Markets slide on nervousness over euro debts

Dow dropped 49, decliners over advancers 5-2 & NAZ fell 6 (a strong Apple stock is limiting the damage from selling in other stocks).  The Financial Index was off fractionally to 204.  The MLP index fell 1+ to the 393s & the REIT index was off 2 to the 262s.  Both have been flattish for a few months.  Junk bond funds were mixed & Treasuries rose as stocks.were sold.  Oil was little changed after the Energy Dept said stockpiles fell more than expected last week.  Gold also did little although it is at highs since early May.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month	0.101%
U.S. 2-year	0.279%
U.S. 10-year	1.748%

CLU12.NYM

...Crude Oil Sep 12

...96.40

... 0.28

(0.3%)

GCQ12.CMX

...Gold Aug 12

....1,637.60

.... 2.30

(0.1%)

Get the latest daily market update below:

Photo:   Bloomberg

People’s Bank of China Governor Zhou Xiaochuan said adjustments to interest rates & banks’ reserve requirements are still possible after the central bank stepped up temporary cash injections this month.  “Use of either tool can’t be ruled out,” Zhou said.  But he didn’t elaborate.  The remarks leave the door open for further monetary stimulus after the PBOC added 220B yuan ($34.6B) to the banking system via reverse-repurchase agreements yesterday, tempering speculation the reserve-requirement ratio will be reduced.  China lowered interest rates in Jun & Jul for the first time since 2008 & has made 3 cuts in the ratio starting in Nov as economic growth slowed.  Chinese Premier Wen Jiabao said last week that easing inflation allows more room to adjust monetary policy & positive signs are emerging in the economy, expressing confidence after Jul data showed a further slowdown in growth.  State television reported Wen as saying there’s “growing room for monetary policy operation.”  Stay tuned, what China does affects the global economy.

Zhou Signals China Rate Cut Possible After Injecting Cas


Greek Prime Minister  Samaras called for "more time" to carry out policy changes to deal with his nation's debt crisis before receiving Luxembourg Prime Minister Juncker today.  What a surprise!!  "All we want is a little more air to breathe to get the economy going and increase government revenue," Samaras said.  "More time doesn't necessarily mean more money."  Limited concessions to Greece are possible as long as they are made within the framework of the 2nd aid program for the over-indebted country, a spokesman for Chancellor Angela Merkel's Christian Democratic Union, said yesterday.  Almost 3 years after the crisis started in Greece, the country remains at the heart of the turmoil even as contagion spreads to Italy & Spain, prompting ECB chief Mario Draghi to announce proposals to re-enter the bond market to help lower gov borrowing costs.  The € rose to 6-week highs yesterday before euro region leaders meet to discuss Greece's fiscal adjustment program amid optimism the European debt crisis is being contained.  French President Hollande is due in Berlin tomorrow for talks on the crisis with Merkel.  The Greek drama plays on.

Greece Asks for More Time as Juncker Meets Samaras in Athens

Photo:   Bloomberg

Dell cut this year’s profit forecast as revenue from corp customers fails to counter shrinking personal computer sales.  The company forecast Q3 revenue that missed estimates & cut its profit outlook by 20%, as competition from the iPad & an anemic global economic recovery drags down PC demand.  DELL’s strategy of using acquisitions to add software, storage & networking equipment has been slow to offset declining sales of desktops & laptops, which account for half of revenue.  Business customers are taking “a wait-and-see approach” on forthcoming tablets based on Windows 8, CFO Brian Gladden said.  Revenue in the current qtr that ends in Oct will decline 2-5% from the prior qtr.  That’s the equivalent of $13.8- $14.2B, less than the $14.9B average estimate.  Fiscal 2013 EPS (excluding some items) will be at least $1.70.  That’s less than the company’s Feb projection of at least $2.13, & below the average $1.90 estimate. The stock slumped 86¢.

Dell Forecast Misses Estimates as PC Sales Continue Slump

Dell (DELL)

This is another drab day of trading in late Aug.  Traditionally, little happens in these days.  The market's main attention is looking east towards Europe & all those meetings.  But this is the talking phase when little is expected.  With today's decline, Dow needs 250 to reach a new 2012 high.  News from Europe can give it a lift along with the announcement by Big Ben on Fri.

Dow Jones Industrials

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Markets slip on earnings worries

Dow finished down 31, decliners ahead of advancers 5-4 & NAZ dropped 21.  The Financial Index fell 2 to the 192s.  The MLP index was up a fraction in the 388s, continuing  its winning ways over the last month, & the REIT index rose 1½ to the 264s, close to its yearly highs.  Junk bond funds sold off but Treasuries were higher, bringing yields near record lows.  Oil rose after the US announced more sanctions on Iran.  As its chart shows below, gold has lost its way & remains near its yearly lows.

AMJ (Alerian MLP Index tracking fund)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.096%
U.S. 2-year	0.258%
U.S. 10-year	1.479%

CLQ12.NYM

...Crude Oil Aug 12

...86.14

... 0.33

(0.4%)

China's new loans exceeded estimates in Jun, boosting odds the gov will secure an economic rebound after growth probably slowed for a 6th qtr.  Banks extended 919.8B yuan ($144.3B) of local-currency loans, accoridng to the the People’s Bank of China, more than the 880B yuan forecast.  Foreign-exchange reserves fell to $3.2T on Jun 30, a record quarterly decline.  The pickup in lending bolsters Premier Wen Jiabao's case that easing policies, including the first interest-rate cuts since 2008, are showing results & that the economy has stabilized. The gov is expected to show Q2 growth of 7.7%, a 3-year low.  Officials are expected to reduce banks’ reserve requirements this month after 3 cuts times since Nov.  Yuan deposits increased 2.86T yuan in Jun, 49% more last year.  China watching is new for most as it copes with a slower rate of economic.

China New Yuan Loans Top Forecasts; Forex Reserves Shrink


The US budget deficit grew by nearly $60B in Jun, remaining on track to exceed $1T for the 4th straight year.  Thru the first 9 months of the budget year, the federal deficit totaled $904B, the Treasury reported.  Dems & Reps remain at odds over how to lower the deficit: disagreeing on how much to spend, where to cut & whether tax increases should be on the table.  The gridlock has left a package of expiring tax cuts & scheduled spending increases in limbo, another threat to an already weak economy.  The Congressional Budget Office predicts the deficit for the full year (ending Sep 30) will total $1.17T, a slight improvement from the $1.3T recorded in 2011, but still greater than any deficit before Obama took office.  A trade deficit is bad for the economy, because it means those purchases were did not come from US suppliers.

U.S. Records $904.2B Deficit Through June


PC sales sagged during the spring as shifting technology trends, upcoming product releases & a shaky economy dampened demand for PCs on the market.  The Q2 decline in the US ranged from 6-11% compared with the same time last year, according to Gartner & International Data.  Gartner came up with the lower of the 2 figures in the research firms' quarterly look at shipments of desktop & laptop computers.  Worldwide shipments held up better, dipping by just 0.1% from last year.  This marks the 7th consecutive qtr in which global PC shipments have either decreased or edged up only slightly from the previous year.  Hewlett-Packard (HPQ), a Dow stock, & Dell (DELL), the biggest PC makers in the US market, suffered the steepest drops during Q2.  HPQ shipments in the US fell 12-13% while DELL sales decreased about 9%.  Consumers & businesses have been buying fewer PCs amid the growing popularity of smartphones & tablets.  The PC market has become mature.   HPQ fell 34¢ & DELL was off 15¢.

PC Sales Fall 6% to 11%

Hewlett-Packard (HPQ)

Dell (DELL)

Very little went on as the markets await earnings & developments in Europe.  JPMorgan (JPM) will get the bulk of attention tomorrow & that will be followed by reports from more big banks next week.  Prospects for encouraging earnings are not good.  There was buying late in the day, reducing losses & bringing averages near break even.  But into the close, selling returned.  Dow has declined for 6 days, all mild losses, & is just above the 12.5K low in late Jun.

Dow Jones Industrials

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Markets fade on weak economic data

Dow fell 51, decliners 5-4 ahead of advancers & NAZ inched up 1 (helped by a 7+ gain at Apple (AAPL)).  The Financial Index was down a fraction to under 197.

The MLP index rose 1+ to 369 but the REIT index fell a fraction in the 261s (close to its yearly highs).  Junk bond funds were mixed to higher & Treasuries rose as stocks pulled back.  Oil fell after the biggest rally in 3 years on concern economic weakness in the US, Europe & China may reduce demand.  Gold is also giving up gains made on Fri.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month	0.086%
U.S. 2-year	0.301%
U.S. 10-year	1.585%

CLQ12.NYM

...Crude Oil Aug 12

...83.65

..... 1.31

(1.5%)

GCN12.CMX

...Gold Jul 12

........1,590.70

... 12.80

(0.8%)

Get the latest daily market update below:

Chinese manufacturing activity deteriorated at a faster clip in Jun than a month earlier, as new-order bookings & employment declined further.  The final reading of HSBC’s China manufacturing Purchasing Managers’ Index dropped to 48.2 from 48.4 in May, indicating that business conditions worsened at Chinese factories, slightly better than HSBC’s preliminary reading of 48.1 but remained below the 50-point level for an 8th month in a row.  “It is all about growth and employment. As external demand has weakened and domestic demand hasn’t shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown, hence weighing on the jobs market,” said Hongbin Qu, chief China economist at HSBC.  HSBC’s release followed a separate, official version of the manufacturing survey, released yesterday, which put China’s Jun PMI at 50.2, also weaker than an official reading of 50.4 in May.  HSBC said lack of demand was behind the latest drop in the monthly PMI, as new order bookings fell at an accelerated rate.  New export orders dropped at the steepest rates in over 3 years on weak demand from both North America & Europe.  This is a very bad sign of global economic health.

China’s Manufacturing Growth Weakens as New Orders Drop


US manufacturing shrank in Jun for the first time in nearly 2 years, a troubling sign that the economy is faltering.  The Institute for Supply Management said that its index of manufacturing activity fell to 49.7, down from 53.5 in May & the lowest reading since Jul 2009, one month after the recession officially ended.  Readings below 50 indicate contraction.  A measure of new manufacturing orders fell below 50 for the first since Apr 2009 & a gauge of production also fell to its lowest level in more than 2 years.  Factories are also reporting much less overseas demand, likely because Europe's financial crisis has lowered demand for US exports.  A measure of exports dropped to 47.5, its lowest level since Apr 2009.  A gauge of employment edged down but remained at a healthy level of 56.6, suggesting factories may still be adding jobs.  Manufacturers have reported job gains for 8 straight months.  Factories have been a key source of jobs & growth since the recession, but the sector has shown signs of weakness in recent months.  The economic recovery is stalling. 

ISM Index of U.S. Manufacturing Decreased to 49.7 in June

Photo:   Yahoo

Dell will buy Quest Software for about $2.4B ($28 a share), ending speculation about who was the unnamed bidder.  With consumer demand for PCs declining, DELL wants to branch out beyond the business of making personal computers into more lucrative fields.  Helped by a recent string of acquisitions of software companies,  DELL is trying to grow into advising corps & govs on how to manage technology needs & sell them more software & computing equipment.  This will make it more competitive in the server, storage, networking & computing services business.  QSFT had agreed to be bought by Insight for $23 per share ($2B) in Mar, followed by a series of increasing bids from Insight & another bidder followed.  The deal is expected to close in  a few months.  Both stocks slipped a few pennies.

Dell Agrees to Buy Quest for $2.4 Billion Adding Software

Dell (DELL)

Quest (QSFT)

Markets had a chance to digest the bailout news from Europe & stock buyers are having 2nd thoughts.  At best, the European debt mess remains in flux & nobody really knows where it is going.  Greece was put on a back-burner for a couple of days, but it is getting more attention now.  There has also been a lot of talk about short covering on Fri, accounting for some of the big gains.  Meanwhile macro economic data around the world is not looking good.  Fri is the big jobs report in the US & expectations are for a meager 90K jobs added.  Sluggish US economic growth indicates that the unemployment rate will continue at unacceptable levels for the rest of the year.

Dow Jones Industrials

Get your favorite symbols' Trend Analysis TODAY!  
Click Here

Markets fluctuate on lower retail sales

Dow slipped 17, advancers were a little ahead of decliners & NAZ was up 1.  The Financial Index was down a smidgen to 189.  The MLP index & the REIT index each were up fractionally.  Junk bond funds pulled back & Treasuries were flattish.  Oil was lower after the Energy Department said stockpiles decreased 191K barrels to 384M barrels. Gold has been crawling higher, taking it above $1600.

JPMorgan Chase Capital XVI (AMJ)

Treasury yield:

U.S. 3-month	0.091%
U.S. 2-year	0.288%
U.S. 10-year	1.649%

CLN12.NYM

....Crude Oil Jul 12

...82.29

.... 1.03

(1.2%)

GCM12.CMX

...Gold Jun 12

.....1,620.90

... 8.20

(0.5%)

Get the latest daily market update below:

Photo:   Bloomberg

Americans barely increased spending at retail in Apr & May, constrained by weak job creation & scrimpy wage increases.  The sharp drop in gas prices pulled down overall sales in both months by 0.2% according to the Commerce Dept.  Excluding volatile gas station sales, retail sales grew only modestly in May after dipping in Apr.  As a result, outlooks for Q2 economic growth may be lowered.  However spending on big purchases increased.  Auto sales rose sharply, & sales of furniture & appliances also were up, suggesting consumers may already be seeing some benefit from lower gas prices.  Total retail sales fell in May to $404.6B, slightly below the Mar record of $406.2B & 21.6% higher than the recession low in Mar 2009.  Gas station sales fell 2.2%, accounting for most of the decline in retail sales.  Excluding gas station sales, retail spending inched up 0.1% in May.  Sales at building supply stores fell 1.7% & general merchandise stores fell for the 2nd straight month.  Part of the decline in those categories may be payback for stronger spending at the start of the year.  A mild winter encouraged some homeowners to get a head start on remodeling & landscaping projects, which normally take place in spring.  Another sign that the recovery is sputtering.

Retail Sales in U.S. Declined for Second Month in May

Photo:   Bloomberg

Spain & Italy appealed to European policy makers to step up their response to the financial crisis after the lifeline for Spanish banks failed to calm markets.  Spanish Prime Minister Rajoy said that he’ll “battle” central bankers refusing to buy debt from peripheral nations.  He published a letter to EU leaders calling for the ECB to buy debt from the countries struggling to shore up their finances.  “That is the battle we have to wage in Europe,” Rajoy said.  “I am waging it.”  His Italian counterpart, Mario Monti, told lawmakers in Rome that Europe faces a “crucial” moment.  They went on the offensive as bond yields jumped following the announcement of a bailout for Spanish banks that was intended to quell concern over the finances.  Monti said in parliament that the EU hasn’t time to wait for austerity plans to stabilize borrowing costs & officials must act to support economic growth as the Italian economy slides deeper into recession.  The economy shrank 0.8% in Q1 compared with 0.7% in Q4 & a 0.3% contraction in Q1 for Spain.   “Above all, Europe needs more growth,” said Monti, who will travel to Berlin today.  The euro area is “in a particularly intense and particularly crucial” situation.  Spiraling borrowing costs & shrinking output are opening divisions among EU leaders who face a series of hurdles in the coming days as bond investors question their ability to hold the euro area together.  Italy is due to sell another €3B of bonds tomorrow while intl consultants are due to report on the extent of Spanish banking losses by Jun 21.  Euro problems are far form over.

Rajoy Battles ECB for Loans; Monti Appeals for EU Action

Dell will focus on data-center gear as well as computing software & services while seeking to cut costs by more than $2B over the next 3 years.  “As you think about our industry it’s constantly in transition,” CEO Michael Dell said.  Costs can be trimmed from the supply chain & sales support, the company said.  DELL initiated an 8¢ quarterly div yesterday amid an uneven turnaround effort.  While PC sales growth is slowing, the company said that the unit is driving sales of software, accessories & services.  DELL has been acquiring makers of data storage, networking equipment & business software to diversify beyond PCs & will continue to use deals to boost revenue.  “We have a modest software business and that’s an area where we can grow rapidly,” Dell said, adding that he plans to work with partners rather than owning products in every category.  “We’ve had some nice acquisitions which are off to a good start.”  Thru the div & stock buybacks, DELL said it plans to return 20-35% of free cash flow to investors, up from a prior projection of 10-30%.  In the last 12 months, DELL has generated $4.9B in cash flow from operations, the company said.  The stock gained 24¢.

Dell Seeks $2 Billion in Cost Cuts Over Next Three Years

Dell Inc. (DELL)

There is not a lot going on in the markets.  The news is on the dreary side with weaker sales & euro debt mess droning on.  Jamie Dimon, CEO of JPMorgan (JPM), told Congress that he was sorry about losing $Bs.  I don't think Congress is happy to hear that story.  What makes this more troubling is that JPM has been considered the best run big bank.  But it's run by mortals who make mistakes which can be enormous.  Now Italy is getting more attention, but the € has been climbing from around $1.24 towards $1.26.  More uncertainty in DC & Europe spells problems for stocks.

Dow Industrials (INDU)

Get your favorite symbols' Trend Analysis TODAY!  

Click Here