Tuesday, September 10, 2013

Markets climb for a 6th straight day

Dow rose 127, advancers over decliners less than 2-1 & NAZ went up 22 despite a decline by Apple (AAPL).  The MLP index gained 3+ to the 442s & the REIT index was flattish in the 267s.  Junk bond funds were mixed & Treasuries continued weak.  Oil & gold lost ground on prospects for a peaceful solution to the Syrian crisis.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLV13.NYM....Crude Oil Oct 13....107.25 Down ...2.27  (2.1%)

Live 24 hours gold chart [Kitco Inc.].

Phil Schiller, senior vice president of worldwide marketing for Apple Inc, talks about the pricing of the new iPhone 5C at Apple Inc's media event in Cupertino, California September 10, 2013. REUTERS/Stephen Lam

Photo:   Yahoo

AAPL introduced 2 new iPhones, including an "iPhone 5C" that comes in 5 colors & starts at $99, priced to bring one of its costliest smartphones within reach of the masses in poorer emerging markets.  The pricier "5S" also comes in 3 colors - gray, silver & gold - & sports expected improvements in processor speed & iOS7 software features along with a fingerprint-scanner that can unlock the phone with just a touch.  The cheaper phone goes on sale online Fri, while the pricier gadget can be pre-ordered on Sep 20.  For the first time, it will go on sale in China at the same time as in the US, a move expected to severely curtail the underground market for smuggled phones in the world's #2 economy.  The broader color palette & lower price for the iPhone mark a departure from its reliance on a premium brand & familiar black & white gadgets.  CEO Tim Cook told the AAPL crowd that he expects to ship the 700 millionth device (iPhone or iPad) based on iOS mobile software sometime next month.  After excitement in the stock during the last 2 months, it pulled back 11+ today.

Apple Unveils New IPhones at Cheaper Price

Apple (AAPL)

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A McDonalds restaurant is seen near the central railway station in Kiev February 16, 2012. REUTERS/Gleb Garanich

Photo:   Yahoo

McDonald's, a Dow stock & Dividend Aristocrat, reported a bigger-than-expected 1.9% increase in global sales at established restaurants in Aug, after a revival in France helped drive solid results in Europe (its top market).  Although the results soundly beat the estimate of a 0.3% increase, its shares rose only slightly.  Analysts maintained their cautious stance on the company, citing its continued dependence on Dollar Menu sales & uncertainty over whether new premium items such as Mighty Wings will draw customers.  New premium wrap sandwiches & high-margin drinks such as blended smoothies & frappes helped bolster sales in Europe, where same-restaurant sales were up 3.3%.  Sales growth resumed in France, & the company also pointed to strength in the UK & Russia.  Analysts had expected a 0.1% fall for Europe, which just edges out the US as the top market.  Same-restaurant sales in the US slightly missed the mark, rising 0.2%, rather than the 0.8 % expected.  In Asia/Pacific, the Middle East & Africa, same-restaurant sales fell less than expected, as declines in Japan somewhat eased.  Sales in the region were off 0.5%, better than the forecast of a 1% drop.  The stock went up 44¢. 

McDonald’s August Sales Rise 1.9% Driven by Demand in Europe

McDonald's (MCD)

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BofA Cuts Jobs as Mortgage Slump Ensnares JPMorgan, Wells Fargo

Photo:   Bloomberg

Mortgage lenders including Wells Fargo & JPMorgan, a Dow stock, that feasted on refinancings as interest rates reached all-time lows are now warning that the drop in demand may be steeper than expected.  Home lenders are tempering forecasts after interest rates rose amid signs the Federal Reserve may scale back stimulus efforts.  WFC, the top home lender, said that Q3 originations may fall 29% to $80B.  JPM, ranked #2, said it expects to lose money on home lending in H2 as volume drops as much 40% from H1.  Interest rates climbed after Big Ben told Congress on May 22 that the central bank may scale back its $85B of monthly purchases of mortgage bonds & Treasuries if the economy shows sustained improvement.  The cost of a 30-year fixed home loan rose to 4.57% last week from 3.35% in May.  WFC CEO Tim Sloan’s forecast for $80B in originations was darker than his Jul prediction that the firm wouldn’t post an 8th straight qtr of $100B or more.  The bank entered Q3 with $63B of unclosed mortgages.  The lender’s gain-on-sale margin, what it gets from selling loans to be packaged into securities & sold to investors, will narrow to about 1.5%.  That would be the lowest since Q3-2011, when it was 1.34%.  JPM rose 81¢ & WFC advanced 73¢.

Bank of America Cuts Jobs as Mortgage Slump Ensnares JPMorgan, Wells Fargo

Wells Fargo (WFC)

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J P Morgan Chase (JPM)

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Stocks extended their winning streak.  Talks about delaying a vote to attack Syria is making some feel better about buying stocks.  Changes are coming.   Hewlett-Pakard (HPQ), Alcoa (AA) & Bank of America (BAC) will be dropped from the Dow.  This change was hardly a surprise & these stock will be weak going forward as Dow funds will have to sell their positions.  Dow has risen 381 in 6 days without any solid news backing up that rise. 

Dow Jones Industrials

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