FINAVESTMENT COMMENTARIES - Weekly comments on ongoing and future transactions.
Week of February 4th, 2013
U.S. stocks fell, giving the Standard & Poor’s 500 Index its biggest decline of the year, as political uncertainty in Europe fueled renewed concern about the debt crisis and American factory rders rose less than forecast.
All 10 groups in the S&P 500 fell at least 0.4 percent. Chevron (CVX) Corp. lost 1.1 percent after UBS AG downgraded its recommendation on the stock. Wal- art Stores Inc. (WMT) dropped 1.7 percent as JPMorgan Chase & Co. cut its rating on the stock. Herbalife Ltd. tumbled 4.5 percent after a report the company is under investigation by the ederal Trade Commission. The S&P 500 slipped 0.9 percent to 1,499 at 11:39 a.m. in New York, after reaching a five-year high last week.
The Dow Jones Industrial Average lost 125.74 oints, or 0.9 percent, to 13,884.05. Trading in S&P 500 companies was in line with the 30- day average at this time of day.“It’s a little bit of a breather,” Joseph Veranth, chief investment fficer at Dana Investment Advisors in Brookfield, Wisconsin, said by telephone. The firm manages $3.8 billion. “Italian, Spanish and Portuguese bond yields up a bit there and that’s partly ausing it. Nevertheless, the market in the U.S. has been strong since the beginning of the year and we don’t see a whole lot to change that trend in the U.S.” The S&P 500 rallied 5 percent ast month as lawmakers reached a budget compromise and companies reported better-than- estimated earnings. The Dow (INDU) climbed above the 14,000-level last week for the first ime since 2007, and is less than 2 percent away from its all-time high.
The Stoxx Europe 600 Index (SXXP) retreated 1.5 percent to 283.88 at 4:35 p.m. in London, the largest decline since ct. 23. The gauge has still increased 1.5 percent this year as U.S. lawmakers agreed to a compromise budget to prevent automatic spending cuts and tax increases that threatened to ush the world’s largest economy into a recession.
Week of September 17, 2012
European stocks declined from a 15- month high as concern of a deepening economic slowdown in China overshadowed optimism resulting from the Federal Reserve’s third round of uantitative easing. SSAB sank 6.6 percent as the Swedish steelmaker said demand for strip products has been much weaker than expected. Hennes & Mauritz AB slid 1.8 percent after hirdquarter sales missed estimates. Vodafone Group Plc (VOD), which has resisted setting aside money for a $2.2 billion tax bill in India, fell 1.5 percent after saying it may make a rovision to cover legal risks. The Stoxx Europe 600 Index (SXXP) slipped 0.4 percent to 274.93 at 4:35 p.m. in London.
The equity benchmark has still climbed 12 percent this year, closing t he highest level since June 2011 last week, as European Central Bank policy makers agreed to implement an unlimited bond-buying program and the Fed unveiled a third round of asset urchases.“With the adrenalin rush of last week’s Fed move now wearing off, markets are looking for the next positive catalyst,” Richard Hunter, head of equities at Hargreaves Lansdown lc in London, wrote in an e-mail. “With indices having posted decent gains in the year to date, investors may sell into strength to lock in gains.” National benchmark indexes fell in all of the 8 western European markets.
Germany’s DAX slipped 0.2 percent and the U.K.’s FTSE 100 (UKX) declined 0.4 percent, while France’s CAC 40 dropped 0.8 percent. Fed Chairman Ben S. ernanke said on Sept. 13 that the U.S. central bank will buy $40 billion of mortgage-backed securities a month, without a limit on the total or duration. The Fed also extended its near-zero nterest rate policy until 2015 and said it will stay accommodative “for a considerable time” even after the economy strengthens. U.S. stocks fell, after the Standard & Poor’s 500 Index allied o its highest level since 2007, as concern grew over Europe’s debt crisis and manufacturing in the New York area shrank more than forecast.
The S&P 500 (SPXL1) slid 0.2 percent to ,462.49 at 10:11 a.m. in New York. The Dow Jones Industrial Average dropped 20.21 points, or 0.2 percent, to 13,573.16. Trading in S&P 500 companies was almost in line with the 30- day average at this time of day.
Week of August 5th, 2012
We are a year on from the summer of 2011, marked by a free fall of financial markets as politicians displayed an inability to provide a credible response to the sovereign debt crisis. Still nothing has been solved, and this crisis remains the principal concern of investors. Spanish and Italian rates hit alarming levels in the middle of July, as doubts succeeded against the short-lived euphoria created by the end of June announcement that banks can now be bailed out directly by the EFSF or ESM, and the authorisation given to these institutions to buy up sovereign debt on their own account. Then, on 26 July, these rates dropped significantly after Mario Draghi declared that all necessary measures will be taken to rescue the euro; "believe me, it will be enough", leaving the door open to purchasing bonds issued by countries in difficulty. Stock indices have, after their gains in early July, been much more volatile but finished with a strong rebound driven by the financial sector. The Stoxx 600 displays a monthly performance of +4.1% (in EUR), and the S&P 500 +1.3% (in USD).
Although macro-economic figures released in the US were disappointing, the results announced by the companies were reassuring, again showing their resistance in a difficult environment. Based on companies having announced their second quarter figures by July 30th, accounting for 65% of the Russell 3000 market cap, results exceeded the End of May estimates consensus by 0.6%, despite Apple results clearly below expectations. 65% of these companies surprised positively. However companies have been very cautious for the coming quarter and analysts have revised down 7% Q3 Earnings estimates.
Week of July 9th, 2012
U.S. stocks fell, giving benchmark indexes the longest slump in more than a month, after a rally in Spanish bond yields above 7 percent intensified concern about Europe’s crisis and as nvestors awaited Alcoa Inc.’s results. Alcoa, which begins the second-quarter earnings season after the market close, retreated 1.8 percent. Payment networks Visa Inc. (V) and asterCard MA) Inc. fell at least 2 percent after being downgraded at UBS AG. Apple Inc. (AAPL), the most valuable company, rose 1 percent amid optimism about its smaller iPad tablet’s sales. merigroup Corp. (AGP) surged 38 percent as WellPoint (WLP) Inc. agreed to buy the company for $4.9 billion in cash.
The Standard & Poor’s 500 Index slid 0.3 percent to 1,350.07 at 1:17 .m. New York time, dropping 1.8 percent in three days. The Dow Jones Industrial Average lost 54.98 points, or 0.4 percent, to 12,717.49. Trading in S&P 500 companies was 25 percent elow the 30-day average at this time of day.“It’s very concerning,” Jeff Savage, regional chief investment officer for Wells Fargo Private Bank in Portland, Oregon, said in a telephone nterview. His firm manages $169 billion.
“Seven percent is not a sustainable level of interest rates for Spain. That’s scary stuff. We can’t have one of our best trading partners going through terrible economic times and not having an effect on U.S. corporate earnings.” American stocks joined a global slump as European finance ministers prepared to meet to ammer ut a rescue plan for banks. Alcoa (AA), the largest U.S. aluminum producer, may report an 81 percent decline in second-quarter earnings as the eighth straight year of urplus global production drives down the price of the metal. The shares fell 1.8 percent to $8.57. National benchmark indexes fell in 15 of the 18 western- European arkets.
Germany’s DAX and France’s CAC 40 declined 0.2 percent and 0.4 percent, respectively. The U.K.’s FTSE 100 lost 0.7 percent. The yield on Spain’s enchmark 10-year bond rose 11 basis points to 7.06 percent at 5:07 p.m. in Madrid. That’s above the 7 percent threshold that prompted full bailouts of Greece, Ireland nd Portugal.
Week of June 11th, 2012
European stocks erased earlier gains after Spanish banks were downgraded by Fitch Ratings and Italian lenders slid. Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA BBVA), Spain’s two biggest lenders, fell in Madrid. Volkswagen AG (VOW) led carmakers higher, while UniCredit SpA led a selloff in Italian banks as bond yields rose. The Stoxx 600 fell .1 ercent to 241.75 at 4:30 p.m. in London after rallying as much as 1.9 percent earlier. The gauge climbed 2.9 percent last week after China cut interest rates and the European Central Bank aid it’s ready to add more stimulus if the economy worsens.
The Stoxx 600 initially rallied after Spain asked euro-area governments for funds to bail out its banks, making it the fourth ember of the currency bloc to seek a rescue since the debt crisis began almost three years ago.“The size of the bailout was much bigger than expected by the markets and that is certainly positive in that it will enable Spanish banks to absorb greater losses,” said Trevor Greetham, director of asset allocation at Fidelity Worldwide Investment. “It does come with a tail in that this capital injection has to go through Spain’s national accounts, which means effectively the Spanish government is on the hook for the bailout.” U.S. stocks fell, following the biggest weekly rally in the Standard & Poor’s 500 Index this year, as optimism over Spain’s bailout plan gave way to skepticism it will succeed in halting the debt crisis.
Commodity and financial shares had the biggest losses among 10 groups in the S&P 500. U.S. Steel Corp. (X), the country’s largest producer of the metal by volume, and Morgan Stanley retreated at least 1.6 ercent. Apple Inc. (AAPL) advanced 1 percent before the company debuts new computers and software tools to woo consumers and keep developers making applications amid accelerating rivalry from competitors.
The S&P 500 fell 0.2 percent to 1,322.69 at 11:11 a.m. New York time, after rallying as much as 0.7 percent earlier today.. Trading in S&P 500 ompanies was down 13 percent from the 30-day average at this time of day.
Week of May 1st, 2012
U.S. stocks advanced, sending the Standard & Poor’s 500 Index toward the highest level in almost a month, after a better-than-estimated manufacturing report bolstered optimism in the world’s largest economy. All 10 industries in the S&P 500 advanced today as financial, energy and technology shares had the biggest gains. Intel Corp. (INTC) and JPMorgan Chase & Co. (JPM) increased more than 1.7 percent. Sears Holdings Corp. (SHLD) rallied 13 percent as it forecast a profit after a gain from selling some stores in the U.S. and Canada.
Archer Daniels Midland Co., the world’s largest grain processor, gained 6.6 percent as profit topped estimates. The S&P 500 rose 0.9 percent to 1,410.84 at 11 a.m. New York time, to the highest on a closing basis since April 3. The index fell more than 0.7 percent in April, halting a four-month rally. The Dow Jones Industrial Average added 90.93 points, or 0.7 percent, to 13,304.56. “Things are improving,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview. “It’s nice to see that manufacturing was better than expected.
The earnings season has been a positive. That’s what investors have to look at. We don’t recommend that people get out of the market.” Equities rose as manufacturing unexpectedly expanded in April at the fastest pace in 10 months, driven by gains in orders and production that signal the U.S. remains a source of strength for the global economy. Investors also watched corporate earnings as about 74 percent of S&P 500 companies that reported results since April 10 have beaten earnings projections, according to data compiled by Bloomberg.
The Morgan Stanley Cyclical Index of companies most-tied to economic growth gained 1.8 percent as 28 of its 30 stocks advanced. The Dow Jones Transportation Average climbed 1.3 percent. The KBW Bank Index jumped 1.7 percent as all of its 24 stocks rose.
The FTSE 100 Index rose 67.55 or 1.2 percent, to 5,805.33 at 3:38 p.m. in London, the largest gain since April 17. The gauge fell 0.5 percent last month as Britain slipped into a double-dip recession and concerns grew that the euro-area debt crisis is deepening.
Week of April 2nd, 2012
European stocks climbed the most in almost three weeks, erasing earlier losses, as reports showed manufacturing expanded more than forecast in the U.S. and China. Oriflame (ORI) Cosmetics SA gained 2.6 percent after Coty Inc. offered to buy Avon Products Inc. for $10 billion. Cookson Group Plc (CKSN) jumped 6.6 percent after the Sunday Times said the company may spin off a unit. The benchmark Stoxx Europe 600 Index (SXXP) advanced 1.4 percent to 267.08 at 4:33 p.m. in London, having earlier dropped as much as 0.4 percent.
The gauge climbed 7.7 percent in the first quarter, its best start to a year since 2006, boosted by the European Central Bank’s 1 trillion euros ($1.3 trillion) in loans to the region’s financial firm. National benchmark indexes advanced in 12 out of 18 western-European markets. France’s CAC 40 Index climbed 1.1 percent, the U.K.’s FTSE 100 Index rose 1.8 percent while Germany’s DAX Index rallied 1.5 percent. T
he Standard & Poor’s 500 Index advanced 0.4 percent at 11:22 a.m. in New York after surging 12 percent in the first three months of the year. Almost two stocks advanced for each that fell on U.S. exchanges. Manufacturing in the U.S. expanded more than forecast in March. The Institute for Supply Management’s factory index climbed to 53.4 from 52.4 in February, data showed. Economists in a Bloomberg News survey had estimated an increase to 53. Readings above 50 signal growth.
China’s Purchasing Managers’ Index (CPMINDX) compiled by the logistics federation and the National Bureau of Statistics rose to 53.1 in March from 51 in February. The gauge, which was released yesterday, has a pattern of gaining each March. In contrast, a PMI from HSBC Holdings Plc and Markit Economics fell to a four-month low of 48.3, showing that manufacturing contracted and export orders declined.
European stocks declined last week as Standard & Poor’s said that Greece may have to restructure its debt again and an ECB policy maker said a bigger bailout package will not solve the fiscal crisis.
Week of March 5th, 2012
U.S. stocks fell, following a three- week advance for the Standard & Poor’s 500 Index, as China reduced its economic growth target and orders to American factories decreased for the first time in three months. Commodity and industrial shares had the biggest losses among 10 groups in the S&P 500. Alcoa Inc. (AA) and Caterpillar Inc. (CAT) slid at least 2.2 percent. The Morgan Stanley Cyclical Index of companies most- ied to growth fell 1.5 percent. Zynga Inc. (ZNGA), the online-game company that sold shares to the public in December, lost 4.9 percent after being cut at JPMorgan Chase & Co.
The S&P 500 fell 0.5 percent to 1,362.26 at 11:01 a.m. New York time, falling for a second day. The Dow Jones Industrial Average slid 61.98 points, or 0.5 percent, to 12,915.59. More than 1.9 billion shares changed hands on U.S. exchanges. “It’s wise to take a little money off the table,” David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., said in a telephone interview. His firm oversees $631 billion. “Some of the easy gains have already been made. We’re back to focusing on the economic fundamentals. China saying that they are targeting 7.5 percent growth raises concern of a hard landing.” Equities joined a global slump as China pared its growth target to 7.5 percent from an 8 percent goal in place since 2005.
Euro-area services output shrank more than estimated, led by Italy and Spain. In the U.S., orders to U.S. factories decreased for the first time in three months. Separately, the Institute for Supply Management’s index of non-manufacturing industries rose to 57.3 in February from 56.8 a month earlier. The Stoxx Europe 600 Index retreated 0.4 percent to 266.25 at 3:12 p.m. in London, paring last week’s 0.9 percent advance. The benchmark measure earlier slid as much as 1 percent.
The Stoxx 600 has rallied 8.9 percent this year as U.S. economic reports beat estimates and investors speculated policy makers will contain the euro region’s sovereign-debt crisis. National benchmark indexes declined in 16 of the 18 western-European (SXXP) markets today. France’s CAC 40 Index (CAC) and the U.K.’s FTSE 100 Index slipped 0.3 percent. Germany’s DAX Index (DAX) lost 0.5 percent.
Week of February 13th, 2012
Global stocks rose, rebounding from the biggest loss of the year, the euro strengthened and commodities gained after Greek lawmakers approved austerity plans to secure rescue funds. Treasuries advanced. The MSCI All-Country World Index (MXWD) added 0.6 percent at 11:24 a.m. in New York after slumping 1.2 percent on Feb. 10. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,348.95. The euro strengthened 0.2 percent to $1.3219, paring a gain of as much as 0.7 percent. The S&P GSCI index rose 0.9 percent as 16 of 24 commodities advanced. Ten-year Treasury yields slipped two basis points to 1.97 percent. Passage of the austerity bill puts the spotlight on a Feb. 15 meeting of euro-area finance ministers who must decide whether to approve the second bailout.
Rioters protesting the measures battled police and set fire to buildings in downtown Athens. Italy met its target at an auction today, selling 12 billion euros ($16 billion) of bills as borrowing costs fell. “We still think you should buy stocks,” Laszlo Birinyi, president of Birinyi Associates Inc. in Westport, Connecticut, said in a Bloomberg Television interview in London today. “It’s a continuation of the bull market and we’re encouraged by what we are seeing in Europe. I look at the markets, I find they are strong. There’s real buying going on. This is not short-covering or a temporary or transitory thing.”
The S&P 500 climbed for the fourth time in five days and rebounded from its last weekly loss of the year. The index, which is up 23 percent from last year’s low in October, trades for about 14 times its companies’ reported earnings and has been stuck below its five-decade average valuation of 16.4 since May 2010, the longest stretch since a 13-year span beginning in 1973, data compiled by Bloomberg show.
Financial, telephone and consumer-discretionary shares climbed at least 0.6 percent to lead an advance among all of the 10 main industries in the S&P 500. Bank of America Corp., Verizon Communications Inc. and JPMorgan Chase & Co. climbed at least 1.3 percent for the best gains in the Dow Jones Industrial Average.
Week of January 23rd, 2012
U.S. stocks were little changed, after the Dow Jones Industrial Average rose to the highest closing level since May, as European finance ministers gathered in Brussels to discuss new budget rules and a Greek debt swap. Bank of America Corp. and Citigroup Inc. added at least 0.8 percent to pace gains among financial companies. Sears Holdings Corp. jumped 9.4 percent, gaining 60 percent in five days. Chesapeake Energy Corp. (CHK) climbed 3.6 percent as the natural-gas producer plans to cut production. Halliburton Co., the world’s largest provider of hydraulic fracturing services, slumped 2.7 percent as its profit margin in North America declined.
The Standard & Poor’s 500 Index gained 0.1 percent to 1,316.36 at 11:24 a.m. New York time, after climbing as much as 0.5 percent. The Dow dropped 6.59 points, or 0.1 percent, to 12,713.89 today after earlier reaching 12,764.49. “It’s going to be more about here than Europe,” Tom Wirth, who helps manage $1.5 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a telephone interview. “If the stress of Europe starts to alleviate and people’s fears start to wane, they are going to start focusing more on the domestic market.
If earnings can hold their own, we can see the price- arnings multiple expand.” The S&P 500 rose all four days U.S. exchanges were open last week as data bolstered confidence in the American economy and companies from Goldman Sachs Group Inc. to Union Pacific Corp. topped analysts’ income projections. Of the 52 companies in the S&P 500 that reported results since Jan. 9, 34 posted pershare earnings that beat projections, Bloomberg data show.
Week of January 9th 2012
U.S. stocks fell, following last week’s advance in the Standard & Poor’s 500 Index, as leaders discussed shoring up the euro and investors awaited the start of the fourth-quarter earnings season.
Seven out of 10 groups in the S&P 500 fell as phone and technology companies had the biggest declines. Costco Wholesale Corp. (COST) lost 2.6 percent after Sanford C. Bernstein & Co. cut its rating for the warehouse-club chain. Alcoa Inc. (AA) rose 2.6 percent as it becomes the first company in the Dow Jones Industrial Average to report quarterly results after the market close. The S&P 500 fell 0.2 percent to 1,275.71 at 11:24 a.m. New York time, after rallying 1.6 percent last week. The Dow dropped 19.60 points, or 0.2 percent, to 12,340.32.
“There’s going to be a lot of volatility,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has more than $107 billion in client assets. “There are many questions about the structure of Europe,” he said. In the U.S., the combination of slower revenue growth and probably peaking margins is the biggest challenge. We’ll see some earnings growth this year but not a lot.’’
U.S. stocks rose last week, sending the S&P 500 to its second-best start of a year since 2006, as reports on manufacturing from America to China bolstered optimism about the economy. Equities fell on the last day of the week after growth in U.S. jobs failed to lift the S&P 500 above its October high.
German Chancellor Angela Merkel and French President Nicolas Sarkozy sought to craft a plan for rescuing the euro over the next three months. Euro-area leaders may complete their new budget rulebook by Jan. 30, one month ahead of schedule, and are considering accelerating capital contributions to the bailout fund being set up this year to stem the debt crisis.
S&P 500 companies, which beat (SPX) analysts’ estimates in the previous 11 quarters, are forecast to report a 6 percent increase in per-share profit during the September-December period, according to projections compiled by Bloomberg. That would mark the slowest growth since the third quarter of 2009.