Markets waver on uncertainties over European debt problems

Dow was higher all day, ending with a gain of 52, advancers ahead of decliner 4-3 while NAZ fell 6.  Bank stocks had little movement as the Financial Index remained near breakeven all day.

S&P 500 Financials Sector Index

Value	176.64
Change	-0.15     (-0.1%)

The indices for MLPs & REITs had fractional changes & junk bond funds eked out gains.  Treasuries barely moved, looking for new developments from Europe.  Oil was essentially even & gold erased much of the AM losses.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Click below for the latest market update:

Treasury yields:

U.S. 3-month	0.000%
U.S. 2-year	0.254%
U.S. 10-year	2.096%

CLF12.NYM

Crude Oil Jan 12

101.18

0.19 (0.2%)

The Green Bay Packers are selling 250K shares to raise funds for redevelopment of its Lambeau Field.  Each share is priced at $250.  This sale is limited to 200 shares per person, an amount that includes shares bought in the team’s last stock offering, launched in 1997.  The only divs for stockholders are bragging rights.  There will be no monetary divs & the shares can’t be sold or transferred (other than handed on to immediate family members).  For Packers fans, the sale is about declaring their allegiance.  The Packers are the defending Super Bowl champions & flying high at 12-0 this season.  This franchise is nonprofit & publicly owned.  Before the offering, the franchise had about 112K stockholders owning 4¾M shares.  The corp is governed by a board of directors & a 7-person executive committee.  No individual is allowed to own more than 200K shares.  This offering, set to run through Feb 29, is Green Bay’s 5th, following offerings in 1923, 1935, 1950 & 1997.  Proceeds will help pay for a $143M project to add seats & amenities to Lambeau Field.  This story is a good contrast compared with the crazy goings on in Europe.

Green Bay Packers Launch Stock Offering MarketWatch

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Photo:    Yahoo

Greece is set to pass next year's austerity budget, extending tough spending cuts measures that have already left Greeks struggling as the country tries to slash debts & pull itself out of a severe recession.  The picture above shows blind demonstrators protesting budget cuts.  The budget is expected to pass with an overwhelming majority in a midnight vote.

• Greek lawmakers expected to pass austerity budget AP

Enbridge Energy Partners will make an additional $145M investment in North Dakota to expand crude oil capacity & add a rail car loading facility to accommodate the additional volume.  EEP will increase the holding capacity at the Berthold terminal by 80K barrels per day & add a double-loop unit-train facility, oil tanks & other terminal facilities next to its existing facilities.  Already it has contractual commitments for 70% of the rail loading capacity & anticipates it will soon finalize agreements for the remaining portion.  The project is expected to be ready by 2013.  The expansion adds to ongoing efforts by EEP to accommodate a boom in oil production in the region.  Its Bakken Expansion Program announced in 2010 is aimed at increasing the company's transport capacity by another 145K barrels of oil per day from fields in Montana, North Dakota & southeast Saskatchewan.  The Bakken Expansion Program is expected to cost about $370M for the US projects & about $187M for the Canadian projects.  There is no recession or high unemployment rates in this area.  The units are having a lackluster year & slipped 16¢ today.  There is also a comparable stock, EEQ, that tracks the unit & pays stocks divs, for those who don't need current income & want to avoid tax hassle associated with owning units.

Enbridge partnership to make $145M ND investmentAP

EEP   Enbridge Energy Partners

Tim Geithner backed a German-French push for closer economic cooperation in Europe, urging policy makers to work with central banks to erect a “stronger firewall” to end the debt crisis.  That's about what is expected from him ahead of the big financial meeting his weekend.  Meanwhile there is not a lot for the markets to do.  Dow is lumbering along, but remains near the 12.2K ceiling which it fell thru at the end of Jul.  Unless there is bombshell news (primarily coming from Europe), it will probably drift until it gets guidance from the European meeting on the debt crisis.  There is a talk of bailout II in Europe but details are lacking including where the money will come from to pay for it. 

Dow Jones Industrial Average

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Markets waver on S&P warning about European credit rate cuts

Dow rose 34, decliners ahead of advancers 3-2 & NAZ was off 7.  Bank stocks also slipped a little.

S&P 500 Financials Sector Index

Value	176.44
Change	-0.34    (-0.2%)

The MLP index fell 2 to the 373s & the REIT index was down 1 to the 221s.  Junk bond funds edged higher & Treasuries were little changed. Oil fell as S&P said it may cut the credit ratings of debt issued by the European bailout fund & 15 euro nations, bolstering concern that the region’s economy will slip into recession.  Gold also pulled back, to the low 1700s.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Treasury yields:

U.S. 3-month	0.000%
U.S. 2-year	0.258%
U.S. 10-year	2.065%

CLF12.NYM

....Crude Oil Jan 12

...100.69

.... 0.30

(0.3%)

GCZ11.CMX

....Gold Dec 11

.....1,703.00

... 27.70

(1.6%)

Get the latest market update below:

• 

Photo:   Yahoo

German leaders downplayed the S&P warning that it might cut the credit rating of 15 eurozone countries, including Germany's, because the financial crisis is worsening without any imminent fix.  It came just hours after Chancellor Merkel & French President Sarkozy urged changes to the EU treaty that would centralize decision-making on spending & borrowing for the 17 countries that use the €.  Tighter political & economic coordination among euro countries is seen as a precursor to further financial aid from the ECB, the IMF, or some combination.  The threat to cut Germany's prized AAA rating was particularly surprising as its bonds are considered among the safest in the world.  Any downgrade threatens to complicate the eurozone's bailout mechanism, since the region's rescue fund relies on AAA-rated bonds of Germany & France to cheaply raise money.

S&P Warning Good for Euro Leaders: Schaeuble


The European Financial Stability Facility (EFSF) may lose its AAA credit rating if any of the bailout fund’s 6 guarantors face a downgrade from AAA, Standard & Poor’s said.  “We could lower the long-term credit rating on EFSF by one or two notches if we were to lower the AAA sovereign ratings, which are currently on creditwatch, on one or more of EFSF’s guarantor members,” S&P said.  At the same time, S&P said it “could affirm the AAA ratings on EFSF and its issues if we affirm the rating on all six of EFSF’s guarantor members currently rated AAA.”  Germany, France, the Netherlands, Finland, Austria & Luxembourg are the top-rated nations backing the rescue fund.  The German Finance Minister said that the downgrade warning will help force Europe to ratchet up efforts to resolve the 2-year old fiscal crisis this week.  The debt mess remains murky at best.

S&P Says Euro Region’s EFSF May Lose Rating If Any AAA Member Downgraded

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Photo:   Yahoo

Toll Brothers fiscal Q4 net income dropped 70%, partly because last year's qtr was helped by a large tax benefit.  Still, it topped expectations & revenue climbed as home deliveries & net signed contracts increased. TOL also benefited from fewer cancellations.  Exec Chairman Robert Toll said that the company believes its prospective customers have the ability to buy but that a lack of confidence in the US economy is holding them back from making purchases.  EPS was 9¢ for the qtr ended Oct 31, down from 30¢ last year earlier (which included a $59.9M tax benefit).  Analysts expected EPS of 5¢.  Revenue rose 6% to $428M, beating estimates of $424M.  Home deliveries climbed 8% to 757 units & signed contracts increased 15% to 644 units.  The average price of its signed contracts was $606K, up from $565K a year ago.  The contract cancellation rate came in at about 7.9%, down from 8.8% in the prior-year period.  For the full year, TOL had EPS of 24¢, versus a loss of 2¢ in the prior year.  Annual revenue dipped 1% to $1.48B from $1.49B.  TOL predicts that it will deliver 2400-3200 homes in fiscal 2012 at an average price of $550K-$575K per home.  The stock rose 28¢.

Toll Brothers' 4Q profit falls, tops Wall St. view AP

TOL    Toll Brothers

Last week markets had an unusually good week with little hard news to back up the gains.  There was plenty of talk, but not much action.  This week, the European powers have a big summit meeting at week's end which will give direction about how they want to handle the debt mess.  And this is a debt mess, make no mistake about that.  Until then, the markets will probably do little, awaiting developments.  Dow bumped against the important 12.2K ceiling yesterday, but could not break thru.  This is becoming an important barrier.

Dow Jones Industrial Average

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Markets manage to hold gains after S&P European credit warning

Dow finished with a gain of 78 (almost 100 below the earlier highs), advancers over decliners 5-2 & NAZ up 28.  Bank stocks also slid back, with the Financial Index closing 2 below the earlier highs. 

S&P 500 Financials Sector Index

Value	176.79
Change	3.65      (2.1%)

The MLP & REIT indices lost early gains, finishing with only modest gains.  Junk bond funds were mixed to higher & Treasuries recovered early AM losses with minimal changes.  Oil declined, reversing earlier gains as it was reported that S&P will put France & Germany on “creditwatch negative.”  Investors, unsure about gold, sold in the PM (shown in the graph below).

AMZ   Alerian MLP Index

DJR  Dow Jones Equity REIT Index

Click below for the latest market update:

Treasury yields:

U.S. 3-month	-0.005%
U.S. 2-year	0.252%
U.S. 10-year	2.035%

CLF12.NYM

....Crude Oil Jan 12....

100.85

... 0.11

(0.1%)

• 

Photo:   Bloomberg

The IMF agreed to release a €2.2B ($2.95B) disbursement to Greece, part of a 3-year IMF-EU bailout package.   "The executive board of the International Monetary Fund today completed the fifth review of Greece's economic performance under a program supported by a three-year Stand-By Arrangement for Greece," the IMF said.  The disbursement brings to €20.3B paid to Greece under the €30B loan agreed in May 2010 & is part of a bigger €110B rescue package for the country.  The approval of the latest aid followed assurances by Prime Minister Papademos & his new unity gov that the country would stick to terms of a debt reduction deal.  So far so good, but this deal remains iffy.

IMF releases 2.2 billion euro in aid for Greece Reuters

Photo:   Bloomberg

Demand is recovering for the auto industry faster than anticipated, as carmakers are headed toward their best annual performance in 3 years with sales of 12.8M vehicles.  US buyers are replacing their cars after delaying new vehicle purchases as long as possible, & they are snapping up hybrids as consumer confidence in the economy jumps.  As a result, automakers haven’t had to resort to fire-sale prices to goose demand.  Spending on marketing promotions averaged less than $2700 per car, down about $74 from a year ago.  Consumer confidence surged in Nov by the most in more than 8 years, & the portion of consumers planning to buy a new vehicle within 6 months climbed to the highest since Apr.  The average age of cars & light trucks on the road has risen to 10.6 years old.  What is needed to have consumers start to buying more houses, needed to give the economy a significant lift.

Automakers Set for Best Year Since 2008 as U.S. Shoppers Returning: Cars

The € turned lower against the $ in late day trading on reports that S&P is warning all 17 countries that use the € that their credit ratings may be lowered.  The € fell a ¼ of a penny to below $1.34.  That was after Angela Merkel & Nicolas Sarkozy said they support a new European Union treaty that would punish countries that overspend, meant to prevent another debt crisis.  Traders worry that Europe's debt crisis could lead to a collapse of the €.

Euro falls on Europe downgrade warning report AP


The day started of in la-la land,  What could possibly go wrong as long as financial leaders had good thoughts?   That was fine, but S&P rained on their parade.  Greece got its money so it can get by until the next crisis.  Italy is a much bigger disaster waiting.  The gov has good intentions, but it is has a lot to accomplish.  Now the major countires with investment grade ratings will have to look over their shoulders before throwing bailout money around.  The financial ministers meet at the end of this week & nobody knows what they will accomplish.  It might be a bit early to celebrate with a market rally.  Meanwhile, Dow was turned back at its 12.2K ceiling but able to hold above 12K.  The bulls will accept that.

Dow Jones Industrial Average

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Higher markets on hopes for European debt bailout

Dow jumped 164, advancers ahead of decliners 7-1 & NAZ was up 41.  As has been the case for some time, bank stocks are leading the way up.  The Financial Index is up an impressive 20 off its lows last week. 

S&P 500 Financials Sector Index

Value	177.46
Change	4.32     (2.5%)

The MLP index was up 2 to the 376s & the REIT index gained 3 to the 223s.  Junk bond funds were a little higher & Treasuries sold off with the rising stock markets. Oil rose  for a 2nd day on concern that tension in the MidEast will threaten supplies & as the Italian Prime Minister proposed budget cuts before a European debt-crisis summit. Gold is unsure where to go.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index (INDEX)

Treasury yields:

U.S. 3-month	-0.005%
U.S. 2-year	0.262%
U.S. 10-year	2.098%

CLF12.NYM

...Crude Oil Jan 12

...102.08

.... 1.12

(1.1%)

GCZ11.CMX

...Gold Dec 11

......1,744.30

.... 2.70

(0.2%)

Get the latest market update below:




Companies decreased orders to US factories in Oct for a 2nd straight month.  The Commerce Dept said total factory orders fell 0.4% & the Sep modest 0.3% increase was also revised to show a 0.1% drop.  Demand for capital goods, a good proxy for business investment, fell 0.8%.  Orders for durable goods fell 0.5%, reflecting weakness in commercial aircraft & autos.  Orders for nondurable goods were down 0.3%.  Auto sales & production are up now that supply chain disruptions caused by the earthquake in Japan have eased.  Also, consumers have stepped up spending since high gas prices chipped away at their paychecks last spring. The economic recovery is giving mixed signals.

US factory orders fall for second straight month AP

Photo:   Bloomberg

Premier Monti told Italian lawmakers there is "no alternative" but to pass his anti-crisis package of new taxes, pension reform & growth measures because the world is focusing attention on Italy & on Parliament to do what is necessary to avoid financial disaster.  His package includes €30B ($40B) in spending cuts & tax hikes & €10B ($13½B) to boost Italy's anemic growth.  The gov agreed for taxes on primary residences & luxury goods like yachts, high-performance cars & private airplanes, increase the age at which retirees can draw full pensions, trim the cost of Italy's political class & give incentives to companies that hire women & young workers.  "Without this package, we believe Italy would collapse, Italy would go into a situation like that of Greece, a country we admire but we don't want to imitate," he said.  The package, passed as an emergency decree, takes immediate effect but Parliament must still approve it within 60 days. The Senate president has said he expected passage before Christmas, although lawmakers indicated they want changes.  Monti acknowledged that some of the more painful measures might aggravate Italy's looming recession, with the gov forecasting an economic contraction of up to 0.5% next year, followed by no growth in 2013.  But these measures are necessary to bring down bond yields, that would give Italy more financial relief than any negative impact from individual measures.

Monti Seeks Support for $40 Billion Austerity Package to Trim Italy Debt

Photo:  Bloomberg

The German gov won’t stand in the way of Bundesbank help to fight the debt crisis with loans channeled through the IMF.  Germany wants the IMF to adopt a “decisive role” in combating the crisis alongside the European rescue fund.  “If the IMF says it needs more money, then it’s up to the Bundesbank to decide this in Germany’s case,” a spokesman for Chancellor Merkel said.  “It’s not for lawmakers nor Frau Merkel’s government to decide or to interfere.” Lawmakers “would have a problem if political pressure was openly brought to bear on the bank, not with its decision.”  Merkel & French President Sarkozy agreed to press fellow leaders at a Dec 8-9 EU summit to lock in tighter economic cooperation as a first step to snuff out the crisis, now in its 3rd year.  Euro finance ministers gave the go-ahead last week for work on a proposal to recycle central bank loans thru the IMF that may deliver up to €200B ($269B) to fight the crisis.  Consider this a "work in progress" involving $Bs.

Germany Won’t Prevent Bundesbank From Lending Crisis-Fighting Funds to IMF


Buyers are back in force.  Dow is up an amazing 1K off its lows last week, on the hopes that the IMF, EU, Germany, whoever, will bail out the weak countries in Europe.  Maybe.  There is a big summit at the end of the week when thoughts will have to be translated in actions.  Countries like Greece & Italy will need to accept ugly austerity measures.  There have been large protests in Greece, but the gov plods on with its plans.  Maybe Santa Claus will bring a rally.  Dow is bumping against the 12.2K ceiling.  Breaking thru it could be significant.

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