a 2.5% annualized rate in H2, up from a 1.4% gain in H1 & little changed from the pace projected last month, according to Bloomberg's latest survey.  Labor Dept figures last week showed employers added 162K workers to payrolls in Jul, the fewest in 4 months.  Gains in manufacturing, record exports, looser bank lending & a sustained housing recovery are raising the odds the economy will accelerate after gov cutbacks slowed growth.  Economists also projected unemployment will drop to 7% by the middle of 2014, matching the timeline Big Ben laid out in predicting when the central bank’s monthly bond purchases will end. 

Second-Half U.S. Rebound Intact Even After Hiring Cools: Economy

This is another quiet summer day with not a lot going on in the markets.   Maybe the bulls are taking long vacations, accounting for the decline this week when Dow has lost 200.  DC is out of session, but when they come back next month there will be ugly battles over gov finances.  That could be spooking the markets.  Red hot MLPs have been trading sideways for more than 3 months & the index is off 25 from its peak.  There is plenty of nervousness in the markets.

Dow Jones Industrials
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