Stocks wanted to go higher in early trading, but selling came in at lunchtime & pulled stocks into the red. Dow was off 68, decliners over advancers 3-2 & NAZ dropped 23. The Financial Index fell a fraction to the 205s. It has been slipping & sliding all month as bank earnings have been coming out.
The MLP index continued strong, gaining 3½ to 393, but the REIT index fell a smidgen to 252. Junk bond funds were mixed & Treasuries were a little higher, bringing lower yields. Oil & gold were pretty much even. Gold has been trading water in the last 6 months after 11 straight up years.
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It is expected that Spain & Italy will be downgraded by Moody’s & S&P this year as the recession & debt crisis worsen. Their credit ratings, along with those of Ireland & Portugal, will be lowered at least one level by year-end. “Deficits will overshoot official forecasts in all the peripheral Economic Monetary Union countries this year and in 2013,” according to a report by CItigroup. “Spain will need to enter some form of a Troika program” this year (referring to the aid package for Greece monitored by the EU, ECB &IMF). Prime Minister Rajoy has repeatedly said that Spain won’t need a bailout. The warning comes amid a flare-up of Europe’s debt crisis. Investor confidence in the debt the peripheral countries has eroded since Spain’s announcement on Mar 2 that it won’t meet its deficit target this year, helping to push up bond yields. Yesterday, Italy also delayed its goal to balance the budget by one year to 2014. Both countries were put on negative outlook by Moody’s on Feb 13, when it downgraded 6 European nations, including Italy to A3 from A2 & Spain to A3 from A1. A month earlier, S&P cut the ratings of 9 euro states, with Spain lowered to A from AA- & Italy to BBB+ from A, both with negative outlooks. The debt mess is becoming scary.
Spain, Italy Set for Downgrade Amid Slump, Citigroup Says
Photo: Bloomberg
Bank of America, a Dow stock, posted a better-than-expected Q1 earnings as the #2 US bank set aside less money for loan losses & capital markets activity rebounded. The bank, like rivals, benefited from signs of strength in the US economy & more activity in the capital markets as fears about the European debt crisis eased. The results showed BAC making further progress in recovering from mortgage-related losses it racked up during the financial crisis. Management claims the bank was building capital faster than expected & raised their outlook for year-end capital measures required under new intl standards. The Q1 provision for expected losses from bad loans fell to the lowest level since Q3 of 2007. Sales & trading revenue, excluding an accounting charge, were the highest since the 2008 acquisition of Merrill Lynch. EPS in Q1 was 3¢, down from 17¢ last year, & revenue declined to $22.3B from $26.9B. The bank reported charges of $4.8B related to changes in the value of its debt, partially offset by gains of $2.8B from equity investments & debt-related transactions. Excluding debt valuation adjustments, earnings were 31¢ sharply ahead of the 12¢ forecast. The stock fell 14¢ on these somewhat muddy results.
Bank of America Posts Higher First-Quarter Profit as Trading Results Climb
Photo: Yahoo
DuPont, another Dow stock, beat Q1 profit expectations, helped by price hikes & sales of insecticides & genetically modified seeds. The company reaffirmed 2012 earnings target for a range mostly above expectations, with CEO Ellen Kullman saying specialized products for agricultural & electronics customers would provide much of the lift. "What you should take away from the first quarter is that we're off to a good start for the year," Kullman said. "We expected slow, sequential improvement and that is what we're seeing." Q1 sales in Europe rose 14%, largely due to the 2011 purchase of Danish food ingredients maker Danisco to increase its presence in the food market. "We're seeing that many European markets remain weak. Europe is mainly in a recession with its sovereign debt issues," Kullman said. "There are a couple of bright spots, and one is agriculture." Sales in Asia were flat, partly because of soft demand for titanium dioxide paint pigment from automobile manufacturers. Sales in the US & Latin America both spiked. EPS was $1.57, compared with $1.52 last year. Excluding a $50M payment to customers of DuPont's Imprelis herbicide, EPS was $1.61 versus expectations of $1.55 by analysts. Sales rose 12% to $11.3B. An 8% price hike offset a 2% drop in volume, as well as currency charges. Sales of paints & coatings to the automobile sector in the company's Performance Coatings unit rose 6%. The company affirmed its 2012 EPS forecast of $4.20-$4.40. The stock fell 74¢.
DuPont Sees Boost to Polymers From Automakers Seeking Resins Amid Shortage
Earnings just ain't getting no respect because they ain't that good & bank earnings demonstrate that. They are sort of higher but it's difficult to tell with the mish-mash explanations of special charges & items. Then there's the growing European debt mess. Nobody knows where that is going, but I don't think it will be good. The IMF is having a big meeting in DC. The main goal was to get another $320B in pledges & Europe is a front burner item. Fundamentals haven't changed. Europe is bogged down with a recession & a debt mess. As a result, growth in Asia will be reduced. The US economy looks to be in better shape, but that's far from clear after recent negative economic data. Dow keeps meandering along, today it slipped below 13K. Dow is still facing headwinds.
The MLP index continued strong, gaining 3½ to 393, but the REIT index fell a smidgen to 252. Junk bond funds were mixed & Treasuries were a little higher, bringing lower yields. Oil & gold were pretty much even. Gold has been trading water in the last 6 months after 11 straight up years.
JPMorgan Chase Capital XVI (AMJ)
Click below for the latest market market update:
Treasury yields:
U.S. 3-month | 0.066% | |
U.S. 2-year | 0.266% | |
U.S. 10-year | 1.949% |
| CLK12.NYM | Crude Oil May 12 | 101.79 |  0.88 (0.9%) |
It is expected that Spain & Italy will be downgraded by Moody’s & S&P this year as the recession & debt crisis worsen. Their credit ratings, along with those of Ireland & Portugal, will be lowered at least one level by year-end. “Deficits will overshoot official forecasts in all the peripheral Economic Monetary Union countries this year and in 2013,” according to a report by CItigroup. “Spain will need to enter some form of a Troika program” this year (referring to the aid package for Greece monitored by the EU, ECB &IMF). Prime Minister Rajoy has repeatedly said that Spain won’t need a bailout. The warning comes amid a flare-up of Europe’s debt crisis. Investor confidence in the debt the peripheral countries has eroded since Spain’s announcement on Mar 2 that it won’t meet its deficit target this year, helping to push up bond yields. Yesterday, Italy also delayed its goal to balance the budget by one year to 2014. Both countries were put on negative outlook by Moody’s on Feb 13, when it downgraded 6 European nations, including Italy to A3 from A2 & Spain to A3 from A1. A month earlier, S&P cut the ratings of 9 euro states, with Spain lowered to A from AA- & Italy to BBB+ from A, both with negative outlooks. The debt mess is becoming scary.
Spain, Italy Set for Downgrade Amid Slump, Citigroup Says
Bank of America, a Dow stock, posted a better-than-expected Q1 earnings as the #2 US bank set aside less money for loan losses & capital markets activity rebounded. The bank, like rivals, benefited from signs of strength in the US economy & more activity in the capital markets as fears about the European debt crisis eased. The results showed BAC making further progress in recovering from mortgage-related losses it racked up during the financial crisis. Management claims the bank was building capital faster than expected & raised their outlook for year-end capital measures required under new intl standards. The Q1 provision for expected losses from bad loans fell to the lowest level since Q3 of 2007. Sales & trading revenue, excluding an accounting charge, were the highest since the 2008 acquisition of Merrill Lynch. EPS in Q1 was 3¢, down from 17¢ last year, & revenue declined to $22.3B from $26.9B. The bank reported charges of $4.8B related to changes in the value of its debt, partially offset by gains of $2.8B from equity investments & debt-related transactions. Excluding debt valuation adjustments, earnings were 31¢ sharply ahead of the 12¢ forecast. The stock fell 14¢ on these somewhat muddy results.
Bank of America Posts Higher First-Quarter Profit as Trading Results Climb
Bank of America Corporation (BAC)
DuPont, another Dow stock, beat Q1 profit expectations, helped by price hikes & sales of insecticides & genetically modified seeds. The company reaffirmed 2012 earnings target for a range mostly above expectations, with CEO Ellen Kullman saying specialized products for agricultural & electronics customers would provide much of the lift. "What you should take away from the first quarter is that we're off to a good start for the year," Kullman said. "We expected slow, sequential improvement and that is what we're seeing." Q1 sales in Europe rose 14%, largely due to the 2011 purchase of Danish food ingredients maker Danisco to increase its presence in the food market. "We're seeing that many European markets remain weak. Europe is mainly in a recession with its sovereign debt issues," Kullman said. "There are a couple of bright spots, and one is agriculture." Sales in Asia were flat, partly because of soft demand for titanium dioxide paint pigment from automobile manufacturers. Sales in the US & Latin America both spiked. EPS was $1.57, compared with $1.52 last year. Excluding a $50M payment to customers of DuPont's Imprelis herbicide, EPS was $1.61 versus expectations of $1.55 by analysts. Sales rose 12% to $11.3B. An 8% price hike offset a 2% drop in volume, as well as currency charges. Sales of paints & coatings to the automobile sector in the company's Performance Coatings unit rose 6%. The company affirmed its 2012 EPS forecast of $4.20-$4.40. The stock fell 74¢.
DuPont Sees Boost to Polymers From Automakers Seeking Resins Amid Shortage
E.I. du Pont de Nemours and Company (DD)
Earnings just ain't getting no respect because they ain't that good & bank earnings demonstrate that. They are sort of higher but it's difficult to tell with the mish-mash explanations of special charges & items. Then there's the growing European debt mess. Nobody knows where that is going, but I don't think it will be good. The IMF is having a big meeting in DC. The main goal was to get another $320B in pledges & Europe is a front burner item. Fundamentals haven't changed. Europe is bogged down with a recession & a debt mess. As a result, growth in Asia will be reduced. The US economy looks to be in better shape, but that's far from clear after recent negative economic data. Dow keeps meandering along, today it slipped below 13K. Dow is still facing headwinds.
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