Earn France loses AAA-rating in blow to eurozone

Earn PARIS (AP) -- France's finance ministry says Standard & Poor's has cut the country's credit rating by one notch to AA. France's loss of its AAA-rating deals a heavy blow to the eurozone's ability to fight off its debt crisis. The country is the second-largest contributor to the currency union's bailout fund. S&P in December put 15 eurozone countries on creditwatch and other downgrades were expected later Friday. The cut in France's creditworthiness could also hurt President Nicolas Sarkozy's re-election chances. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below. ROME (AP) -- Europe's ability to fight off its debt crisis was again thrown into doubt Friday when the euro hit its lowest level in over a year and borrowing costs rose on expectations that the debt of several countries would be downgraded by rating agency Standard & Poor's. Stock markets in Europe and the U.S. plunged late Friday when reports of an imminent downgrade first appeared and the euro fell to a 17-month low. The fears of a downgrade brought a sour end to a mildly encouraging week for Europe's heavily indebted nations and were a stark reminder that the 17-country eurozone's debt crisis is far from over. Earlier Friday, Italy had capped a strong week for government debt auctions, seeing its borrowing costs drop for a second day in a row as it successfully raised as much as euro4.75 billion ($6.05 billion). Spain and Italy completed successful bond auctions on Thursday, and European Central Bank president Mario Draghi noted 'tentative signs of stabilization' in the region's economy. A credit downgrade would escalate the threats to Europe's fragile financial system, as the costs at which the affected countries — some of which are already struggling with heavy debt loads and low growth — could borrow money would be driven even higher. The downgrade could drive up the cost of European government debt as investors demand more compensation for holding bonds deemed to be riskier than they had been. Higher borrowing costs would put more financial pressure on countries already contending with heavy debt burdens. In Greece, negotiations Friday to get investors to take a voluntary cut on their Greek bond holdings appeared close to collapse, raising the specter of a potentially disastrous default by the country that kicked off Europe's financial troubles more than two years ago. The deal, known as the Private Sector Involvement, aims to reduce Greece's debt by euro100 billion ($127.8 billion) by swapping private creditors' bonds with new ones with a lower value, and is a key part of a euro130 billion ($166 billion) international bailout. Without it, the country could suffer a catastrophic bankruptcy that would send shock waves through the global economy. Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos met on Thursday and Friday with representatives of the Institute of International Finance, a global body representing the private bondholders. Finance ministry officials from the eurozone also met in Brussels Thursday night. 'Unfortunately, despite the efforts of Greece's leadership, the proposal put forward ... which involves an unprecedented 50 percent nominal reduction of Greece's sovereign bonds in private investors' hands and up to euro100 billion of debt forgiveness — has not produced a constructive consolidated response by all parties, consistent with a voluntary exchange of Greek sovereign debt,' the IIF said in a statement. 'Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach,' it said. Friday's Italian auction saw investors demanding an interest rate of 4.83 percent to lend Italy three-year money, down from an average rate of 5.62 percent in the previous auction and far lower than the 7.89 percent in November, when the country's financial crisis was most acute. While Italy paid a slightly higher rate for bonds maturing in 2018, which were also sold in Friday's auction, demand was between 1.2 percent and 2.2 percent higher than what was on offer. The results were not as strong as those of bond auctions the previous day, when Italy raised euro12 billion ($15 billion) and Spain saw huge demand for its own debt sale. 'Overall, it underscores that while all the auctions in the eurozone have been battle victories, the war is a long way from being resolved (either way),' said Marc Ostwald, strategist at Monument Securities. 'These euro area auctions will continue to present themselves as market risk events for a very protracted period.' Italy's euro1.9 trillion ($2.42 trillion) in government debt and heavy borrowing needs this year have made it a focal point of the European debt crisis. Italy has passed austerity measures and is on a structural reform course that Premier Mario Monti claims should bring down Italy's high bond yields, which he says are no longer warranted. Analysts have said the successful recent bond auctions were at least in part the work of the ECB, which has inundated banks with cheap loans, giving them ready cash that at least some appear to be using to buy higher-yielding short-term government bonds. Some 523 banks took euro489 billion in credit for up to three years at a current interest cost of 1 percent. ___ Steinhauser contributed from Brussels. AP Business writer David McHugh in Frankfurt contributed.

Signals JP Morgan Earnings Highlight a Major Challenge for All Big Banks

Signals One of the hottest stocks in the land is limping into a long weekend this morning after earnings failed to impress investors, not only casting a shadow over JP Morgan (JPM), but stoking concerns about the entire Financial sector. Officially, JP Morgan's fourth quarter net income fell 23% to $3.7 billion, or $0.90 per share. While that met expectations, the biggest U.S. bank by assets stumbled on the revenue side, with a 9.6% decline that fell nearly a billion dollars short of estimates. 'They barely got over a very low bar,' says Charles Smith, CIO of Fort Pitt Capital and manager of the Fort Pitt Capital Total Return Fund (FPCGX), pointing out that the EPS estimate had come down about 20% in the past month alone. 'Their revenue growth was very weak,' he says, particularly at the investment bank were the top line shrank 30%. 'The fact that he (CEO Jamie Dimon) said he was proud of an 11% ROE is really telling,' Smith says in the attached clip, adding that revenue growth is going to be tough for all the universal banks. He believes slow revenue growth and shrinking ROE's (Return On Equity) is going to be the theme for the other big banks, many of which report results next week: Citigroup (C) and Wells Fargo (WFC) on Tuesday, Goldman Sachs (GS) on Wednesday, and Bank of America (BAC), Morgan Stanley (MS) and American Express (AXP) on Thursday. Another reason for the poor reaction is simply because JPM and the broader Diversified Financials Industry have become market leaders, after shedding 25% and finishing in the bottom of the pack for 2011. Even though 85% of analysts who follow JP Morgan rate it a ''buy'' with an average price target of $45, Smith is not interested. 'There's going to be a continued opaque nature for these earnings reports going out at least another year,' he says, adding that things like ongoing expenses for mortgage litigation and write downs will continue to muddy up the results. To be fair, while the 4th quarter numbers appear to reflect a ''very weak December,'' the powerful earnings story of the full year cannot be ignored, where JP Morgan netted a record $19 billion profit for 2011. Have the recently re-heated bank stocks gotten ahead of themselves or can they recover and resume their trek higher? Feel free to reach out to us on our Facebook page, on Twitter @MattNesto or @JeffMacke, or in the comment section below. Related Quotes: XLF 13.81 -0.11 -0.75% JPM 35.92 -0.93 -2.52% GS 98.96 -2.25 -2.22% BAC 6.61 -0.18 -2.65% MS 16.63 -0.54 -3.15% C 30.74 -0.86 -2.72% WFC 29.61 0.00 0.00% AXP 49.76 +0.11 +0.22% ^BKX 43.44 -0.17 -0.39%

Earn Big stocks on the move

Earn

Large cap stocks are showing good action. Besides AAPL, GOOG was another big mover yesterday. AMZN may be setting up for breakout.

Signals August 16th Penny Stock Winners, Losers, and Stock Scans

Signals

Today's Winners and Losers

Today's Bottom Scan

Forex Glass is still half full for flush American farmers

Forex Glass is still half full for flush American farmers WASHINGTON (Reuters) - Brian Roach scrawled a simple outlook for corn prices in a spiral notebook, with a line diving from the upper left hand corner to the lower right. Sitting in a hotel ballroom at the U.S. Department of Agriculture's annual Agricultural Outlook Forum last week, the commodity broker predicted increasing supplies and weakening demand would slow a boom in the farm economy that has fattened growers' wallets and pushed up food prices. 'Nothing is telling me to think any different right now,' said Roach, president of the Florida-based commodity business Roach Ag Marketing. For the first time in years at the conference that traditionally kicks off the year for America's agri-business sector, forecasters said the seemingly endless upward trajectory on everything from crop prices to farmer income was coming to an end. The price of corn, the big daddy of the major U.S. crops, could fall 20 percent this year and because of expanding production globally, the corn stockpile would double. It is a significant shift after corn prices reached a record high near $8 a bushel last summer on concerns about strong demand draining inventories. The surge in prices is expected to encourage an expansion in planting of crops this year. Farmers are becoming 'very pragmatic about the investments they're making in machinery, equipment and input costs' after spending freely following last autumn's profitable harvest, said Thomas Dorr, president of the U.S. Grains Council. Many built new storage bins and upgraded their tractors and combines. Moving forward, 'the mood is one of caution,' Dorr said. To be sure, farmers are flush with cash after farm income topped $100 billion for the first time in 2011 as the rural economy rebounded from the pothole of the global recession. Even if income slumps to $96.3 billion this year due to larger world and domestic supplies as predicted by the government, farmers and ranchers would be looking at their second-best year ever. Income would remain well above the 10-year average. 'Prospects for U.S. agriculture continue to be strong with record income in 2011 and a strong balance sheet,' said Joe Glauber, the USDA chief economist. Still, there was a sense of deja vu of 2008 at the conference that attracts some 2,000 attendees. That year, farmers enjoyed sky high prices for their crops but marching in lockstep, was the price of crude oil. The recent spike in fuel prices could again add pressure to the farm economy. Energy costs squeeze farmer margins because they depend heavily on tractors, combines, pesticides and fertilizers -- which track the price of fuel -- to get most out of their land. 'Energy costs to a farmer are obviously a serious concern,' said David Berg, president of the American Crystal Sugar Company, based in Moorhead, Minn. 'It's almost like a few years ago where everyone was in a state of panic.' He said sugar beet farmers in Minnesota and North Dakota are doing well but a double whammy of lower prices on the market for the commodity and higher energy prices would be hard to swallow for a number of growers. 'The price of sugar is high enough so that an increase in energy costs is a negative for them, but it's not going to put them under water,' Berg said. 'If the price of sugar goes down from where it is today, it will very likely put some of them under water.' Tyson Foods also is worried about rising fuel costs, with Chief Executive Donnie Smith warning the recent jump in gas prices could dent demand for beef by reducing disposable income of consumers. Beef prices have reached record levels due to a historic drought that reduced cattle herds in the southern Plains and high prices for corn that is fed to livestock. 'You're not moving as much volume of meat but you're paying more for it,' Smith told reporters at the conference. A drop in demand for meat could hurt livestock producers even as increased grain production would cut their feed costs. Farmers are expected to go all out to get their seeds in the ground this spring, especially with the mild winter that is now coming to a close. The USDA estimates they will plant 94 million acres (38 million hectares) of corn, about 2 million acres more than last year and the largest area since 1944. Still, Jon Caspers, a producer of about 8,000 hogs a year in Iowa, is not breathing a sigh of relief due to high gasoline prices and lingering uncertainty about demand. He's also unsure farmers will plant as much corn as expected. Last year, heavy spring rains dashed their plans to plant from fence post to fence post. 'A lot of producers are waiting to see if it really happens,' he said. (Additional reporting by Charles Abbott; Writing by Russ Blinch; Editing by Marguerita Choy)

Earn Choppy action continues

Earn

he market continues to go up in choppy manner. It has so far held its gain. There are very few signs of aggressive buying at this stage.

Market has had tough time sustaining multi week rallies. We will see if this time it is different. This is the kind of environment where you have to focus on small moves while protecting capital. 

Earn Weidmann-Bundesbank profit will be crimped by reserves

Earn Weidmann-Bundesbank profit will be crimped by reserves BERLIN (Reuters) - The Bundesbank profit turned over to the federal government will be considerably smaller this year than in 2011 due to the risk provisions linked to the euro zone crisis, central bank president Jens Weidmann was quoted telling Der Spiegel. Weidmann said the German central bank had to raise its reserves due to the greater risks and had consulted with its accountants. In 2012 the Bundesbank had a 2.2 billion euro profit and set aside 1.6 billion for risks. 'The distributed profit will be considerably less than last year,' Weidmann said, without providing any specific numbers. Weidmann also said that he had doubts whether European central banks will be able to make a profit on Greek sovereign bonds that euro zone countries are eager to use as part of the latest Greek bailout. 'It's assumed that the central banks will earn a profit from purchasing the bonds. But that is not certain at all. On the contrary, the balance sheet risks have increased. And that affects not only the Greek bonds but also all the extraordinary monetary measures related to the crisis.' (Reporting By Erik Kirschbaum; Editing by Elaine Hardcastle)