Wednesday, August 14, 2013

Macy's earnings weigh on stock markets

Dow tumbled 113, decliners over advancers 3-2 & NAZ was off 15. The MLP index was flattish in the 439s & the REIT index slipped a fraction, going below 271.  Junk bond funds were lower & Treasuries inched higher.  Oil was flat near its yearly highs & gold gained again, shown in the mini chart below. 

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...106.90 Up ...0.07 (0.1%)

Live 24 hours gold chart [Kitco Inc.]

ANA Finds Wiring Defects in Dreamliners as JAL Plane Scraps Trip

Photo:   Bloomberg

Boeings's 787 Dreamliner suffered a fresh setback after ANA Holdings, the model’s biggest operator, said it discovered wiring defects in the fire-suppression system on 3 aircraft.  The fault, first detected on a 787 due to depart Tokyo’s Haneda airport today, would trigger the wrong extinguisher in the event of a blaze in one of the 2 engines.  Japan Airlines recalled a 787 flying to Helsinki from Tokyo as a precaution, & Boeing, a Dow company, said it was investigating the flaw.  The airliner, which made its commercial debut in 2011, is already under scrutiny following a fire in London last month that UK investigators linked to an emergency beacon.  The 787 returned to service with ANA & Japan Airlines on Jun 1 after a global grounding spurred by a pair of meltdowns in the lithium-ion batteries on the carriers’ jets.  ANA’s parts were replaced in 2 of the jets in which the Tokyo-based carrier found the defect, which must have occurred during the manufacturing process, said a spokeswoman & the 3rd aircraft will also be fixed by the end of the day.  Japan Air brought back the 787 from Helsinki to Narita airport in Tokyo as a precautionary measure after being informed of the new wiring issue by the National Transport Ministry.  The carrier subsequently inspected all 10 of its 787s & found no problems.  Among other Dreamliner operators, LOT Polish Airlines said its planes are flying as scheduled, while Qatar Airways said it has had no problems & Norwegian Air Shuttle ASA said it was unaware of the issue.  The stock fell 2.07.

Boeing 787 Hit by New Setback With Fire-Extinguisher Wiring Flaw

Boeing (BA)

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<p> FILE - In this April 2, 2012 file photo, Derek Long uses a John Deere tractor to disk and cultivate a field in preparation for planting corn in Loami, Ill. John Deere & Co. reports quarterly earnings on Wednesday, Aug. 14, 2013. . (AP Photo/Seth Perlman, File)

Photo:   Yahoo

Fiscal QE3 net income rose 27% at Deere, driven by booming agricultural activity in North & South America.  The company easily beat most expectations.  EPS rose to $2.56, well ahead of the $2.17 estimate.  Revenue climbed 4% to $10B, also topping most expectations.  The company last year booked EPS of $788M with EPS of $1.98.  For the qtr ended Jul 31, worldwide equipment sales increased 4% on higher prices.  Equipment sales rose 4% in the US & Canada, & 5% in other regions.  Agriculture & turf segment sales rose 8%.  Construction & forestry sales fell 11% on lower shipment volumes.  For fiscal Q4, DE anticipates equipment sales falling about 5% as it faces a tough year-ago comparison because factories were working quickly to catch up with customer orders at that time.  The company foresees full-year equipment sales rising approximately 5% & agriculture & turf sales increasing about 7%.  Construction & forestry equipment sales are predicted to drop about 8%, mostly due to a cautious outlook on US economic growth.  The stock lost 1.57.

Deere Forecasts U.S. Farm Revenue Will Decline on Crops

Deere (DE)

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German, French Growth Helps Euro Region Recovery From Recession

Photo:   Bloomberg

Europe’s 2 largest economies expanded more than predicted in Q2, helping to pull the area out of its longest-ever recession.  German GDP rose 0.7% from Q1 & the French economy expanded 0.5%.  Economists predicted growth of 0.6% & 0.2%, respectively.  Faster growth in Germany & France probably coaxed the currency bloc out of a 6-qtr slump, supporting the ECB’s prediction of a gradual recovery in H2.  At the same time, unemployment in the euro area remains at a record high of 12.1% & the Bundesbank expects a slowdown in Germany later this year.  Austria’s economy grew 0.2% in Q2 according to the Wifo economic research institute, while Dutch GDP shrank 0.2%, the national statistics bureau said.  Q2 growth in Germany was primarily driven by domestic demand, the statistics office said.  Private & gov consumption both increased from Q1, investment activity picked up & net trade also contributed to growth.  Commerzbank, Germany’s 2nd-largest bank, raised its 2013 growth forecast to 0.4% from 0.2%, citing strong Q2 performance.  The Bundesbank predicts an expansion of 0.3% this year & 1.5% in 2014.  France's quarterly expansion, the best since President Hollande came to power in May 2012, was lifted by a recovery in consumer spending & exports, the national statistics office Insee said.  Hollande, who is battling unemployment at a 14-year high & struggling to contain the budget deficit, began trumpeting an exit from recession last week in a bid to instill confidence among consumers & executives.  The Socialist president will need the economy to pick up substantially if he is to keep a pledge to reverse a 26-month increase in jobless claims.  While growth is good, it is not very strong.

German, French Growth Helps Euro-Region Recovery

Dow has been loosing ground slowly this month, down more than 300 from its record.  Another way to look at the decline is that it is down 2% in a vastly overbought market.  This decline settled nothing but the earnings report from Macy's (M) is unsettling.  It could be forecasting consumers are being pinched more than current estimates.  Junk bond funds continue weak, down around 15% from their highs earlier 3 months ago.  These stocks with high yields are sending a negative signal for the stock market.

Dow Jones Industrials

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