S&P 500 FINANCIALS INDEX
| Value | 190.55 |  |
| Change | 0.47 (0.2%) |
The Alerian MLP Index dropped 2 to the 321s. It's lost zest recently with few new MLP funds. However the Dow Jones REIT Index was flat at 205. Junk bond funds were mixed & the VIX was up a fraction in the 24s. Treasuries were strong again taking the yield on the 10-year Treasury bond down 5½ basis points to 2.59%. The rally in Treasuries is very scary for the stock markets. The € was pretty much even at $1.28½.
Treasury Securities
| U.S. 3-month | 0.16% | |
| U.S. 2-year | 0.50% | |
| U.S. 10-year | 2.60% |
Alerian MLP Index --- YTD
Dow Jones REIT Index --- YTD
VIX --- YTD
10-Year Treasury Yld Index --- YTD
Oil fell to a one-month low after a report showed US inventories climbed, bolstering concern that a glut of oil is forming in the US. The American Petroleum Institute said that stockpiles increased 5.9M barrels to 358.6M last week & gasoline supplies rose 2M barrels. Gold fell, heading for the biggest loss in 3 weeks, as the dollar erased a decline, curbing demand for gold.
| CLU10.NYM | ...Crude Oil Sep 10 | ...74.17 | ... 1.60 .......(2.1%) |
| GCQ10.CMX | ...Gold Aug 10 | ...1,219.00 | ... 7.60 .......(0.6%) |
Photo: Bloomberg
Target (TGT), a Dividend Aristocrat, reported Q2 net income rose 14.3%, helped by cost-cutting that offset weaker-than-expected revenue. EPS was 92¢ in the period ended Jul 31, up from 79¢ last year. Revenue reached $15.53B, up 3.1%. But revenue at stores open at least a year rose only 1.7%. Results pretty much matched expecations. "Our retail segment generated strong profitability, overcoming softer-than-expected sales," Gregg Steinhafel, CEO, said. He added that its credit card segment enjoyed "very strong results" amid a sharp reduction in bad-debt expense compared with last year. He continued, "Regardless of the pace of recovery, we are well-positioned to continue to gain profitable market share." Sales have been mushy in Q2 for most retailers, not consistent with a strong economic recovery. The stock fell 56¢.
Target Earnings Rise; Sales `Softer' Than Expected
Target --- 2 years
BJ's (BJ), another retailer, fell the most in 2 months, after it cut its full-year earnings forecast to $2.40-2.50, from $2.58-2.68 projected in May. Analysts had predicted $2.68. The forecast reflects increased price competition in H2 & more competition with supermarkets.
BJ's Declines After Warehouse Store Chain Cuts Full-Year Earnings Forecast
BJ --- 2 years
Photo: Yahoo
Deere (DE) said its Q3 profit grew 47%. American & Canadian farmers bought enough of the company's large equipment to offset a sharp downturn in Europe & DE kept its forecast for the year conservative. EPS was $1.44 in the qtr ending Jul 31 up from 99¢ last year. Global revenue jumped 16% to $6.84B. Agricultural equipment sales in the US & Canadian markets increased 19% & sales in other markets rose 16%, but that figure masks the European weakness. "While we have benefited from positive conditions in the U.S. farm sector, particularly in terms of demand for large equipment, European markets are down sharply," said CEO Samuel Allen. Quarterly results beat expectations of $1.24 on $6.52B revenue. DE now expects its sales to grow about 12% in FY2010, in line with the 11-13% offered in May. DE also expects Q4 net income to increase about 32% over last year to $375M. Investors were disappointed with the Q4 forecast, the stock fell $1.40.
Deere --- 2 years
There is a recurring theme in earnings reports. Improvement in earnings comes from improved results overseas (especially outside Europe) & cost cutting in the US. But US business was soggy in Q2 & appears weak in Q3. Expansion plans are being deferred with many uncertainties including possible tax hikes next year.
Dow Jones Industrials --- YTD
1.31
