Monthly Archives: August 2011
Lowe’s, LOW, Stashes %5 billion for Share Buy Back
ECB bought $20.6 billion in bonds last week
Comments »FRANKFURT, Germany (AP) — The European Central Bank spent euro14.3 billion ($20.6 billion) last week buying government bonds to keep the region’s government debt crisis at bay until the eurozone’s newly-strengthened bailout fund can step into the role.
The amount of bond purchases disclosed on Monday was short of the previous week’s figure of euro22 billion but close to market expectations.
Buying Italian and Spanish bonds on financial markets has driven down borrowing rates that were threatening those two countries with financial ruin. European officials want the eurozone’s bailout fund to take over the purchases, but national parliaments will not give their approval for that until this fall.
That has left the central bank with the main burden of fighting off market turmoil. Last week’s purchases ran the bank’s total spent in supporting shaky eurozone government bonds to euro110.5 billion since the program was launched in May, 2010.
Eurozone leaders agreed on July 21 to expand the powers of their euro440 billion bailout fund to let it purchase government bonds on the secondary market — that is, from other bond investors, not directly loaning money to the governments. They also gave it the power to loan money quickly to countries in trouble and to help recapitalize banks. Those powers can be used to support financially troubled governments and prevent bond market turmoil while governments use the respite to clean up their finances.
However, the changes have not yet gone through national parliaments. During the delay, market fears about potential defaults spread increasingly to Italy and Spain, which are too large to be bailed out.
The ECB decided to re-start bond purchases at an emergency meeting Aug. 7 and began them the next day, driving bond yields down to under 5 percent for both countries.
Those yields reflect the costs the countries would face if they turned to the bond market for new borrowing. Their yields had previously been over 6 percent, heading toward the level that forced the eurozone to rescue Greece, Portugal and Ireland, which together are only 6 percent of the 17-country eurozone.
Troubled mortgages on the rise
Comments »In another hit to the beleaguered housing market, a report out Monday found that the number of delinquent mortgage borrowers — those who have missed at least one payment — rose during the three months ended June 30.
The delinquency rate grew to 8.44%, adjusted for seasonal effects, up 0.12 percentage points compared with three months earlier. The non-seasonally adjusted increase was up 0.32 points to 8.11%.
The increase, as reported by the Mortgage Delinquency Survey from the Mortgage Bankers Association (MBA), may not sound like much, but it reverses a steady improvement in delinquencies that prevailed through most of the past two years.
“While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped.” said Jay Brinkmann, MBA’s Chief Economist. “Mortgage delinquencies are now showing some signs of worsening.”
Avian & Piper Upgrading $YGE
Piper Jaffray is upgrading YGE to Overweight from Neutral with a $8 price target (prev. $11) noting the company solidly cemented its status as a tier 1 solar PV module supplier, as it continued to gain share through a difficult 1H11 by leveraging its low cost vertically integrated model and very strong brand recognition. Full story…
Comments »Gapping Up and Down This Morning
Gapping up
NVS +3.6%, BP +3%, UN +2.7%, BHP +2.2%,AA +1.7%, CEL +4.2%, GSK +3.9%, AZN +3.6%,HPQ +1.4%, BAC +1.9%, HBC +1.8%, RIO +1.8%,AAPL +1.2%,HMY +4.7%, MCP +4.6%, TOT +4.5%
Gapping down
MPEL -6.3%, STP -2.0%, RBS -2.5%, VXX -3.7%, TZA – 7.8%, UNG -1.2%
Upgrades and Downgrades This Morning
Upgrades
AA – Alcoa upgraded to Buy from Neutral at Davenport
HPQ – Hewlett-Packard upgraded to Buy from Hold at Auriga
SYK – Stryker upgraded to Buy from Hold at Lazard
POT – Potash upgraded to Outperform from Sector Perform at Scotia
PEG – Public Service upgraded to Buy from Hold at Citigroup
RAX – Rackspace upgraded to Outperform from Market Perform at Raymond James
NEM – Newmont Mining upgraded to Buy from Hold at Citigroup
UA – Under Armour initiated with a Buy at Canaccord Genuity
IR – Ingersoll-Rand downgraded to Underweight from Neutral at Atlantic Equities
ECL – Ecolab upgraded to Buy from Hold at Citigroup
SLM – SLM Corp upgraded to Outperform from Neutral at Credit Suisse
PII – Polaris Inds and Arctic Cat upgraded at Baird
Downgrades
MSFT – Microsoft downgraded to Neutral from Buy at Davenport
YZC – Yanzhou Coal Mining downgraded to Neutral from Overweight at HSBC Securities
NWSA – News Corp downgraded to Hold at Needham
EGO – Eldorado Gold downgraded to Buy from Action List Buy at TD Newcrest
CBS – CBS target lowered to $30 from $35 at Needham
ETN – Eaton downgraded to Underweight from Neutral at Atlantic Equities
APEI – American Public Education upgraded to Outperform from Market Perform at BMO Capital
Comments »In Play and On the Wires
Crack Spreads Retreat From 52 Week Highs; Oil Higher on Weaker Dollar
U.S. Futures Solidly Higher on Speculation Bernanke Will Announce QE3 Later This Week
At this point we saved the Western world; the question remains if stimulus and QE is prudent. Perhaps more specific and targeted means of spending are needed…..like giving every household in America 100k to get back on their feet. It would pay down debt, mortgages, and boost sentiment and consumer spending.
Comments »It Took $1.2 Trillion Dollars to Save The Banking System of the Western World; Unfortunately it Was a Temporary Fix
This whopping amount of money does not include what other central banks kicked in or back stopped….
A kicking the can down the road measure….
Comments »Roubini Strays From Economics
ECB Governor Sees a Problem With EFSF Taking Over The Purchase of Bonds in Europe
Hedge Funds Take Advantage of Weak Markets and Scoop Up Commodity Positions
Why not since the interest rate shall stay low and it is likely more fiscal stimulus is on the way.
Comments »Italy’s Debt Expected to Boom As Austerity Cuts Into Growth; ECB Bond Buying Not Expected to Last Very Long as a Real Solution
The Yen and Franc Fall on Expectations of More Intervention
Low Yields Indicate That The Treasury Market Expects QE3; Barclays Thinks $500-$600 Billion is Priced In
“Barclays Plc said 10-year yields indicate traders have priced in $500 billion to $600 billion of Treasury purchases by the Fed. Citigroup Inc. said current rates can only be justified by more central bank bond buying or assuming the economy will shrink by 2 percent.”
Comments »Euro Survival May Depend Upon a Smaller Union
It has bee n suggested by many that if the Euro wants to survive it must shrink from 17 member nations to a smaller healthier union of solvent and economically powerful countries….
Comments »The Gold Freight Train Speeds Through $1,890
World Markets and U.S. Futures Swing Intensely From Red to Black
World markets and futures swing back and forth wildly overnight as a number of factors converge. First off, Libyan rebels have taken over the Green Square in Tripoli. It is widely expected that Qaddafi will reign no more and that this should lower the price of oil….for now WTI is up and Brent is down; the spread is coming in.
Second, Germany is reiterated yesterday that hey are not fond and will not consider, for the moment, any style of Euro bonds.
Lastly, there is wide speculation over Bernanke announcing or hinting fiscal stimulus later this week in Jackson Hole.
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