Updated: 2:25 p.m.You can't blame Facebook (FB) for today's market slump. The stock is up 72 cents to $31.72 today after two days of losses.
Blame Dell (DELL), which missed Street estimates badly with its fiscal-first quarter earnings. Blame Hewlett-Packard (HPQ), which reports results after today's close and has been falling in sympathy with Dell.
But above all, blame Europe and the debate of Greece's future as a eurozone nation. The turmoil on the continent has pushed the euro to its lowest level against the dollar in two years. That means investors seeking safety see that safety in the greenback. That means lower U.S. interest rates.
The euro crushing knocked gold (-GC) and metals lower. It briefly pushed crude oil (-CL) below $90 a barrel for the first time since October. And it has hurt the stocks of big companies that generate large portions of their business in Europe. Think Dell, IBM (IBM), 3MM (MMM) and big banks.
The result: The Dow Jones industrials ($INDU) are off 160 points to 12,343 at 2:25 p.m. ET. There is a little good news in that number: The blue chips have been down as many as 191 points. The Standard & Poor's 500 Index ($INX) is down 16 points to 1,301 There's a little good in that number, too: The index dropped under 1,300 but has climbed back. The Nasdaq Composite Index ($COMPX) is off 31 points to 2,808. The Nasdaq-100 Index ($NDX) is down 29 points to 2,510.
Dell is by far the worst performer among S&P 500 and Nasdaq-100 stocks. Hewlett-Packard is the worst performer among the 30 Dow stocks and the 5th worst S&P 500 performer.
Dell was down $2.73 to $12.36; it hit a 52-week low of $12.31. The personal-computer maker reported 43 cents a share after one-time charges are excluded. Wall Street was looking for 46 cents. Revenue fell to $14.42 billion from $15.02 billion a year ago. It guided lower for the second quarter.
Business was especially weak in notebook sales; they're getting cannibalized by tablets such as Apple's (AAPL). Sales to the public sector were weak and Europe was weak.
HP was down $1.02 to $20.76. It also hit a 52-week low of $20.76. The company faces the same environment and is expected to announce a huge round of job cuts when it reports later today.
Apple, normally the biggest influence on the Nasdaq-100, was up $2.95 to $559.92.
A bias to the downside
Only two of the 30 Dow stocks are higher: Wal-Mart Stores (WMT) and Coca-Cola (KO).
Meanwhile, only 53 S&P 500 stocks are higher, led by Expedia (EXPD) and Big Lots (BIG). And 21 Nasdaq-100 stocks are higher, led by Expedia (EXPE) and Avago Technologies (AVGO).
Crude oil slumps, along with gold
Crude oil was down $1.83 to $90.02 a barrel in New York; it had traded as low as $89.28. Brent crude was off $2.17 to $106.03 a barrel after falling to as low as $105.25 a barrel.
The national average retail price of gasoline was $3.678 a gallon, down slightly from $3.68 on Tuesday, according to AAA's Daily Fuel Gauge Report. The price is now down 6.6% since peaking in early April.
Gold was at $1,548.70 an ounce, down $27.90, near the close in New York. It had fallen to as low as $1,532.80. Silver (-SI) and copper (-HG) fell 66 cents to $27.519 an ounce and 9.1 cents to $3.396 an ounce. Gold is off 1.2% for the year, with silver down 1.4% and copper 1.2%.
The 10-year Treasury yield fell to a record low 1.719% from Tuesday's 1.793%. If you think that's low, the 30-year German bund rate fell under 2%. A two-year Swiss note yields -0.1%. Yes, you pay for the safety.
Facebook rises while the lawsuits start
While Facebook's shares were higher today, the controversy over the messy initial public offering continues.
Three Facebook investors filed a civil lawsuit today in New York, alleging the company and its underwriters failed to properly disclose changes to analysts' forecasts made at the underwriting banks.
The suit follows reports that Morgan Stanley and Goldman Sachs analysts cut their revenue forecasts on Facebook during the investor roadshow, a change that wasn't widely disseminated, The Wall Street Journal reported.
Late Tuesday, Massachusetts sent a subpoena to Morgan Stanley following the reports. Several other plaintiffs' lawyers have said they filed suits over the offering in other courts throughout the country, seeking class-action status.
The New York law suit, which also seeks class-action status, alleges the changes made to Facebook's offering document, which said that mobile-user growth could slow revenue growth, didn't accurately portray the impact on Facebook's finances.
How much chaos would a Greek departure from the eurozone cost?
In Europe, the question was when Greece would leave the Eurozone and how much chaos that would cause. Germany's Bundesbank said a Greek departure would be "manageable."
A bad day for European stocks immediately got worse. British, German and French stocks closed down more than 2%. The euro was trading at $1.2566.
A summit on the Greek question was to be held tonight, and there was little confidence anything positive would happen.
"The meeting may reveal a growing rift within the group as the anti-austerity movement gathers pace," David Song, currency analyst at Daily FX, told the Guardian newspaper in London. "However, it seems as though the European Central Bank will carry its wait-and-see approach into the second-half of the year in an effort to secure its independence."
More life in housing
If you're hungering for some good news, let us guide you to the April new-home sales report.
The report showed that sales of new homes rose 3.3% from March to a seasonally adjusted annual rate of 343,000 units. That's also up 9.9% from a year ago.
Now, don't get too excited. The February sales rate was 358,000 units, and the April sales rate is still off 75% from the 2005 peak of 1.39 million units. That, of course, was during the housing bubble. A more or less sustainable level of new-home sales may be 720,000 units, the 20-year average between 1983 and 2002.
The supply of new homes was just 5.1 months, down from 5.2 months in March and 6.7 months a year ago.
Luxury builder Toll Bros. (TOL) said it earned 10 cents a share on revenue of $373.7 million, up from a loss of 28 cents a share and revenue of $319.7 million a year ago. "The spring selling season has been the most robust and sustained since the downturn began," CEO Douglas Yearley said in a statement. Shares rose 25 cents to $27.28.
Business News: Denys Shortt leaves strong legacy at Coventry and Warwickshire LEP - Coventry Telegraph.net
Junk paper on black money - Express Buzz
When the issue of black wealth stashed away by Indians became an election issue in 2009, thanks to the Bharatiya Janata Party leader L K Advani coming out with a white paper on black money, the knee-jerk reaction of the Congress was that it was a figment of imagination. Within a week the party had to abandon its denial mode. The prime minister was forced to assure that within 100 days the new government would take steps to bring back the monies stashed away. The Congress president Sonia Gandhi had to say that the party would address the issue of bringing back black money. The new government told Parliament through the President’s Address in June 2009 that it “was fully seized of the issue of illegal money of Indian citizens outside in secret bank accounts” which it “will vigorously pursue”. The next year, however, the president completely forgot the issue.It was a year later, in 2011, that the Union finance minister remembered the issue. He said that a rigorous study would be carried out to get a reliable estimate of the black money stashed abroad. In March 2011 an MoU was signed between the Central Board of Direct Taxes and three expert bodies — National Council of Applied Economic Research, National Institute of Financial Management, and National Institute of Public Finance and Policy — to do the study and report within 18 months, by September 2012. Suddenly the minister announced in his budget speech on March 16, 2012 that he could come out with a white paper on Black Money soon. That white paper came out a few days ago on May 21. Three years after it promised vigorously to pursue black money, the government has thus produced a white paper on black money. What is the need, however, for the white paper now when ‘the rigorous study’ to get ‘reliable estimates’ of black money initiated by the government is scheduled to be over in September?When the white paper says innocuously that there is no reliable estimate of black wealth in or outside India and so a rigorous study is on, it is no innocent statement. The intention is to undermine the estimates made by diverse sources. Also the white paper ignores that those estimates were time specific. The estimates of 1960s and 1980s and 1990s cannot be compared with one another and seen as conflicting. What the white paper leaves unsaid is that since there is no reliable estimate of black money it is not a serious issue. The unstated but obvious objective of the white paper is to trivialise the estimates of black money by such credible sources such as Global Financial Integrity (GFI) and the International Monetary Fund (IMF) as not reliable. Is it not how the Congress started in 2009, namely that the amount of black wealth of India abroad was a ‘figment of imagination’? Is the white paper implying the same without saying explicitly?The white paper refers to black money estimates made in 1960s, 1970s, 1980s and in the early part of 1990s, till 1995. The amount of black money generated before early 1990s would be insignificant as compared to the post-financial liberalisation period from early 1990s. The GDP of India for 2012-’13 will cross `100 lakh-crore. Till 1980s, it was less than `1 lakh-crore — just 1 per cent of the size of today’s economy on rupee to rupee basis. The black money generated in the last 15 years and that what is being generated now is incomparably huge. The information in the white paper on the estimates of black money till 1995 is 17 years old and is irrelevant. Anyone familiar with recent economic history knows that there is no comparison between pre-liberalisation and post-liberalisation Indian economy. The GFI estimated that most of the black money has been stashed away post 1991. Applying the IMF estimates of the informal economy in India (at 23.7 per cent of the GDP mentioned in the white paper itself) the amount of black economy in India would now be about `24 lakh-crore. Against these huge numbers the white paper talks of `36,000 crore as black component of the GDP in 1983-’84 (page 12) as if the said figures are relevant now. This white paper is thus fit only for archives. It is an old paper to be junked, not a white paper to be preserved. Actual money was only the source of white or black money till 1980s. Now new money known as derivatives (which are just speculative monies that turn into actual monies) are a bigger source of black money. The global speculative money stock of $82 trillion (`4,610 lakh-crore) in 1997 has multiplied by more than 10 times to $618 trillion (`33,990 lakh-crore) in 2009. As compared to the real global economy of $58 trillion (`3,190 lakh-crore) speculative money stock is 10 times more. Again, the cash wealth of the rich rose from $5.7 trillion in 1997 to $32.8 trillion in 2009. Some 40 per cent of it, `556.5 lakh-crore, is black money. This is managed by banks as trustees. Just one bank — UBS — alone manages $2.7 trillion (`148.5 lakh-crore). This is outside the balance sheets of banks. In India the total of forex, stock and commodity market speculative money stock is `685 lakh-crore. It has outstripped the real economy by almost seven times. Yet, the white paper totally omits this huge source of black money.The most ridiculous claim made in the white paper (page 17) is that part of the black money stashed away abroad is ‘already returned’. It refers to the infamous PN or Participatory Note under which anyone, including an Indian, abroad can invest black money in the name of an approved investment institution. It shamelessly admits (para 2.8.3) that ultimately Indians could be the owners of the PN and therefore large parts of the PN and may represent ‘return’ black monies stashed away by Indians. It can’t be more ridiculous. The PNs are not Indian monies in India, but Indian monies abroad which have escaped tax. To claim they are return of Indian monies is a fraudulent claim as well.The white paper is deafeningly silent on the names of those who have stashed away monies abroad. Ottavio Quattrocchi’s millions and Hasan Ali’s billions are standing examples. Not to speak of the suspected holdings of the Sonia Gandhi family, estimated at between $10-19 billion. When such suspects rule, how will black money come? Only white paper will.(Views expressed in the column are the author’s own)S Gurumurthy is a well-known commentator on political and economic issues. E-mail: comment@gurumurthy.net
Vince Cable: I am not holding back business - Daily Telegraph
Mr Cable hit back saying: "I'm getting on with my job, supporting business and getting growth growing in Britain. We not holding anybody back, I'm back growth, supporting British business, working with government, working with the labour-force in a partnership. That's the way it's got to happen.
Money becomes new church battleground - The Guardian
The Rev Paul Perkin seemed bewildered by the question: what was his take on the latest scheme for conservative evangelical churches to withhold money from the rest of the Church of England in order to keep it out of the hands of liberals, gay people or women priests?
"I can't talk about that," he said. "You'll have to ask James Paice." Both men are vicars in south London. And both are directors of the company set up last month to implement this scheme, the Southwark Good Stewards Company. It is the latest, and perhaps the most serious, move in a bitter power struggle within the CofE and the wider Anglican communion.
Not contributing to central funds could represent a serious threat to the rest of the CofE, whose cohesion depends in part on a redistribution of money from rich, largely suburban and middle-class parishes to the inner cities and the countryside where congregations are too small and the buildings too old to be economically sustainable.
Although the Good Stewards Company claims not to be separating from the rest of the CofE, this reading is plausible only if you assume it is the rest of the CofE that has separated from Christianity.
The money will be made available only to churches that commit themselves to a rejection not just of homosexuality, but of liberalism: they must sign "in good faith" a declaration that they will "reject the authority of those churches and leaders who have denied the orthodox faith in word or deed … Pray for them and call on them to repent and return to the Lord." Such people include the present archbishop of Canterbury, Rowan Williams.
The involvement of Perkin in this protest brings it very close to the heart of the institutional church. His is one of the most prosperous and well connected parishes in England: St Mark's, Battersea Rise, in south London, which hosted an international meeting of conservative bishops last month. Apart from encouraging others to hold back money, it is also preparing a network of sympathetic lawyers in case the church fights back.
St Mark's has a long history of financial and political links with conservative churches outside England, but it also stands very close to the central networks of the CofE. Until last year, the church's most senior civil servant, William Fittall, who is the secretary general of its governing body, the General Synod, was a regular worshipper there, a licensed reader who sometimes preached for them.
Before last month's meeting, the congregation were treated to a sermon from the archbishop of Sydney, Dr Peter Jensen, one of the leaders of the conservative movement, who said: "The world has invaded the church. So the contest we have, as Bible-based, Bible-believing Christians, is on two fronts. It is against the world, but it is also against those in the church who have come to terms with the world, who have made their peace with the world, who have compromised with the world, who have given up biblical standards in order to be thought well of in the world."
He warned the congregation they would be vilified, discriminated against, and turned into second-class citizens for their beliefs. "Alas, the truth of the matter is that there are occasions in which the church is being used to persecute the church," he said.
Last year, the evangelical parties blocked the appointment as bishop of Southwark of the two liberal candidates, Jeffrey John, who is gay, and Nick Holtam, who is sympathetic to gay marriage. The compromise candidate, Christopher Chessun, has failed to promote any evangelicals in his first year in office. This month 100 of them demanded, and got, a meeting with the bishop to complain about this.
Even those among conservatives who do not support the financial boycott, and they are a majority, now feel aggrieved at the lack of promotion for evangelicals.
And among the others, the dream of financial independence from the rest of the church has been nurtured for years.
The Rev Richard Perkins, who runs a small independent but still Anglican chapel in Southwark, once blogged: "Why would you give money to a corrupt central administration that'll use it to fund ministries which we oppose? … We shouldn't fund heresy. That's disgraceful."
These tensions are mirrored in the wider Anglican communion, which the conservatives hope to control because they far outnumber the liberal churches of the Anglo-Saxon world. They believe they speak for the true CofE, never mind what the archbishop of Canterbury or the synod may decide. They have set up a body calling itself the Anglican Mission in England.
Five retired English bishops, among them Dr Michael Nazir-Ali, the former bishop of Rochester who was the evangelical candidate for archbishop of Canterbury last time, have promised to act as bishops for those clergy who sign up to the pledge not to accept women bishops or tolerate gay people in the church. It is not at all clear that these arrangements are legal, since the authority of the bishops over their clergy is established by the law of England. But any legal battle would be enormously expensive and time consuming. There is no sign that the rest of the Church of England has the stomach for it.
One crisis is approaching rapidly. This summer the synod must decide whether to accept legislation allowing women to become bishops that will not make special provision for their opponents. The present draft is the product of years of wrangling. If it goes through unamended Nazir-Ali predicts that more clergy will come over to his organisation. They will attempt to leave the rest of the CofE, taking their money and their churches with them – all the while claiming, as their rhetoric already suggests, that it is the rest of the church that has left them.
But if the bishops water down the draft to avoid this open split the other side – a great majority of the church – will probably rebel. Campaigners for women bishops threaten to vote the whole measure down rather than accept amendments that would give them a permanent second-class status. The bishops meet later this month to decide and their space for compromise is vanishingly small.
World stocks dip as China trade data disappoints - Yahoo Finance
HONG KONG (AP) -- World stock markets were mostly lower Thursday, as disappointing Chinese trade data added to investor gloom over the Europe's brewing sovereign debt crisis.
In early European trading, France's CAC 40 was down 0.5 percent while the FTSE 100 index of leading British companies retreated 0.3 percent to 5,516.25. Germany's DAX rose 0.2 percent to 6,485.11.
US stock futures were poised for a weak open. Dow futures were down 0.1 percent to 12,777.00 while broader S&P 500 futures rose less than 0.1 percent to 1,351.80.
Asian markets fell after the release of Chinese data showing slower than expected exports and imports in April.
The weak import growth raised fears the world's second-biggest economy wasn't doing enough to stimulate domestic demand amid an economic slowdown. The weaker than expected figures for both imports and exports also reinforced concerns over lax global demand for China's exports and slack Chinese demand for commodities needed from other countries to fuel growth.
Japan's Nikkei 225 index dropped 0.4 percent to close at 9,009.65 and South Korea's Kospi lost 0.3 percent to end at 1,944.93. Hong Kong's Hang Seng fell 0.5 percent to 20,227.28.
But mainland Chinese stocks took a smaller hit, with the poor trade numbers also raising hopes that China's leaders would take steps to ease policy measures to boost demand.
The benchmark Shanghai Composite Index was almost unchanged, gaining less than 0.1 percent to 2,410.23 while the Shenzhen Composite Index of China's smaller, second market rose 0.4 percent to 966.66. Shares traded in a narrow range ahead of Chinese inflation data out Friday.
Australia's S&P/ASX 200 was nearly up 0.5 percent to 4,295.60. Benchmarks in Singapore, Thailand, India and Indonesia were lower. Key Benchmarks in Taiwan and New Zealand rose.
World markets have been roiled this week by political instability in Europe. Greece has been left without a government since elections on Sunday, adding to growing worries that it will drop out of the euro currency union or be forced out.
The turmoil shook markets in Spain, where the interest rate that the government must pay on benchmark 10-year bonds rose to an uncomfortably high level of 6.06 percent. Rates of above 7 percent are seen as unsustainable, and forced Greece, Ireland and Portugal to ask for bailouts.
"The European turmoil has kept investors jittery here in Hong Kong, but after dropping five days in a row, the market is oversold," said Louis Wong, a director at Phillip Securities. "So we saw a rebound this morning, but the rebound is quite weak, because now the worry seems to have moved to Spain."
Investors will be looking ahead to more economic data expected this week, including a decision by the Bank of England on whether to expand fiscal stimulus and U.S. jobless claims and trade balance data out Thursday.
"It is going to be a big day for event risk," said Stan Shamu, market strategist with IG Markets in Melbourne, Australia.
Hong Kong's Cathay Pacific Airways slid 6.4 percent after the airline said that first half earnings would be disappointing because of a cloudy global economic outlook and high fuel prices that are forcing it to cut costs and reduce flights on some long-haul routes.
Singapore Airlines Ltd. fell 2.5 percent after the carrier posted its first loss since 2009 in the first quarter as higher fuel prices sent costs up.
Benchmark oil for June delivery was down 42 cents at $96.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 20 cents to finish at $96.81 per barrel in New York on Wednesday.
In currencies, the euro rose to $1.2955 from $1.2945 late Wednesday in New York. The dollar rose to 79.73 Japanese yen from 79.68 Japanese yen.
No comments:
Post a Comment