Dow rose 93, advancers over decliners 2-1 & NAZ was up 24. The MLP index was flat at 454 & the REIT index rose 1+ to 272. Junk bond funds were mixed & Treasuries pulled back as stocks rose. Oil
advanced after
forecasts showed US stockpiles declining for a 7th week. Gold slid back, staying above the 1200 support level.
AMJ (Alerian MLP Index tracking fund)
BofA Says Profit Quadruples as Mortgage Costs Ebb
Photo: Bloomberg
US wholesale prices climbed in Dec for the first time in 3 months to cap the smallest annual increase in 5 years, showing companies face little pressure to charge more. The 0.4% increase in the producer-price index matched the estimate & followed a 0.1% drop in Nov, according to the Labor Dept. The core measure, which excludes food & energy, climbed more than forecast, led by the biggest surge in tobacco costs since 2007. The 1.2% advance for the calendar year was the smallest since 2008, when the financial crisis made the recession that began in Dec 2007 even worse. Scant signs of accelerating inflation have given the Federal Reserve room to move gradually as it winds down its unprecedented asset-purchase program.
Buyers are out again today, but not in force. The market breadth is less than impressive. Along with the favorable report from BAC, unlike other banks, it was able to report higher revenue. However, accounting adjustments continue to be a big part of the earnings gain. Industrial companies will report soon & those reports should provide more information about the economy along with guidance for the new year.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.04% | |
U.S. 2-year |
0.39% | |
U.S. 10-year |
2.91% |
| CLG14.NYM | ...Crude Oil Feb 14 | .............92.94 |  ....0.35 | (0.4%) |
| ZGG14.CBT | .....Gold 100 oz. Feb 14 | ...1,252.70 | ...7.30 | (0.6%) |
Bank of America reported a stronger-than-expected quarterly profit,
driven by a steep fall in mortgage losses & provisions to cover bad
loans. Q4 shot up to 29¢ from 3¢ last year when profit was dented by $5B of
mortgage-related charges. Analysts were expecting 26¢. "Capital and liquidity are at
record levels, credit losses are at historic lows, our cost savings
initiatives are on track and yielding significant savings, and our
businesses are seeing good momentum," CFO Bruce
Thompson said. Provisions for credit losses fell to $336M from $2.2M in Q4-2012. The consumer mortgage business lost $1.1B, compared with a loss of $3.7B a year earlier. Mortgage losses are mainly a legacy of the housing crisis & the disastrous 2008 purchase of Countrywide Financial. Revenue excluding accounting adjustments rose 14% to $22.3B, while operating costs fell 6% to $17.3B. CEO Brian Moynihan has focused on cutting costs since he
took the top job in 2010 & announced plans in 2011 to
save $8B per year. BAC released $1.2B from reserves to cover bad
loans, compared with $900M in the same period a year earlier &
$1.4B in Q3. The net charge-off ratio fell to 0.68% from 1.40% in Q4-2012 & 0.73% in Q3. The global wealth & investment management business reported record net income & asset management fees. Net income rose 35% to $777M, while revenue increased 7% to $4.5B, driven by higher noninterest income related to
long-term flows of assets under management & strong markets. However, the end of the mortgage refinancing boom hurt the consumer real estate services business. The bank made $13.5B in home loans,
down from $22.6B in Q3 & $21.5B last year. Core production revenue more than halved to
$403M. Net interest margin rose to 2.46%, up from 2.35% a year
earlier & 2.44B in Q3. Litigation expenses rose to $2.3B from $1.1B in Q3 & $2.0B a year earlier. The bank has already agreed to pay in excess of $45B to settle disputes stemming from the 2008 financial crisis. The stock went up 49¢.
BofA Says Profit Quadruples as Mortgage Costs Ebb
Bank of America (BAC)
US wholesale prices climbed in Dec for the first time in 3 months to cap the smallest annual increase in 5 years, showing companies face little pressure to charge more. The 0.4% increase in the producer-price index matched the estimate & followed a 0.1% drop in Nov, according to the Labor Dept. The core measure, which excludes food & energy, climbed more than forecast, led by the biggest surge in tobacco costs since 2007. The 1.2% advance for the calendar year was the smallest since 2008, when the financial crisis made the recession that began in Dec 2007 even worse. Scant signs of accelerating inflation have given the Federal Reserve room to move gradually as it winds down its unprecedented asset-purchase program.
Photo: Bloomberg
General Motors, which announced
a 30¢ a share div yesterday, forecast 2014 profit to
“modestly” improve this year as it introduces 15 new or
refreshed vehicles in the U.S & 17 in China. Improved operating performance should offset $1.1B
in additional restructuring costs leaving margins for
adjusted earnings before interest & taxes similar to 2013. GM forecast 2% industrywide global sales growth
to more than 85M vehicles. GM, which will probably report its 16th straight quarterly
profit next month, is benefiting from 18 new or refreshed
vehicles introduced last year in the US as the company
rebounds from its 2009 bankruptcy. “Our fortress balance sheet, substantial liquidity,
consistent earnings and strong cash flow provide the foundation
for an ongoing payout,” Dan Ammann, the former CFO who became pres today, said yesterday. Adjusted EBIT will be softer in Q1 because
of currencies & costs for restructuring &truck-model
changes, GM execs said in a presentation. Q2 & Q3 will be the most profitable for its
North American operations. The stock lost 46¢.
General Motors (GM)
Buyers are out again today, but not in force. The market breadth is less than impressive. Along with the favorable report from BAC, unlike other banks, it was able to report higher revenue. However, accounting adjustments continue to be a big part of the earnings gain. Industrial companies will report soon & those reports should provide more information about the economy along with guidance for the new year.
Dow Jones Industrials
No comments:
Post a Comment