Markets waver ahead of Greek bailout decision

The Dow was up 45, advancers ahead of decliners 3-2 & NAZ fell 8.  The Financial Index rose 1+ to 199, another new high since late Jul.  The MLP index cooled down a bit with an increase of "only" 1½ to 48, but good enough for a new record close.  The REIT index & junk bond funds were flattish & Treasuries sold off.  Oil continues strong while gold is drifting after its gains in Jan.

JPMorgan Chase Capital XVI (AMJ)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.076%
U.S. 2-year	0.286%
U.S. 10-year	2.016%

CLH12.NYM

...Crude Oil Mar 12...

103.45

... 1.14

(1.1%)

Photo:   Bloomberg

The index of leading indicators rose in Jan   The 0.4% increase in the Conference Board’s gauge of the outlook for the next 3-6 months followed a 0.5% rise in Dec, the strongest back-to-back gains.  The median forecast for the leading index was 0.5% & 7 of the 10 indicators contributed to the pickup, helped by a gain in the factory workweek & higher stock prices.

Leading Economic Indicators Rise 0.4%

Photo:   Bloomberg

Europe is closer to a deal on the €130B ($171B) bailout for Greece.  Germany, the biggest contributor to the rescue, signaled that finance ministers may be ready to back Greece’s 2nd bailout in 2 years when they meet on Feb 20.  Chancellor Merket's gov indicated it aims to avoid splitting the timetable of the aid & a writedown of Greek debt to private bondholders & agree to the deal as one package.  Germany has led pressure on Greece to enforce austerity, stoking recrimination between Europe’s southern countries & northern creditors.  In focus over the weekend will be the role of the ECB as it holds talks with Greece over exempting Greek bonds in national central banks’ investment portfolios from a debt restructuring.  Who really knows what's going on with the Greek debt bailout?

Greek Bailout Deal Nearer After Germany Signals Backing at Feb. 20 Meeting


General Mills lowered is fiscal 2012 adjusted earnings forecast, saying it experienced softer volumes in the US in Dec & Jan.  While General Mills remains one of the most popular food brands in grocery stores, it has struggled with higher costs from ingredients to labor.  As a result, if has raised its prices.  GIS now expects full-year adjusted EPS of $2.53-$2.55, below its prior guidance of $2.59-$2.61.  Analysts are forecasting $2.60.  For fiscal Q3, GIS expects EPS of 54-to 56¢ (similar 56¢ in the prior year).  The stock fell 1.47 & has been weak when the general market rallied in 2012.

General Mills cuts fiscal 2012 adj. profit outlookAP

General Mills, Inc. (GIS)

Coca-Cola, a Dow stock & now a Double Dividend Aristocrat, raised its quarterly div 8.5% to 51¢ ($2.04 annualized).  It has increased the annual div for 50 consecutive years.

Coca Cola raises dividend to 51 centsAP

Coca-Cola Company (The) (KO)

Once again, not a lot going on in the markets while waiting for the outcome of bailout II.  Congress is getting serious about passing the tax cut extension & won't wait until the last minute this time.  However, rising gas prices are getting more attention.  Unfortunately the outlook for crude is even higher prices as long as Iran is rattling its sabers.  This will be a long weekend in the US, but the biggies in Europe will be working hard to come up with an agreement on refinancing Greek's debts.  The €, a proxy for the sentiment of what's going on, was even.  Chances are the gut reaction in US markets on Tues will be to rally.

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Markets continue rising ahead of a 2nd Greek vote

Stocks are charging  ahead.  Dow rose 78, advancers ahead of decliners 3-1 & NAZ gained 13.  Banks are leading the way up, with the Financial Index having one of its best days in some time.

S&P 500 Financials Sector Index

Value	205.14
Change	3.29    (1.6%)

The Alerian MLP Index rose 3+ to 370, its best level in almost a month, & the REIT index gained 2+ to 240.  Junk bond funds edged higher & Treasuries were weaker as investing money is embracing risk again.  Oil & gold also were recovering from recent lows.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month	0.025%
U.S. 2-year	0.461%
U.S. 10-year	3.058%

CLQ11.NYM

...Crude Oil Aug 11

...93.78

.... 0.89

(1.0%)

GCN11.CMX

...Gold Jul 11

.......1,508.90

... 9.20

(0.6%)

The latest latest market update below:

Photo:   Bloomberg

The Greek Parliament voted to back a package of deep spending cuts to help clear a path for the release of funds & potentially a 2nd bailout by the EU & IMF.  The EU & IMF had made the release of a €12B ($17.3B) portion of last year's €110B bailout contingent on the passage of the bill to stave off a sovereign default.  In his speech ahead of the vote, Prime Minister George Papandreou said there was "no plan B." "We must avoid the country's collapse at all costs. Now is not the time to step back," he said.  A 2nd vote on the implementation of the law is due tomorrow. The main opposition party said that it would vote against the package & several members of the ruling party were known to be opposed to cuts.  Unions began a 48-hour strike as protests outside the parliament building & turned violent as MPs debated the austerity package.Stayed tuned.

Papandreou Wins Budget Vote as Risk of Default Recedes

Photo:  Bloomerg

The number of people who signed contracts to buy homes rose sharply in May, pushed higher by an influx of spring buying.  The National Association of Realtors said its index of sales agreements for previously occupied homes rose 8.2%, to a reading of 88.8 following a 7-month low of 82.1 in Apr.  Signings are 17% above the Jun reading of 75.9, the lowest figure since the housing market went bust nearly 4 years ago. Contract signings are typically an indicator of where the housing market is headed.  But the Realtors group also said a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid.   The trade group said the report "implies that home values in many localities are or will soon be stabilizing."  These days, a mixed message in housing is viewed as good.

Pending Sales of U.S. Existing Homes Rise 8.2%




Photo:   Yahoo

General Mills Q4 income rose 51% on stronger sales abroad, but rising ingredient & fuel costs remain a concern as it gave a 2012 earnings outlook below expectations. GIS started raising its prices to help cope with climbing ingredient costs & escalating fuel costs.  GIS anticipates 2012 EPS of $2.60-$2.62 with revenue growth in the mid single-digits. Forecasts were for EPS of $2.68.  This guidance assumes "significantly higher costs for ingredients and energy," costs are assumed to rise 10-11% & the outlook assumes that developed markets will remain challenging over the next year. In Q4, GIS benefited mostly from strength overseas, with intl revenue up 16%. Its bakeries & foodservice segment also posted an 11% revenue gain.  Results for the US retail division were weaker, it posted a 2% revenue decline as higher prices were offset by a 6% drop in volume.  For the year, EPS was $2.70 compared with $2.24 in the prior year. Adjusted EPS climbed to $2.48 from $2.30.  Annual revenue improved to $14.88B from $14.64B.  The stock rose 18¢.

General Mills 4Q profit climbs on higher sales AP

General Mills, Inc. (GIS)

Monsanto said higher sales of genetically engineered seeds helped Q3 profits nearly double.  EPS was $1.26 for the qtr ended May 31, compared with 70¢ last year.  Revenue increased 21% to $3.6B.  The results easily beat expectations of $1.10 on revenue of $3.4B. Total seeds & traits revenue rose to $2.65B from $2.36B last year. Corn seed sales jumped 10% from last year to $1.12B & soybean sales rose 10% to $605B.  MON raised its 2011 outlook for ongoing EPS to $2.84-$2.88, from the prior estimate of $2.72-$2.82.  The stock was up 2.33.

Monsanto posts $680 million profit in 3rd quarter AP

Monsanto Company (MON)

The IMF said the US should raise the debt ceiling to avoid a global shock.  Nobody is arguing with the thought, but getting it done is another thing.  Negotiations in DC are dead in the water & the clock is ticking.  Greece has another big vote coming tomorrow, it's still hard to see how its debt problem will be resolved with protests in the street.  However stocks are having a good day & the Dow hopes to make it 3 days in a row of triple digit gains after waffling around 12K for 3 weeks 

Dow Industrials (INDU)

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Stronger natural resource stocks lift markets

Stocks were higher led by mining & oil stocks.  Dow rose 67 taking it clearly above 12K, advancers ahead of decliners 5-4 & NAZ was up 14.  Bank stocks slipped in trading, when the proposed div by BAC was declined by the FED .

S&P 500 FINANCIALS INDEX

Value	218.52
Change	-0.65  (-0.3%)

There was profit taking in MLPS, the index dropped 1+ to the 373s & the REIT index fell 2½ to the 228s.  Junk bond funds were little changed & Treasuries also ended pretty much even on the day.  Oil climbed near a 30-month high as another attack was prepared on Libya & protesters clashed with gov forces in Syria, bolstering concern supplies will be disrupted. Gold rose for the 6th straight session, nearing a record, on increasing unrest in the Mideast.

JPMorgan Chase Capital XVI (AMJ)

Treasury yields:

U.S. 3-month		0.08%
U.S. 2-year		0.65%
U.S. 10-year		3.34%

CLK11.NYM

...Crude Oil May 11

...105.69

..... 0.72

(0.7%)

GCH11.CMX

...Gold Mar 11

........1,437.90

... 10.40

(0.7%)

Photo:  Bloomberg

The Federal Reserve (FED) has rejected Bank of America's (BAC), a Dow stock, plan to increase the div in H2, an unexpected blow as rivals prepare to increase pay-outs.  BAC is still planning to boost the div later in 2011. FED officials said they would base any rejection on 1 of only 3 reasons: the proposed pay-out was too high; the institution failed to show it could weather a sudden economic shock; or it had weaknesses in its planning process.

BofA Says Fed Objected to Planned Dividend Increase in 2011




Photo:  Yahoo

General Mills (GIS) net income rose 18% in the fiscal Q3, driven by the sale of more snacks & strength abroad.   It has started raising prices for cereals over the past few months to cope with rising ingredient costs & GIS expects price increases will accelerate during fiscal Q4.  CEO Ken Powell anticipates the qtr will include the "highest earnings growth of the year."  GIS maintained its FY2011 earnings & revenue outlooks.  For Q3 (ending Feb 27), GIS had EPS of 59¢, up from 48¢ a year earlier.  Adjusted earnings were 56¢, matching expectations.  Revenue climbed 2% to $3.65B.  Revenue for the snack division increased 14%, with Nature Valley & Fiber One snack bars among its strongest performers. The company also saw solid results from its Small Planet Foods natural & organic unit, with revenue up 14% while revenue for the bakeries & foodservice division rose 9%.  Intl revenue climbed 8% to $688M, powered by strength in the European & Asia/Pacific regions.  GIS said that consumers are seeing a general increase in most food prices due to broad-based inflation.  The stock fell 67¢.

• General Mills 3Q net income climbs on snack sales- AP

General Mills, Inc. (GIS)

The average price at the pump remains at $3.55


Late day buying pulled stocks solidly into the black.  But fundamental problems remain.  Portugal is becoming a bigger mess.  Libya looks to be a disaster & Syria is the next country in the Mideast to suffer politcal unrest.  Economic implications of the Japanese disaster are still trying to be understood.   We were reminded earlier that housing in the US market is going nowhere.  But US markets feel fairly good, Dow is up 1K in the last 12 months.

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Markets meander after Federal Reserve meeting

Uncertainty about the next moves by the Federal Reserve is starting to take hold in the stock markets. Dow fell 27, decliners over advancers 3-2 & NAZ was off 19. Bank stocks continued their weakness following selling after the Federal Reserve meeting yesterday.


S&P 500 FINANCIALS INDEX

Value	195.68
Change	-2.77 (-1.4%)

The Alerian MLP Index keeps pushing to reach a new yearly high. Today it's up 1 to the 332s, needing only 4 more to reach a new 2010 high & 11 for an all time record. The REIT index pulled back another 2 to the 213s after touching its 219 yearly high on Mon. Junk bond funds were flattish to higher while the VIX was up a fraction in the 22s. The weak dollar sent the € up another 1½ pennies to $1.34 (essentially at its interim high in early Aug). Treasuries turned in a major rally on expectations the Federal Reserve will buy more bonds. The yield on the 10 year Treasury bond fell 6 basis points to 2.53%, near its recent low levels.

Treasury Yields

U.S. 3-month		0.15%
U.S. 2-year		0.42%
U.S. 10-year		2.53%

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yld Index --- 2 weeks

Photo: Bloomberg



Oil recovered after yesterday's decline but is still in the middle of its longer term 70-80 trading zone. Gold climbed to a record $1,298 after the Federal Reserve said it was willing to ease monetary policy further to boost the US economy, triggering a slump in the dollar.

CLX10.NYM

...Crude Oil Nov 10

...75.53

... 0.56 .......(0.8%)

GCU10.CMX

...Gold Sep 10

...1,293.50

... 21.10 .......(1.7%)

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Adobe (ADBE) plunged when the software maker forecast soft demand for its flagship software package. The company said while demand for Creative Suite 5 (CS5) continued to be positive, sales in Japan & to US education customers could be weaker-than-expected. ADBE expects current qtr revenue in its creative solutions business, including CS5, to be flat to slightly down sequentially. Estimates are that Q4 business will also have a sequential decline, which is not the normal seasonal pattern. The stock received numerous downgrades today & fell 6.83 (21%).

Adobe Plunges the Most in Eight Years After Sales Outlook Misses Estimates


Adobe --- 1 month






General Mills (GIS) Q1 net income rose 12% on higher prices & stronger sales of products such as Cheerios, Cinnamon Toast Crunch & Yoplait yogurts. "Economic conditions remain relatively weak and consumer confidence is still pretty low, so it is a challenging time," said Ken Powell, . "But as we've said before, it's still a great time to be in the food business." GIS reported EPS of 70¢ for its Q1, up from 62¢ last year. On an adjusted basis, the company earned 64¢, a penny better than expected. GIS revenue edged up 1% to $3.53B, slightly short of expectations of $3.57B. Revenue in its US business grew 6%. Intl revenue was up slightly (less than 1%), but, excluding the impact of unfavorable foreign exchange, rose 4%. There were big gains for its cereals, snacks & Yoplait yogurt business, but Pillsbury & baking products reported revenue declines. Advertising spending was increased 8% in the qtr & GIS said it would continue to reinvest in the creation & marketing products to drive future growth. The company maintained that its guidance of adjusted EPS at $2.46-2.48 for fiscal 2011. The stock was up 90¢ (more than 2%).

General Mills First-Quarter Profit Rises 12% on Sales of Cereals, Snacks


General Mills --- 2 years








Photo: Yahoo


Microsoft (MSFT), a Dow stock, raised its quarterly div 23% to 16¢ per share, its first increase in 2 years. The company, whose stock is trading at the same level it was 8 years ago, has been under pressure to distribute more of the $37B in cash. In addition, its board approved to sell up to $6B in additional debt to fund working capital, capital expenditures, stock buybacks & acquisitions. The bonds may be sold as soon as today. MSFT is one of only a handful of companies to earn a AAA credit rating. The stock fell 63¢ on the news.

Microsoft Plans Bond Offering After Boosting Dividend


Microsoft --- 2 years





There's not a lot happening, or maybe there is! Stock markets meander but gold & Treasuries are rocketing ahead. Money can not keep going into all 3 areas very long. At least one will have to experience selling.

Dow Jones Industrials --- 2 weeks

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