Moody’s Investors Service has put Germany, the Netherlands and Luxembourg on a negative outlook because of uncertainty in the eurozone.
Greece: The EU is preparing for Greece’s exit from the eurozone
The likelihood of a Greek exit from the eurozone has increased to the extent that:
- Citigroup estimates the likelihood of a Greek exit within 18 months is 75% (update 26 Jul 2012: make that 90%)
- More than 50% of investors surveyed by Bloomberg predict a Greek exit within 5 months.
- European officials are already working on contingency plans for a Greek exit.
Planners believe that a Greek exit must be executed within 46 hours, from the close of the bond market in New York at 17:00 on Friday ET to the opening of the New Zealand market at 15:00 on Sunday ET. [Video]
Spain’s 10-year bond rate has risen to a record 7.64%.
Luxembourg Finance Minister Luc Frieden has said that the EU is not working on any bailout plan for Spain. [More]
Japan reported a trade surplus of JPY 61.7bn (USD0.789bn) in Jun 2012. A fall in the dollar value of imports, driven by lower oil prices, exceeded a fall in exports. [More]
- The manufacturing index fell to 51.8 in Jul 2012 from 52.8 in Jun 2012. A value above 50 represents growth, but the pulse is currently weak.
- Zillow reports that house prices rose 0.2% to an average of $149,300 in the Jun 2012 quarter. Analysts consider that home prices have bottomed, and the future should be a recovery in prices.
- Gold Futures (Aug): $1,576/oz, down $1.20 from $1,577/oz
- Oil Futures (WTI LSC Sep – NY trading): $88.50/barrel, up $0.36 from $88.14/barrel
- 30-year: 2.46%, down 5 points from 2.51%
- 10-year: 1.39%, down 5 points from 1.44% (is this a record low?)
- 5-year: 0.54%, down 2 points from 0.56%
Share market indices
Another day of selling.
- S+P 500: 1,338 -0.90%
- DJIA: 12,617 -0.82% (-104 points)
- NASDAQ: 2,863 -0.94%
Tech stock news
- Apple [NASDAQ:AAPL] reported its Jun 2012 quarter (Q3) results after the bell. [More]. Key points:
- Revenue: $35.0bn, up from $28.6bn in Q3 of 2011. Analysts had been expecting $37.2bn.
- Net profit: $8.8bn, up from $7.3bn in Q3 of 2011, but the gross margin of 42.8% was below analysts’ expectation of 43.8%.
- EPS: $9.32, up from 7.79 in Q3 of 2011. Analysts had been expecting $10.37.
- iPhone sales: 26.0m, up 28% on Q3 2011. Analysts, who had been expecting 29m.
- iPad sales: 17.0m, up 84% on Q3 2011. Analysts had been expecting 16m.
- Mac sales: 4.0m, up 2% on Q3 2011
- iPod sales: 6.8m, down 10% on Q3 2011.
Apple also reduced its guidance for Q4 revenue to $34bn (analysts’ estimate had been $38bn) and Q4 earnings to $7.65 EPS (analysts’ estimates had been $10.27).
These results led to a 5.6% crash to less than $570 in after-hours trading. This selloff influenced after hours trading in other tech stocks, e.g: Amazon down 2.65% to $220, Google down 2.32% to $601.
Lloyd says: The results are a time shift: iPhone buyers are understandably holding back until the release of the iPhone 5, due out in a few months (in time for the Dec 2012 quarter and the next quarter too). Also, trademark issues that had been causing a delay in releasing the iPad to mainland China have recently been resolved. Nevertheless, one can expect an immediate selldown based on disappointing earnings in Q3 and Q4, which to me represents a buying opportunity for Q1 and Q2 of Apple’s 2013 year. [Video: Shaw Wu, Michael Holland]
Motley Fool considers that iPhone’s disappointing sales are caused by competition from Samsung.
- Netflix [NASDAQ:NFLX] reported that its Q2 results included a return to profitability: EPS of +$0.11 after a loss in Q1. However NFLX expected the London Olympics would affect signups and revenue. NFLX share price immediately fell more than 13.5%. [More]
Tech stock price movements
- Substantial rises (more than 2.0%)
- Substantial falls (more than 2.0%)
- Advanced Micro Devices [NYSE:AMD]: down 2.41% to $4.05
- Salesforce [NYSE:CRM]: down 3.41% to $126.53
- Cisco [NASDAQ:CSCO]: down 5.91% to $15.12
- Jive [NASDAQ:JIVE]: down 3.08% to $18.59
- Nokia [NYSE:NOK]: down 3.83% to $1.76
- Pandora [NYSE:P]: down 2.96% to $9.56
- Red Hat [NYSE:RHT]: down 2.20% to $51.48
- YHOO [NASDAQ:YHOO]: down 2.09% to $15.43
We may have beaten the market again today – but given Apple’s earnings report, we expect tomorrow to be a bad day – make that a really bad day! . The AUD spot rate has fallen to USD1.0248. Note that our valuation rate includes 50bp for FX.
- Portfolio Index (USD): 1.064 -0.56%
- AUD 1.00 = USD 1.0266 -0.47%
- Portfolio Index (AUD): 1.036 -0.09%
Apple has declared its first dividend in 15 years: “On July 24, 2012, Apple’s Board of Directors declared a cash dividend of $2.65 per share of the Company’s common stock. The dividend is payable on August 16, 2012, to stockholders of record as of the close of business on August 13, 2012. The ex-dividend date is August 9, 2012.”
Lloyd says: Frankly, this dividend is a nuisance. It is insignificant by comparison with Apple’s share price (about 0.45%), and creates taxation problems for international investors. We consider the dividend to be a $2.65 write down in Apple’s share price on 9 Aug 2012 and otherwise irrelevant to our portfolio.
- Apple [AAPL] $601.29 -0.42%.
- Amazon [AMZN] $223.04 -1.31%
- Google [GOOG] $607.68 -1.25%
- Linkedin [LNKD] $103.14 -1.01%
- VMware [VMW] $88.99 -0.27%