Wednesday, May 9, 2012

Markets fall on Greek election worries

Dow fell 97, decliners over advancers 2-1 & NAZ was off 11. The Financial Index dropped to just over 200, the lowest level in more than a month. The MLP index fell another 3½ to the 381s (down 18 in May) & the REIT index was flattish at 260. Junk bond funds were mixed & Treasuries inched higher near their best levels in more than 6 months. Losses were reduced for crude oil with thinking that the recent selling has been overdone. Gold fell to the lowest level of the year as uncertainty about Europe's political & economic future dominates financial markets.

JPMorgan Chase Capital XVI (AMJ)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.086%
U.S. 2-year	0.258%
U.S. 10-year	1.837%

CLM12.NYM

...Crude Oil Jun 12

...96.62

...

0.39

(0.4%)

No deal for Greek coalition with conservative head

Photo: Yahoo

The Greek conservative leader, whose party came first in last weekend's elections that produced a hung parliament, has not reached an agreement for a coalition gov with the head of the runner-up Radical Left Coalition. He explained to Radical Left leader that his demands for Greece to reject the country's intl bailout deal would lead Greece into bankruptcy. Then he reiterated he was prepared to even back a minority gov on condition that the country remain in the EU joint € currency. Demands from the left accept Greece's exit from the € & the country's bankruptcy. The Greek socialist (3rd party) leader said there has been no success so far in negotiations to form a coalition gov after the elections resulted in a deadlock. The party leaders are meeting, but there is no agreement on what to do next. All have said they want to avoid another round of elections, which will be inevitable if no coalition gov can be formed. But there may be another election next month & leaving the € zone is being discussed by more people. Confusion reigns.

Greek Euro-Exit Talk Goes Public as Officials Air Doubts

Photo: Yahoo

Walt Disney, a Dow stock, shares rose to a life-high after the company reported a rise in quarterly profit despite its science fiction film John Carter bombing, & announced a sequel to its hugely successful superhero flick, The Avengers. Brokerage firms raised price targets on the stock, citing the strong debut of The Avengers, which had the biggest weekend opening in film history, & the company's announcement of a sequel. Q2 profit was driven by strong attendance at its theme parks & higher advertising revenue at its cable networks, including ESPN. The success of The Avengers has changed the company's mixed track record, which had brought on by flops. EPS was 63¢, up from 49¢ last year. Excluding one-time items, EPS was 58¢, beating the 55¢ estimate. Sales gained 6.1% to $9.63B, beating projections of $9.56B. EPS included a gain of 5¢, reflecting a $184M noncash credit on its investment in UTV Software Communication & $38M in impairment costs. Theme-park operating profit leapt 53% to $222M on a 7% increase in domestic attendance & higher average room rates worldwide. Revenue rose 10% at the namesake resorts to $2.9B, driven by gains in the US, Tokyo & Hong Kong. But revenue fell at Disneyland Paris. The stock gained 70¢.

Disney Races to Exploit ‘Avengers’ After Second-Quarter Profit Gains 21%

Walt Disney Company (The) (DIS)

FHA New Foreclosures Jump as Modified Loans Default

Photo: Bloomberg

The number of FHA insured home loans entering foreclosure jumped in Mar after half the mortgages it modified to ease repayment terms were in default again a year or more later. The FHA’s role in lending to first-time buyers with poor credit & limited cash expanded after the 2008 collapse of the mortgage market put it at the center of gov efforts to revive housing. The FHA allows down payments as low as 3.5% for borrowers with subprime credit rating. An increase in foreclosures may lead to further demands for stricter standards that could shut buyers out of the real estate market as it shows signs of stabilizing after a 6-year slump. Borrowers with mortgages for homes bought in 2010, the FHA’s peak lending year, now owe almost 7% more than their homes are worth if they used the minimum down payment, according to S&P/Case-Shiller home price index data. That year, the agency insured 1.1M loans to purchase single-family homes, more than 4X the total of 261K in 2007. Lenders initiated foreclosures on 36K FHA-backed mortgages, twice the number in Apr 2011, according to Lender Processing Services. A Treasury Dept study of modified gov- guaranteed mortgages in Q4 found that 49% were delinquent again after 12 months. The share of gov-guaranteed loans being paid on time dropped to 84% in Q4 from 85% in Q3, the 3rd consecutive quarterly decline. The housing market still has major problems in spite of other favorable data.

FHA Foreclosures Jump With Half of Modified Loans Re-Defaulting: Mortgages

Greece is not the only euro country with debt problems. Spain plans to partly nationalize BFA- Bankia group as the Prime Minister tries to restore investor confidence with his 2nd overhaul of lenders in 3 months. It has different problems than Greece, but the big picture is similar. It's called debt mess. Spain may be looking for a bailout & the stronger euro countries, starting with Germany, are running out of patience (not to mention money). Markets are having a very bad month & it's not 1/3 over.