Dow gained 70, advancers over decliners better than 2-1 & NAZ soared 64. The MLP index dropped 5 to the 394s (multi year lows) & the REIT index rose 2+ to the 318s. Junk bond funds crawled higher & Treasuries were off a tad. Oil continued weak & gold also slid lower.
AMJ (Alerian MLP Index tracking)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.6503241589189369)
US builders are more upbeat about the real-estate market than at any time in the last decade as better job prospects fuel home sales. The National Association of Home Builders/Wells Fargo (NAHB) sentiment gauge held at 60 in Jul, matching the previous month as the highest since Nov 2005. Greater employment opportunities are encouraging Americans, including those paying higher rents, to take advantage of historically low interest rates. Builders’ sales outlook climbed to the highest since 2005, pointing to gains in construction that will help boost the economy. “Housing continues to improve at a steady pace,” the NAHB said. “As we head into the second half of 2015, we should expect a continued recovery.” The forecast called for the index to hold at the previously reported Jun level of 59. A measure above 50 means more respondents said conditions were good. The measure of the 6-month sales outlook advanced in Jul to the highest level since Oct 2005 & the gauge of current single-family sales rose, while a measure of prospective buyer traffic eased. Builder confidence climbed in 3 of the 4 regions, with the Northeast showing the greatest improvement -- a 5 point gain to 52. Residential real estate has progressed in fits and starts this year, with a stronger labor market going a long way toward improving affordability.
Goldman Sachs profit tumbled 49% as fixed-income trading revenue dropped more than its rivals & litigation expenses rose 5X. Q2 EPS was $1.98, down from $4.10 a year earlier. Excluding the $1.45B legal cost & an accounting adjustment, EPS was $4.49, beating the $3.96 estimate. The highest investment-banking fees since 2007 weren’t enough to offset the decline in fixed income, which fell amid concern Greece would be forced to abandon the European common currency. The 35% drop in bond-trading revenue was steeper than at the competition. Legal costs were higher than the previous 5 qtrs combined, as GS continued talks with the Justice Dept over a settlement of a probe into its sales of mortgage bonds leading up to the financial crisis. The bank may have to pay as much as $3B. Fixed-income, currency & commodity trading revenue was $1.45B, excluding accounting adjustments, falling short of estimates. The equities division posted a 21% increase from a year earlier to $1.97B. Total revenue from sales & trading was $3.42B. Revenue fell 1% to $9.07B. The firm’s return on equity, a measure of profitability that takes into account how much capital the business uses, was 4.8%, compared with 10.9% a year earlier. It was 11.5% excluding the legal cost. Compensation, the firm’s biggest expense, fell 3% to $3.81B, or 42% of revenue. That was the same percentage as in Q1, & down from 43% a year earlier. Revenue from investment banking climbed 13% to $2.02B. The figure included $821M of financial-advisory revenue, including fees for takeover advice, an increase of 62%. Revenue from underwriting declined 6% to $1.2B, including $603M from debt underwriting & $595M for equity offerings. Investing & Lending, which includes gains & losses on its own investments in stocks, debt, real estate, private equity & hedge funds, as well as loans, posted Q2 revenue of $1.8B, down from $2.07B a year earlier. Investment-management revenue climbed 14T to $1.65B as assets under supervision rose to $1.18T. The stock fell 1.78. If you would like to learn more about GS, click on this link:
club.ino.com/trend/analysis/stock/GS?a_aid=CD3289&a_bid=6ae5b6f7
AMJ (Alerian MLP Index tracking)
| CLQ15.NYM | ....Crude Oil Aug 15 | ....51.01 |  ...0.40 | (0.8%) |
US builders are more upbeat about the real-estate market than at any time in the last decade as better job prospects fuel home sales. The National Association of Home Builders/Wells Fargo (NAHB) sentiment gauge held at 60 in Jul, matching the previous month as the highest since Nov 2005. Greater employment opportunities are encouraging Americans, including those paying higher rents, to take advantage of historically low interest rates. Builders’ sales outlook climbed to the highest since 2005, pointing to gains in construction that will help boost the economy. “Housing continues to improve at a steady pace,” the NAHB said. “As we head into the second half of 2015, we should expect a continued recovery.” The forecast called for the index to hold at the previously reported Jun level of 59. A measure above 50 means more respondents said conditions were good. The measure of the 6-month sales outlook advanced in Jul to the highest level since Oct 2005 & the gauge of current single-family sales rose, while a measure of prospective buyer traffic eased. Builder confidence climbed in 3 of the 4 regions, with the Northeast showing the greatest improvement -- a 5 point gain to 52. Residential real estate has progressed in fits and starts this year, with a stronger labor market going a long way toward improving affordability.
Builders Are Most Upbeat Since 2005 on Improving U.S. Home Sales
Citigroup posted profit that beat estimates as
CEO Michael Corbat cut expenses. Q2 EPS was $1.51, up from 3¢ a year earlier, when the firm had $3.7 in costs from settling a mortgage-bond probe. Excluding accounting adjustments & one-time items, EPS was $1.45 a share, beating the $1.34 estimate. Corbat is striving to meet financial goals set more than 2 years
ago to measure his progress in transforming the firm, making it leaner & more profitable. He's sold businesses, exited consumer banking in
more than a dozen markets & focused on his best customers. “Through active expense and balance sheet discipline, we are on track
to reach our financial targets for the year,” Corbat said. Total revenue, excluding accounting
adjustments, fell 1.5% to $19.2B from a year earlier, in
line with estimates. Operating expenses slid 7.2% to
$10.9B, with legal & repositioning costs accounting for $421M. Citi had set aside $3.5B in
Q4-2014 for investigations, severance & office closures in
an effort to make 2015 results more predictable. That absorbed costs when Citi settled probes in May into
currency rigging. Adjusted profit at the institutional clients group rose 2.5% to $2.63B on revenue, excluding
accounting adjustments, of $8.58B. Revenue in the markets business fell less than 1% to $3.72B. Fixed-income
trading declined $18M to $3.06B, while equities trading
was roughly flat at $653M. The bank took a $175M charge in equities trading when it cut
the value of collateral underlying loans to facilitate customer trading
activity. Excluding that, revenue would have climbed 26% from a year earlier, mostly reflecting improvements in
derivatives. Profit in global consumer banking rose 4.4% to $1.63B on
revenue of $8.55B. Corbat has sought to make the business
simpler, moving to a common technology platform & exiting some
countries. Corbat has made headway on 2 of 3 financial goals set 2 years ago after he became CEO. Corbat has promised to achieve a return
on assets of 90 basis points to 110 basis points by the end of this
year, & an efficiency ratio in the mid-50% range for the core
business. Citi Holdings, the collection of unwanted assets the bank is selling,
generated profit of $163M as its assets fell to $116B. The stock rose 2.13. If you would like to learn more about Citi, click on this link:
club.ino.com/trend/analysis/stock/C?a_aid=CD3289&a_bid=6ae5b6f7Citigroup Profit Beats Estimates
Citigroup (C)
Goldman Sachs profit tumbled 49% as fixed-income trading revenue dropped more than its rivals & litigation expenses rose 5X. Q2 EPS was $1.98, down from $4.10 a year earlier. Excluding the $1.45B legal cost & an accounting adjustment, EPS was $4.49, beating the $3.96 estimate. The highest investment-banking fees since 2007 weren’t enough to offset the decline in fixed income, which fell amid concern Greece would be forced to abandon the European common currency. The 35% drop in bond-trading revenue was steeper than at the competition. Legal costs were higher than the previous 5 qtrs combined, as GS continued talks with the Justice Dept over a settlement of a probe into its sales of mortgage bonds leading up to the financial crisis. The bank may have to pay as much as $3B. Fixed-income, currency & commodity trading revenue was $1.45B, excluding accounting adjustments, falling short of estimates. The equities division posted a 21% increase from a year earlier to $1.97B. Total revenue from sales & trading was $3.42B. Revenue fell 1% to $9.07B. The firm’s return on equity, a measure of profitability that takes into account how much capital the business uses, was 4.8%, compared with 10.9% a year earlier. It was 11.5% excluding the legal cost. Compensation, the firm’s biggest expense, fell 3% to $3.81B, or 42% of revenue. That was the same percentage as in Q1, & down from 43% a year earlier. Revenue from investment banking climbed 13% to $2.02B. The figure included $821M of financial-advisory revenue, including fees for takeover advice, an increase of 62%. Revenue from underwriting declined 6% to $1.2B, including $603M from debt underwriting & $595M for equity offerings. Investing & Lending, which includes gains & losses on its own investments in stocks, debt, real estate, private equity & hedge funds, as well as loans, posted Q2 revenue of $1.8B, down from $2.07B a year earlier. Investment-management revenue climbed 14T to $1.65B as assets under supervision rose to $1.18T. The stock fell 1.78. If you would like to learn more about GS, click on this link:
club.ino.com/trend/analysis/stock/GS?a_aid=CD3289&a_bid=6ae5b6f7
Goldman Sachs Profit Plunges 49%
Goldman Sachs (GS)
Stock traders feel relieved now that the Greek debt mess is not leading to disaster. But problems remain. The population does not support severe austerity & there have been protests. This is far from a done deal. Earnings from the banks are difficult to understand, especially when lower revenue is considered "good enough." Tech has been flying high & NAZ eked out a new record close. Industrial earnings are coming shortly & they should be telling.
Dow Jones Industrials
Dow Jones Industrials
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