Markets fluctuate ahead of ECB meeting

Dow inched up 11, decliners slightly ahead of advancers & NAZ lost 5.  The Financial Index did little in the 203s.  The MLP index was off a fraction in the 396s & the REIT index fell a fraction to 268.  Junk bond funds were mixed & Treasuries pulled back a tad.  Oil was flat & gold declined for the first time in 3 sessions as a ECB plan to buy bonds as part of an economic-stimulus program lowered demand for the precious metal as a hedge against inflation.

AMJ (Alerian MLP Index tracking fund)

Click below the latest Daily update:

Treasury yields:

U.S. 3-month	0.101%
U.S. 2-year	0.234%
U.S. 10-year	1.589%

CLV12.NYM

...Crude Oil Oct 12

...95.36

... 0.06

(0.1%)

Motorola is broadening the use of its Razr brand to a family of smartphones in its first major product launch under new owner Google (GOOG).  Verizon Wireless (VZ) starts to take pre-orders for the first of the new phones, the Droid Razr M.  It's a cheaper, smaller phone than the Razr that Motorola Mobility launched last year.  The Razr is the name of the wildly popular clamshell phone launched in 2004 but Motorola hasn't had a hit since then.  The $99 Razr M will be in stores next week which will be followed with the launch of 2 high-end models, the Razr HD & Razr Maxx HD, later this year.  It's emphasizing long battery life, up to 21 hours of talk time for the Maxx HD or 10 hours of video streaming.

Motorola Unveils New Verizon Phones, Including a $99 Razr

Speaking of technology, Amazon (AMZN) is readying an updated Kindle Fire tablet, seeking to revive demand for the 10- month-old device as the market crowds with competing machines.  AMZN is holding an event tomorrow where it is expected to announce the newest versions of its line of Kindle e-readers & the Kindle Fire tablet.  The company said it sold out of the Kindle Fire last week.  Last year’s holiday shoppers helped vault its share of the market to 17% in the Dec period, according to IDC.  But demand for the Kindle Fire has since stalled when the Q1 share slumped to 4%. The stock slipped $2.

Amazon Readies Kindle Fire Update to Keep Up in Tablets

Amazon (AMZN)

After Nokia revealed its first smartphones to run the next version of Windows, Microsoft (MSFT), a Dow stock, will have a lot of catching up in the phone world.  Android & Apple (AAPL) devices dominate in smartphones, with 85% of the worldwide market combined, according to IDC   Companies making Android devices include Samsung Electronics, HTC & Motorola Mobility, part of GOOG.  Samsung also makes phones running Bada, which is based on Linux.

Here are the figures for worldwide smartphone unit sales & market share in Q2, by operating system.
— Android (Google) — 104.8M units, 68.1% share (46.9% a year earlier)
— iOS (iPhone) — 26.0M units, 16.9% share (18.8% a year earlier)
— BlackBerry (Research in Motion.) — 7.4M units, 4.8% share (11.5% a year earlier)
— Symbian (mostly Nokia) — 6.8M units, 4.4% share (16.9% a year earlier)
— Windows (Microsoft) — 5.4M units, 3.5% share (2.3% a year earlier)
— Linux — 3.5M units, 2.3% share (3.0% a year earlier)
— Others — 0.1M units, 0.1% share (0.5% a year earlier)

Worldwide market share for smartphones AP


Traders don't want to take on new positions as eyes watch for the outcome of the ECB meeting tomorrow & then the big jobs report on Fri.  The ECB meeting has the potential for disappointment because hopes for a super bailout for the € have been raised so high.  Any bond buying program would have to wait for a ruling by the German court next week.  Dow remains above 13K, not far from its center line for more than 7 months.

Dow Jones Industrials

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Lower markets on increased doubts about the Greek debt mess

Dow dropped 47, decliners over advancers 3-2 & NAZ was off 7 (losses reduced by Apple reaching a new record).

S&P 500 Financials Sector Index

Value	196.88
Change	-1.48   (-0.7%)

MLPs hardly changed while the REIT index dropped 1+ to 251.  Junk bond funds were mixed & Treasuries fell.  Oil declined on concern that Greece will fail to take sufficient steps to avert a default.  Gold also pulled back.

Alerian MLP Index

Value	396.59
Change	-0.17 (-0.0%)

Treasury yields:

U.S. 3-month	0.066%
U.S. 2-year	0.230%
U.S. 10-year	1.912%

CLH12.NYM

...Crude Oil Mar 12

...97.29

..... 0.55

(0.6%)

GCG12.CMX

...Gold Feb 12

......1,723.20

... 14.70

(0.9%)

Get the the latest market update:

Greek PM Papademos
Photo:   Yahoo

Chancellor Merkel told Greece  to make up its mind fast on accepting the painful terms for a new EU/IMF bailout.  However, the country's leaders responded by delaying their decision for another day.  Failure to strike a deal to secure the €130B ($170B) rescue (much of which Germany will fund) risks pushing Greece into a chaotic debt default.  Merkel expressed the exasperation spreading among euro zone leaders at seemingly endless wrangling that has yet to produce a definitive acceptance of the austerity&  reform.  "I honestly can't understand how additional days will help. Time is of the essence. A lot is at stake for the entire euro zone," she told a news conference with French President Sarkozy.  A statement issued shortly after Merkel spoke gave no reason for the delay.  However, it said Papademos would hold further talks.  Merkel made clear that her patience was wearing thin on a deal.  In a fresh sign of mistrust, the German leader said she & Sarkozy agreed Greece should deposit revenue to meet future interest payments in a special escrow account to guarantee that creditors were paid consistently.  Frustration is the key word in Europe.

Greeks Delay Bailout Talks As Merkel Demands Action

Photo:   Bloomberg

Global smartphone shipments surged 55% in Q4. The Apple (AAPL) iPhone 4S countered declines by Research in Motion (RIMM) & Nokia (NOK) according to International Data Corporation (IDC).  Shipments rose to 158M units from 102M a year earlier, exceeding forecast for a 40% gain.  AAPL sold 37M iPhones, helping it profit in the period.  By the end of 2011, one out of every 3 mobile phones shipped worldwide was a smartphone.  Apple’s share of the global smartphone market jumped to 24% from 16% a year earlier, regaining its top spot from Samsung, which had overtaken the iPhone- maker in Q3.  Samsung’s share climbed to 23% in Q4 from 9.4% a year earlier, IDC said.  Make no mistake, Samsuing is a major rival for AAPL.  AAPL stock remains hot, gaining 4 to 464.

Smartphone Shipments Jump 55%, Led by IPhone

Apple Inc. (AAPL)

Markets (except for AAPL) are just meandering today awaiting developments in Greece.  That situation is going from bad to worse.  Earnings season is largely over, so Greece will take center stage.  Iran looks like it's getting ready to play hardball as the mideast has an  abundance of problems.  The days in Feb are limited & Congress has to come up with its deal to extend tax benefits.

Dow Industrials

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Optimism from jobs data lifts markets

Dow gained 31 to a new 27 month high, advancers ahead of decliners 4-3 & NAZ was up a more impressive 20.  Bank stocks were strong, taking the Financial Index to an 8 month high. The index is up almost 30 since the beginning of Dec, leading the advance for all markets.   

S&P 500 FINANCIALS INDEX

Value	221.80
Change	2.61  (1.2%)

The Alerian MLP Index was up a fraction to the 364s, remaining just under its record highs of the last 2 months, & the REIT index rose 1+ to 225.  Junk bond funds were a little lower although demand continues strong for new issues (see below).  Treasury rates climbed to the highest level in a week on the ADP employment report.  The yield on the 10 year Treasury bond rose a massive 14 basis points to 3.48%, near the interim highs reached 3 weeks ago.

Treasury yields:

U.S. 3-month		0.13%
U.S. 2-year		0.71%
U.S. 10-year		3.48%

Alerian MLP Index   ---   1 year



Dow Jones REIT Index   ---   1 year



10-Year Treasury Yield Index   ---   1 year




Oil rose after reports showed that US service industries expanded & companies added workers in Dec, signaling that fuel demand may increase in the US.  Gold fell, capping the biggest 2 day drop in 11 months, on speculation that an economic recovery will curb demand for the metal as a haven.

CLG11.NYM

...Crude Oil Feb 11

...90.42

... 1.04 (1.2%)

GCF11.CMX

...Gold Jan 11

......1,371.50

... 7.00

(0.5%)

** Gold Super Cycle **  

Click Here

Investors are accepting the lowest relative yields on speculative-grade debt in more than 3 years with more new issues from borrowers amid signs the economy is improving.  Spreads on junk bonds declined 5 basis points yesterday to 527 basis points.  This reinforces the old addage the junk bonds are stocks with high yields & in a rising stock market, demand continues strong for high risk debt.  Spreads have declined from a record 21.8% points in Dec 2008 as the default rate for US junk bonds fell for a 12th consecutive month in Nov to 3.35%, according to Standard & Poor’s. Relative yields on junk debt, rated below Baa3 by Moody’s Investors Service & BBB- by S&P, are the lowest since reaching 525 basis points in Nov 2007 according to Bank of America Merrill Lynch index data.  High-yield debt, which advanced 15.2% in 2010 after surging 57.5% in 2009, is forecast to beat investment grade this year as the economic recovery gains momentum & as rising Treasury yields temper the performance of the highest quality credit. 

High-Yield Debt Spreads Narrow to the Least Since November 2007


AT&T (T) plans to sell 20 phones with high-speed Web surfing this year including 12 phones running Google (GOOG) software in its biggest push yet to lessen its dependence on the Apple (AAPL) iPhone. ATT said, ahead of the Consumer Electronics Show (CES), that the 20-phone lineup would include Google Android devices from Motorola (MOT), HTC & Samsung. By comparison, it announced 5 new smartphones at last year's CES.  It will sell a tablet computer from MOT but declined to elaborate.  ATT also will speed up its plan for upgrading the network with LTE, a high-speed technology already offered by rival Verizon (VZ), scheduled for the middle of 2011.  ATT also plans to sell a high-speed phone from HTC called Inspire 4G & a phone called Infuse from Samsung. The Infuse would be its thinnest phone at 9 millimeters & would sport its largest display, a 4.5" screen.  The stock gained 10¢ today & has a nice run in the last 6 months.

• AT&T plans 20 new smartphones- Reuters

AT&T   ---   2 years




US auto sales could rise to almost 13M vehicles in 2011, the 2nd straight year of gains, demonstrating the market’s recovery is legitimate.  Total deliveries would rise 11% from 2010 after rebounding to 11.6M vehicles last year from a 27 year low in 2009, according to Autodata.  The gain would provide additional revenue for an industry that returned to profitability in 2010, led by Ford (F) earning $6.4B in the first 3 qtrs.  However, the forecast is for the 3rd-lowest annual total since 1992 & would be 23% below the average 16.8M annual sales rate before the recession.  Sales this year may be as much as 13½M when including medium & heavy-duty trucks.  Ford was up 51¢ & has a spectacular run from when it was on death's door 2 years ago.

• AT&T plans 20 new smartphones- Reuters

Ford   ---   2 years





Since the start of Dec, the Dow is up 715, hardly pausing along the way.  Optimism is high & risk is of little concern to investors in the pursuit of market gains.  The strong acceptance for new offerings of junk bonds with modest yields signals that markets are poised for extending the 2 years rally.  I still worry about that unforeseen glitch which could bring a rude shock to those not expecting setbacks.  

Dow Jones Industrials   ---   1 year

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Markets slide on nervousness about the next moves by the Federal Reserve

Stocks could barely hold early gains when financial & consumer companies turned lower.  Dow had to settle for up 6, advancers barely ahead of decliners & NAZ dropped 2.  The Financial Index was about break even with bank stocks selling off.

S&P 500 FINANCIALS INDEX

Value	195.80
Change	-0.03  (-0.0%)

The Alerian MLP Index gave up its early gains but late day brought back a gain of 0.76 in the 353s to yet another record.  Higher prices bring lower yields.  The yield on the index has fallen to 6¼%.  The REIT index, off from its highs, still managed a gain of 2 to the 221s on favorable earnings. Junk bond funds also gave up AM gains.  Treasuries are sloshing around prior to the FED meeting, but interest rates are already at near record or very low levels.

Treasury yields:

U.S. 3-month		0.10
U.S. 2-year		0.34
U.S. 10-year		2.62

Alerian MLP Index   ---   YTD



Dow Jones REIT Index   ---   YTD



10-Year Treasury Yield Index   ---   YTD




Oil prices surged on a series of reports that point to improving economic growth in the US & China.  Gold is the classic bet against inflation, investors are waiting to see the results of the FOMC meeting.

CLZ10.NYM

...Crude Oil Dec 10

....82.94

... 1.51

(1.9%)

GCX10.CMX

...Gold Nov 10

.....1,351.30

... 5.80  (0.4%)

$$ Gold Super Cycle $$ 

Click Here

Photo:  Bloomberg


The Federal Reserve (FED) is widely expected to begin a new round of unconventional monetary easing this week by announcing a plan to buy at least $500B of long-term securities after its meeting on Wed. The FED would restart a program of securities purchases to spur growth, reduce unemployment & increase inflation. However Fed officials have different ideas about the total amount of purchases needed to bolster the recovery. The FED has already cut the benchmark rate almost to zero & bought $1.7T (that's T as in trillion) in securities without generating growth fast enough to bring down unemployment from near a 26-year high.  Some analysts question how much good this progam will do versus how much harm.  If they restart this program, interest rates will fall further.

Fed Likely to Announce $500 Billion of Purchases, Survey Shows



Apple, with the 2nd largest market cap in the world, has finally hit a roof after soaring to new heights.  Its peak was when it reported great earnings again & announced new products for its iPad & iPhone product lines.  Since then it it has been slipping & sliding along with the markets, or perhaps leading the markets down.  Today it rebounded 3.20 off the 300 floor but investors may be scenting increased competition for these lines.  The New York Times just published an article about the competition for smart phones.

The Race to Dominate the Smartphone Marketat New York Times


Apple  --  1 month




Stock markets have not been performing well in the last few weeks.  For the 3rd time in 2 weeks, the Dow rose above its highest closing price of the year only to see traders pull back. Little should happen tomorrow.  But Wed, after election results are in & the FED announcement, will give us a better sense of where markets want to go.  I'll take a holiday tomorrow, back on important Wed.

Dow Jones Industrials   ---   YTD

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