Oversold markets bounce back

Dow rose 178, advancers over decliners 5-1 & NAZ was up 33.  As has been the case for the last month, bank stocks were market leaders.  The Financial Index had a solid advance, but is still off 6% from its highs at the start of this week.

S&P 500 Financials Sector Index

Value	177.88
Change	4.86    (2.8%)

The MLP index was flat & the REIT index gained 4+ to 228.  Junk bond funds edged higher & Treasuries were flattish.  Oil finished off its best levels, but gold managed a good gain. 

Alerian MLP Index

Value	366.82
Change	0.32    (0.1%)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.000%
U.S. 2-year	0.230%
U.S. 10-year	2.002%

CLZ11.NYM

...Crude Oil Dec 11

...92.64

... 0.45

(0.5%)

Photo:   Bloomberg

Ben Bernanke acknowledges the pace of economic growth is likely to be "frustratingly slow," after the Federal Reserve (FED) downgraded its forecast for the next 2 years.  He said the FED is looking for economic activity & labor market conditions to improve gradually over the next 2 years, but at a sluggish pace.  The FED will use monetary tools if necessary to safeguard the recovery.  The debt crisis in Europe is a particular concern to the FED because it could have adverse effects on confidence & growth.  The FED is closely monitoring the situation.  This was his 3rd news conference this year, a practice he started in Apr in an effort to provide more background on FED actions & its thinking behind its latest economic forecast.

Fed Says Economy Has Picked Up While Still Detecting ‘Significant’ Risks




Photo:   Yahoo

Greek Prime Minister Papandreou is explaining to his furious European colleagues why he was holding a surprise referendum on a bailout deal that took them all months to work out.  His pledge to let the Greeks vote has riled financial markets & threatens to derail an entire European debt crisis plan that's not even a week old.  Some call it a "back me or sack me" move to make sure the Greek public will support the severe austerity measures.  But a "no" vote would have enormous consequences not just for Greece but for the rest of Europe.  It could lead to a disorderly Greek default, force Greece out of the 17-nation eurozone, topple many fragile European banks & send the global economy spinning back into recession.  French President Sarkozy & German Chancellor Merkel have gathered for private talks ahead of their meeting with Papandreou.  Finance ministers had already approved their portion of a €8B ($11B) aid installment for Greece, but eurozone officials now say that the payout was conditional on additional austerity measures that Greece committed to as part of the new rescue deal.  Can you spell "chaos?"

EU Leaders Press Papandreou on Greece’s Bailout Vote as G-20 Leaders Meet

Photo:    Yahoo

Clorox, a Dividend Aristocrat, raised prices to combat higher costs as gross margins have been hurt in fiscal Q1.  The higher prices boosted revenue 3% & overall sales volume increased 2% helped from intl growth.  But the higher prices drove down sales volume on many products.  Net income plummeted nearly 40% despite the revenue gain largely because the company benefited in the year-ago period from selling its auto care business.  If that gain was excluded, then net income would have fallen only 7%.  After adjusting for one-time items, EPS was 98¢, beating expectations of 94¢.  Overall revenue of $1.31B edged past expectations of $1.3B.  Its best performing division was intl where revenue grew 9%, helped by expansions in "small emerging countries" in Asia & the Middle East.  But intl revenue makes up about 20% of revenue.  The stock fell 86¢,

Clorox's net income falls, but revenue rises AP

Clorox Company (The) (CLX)

Enterprise Products Partners Q3 net income rose sharply, largley from natural gas liquids, crude oil production growth & demand for natural gas liquids by the US petrochemical industry & in intl markets.  The company has been growing thru acquisitions, acquiring Duncan Energy Partners in Sep & Teppco Partners in 2009 in a deal that made it one of the largest MLPs.  Net income rose per unit rose to 55¢ in Q3 from 18¢ & beat forecasts for 50¢.  Revenue rose 40% to $11.3B from $8B, beating expectations of $10.7B.  Its largest project, the $1.5B Haynesville Extension of its Acadian Gas system, began commercial operations yesterday.  EPD was up 23¢.

Enterprise Products 3Q risesAP

Enterprise Products Partners L.P. (EPD)

In the last 9 trading sessions, Dow has had triple digit swings in all but one of those days.  The VIX, volatility index, chart for the last month shows it remains in very high territory (above 30).  The plan to solve the Greek debt mess looks like it will come unglued.  Leaders will need more Scotch-Tape to patch it together, not a comforting thought.  Meanwhile the super committee in DC is trying to put together a plan to reduce the federal deficit, but with little success.  The stock market is very fragile & high volatility could spell trouble.  I'm surprised that the lack of help by the FED was treated with a sense of equanimity by the markets.

Volatility Index (^VIX)

Dow Industrials (INDU)

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Higher markets on hopes for a QE3

Dow shot up 202, advancers over decliners 8-1 & NAZ added 37.  Bank stocks led the way as the Financial Index was able to recover much of the lost ground from the last 2 days.

S&P 500 Financials Sector Index

Value	178.01
Change	5.05   (2.9%)

The MLP index went up 2+ the 368s & the REIT index gained 5+ to the 229s.  Junk bond fudns edged higher while Treasuries fell with the rising stock market.  Oil pared gains after the US Energy Dept said stockpiles advanced 1.83M barrels last week.  Gold is also participating in today's rally.

ALERIAN MLP Index (^AMZ)

DJ REIT INDEXDJR (^DJR)

Treasury yields:

U.S. 3-month	0.000%
U.S. 2-year	0.226%
U.S. 10-year	2.040%

CLZ11.NYM

....Crude Oil Dec 11

...93.42

.... 1.23

(1.3%)

GCX11.CMX

...Gold Nov 11

.....1,737.80

... 26.80

(1.6%)

Get the latest market update below:

• 

Photo:   Yahoo

US private employers added more jobs than expected in Oct, while planned layoffs dropped sharply.  The ADP National Employment Report showed the private sector added 110K jobs, topping expectations for a gain of 101K jobs.  ADP also increased Sep job additions, to a gain of 116K from the previously reported 91K.  While the data was encouraging, it still points to a sluggish recovery rather than robust growth.  ADP figures come ahead of the gov much more comprehensive jobs report on Fri, which includes public & private sector employment.  That report is expected to show a rise in nonfarm payrolls of 95K last month & a rise in private payrolls of 120K while the unemployment rate holds steady at 9.1%.  This is another report showing that the economy is getting by but not expanding like it should in a recovery from a recession.

U.S. Companies Add More-Than-Expected 110,000 Workers in October, ADP Says


Job cuts announced by US employers increased in Oct from Oct 2010 as dismissals remain a hurdle to faster economic growth.  Planned layoffs rose 13% to 43K from 38K last year, according to Challenger, Gray & Christmas.  Gov agencies & financial companies have cut the most jobs this year. “We have yet to see the full impact of mandated federal spending cuts,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said.  “Meanwhile, the European debt crisis is wreaking havoc on Wall Street.”  Budgetary constraints have induced a wave of gov reductions as financial firms trim headcounts, creating an impediment for American employment prospects.  Compared with Sep, which saw the most layoffs since Apr 2009, job-cut announcements decreased 63%.  Consumer products companies led the Oct job cuts with 7K announced reductions followed by retail companies with 4K planned cuts.  More inconclusive news about an economy that is just getting by.

Announced U.S. Job Cuts Rose 13% From Year Ago, Challenger Says

Photo:   Bloomberg

MasterCard reported sharply higher Q3 profits, easily beating estimates on double-digit increases in volumes.  The CEO said that consumers were still spending despite economic uncertainty, though growth comparisons will start to get harder from this month.  The company has increased efforts to get US. business from Visa (V), just as Visa is expanding its intl business.  EPS was $5.63, up from $3.94 last year.  Revenue rose more than 27% to $1.8B.  Estimates were for EPS of $4.82 & was the biggest earnings beat in the last 2 years.  MA gross dollar volume rose 18.1%, while transactions processed rose 20.5%.  For the rest of the year, MA said its outlook is consistent with the guidance it gave in Sep & it also maintained its long-term targets.  The stock rose $26 to a new record.

MasterCard Profit Climbs 38% as Spending Rises

Mastercard Incorporated (MA)

The economic news is not there to justify the big rise today.  But hopes are riding high that the Federal Reserve will announce a QE3 program later today.  Sounds good, but I don't think so.  If its does, not sure what is supposed to accomplish other than bring out buyers for stocks.  It would not make any difference in resolving the Greek debt mess & nobody knows where that will lead.  The US economy has only a limited recovery, not enough to reduce high unemployment.  The jobs report is coming on Fri & that is not expected to be encouraging.  If Ben doesn't have any magic tricks, the markets will sell off later today.

Dow Industrials (INDU)

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Markets tumble on Greek turmoil

Dow sank 297 finishing near its lows, decliners over advancers 6-1 & NAZ sold off 77.  On Greek debt worries, banks led the decline with the Financial Index falling 10% in the last 2 days. 

S&P 500 Financials Sector Index

Value	173.02
Change	-6.56    (-4.7%)

The MLP & REIT indices eached dropped over 6 on a very bad day for the markets.  The VIX, volatility index, went up 6 to 36.  Junk bond funds were lower while Treasury prices jumped on growing anxieties from Greece.  Oil dropped with the stock market as a surprise referendum in Greece threatened to derail a plan to bolster Europe's banks.  Gold also suffered from selling, but buying in the PM reduced its losses.

Alerian MLP Index

Value	366.20
Change	-6.83   (-1.8%)

Click below for the latest market update:

Treasury yields:

U.S. 3-month	-0.020%
U.S. 2-year	0.238%
U.S. 10-year	1.982%

CLZ11.NYM

...Crude Oil Dec 11

...91.02

.... 2.17

(2.3%)

Photo:   Bloomberg

General Motors & Ford US deliveries in Oct increased less than forecasts that called for the best sales month since Feb.  GM sales increased 1.7% to 187K & Ford light-vehicle deliveries gained 6.2% to 167K, below a 6.6% estimate.  Oct light-vehicle sales may have risen to an annual rate of 13.2M but that pace may be challenged due to floods in Thailand.  GM estimates a 13.7M industry sales rate for Oct, including medium-duty & heavy-truck deliveries.  Chrysler Group, controlled by Fiat, boosted sales 27% to 114K, shy of the 28% estimate.  Sales of the Jeep Compass rose more than sixfold from a year earlier to 5K but Grand Cherokee deliveries dropped 13% to 11K.  Honda US sales grew but it may lose US & Canadian output thru yearend because of parts shortages caused by Thailand floods.  Nissan US sales rose 18% in Oct, beating estimates for a 16% increase.  Deliveries of Versa & Sentra cars rose by more than 40% & Juke crossover sales gained 37%.  GM fell 2.52 & Ford was down 60¢.

Big Three Auto Sales Rise Less Than Estimates

General Motors Company (GM)

Ford Motor Credit Company (F)

Photo:   Bloomberg

Greek Prime Minister Papandreou’s grip on power weakened ahead of a confidence vote later this week.  His decision to call a referendum on a new bailout package provoked a lawmaker rebellion.  One said she will defect from Papandreou’s socialist Pasok which means he would only control 151 seats in the 300-seat chamber.  6 members of the party called on the premier to resign in a joint letter!  He has been ruling with thin margins, his last major vote on austerity measures passed by 154 votes to 144 on Oct 20.  The Greek debt mess remains far from being resolved.

Papandreou’s Power Weakens as Lawmakers Rebel

Photo:  Bloomberg

Yahoo! stock dropped after the company was said to be leaning toward selling its Asian assets & redistributing the proceeds to shareholders, rather than selling itself to a group of buyers.  This scenario is the most likely option & would let YHOO pay a special dividend or buy back shares.  YHOO has been exploring options while searching for a new CEO.  Co- founder Jerry Yang said on Oct.20 that the company isn’t necessarily on the block. “The intent going in is not to put ourselves up for sale,” Yang said.  “The intent is to look at all options. There’s plenty of options for the board, and plenty of options for our shareholders to realize value.”  But it could still sell to a group of investors.  The stock fell 71¢.

Yahoo Dips as Company Said to Lean Toward Dividend, Not Sale

Yahoo! Inc. (YHOO)

The FOMC is meeting held & getting little attention because no great surprises are expected.  Interest rates will not be raised & there is no room left for cuts.  Clearly Europe, especially Greece, is receiving the bulk of investor attention.  The 3 month chart for the Dow was encouraging last month, but the large amount of selling in the last 2 days changed all that.  Greece & Europe are divided, not good for the markets.  The Oct jobs reports comes on Fri & then eyes will turn towards DC to see what a divided super committee comes up with to reduce massive federal deficits.  There is the potential for the Oct gains in the stock market to be lost very quickly.  With  today's decline, Dow is barely positive YTD.

Dow Industrials (INDU)

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Markets in disarray on Greek referendum

Dow dropped 205 (but off earlier lows), decliners over advancers 7-1 & NAZ fell 53.  Bank stock are leading the way lower with the Financial Index suffering a substantial loss on Greek debt worries.

S&P 500 Financials Sector Index

Value	175.814
Change	-5.77    (-3.2%)

The MLP index fell 5+ to the 368s & the REIT index was off 3½ to the 228s.  The VIX, volatility index, jumped 4 to the 34s (up 9 in 2 days) on increased uncertainty in the markets.  Junk bond funds fell while Treasuries soared bringing the yield on the 10 year Treasury near 2%.. Oil fell for a 3rd day after a Greek pledge to hold a referendum raised the prospect of the failure of the bailout plan & Chinese manufacturing growth slowed.  Gold fell sharply, bringing it back below 1700.

ALERIAN MLP Index (^AMZ)

DJ REIT INDEXDJR (^DJR)

Treasury yields:

U.S. 3-month	-0.015%
U.S. 2-year	0.238%
U.S. 10-year	2.024%

CLZ11.NYM

....Crude Oil Dec 11

...90.55

..... 2.64

(2.8%)

GCX11.CMX

...Gold Nov 11

.......1,683.80

... 40.40

(2.3%)

Get the latest daily market update below:

Photo:   Yahoo

A Dutch Labor party member said that a Greek decision to hold a referendum would be a "deal-breaker" for last week's accord to resolve the European debt mess.  The conservative Dutch gov needs Labor's support to achieve a majority in parliament in support of the deal, meaning Labor could effectively veto it.  The Dutch parliament is debating the EU agreement now.  Europe's new plan to solve its crippling debt crisis has been thrown into turmoil by the Greek Prime Minister's shock decision to call a referendum on the country's latest rescue package. Months of uncertainty over the vote will threaten the stability of larger economies like Italy, which saw its borrowing rates rise sharply.  It will also hinder European leaders' efforts to get countries like China to contribute to their expanded bailout fund & to convince banks to accept bigger losses on their holdings of Greek debt.  Greek Prime Minister Papandreou stunned investors, as well as his own citizens & partners in the eurozone, by announcing that a plebiscite will be held in what he called "a supreme act of democracy and of patriotism for the people to make their own decision." A confidence vote in the Socialist gov will also take place at the end of this week.  This spells chaos, very bad for the markets.

Papandreou’s Power Weakens as Lawmakers Rebel on Vote

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Photo:   Yahoo

Pfizer, a Dow stock, had better-than-expected quarterly results, helped by the weaker dollar & strong performance of the nutritionals & animal health businesses it plans to sell or spin off.  It boosted its full-year 2011 profit forecast & predicted 2012 earnings will be little changed from this year despite the loss of patent protection for Lipitor in the US on Nov 30.  A handful of promising new drugs are working their way thru late-stage trials which has restored some faith in the company.  EPS was 48¢ in Q3, including a $1.3B after-tax gain on the recent sale of its Capsugel business, ahead of 11¢ last year when the company took a big charge for asbestos litigation.  Excluding special items, EPS was 62¢, beating expectations of 56¢.  Revenue rose 7% to $17.2B, well above expectations of $16.4B.  But revenue would have risen only 1% if not for the weak dollar.  The stock rose 40¢ in a declining market.

Pfizer Profit Tops Estimates on Pain Drug

Pfizer, Inc. (PFE)

Photo:   Bloomberg

The Institute for Supply Management’s Non Manufacturing survey fell in Sep to 53.0 from 55.3 in Aug, but better than expectations of 52.8.  However, it'is not a great reading as it has averaged 55 & hit a high or 59.7 in Feb.  It has been over the magic 50 level for 22 straight months.  6 of the sub-indices fell while 4 increased on the service side & 7 are above the magic-50 level.  While the increases are welcome, current levels indicate that order backlogs are growing, but slowly.  Still, better than shrinking the way they were in Aug.  This is the usual sort of mixed news on the economy which shows the recovery is stuttering.

ISM Index of U.S. Manufacturing Falls


European leaders were hoping that waving a magic wand would make debt problems go away.  Not so.  The debt mess is getting worse which causes more selling of stocks.  The chart below shows the Dow has stumbled badly this week (but remains up 1% YTD).  The US economy continues soggy.  Early reports for car sales in Oct show Chrysler had a good month, but General Motors (GM) had a meager gain.  Fri is the big jobs report & that could add more gloom on the demestic scene.  The bulls have given up command, stocks are back on defense & could be seeing a lot more selling.

Dow Industrials (INDU)

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