Markets waffle as the Portugal debt rating is cut

Dow slipped 12 (after last week's spectacular gain), decliners were barely ahead of advancers & NAZ was up 9.  Bank stocks led the selling, but the Financial Index finished 1+ above its lows.

S&P 500 Financials Sector

Value	208.69
Change	-1.76     (-0.8%)

MLPs & REITs were strong in an otherwise lackluster market.  The MLP index is at a 2 month high & the REIT index was up 1½ to the 247s (3 short of the 2011 highs).  Junk bond funds inched higher & Treasuries were strong with the scare over Chinese banks holding too many bad loans.  The yield on the 10 year Treasury is back below 3.2% (last week's high).  Oil rose after Barclays Capital raised its price forecast for 2012 & Goldman Sachs said the International Energy Agency's decision at the end of Jun to release 60M barrels of oil from its reserves won't cool off prices as much as originally thought.  The chart for gold below shows its extreme strength in the last 2 days as Asian investors are seeking a safe investment.

Alerian MLP Index

Value	373.61
Change	0.40     (0.1%)

Treasury yields:

U.S. 3-month	-0.005%
U.S. 2-year	0.430%
U.S. 10-year	3.123%

CLQ11.NYM

...Crude Oil Aug 11

...96.85

... 1.91

(2.0%)

INO TV Signup with the latest Daily update below:

Moody's downgraded Portugal's gov debt, citing growing risks the country will require a 2nd rescue package because it cannot meet its debt reduction targets.  Portugal's rating was cut one notch to Baa2 from Baa1 & Moody's said that it was increasingly unlikely that Portugal would be able to borrow money on capital markets in 2013, as planned.  As a result, the country would probably require more financial aid, on top of the €78B ($113B) it received earlier this year, with private banks taking some losses.  Moody's said the EU's insistence on involving private sector holders of Greek debt in a 2nd bailout for the country indicates the same would happen for Portugal.  This is a blow to Portugal as it tries to distance itself from Greece, which has had to redouble painful austerity measures because it did not meet debt reduction targets.  Portugal faces huge challenges in reducing spending & tax evasion, achieving economic growth & supporting the banking system.  Another rating cut is possible.  The Greek tragedy plays on.

Portugal Ratings Cut to Junk by Moody’s


Netflix is expanding its streaming service into 43 countries throughout Latin America & the expansion was larger than expected.  NFLX subscribers in Mexico, South & Central America & the Caribbean will be able to watch TV shows & movies streamed on a wide range of gadgets next year. Pricing has not been announced or the starting date set.  The US streaming subscription costs $8 a month & customers can pay slightly more to get DVDs in the mail. The service in Latin America will be streaming-only, with no DVD option.  The company is working on broadening its intl reach as its service in the US becomes more ubiquitous, NFLX has 23M subscribers in the US.  NFLX launched its streaming service in the US in 2007 & in Canada in 2010.  The stock rose $21 today with one of the best looking charts over the last 3 years.

• Netflix to stream movies, shows in Latin America- AP

Netflix, Inc. (NFLX)

This was a dull day of trading but NFLX provided excitement, vaulting to a new record high.  But there was little else that was noteworthy.  Moody’s cut Portugal’s bond ratings, sending an ominous sign while Greece is still trying to arrange for its borrowings to be swapped for longer term debts.  The deadline to raise the US debt ceiling is only 4 weeks away (maybe 2 weeks when lead time to write the new legislation is factored in).  Earnings season will begin next week & big picture economic signals are that the reports could be less than impressive.  But stock markets aren't worried with the Dow just 240 below its 2011 highs.

Dow Industrials (INDU)

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Find out what's inside Trend TV  

Click Here

Markets fluctuate after last week's gains

All good things come to an end.  After the best week for the stocks in the last year, markets fell back.  Dow dropped 31, decliners ahead of advancers 3-2 & NAZ was off 3.  Banks saw serious selling on worries about Asian banks.

S&P 500 Financials Sector Index

Value	207.70
Change	-2.75    (-1.3%)

The MLP index was essentially even at 373 while the REIT index slipped a fraction in the 245s.  Junk bond funds inched higher & Treasuries rose, snapping a 5-day rout, as a deteriorating credit outlook for China’s banks encouraged demand for the safety of US gov debt.  Oil bounced back above $96 on the back of forecasts for more expensive crude in 2012.  Gold rose sharply on the revised outlook for Chinese banks.

JPMorgan Chase Capital XVI (AMJ)

The latest daily market update below:

Treasury yields:

U.S. 3-month	0.005%
U.S. 2-year	0.446%
U.S. 10-year	3.138%

CLQ11.NYM

...Crude Oil Aug 11

...96.87

..... 1.93

(2.0%)

GCN11.CMX

...Gold Jul 11

.......1,509.70

... 27.40  (1.9%)

Photo:   Bloomberg

The Commerce Dept said factory orders rose 0.8% in May, following a downwardly revised drop of 0.9% in Apr.  Much of the increase was driven by orders for aircraft which jumped 36.5%. Auto & auto parts orders rose 2%. Excluding transportation, factory orders increased 0.2% in May, the same as Apr & down from a 2.9% gain in Mar.  The report also showed companies are investing in computers & other equipment.  A measure of business investment rose 1.6%, after falling 0.4% in the previous month.  Orders for nondurable goods fell 0.2%, partly because oil prices fell in May.  The effects of the Mar earthquake in Japan receded in May & lower gas prices also helped these numbers.

Orders to U.S. Factories Rose 0.8% in May

Photo:   Bloomberg

Chinese bank loans to local govs are about 3.5T yuan ($540B) more than the national auditor’s estimate, & the industry’s credit outlook could decline, according to Moody’s Investors Service.  “The Chinese audit agency could be understating banks’ exposure to local governments,” Yvonne Zhang, a Moody’s analyst said. The “apparent absence of a clear master plan to deal with this issue” is likely to exacerbate problems & lenders may be left to manage a portion of the souring loans on their own, it said.  Chinese bank shares fell on concern that the banks will be unable to absorb losses on defaults should property prices drop.  Moody’s estimates that local gov debt is about a third more than the audit office’s findings last week of 10.7T yuan & non-performing loans could reach as much as 12% of total credit.  China's influence in the world economy is huge & problems with its banks conjure up thoughts of the recent mortgage crisis in the US.

China Banks’ Outlook May Be Souring on Loans


Greek banks are willing to roll over gov bonds as part of an EU rescue plan that will keep the country out of financial markets for 3 years. “The Greek banks are ready to participate,” Finance Minister Evangelos Venizelos said. “We must respect absolutely the voluntary character of this procedure. This is very sensitive and I give a very crystal clear answer on this topic.”  EU leaders have called on investors to shoulder part of a new aid package for Greece after last year’s €110B ($159B) rescue failed to stop the spread of Europe's debt crisis. Participation by Greek banks & pensions funds is key to the success for investors to roll over as much as €30B of maturing bonds into longer-term securities.  Making this plan work remains a delicate task.

Greek Banks Ready to Take Part in Rollover, Finance Chief Venizelos Says


While markets are lower, they are digesting gains from last week fairly well.  But bank stocks are seeing a fair amount of selling which should continue with more questions raised about loans at Chinese banks. The factory orders report was fairly good.  The big  jobs report is coming on Fri & the only question is, how dreary will the unemployment rate be?  Then Alcoa (AA), a Dow stock, kicks off earnings season next Mon evening.

Dow Industrials (INDU)

Find out what's inside Trend TV  

Click Here

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Markets had their best week in a year!

Stocks had an amazing week, up every day with strong gains.  Dow rose 168 today, advancers ahead of decliners 4-1 & NAZ was up 42.  While most stocks were strong, banks led the way, taking the Financial Index up 11 this week.

S&P 500 Financials Sector Index

Value	210.45
Change	3.58    (1.7%)

The MLP index is climbing back to its record highs reached 2 months ago while the REIT had an excellent day, rising 4½ to 246 (just 4 below the 2011 highs).  Junk bond funds edged higher, but are still below their 2011 highs.  Treasuries are sold again, taking the yield on the 10 year Treasury bond to a 2 month high.  Don't forget, QE2 is over which could be contributing to the price declines.  Oil fell back & gold took a nasty spill today, bringing it well below $1500.

Alerian MLP Index

Value	372.21
Change	1.62     (0.4%)

Treeasury yields:

U.S. 3-month	0.015%
U.S. 2-year	0.486%
U.S. 10-year	3.197%

CLQ11.NYM

...Crude Oil Aug 11

...94.92

... 0.50   (0.5%)

Today's Market Update video, click below:

Photo:   Bloomberg

Zynga filed for an IPO hoping to raise up to $1B.  The company, which makes popular games that people play on the Facebook, did not say how many shares it was planning to sell or give an expected price range but it is believed that Zynga's IPO could raise $1.5-$2B which would value the company at $15-$20B.  By way of comparison, Microsoft (MSFT), a Dow company which pays a dividend, has a market cap of around $200B.  Zynga is the company behind FarmVille & Mafia Wars & is the top game publisher on Facebook. While its games are free, its revenue comes mainly from selling virtual items such as tractors & weapons that people use in the games. In Q1,ended Mar 31, Zynga broke even on revenue of $235M compared to $101M last year.  During the same period, adjusted earnings before interest, taxes, depreciation & amortization were $112M, up 20%  from the prior year.  This is viewed as exciting, creating a lot of buzz.  But the track record of IPOs this year is spotty at best.

Zynga Files to Raise $1 Billion in IPO




Photo:   Yahoo

Gas prices have hit a sweet spot for US based automakers.  They've fallen enough to spur pickup truck sales, yet remain so high that newer small cars are selling as well.  However, this is not the case for Honda & Toyota. They ran short of small cars because of production problems tied to the Mar earthquake in Japan.  Analysts expect overall US sales to rise 13.5% from last Jun, to around 1.1M vehicles.  General Motors & Ford said their sales rose 10% & Chrysler sales increased 30%. Honda & Toyota saw their sales drop more than 21%, but their factories are starting to return to normal production.  GM said that cheaper gas lured more pickup truck buyers into showrooms.  Sales of Ford's F-Series pickups rose 7%, while Chrysler reported a 35% increase in Ram truck sales  GM's sales increases were powered by smaller, more fuel-efficient cars.  Even with sales rebounding, there is some concern about the strength of the recovery. Don Johnson, GM's VP of US sales, said he now expects industry sales to be at the low a range of 13-13.5M.  J.D. Power lowered its full-year sales forecast from 13M to 12.9M.  Johnson blamed stubbornly high unemployment. Sluggish hiring in May contributed to that month's sales decline, which broke a string of double-digit monthly increases. Forecasters say the jobs picture will improve only slightly in Jun.

GM, Ford Sales Miss Estimates as Consumers Defer Auto Purchases

General Motors Company (GM)

Ford Motor Credit Company (F)

Toyota Motor Corp Ltd Ord (TM

Everything seemed to break right this week for the markets.  Greece may be avoiding default.  Other economic news was viewed as good & IPOs are getting exciting.  But raising the debt ceiling is still stuck in the mud.  Treasuries sold off sharply as money is seeking risky investments again.  The holiday weekend will be a much happier time for many stockholders.

Dow Industrials (INDU)

Get your favorite symbols' Trend Analysis TODAY! Click Here

Find out what's inside Trend TV  

Click Here

 

Markets higher on manufacturing report

Stocks jumped out of the gate,extending their week long gains.  Dow rose 109, advancers ahead of decliners 3-1 & NAZ was up 21. Bank stocks led the advance again as the Financial Index has an 11 point bounce off its lows in mid May.

S&P 500 Financials Sector Index

Value	209.11
Change	2.24    (1.1%)

The MLP index only gained a fraction to 372 but the REIT index was up 2+ to 244 (short 6 of its yearly high).  Junk bond funds were generally a little higher & Treasuries continued weak as the concept of their safety has been forgotten this week.  Oil pulled back after gains earlier this week.  Gold declined to a 6-week low as Greece progressed in staving off a default, curbing demand for the metal as a protection of wealth.

JPMorgan Chase Capital XVI (AMJ)

Below is the latest Daily update:

Treasury yields:

U.S. 3-month	0.015%
U.S. 2-year	0.482%
U.S. 10-year	3.201%

CLQ11.NYM

....Crude Oil Aug 11

...94.69

...... 0.73 (0.8%)

GCN11.CMX

...Gold Jul 11

........1,484.80

... 17.50

(1.2%)

Photo:   Bloomberg


Manufacturing activity recovered somewhat in Jun from a sharp slowdown in May.  The Institute for Supply Management said its index of manufacturing activity rose to 55.3 in Jun from 53.5 in May, the slowest growth in 20 months (a reading above 50 indicates that the sector is expanding).  In Jun, new orders for goods & employment picked up again.  Growth had slowed sharply in May as high gas prices cut into consumer spending & an auto parts shortage stemming from Japan's March earthquake.  The factory sector has been the primary driver of the recovery, growing now for 23 straight months.  The rest of the world is not doing so well.  Other figures showed manufacturing growth is slowing from China to Europe. China’s factory index fell in Jun to the lowest level since Feb 2009, while in the euro area, a gauge slipped to an 18-month low. German manufacturing expanded at the weakest pace in 17 months, as Italy, Ireland, Spain & Greece contracted.  Good news for the US, but mixed at the bigger picture level.

Manufacturing Growth in U.S. Likely Slowed in June on Japan Parts Shortage


Consumer sentiment worsened in Jun on jitters about the economic outlook & spending is likely to remain lackluster in the long-term.  Falling gas prices stabilized consumers' view of their current economic conditions, but expectations remained gloomy according to the Thomson Reuters/University of Michigan survey.  The final reading for the consumer sentiment index came in at 71.5, down from 74.3 in May.  While small spending gains can be expected in H2, the trend is more likely to vary between lackluster & zero than lackluster & robust over the next several years.  "Resurgent spending is not on the horizon, nor is widespread retrenchment," survey director Richard Curtin said. "Importantly, the consumer no longer has the financial wherewithal to power the economy into overdrive."  The survey's barometer of current economic conditions edged up to 82.0 from 81.9 in May but the gauge of consumer expectations fell to 64.8 from 69.5 & below forecasts for 66.6.  Consumers one-year inflation outlook improved, falling to 3.8% from 4.1% & the 5-10 year inflation outlook inched up to 3.0% from 2.9%.  Consumers are not supporting a robust recovery. 

• Consumer sentiment worsens as outlook sours- Reuters

Photo:   Bloomberg

Greece could receive as much as €85B ($124B) in new financing (including a contribution from private investors) in a 2nd bailout aimed at preventing default & ending its debt crisis.  Euro-area nations & private investors will contribute 70% of that aid, with the IMF offering the rest, Thomas Wieser, head of the AUstrian ministry’s economic policy & financial markets dept, said. “I’m certain we now have a sufficient consensus that we can take a decision during the weekend on the fifth tranche of the Greek loan package,” EU Economic & Monetary Commissioner Olli Rehn said today.  Greek 2-year notes led market gains as speculation about an imminent Greek default eased.  2-year Greek note yields fell 115 basis points to 26.15% after topping 30% last month. 

Greece to Receive Up to $124 Billion in New Aid

Dow is up almost 700 off its lows late last week.  Amazing what the absence of a Greek default can do, especially when those problems are not completely over.  Economies around the world are not showing vigorous growth & raising the debt ceiling in the US still looks to be a long way off.  But markets fell good, although MLPs lost a little steam in the last 2 days.  The constant threat of higher taxes on anything (especially energy) should keep this group from making significant progress for some time. 

Dow Industrials (INDU)

Find out what's inside Trend TV!  

Click Here

Get your favorite symbols' Trend Analysis TODAY! 

Click Here