Thursday 26 July 2012

by

EUROPE

Greece

In discussions with European Commission President Jose Manuel Barroso, Greek Prime Minister Antonis Samaras has said that his government would do all it could to get Greece back on track. [More]. The problem is that what creditors want to hear is that the government will do what is necessary to get Greece back on track.

After the meeting with Samaras, Barroso is expected to meet the troika (European Union, the European Central Bank and International Monetary Fund) auditors who are preparing a report on whether Greece should be given the final tranche (EUR31.5bn) of bailout funding. Without that funding Greece will be bankrupt.

German economics minister, Philipp Rösler has said “Let me say this quite clearly: if Greece doesn’t fulfill its conditions, then there can be no further payments to Greece.” Similar threats have come from Finance Minister Wolfgang Schäuble and Chancellor Angela Merkel [More].

European Central Bank President Mario Draghi has said “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me it will be enough.” [More].

USA

Markets have taken heart from Mario Draghi’s (ECB) assurance that a eurozone disaster will be avoided.

Commodities

  • Gold Futures (Aug): $1,615/oz, up $7.00 from $1,608/oz
  • Oil Futures (WTI LSC Sep – NY trading): $89.39/barrel, up $0.42 from $88.97/barrel

Treasury yields

  • 30-year: 2.50%, up 5 points from 2.45%
  • 10-year: 1.44%, up 4 points from 1.40%
  • 5-year: 0.59%, up 4 points from 0.55%

Share market indices

  • S+P 500: 1,360 +1.65%
  • DJIA: 12,901 +1.67% (212 points)
  • NASDAQ: 2,893 +1.37%

Tech stock news

  • Facebook’s operating margin in Q2 was 43%, down from 53% in Q2 2011. FB reported a net loss of $157m (8 cents.share) for the quarter. [More] In after hours trading Facebook fell to a record low of $23.85 (-18.74%). After hours trading closed at $24, a 69.4% writedown of Facebook’s IPO price of $38 a few months ago.
  • Zynga [NASDAQ:ZNGA] has been sold off today on the basis of yesterday’s earnings report. The problem is the current and forecast loss of revenue from users who buy virtual goods on sites such as Farmville. Analyst Richard Greenfield of BTIG says “Right now, everything is going wrong for Zynga. In a rapidly changing internet landscape that is moving to mobile, it’s very hard to have confidence these issues are temporary.” [More] In after-hours trading ZNGA fell further to $3.06, down 39.74% as the results for Facebook were announced. This is a 69.4% writedown of ZNGA’s IPO price of $10 last December. [IPO]

Tech stock price movements

PORTFOLIO

Portfolio index

:-( Wall Street had a wonderful rally with the DJIA up 212 points (1.67%), but some tech stocks are not at the party. The best Apple could manage today was occasionally break even, but it ended in negative territory. And so we under performed the market … again.

Reuters wonders whether Apple is losing its aura of invincibility. But it goes on to note “consumers are more attuned to product life cycles and launch timelines, something that Apple goes to great lengths to keep secret.” [More] The lower than expected growth in iPhone sales is driven by consumers awareness of, and preparedness to wait for, the Sep 2012 release of the iPhone5. Hopefully the Dec 2012 and Mar 2013 quarters will see the deferred demand lift iPhone sales.

:-( Our AUD-denominated index also suffered from further strengthening of the AUD.

Index values

  • Portfolio Index (USD): 1.028 +0.33%
  • AUD 1.00 = USD 1.0453 +0.79%
  • Portfolio Index (AUD): 0.983 -0.45%

NASDAQ

  • Apple [AAPL] $574.88 -0.02%
  • Amazon [AMZN] $220.01 +1.36%
  • Google [GOOG] $613.36 +0.88%

NYSE

  • Linkedin [LNKD] $100.82 -1.34%
  • VMware [VMW] $92.41 +5.38%