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Monthly Archives: October 2012

Muni Ratings Downgrades Now Exceed 2011

“Credit-rating cuts were made on more than $200 billion of municipal securities in the first nine months of this year, exceeding the total for 2011, and there’s no end in sight. Bloomberg Briefs also notes that it is not just the weaker Californian cities (such as Fresno) but even Los Gatos (an affluent town about 50 miles south of San Francisco, where Apple’s Steve Wozniak lives) is facing possible rating downgrades. Moody’s is concerned that cities might skip debt payments in a cash crunch to preserve services and meet payroll….”

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Pandora’s Box Is Open

“Via Mark J. Grant, author of Out of the Box,

“No matter where you stand, no matter how far or how fast you flee, when it hits the fan, as much as possible will be propelled in your direction, and you will not possess a towel large enough to wipe all of it off.”

                                           -The Wizard

Coming Attractions….”

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Pimco’s El-Erian: ‘No Doubt’ That Fed Plans More Stimulus

“The European Central Bank and the U.S. Federal Reserve will very likely provide even more stimulus to their economies, said the chief executive of Pimco, the world’s largest bond fund.

The two powerful central banks are “all in” as they act to give lawmakers more time to resolve problems in Europe and the United States, Mohamed El-Erian, who is also co-chief investment officer of Pacific Investment Management Co., said at a conference hosted by The Economist magazine.

In a wide-ranging speech that touched on Europe’s debt crisis and suggested that a contraction in the U.S. government bond market is unlikely, El-Erian said he sees a 60 to 70 percent chance U.S. politicians will strike a “mini bargain” to avoid looming tax rises and spending cuts at year-end, known as the fiscal cliff.”

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Gapping Up and Down This Morning

Gapping up

TSYS +17.3%, EXPE +17.1%, SYNA +16%, STMP +14.7%, DV +12.9%, VAR +12.9%,

CERN +10.7%, PPC +6.1%, N +5.4%, FII +5.1%, CRZO +5%, APKT +4.6%, P +4.5%,

PCLN +4%, ADNC +4%, TRIP +3.9%, DMND +3.4%, NVO +2.6%, QLGC +2.6%,

COG +2%, COLM +1.5%

Gapping down

DECK -14.1%, CTCT -11.3%, IMOS -10.7%, PACB -10.3%, CSTR -8.6%, VRSN -7.6%,

PWER -5%, VPRT -4.3%, IXYS -4.1%, BJRI -4%, QLIK -3.8%, CA -3.6%, CRUS -3.1%,

FB -2.5%, BHP -2.3%, NTGR -2.3%, MT -1.5%, AMZN -1.3%, STO -1.3%, AKR -1%

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$EXPE Hits 52 Week Highs on Strong Earnings

“Shares of Expedia (EXPE) traded with gains of over 15% in after hours trading. The online travel company reported a strong set of third quarter results on Thursday after the close.

Third Quarter Results

Expedia reported third quarter revenues of $1.20 billion, up 17% on the year. Growth was driven by a 27% increase in the number of room nights booked via the company’s websites. The number of air tickets sold rose 11%. Gross bookings rose 19% to $9.05 billion.

Net income fell 18.1% on the year to $171.5 million. Net income per diluted share fell from $1.50 per share last year to $1.21 over the past quarter. Last year’s earnings received a boost of $38.6 million related to discontinued operations. Adjusted earnings per share rose to $1.32 per share, beating analysts expectations of $1.26 per share.

So far this year, Expedia repurchased 10.7 million shares for a total consideration of $397 million. Third quarter repurchase activity slowed down to 1.1 million shares.”

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Hope You Have Saved Up for Next Year’s Rainy Days

“Consumers will have to dig deeper into their pockets next year to pay for costlier health care, more expensive grocery bills and higher taxes, an extra drag on the country’s already slow-moving economy.

Getty Images

The additional outlays look set to test the resilience of consumers, whose spending accounts for around two-thirds of the U.S. economy.

“We think it’s going to be a difficult six to nine months,” said Scott Hoyt, senior director of consumer economics for Moody’s Analytics. “If anything, conditions are likely to get worse, particularly at the start of the year.”

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Can the FED Really Stop All the Pain ?

“In the face of a world-wide slowdown, the European sovereign debt crisis, dysfunction in Washington and the fiscal cliff, two major props have been behind the upward move of the market—-the vigorous gains in corporate earnings and the Fed’s determination to keep monetary policy ultra-easy into mid-2015.  Now one of these bulwarks—-earnings—– are in the process of reversing to the downside, leaving only the Fed to stem the tide against the force of household debt deleveraging.”

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Rosenberg: U.S. Fiscal Cliif Hurting CAPEX and Already Pushing Economy Into Recession (Chart Porn)

“A few weeks ago, we mentioned that Gluskin-Sheff economist David Rosenberg was worried about the sharp downturn in the year-over-year growth rate of the 3-month average of core CAPEX (capital expenditure) orders.

His interpretation: The fiscal cliff is already creating a lot of uncertainty, and could be pushing the US economy closer to recession.

Now everybody is talking about this fact and this chart.”

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$TM Reports a Sales Increase of 28%

“TOKYO (AP) — Toyota sold 7.4 million vehicles around the world in the first nine months of the year, up 28 percent from a year earlier, but its strong growth faces headwinds from a sales plunge inChina that could unseat it as the world’s top automaker.

Anti-Japanese sentiment flared in China after Japan nationalized tiny islands in the East China Sea, called Senkaku in Japan and Diaoyu in China, intensifying a territorial dispute. The move set off violent protests in China and a widespread call to boycott Japanese goods. The islands are administered by Japan but also claimed by China and Taiwan.

Toyota’s vehicle sales in China dropped to about half of last year’s levels in September to 44,100 vehicles from 86,000 the year before. In August, Toyota sold 75,280 vehicles in China, down 15 percent.

Toyota reclaimed its crown as the world’s top automaker from General Motors Co. in the first half, selling 4.97 million vehicles globally. That marked a turnaround Toyota, which had suffered setbacks in recent years from massive recalls and natural disasters.”

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Samsung Nearly Doubles Profits, Outlook Expected to Fall

“SEOUL, South Korea (AP) — Strong sales of Galaxy phones propelled Samsung’s quarterly profit to a record high, but its shares dropped Friday on the prospect its growth will slow in an increasingly crowded smartphone market.

Samsung Electronics Co. said July-September net profit nearly doubled to 6.56 trillion won ($5.97 billion) from 3.44 trillion won a year earlier. Revenue for the third quarter climbed 26 percent to 52.2 trillion won.

The company’s shares fell 2 percent in Seoul after the earnings announcement. Analysts said investors are worried that the widespread adoption of smartphones in developed markets and heightened competition from rivals could squeeze profit from the lucrative smartphone business. Samsung and Apple Inc. together account for nearly half of global smartphone sales.”

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ECB Policymaker: ECB Can Not Solve Root Cause of the Banking Crisis, Can Only Alleviate Some Pressure


“MILAN (Reuters) – The European Central Bank can alleviate some pressure on banks struggling to cope with capital shortfalls and funding strains, but a wider policy response is needed to tackle the underlying structural problems, ECB policymaker Peter Praet said on Friday.

The ECB flooded financial markets in December and February with more than one trillion euros in 3-year loans to ease banks’ funding strains in the aftermath of the financial crisis.

Praet said there was some evidence that ECB liquidity injections had helped in supporting credit provisions, but he stressed that broader measures were needed.”

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Spanish Bonds Fall, Yields Post Largest Increase Since the Acute Phase in August

Spain’s government bonds fell, with 10-year yields heading for their biggest weekly increase since August, after a report showed the jobless rate climbed to a record last quarter.

Spanish 10-year securities dropped for a second day as the data added to evidence the economy is worsening after its central bank said this week gross domestic product shrank for a fifth quarter. German bonds gained as French household sentiment worsened and European stocks declined, boosting demand for the region’s safest assets. Italian securities fell as the nation sold a combined 4 billion euros ($5.12 billion) of inflation- linked and zero-coupon debt.

“Contracting pressures in the economy remain persistent” in Spain, said Elwin de Groot, a senior market economist at Rabobank Nederland in Utrecht. “It will be very hard for the Spanish government to achieve its budget targets. It is likely to be negative for the bonds.”

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