Dow started weak & sank in the PM, finishing down 100, decliners over advancers almost 4-1 & NAZ fell 32. Bank stocks led the markets lower, the Financial Index had a very bad day, taking it to the lows for Dec.
The MLP index was up 1 to 375 but the REIT index fell 2½ to the 221s. Junk bond funds were mixed but Treasuries rose on more uncertainty coming from the European debt mess. The 10 year Treasury bond yield has fallen to 1.81%, nearing the lows set 3 months ago. Oil & gold didn't do much, getting caught up with the negative bias from the stock markets.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Jeffrey Lacker
Photo: Bloomberg
Jeffrey Lacker, President of the Federal Reserve Bank of Richmond predicted the economy will grow 2-2½%% next year, with inflation likely to meet goals though posing a risk. He said that the recent cooling in prices “is likely to prove as transitory, as did the acceleration we saw earlier in the year.” “Despite this year’s run-up, I believe the inflation outlook is reasonably good” though “I still view the risks to inflation as tilted to the upside.” Last week, the FOMC said the economy was expanding moderately despite “apparent slowing in global growth,” adding market strains pose “significant downside risks.” Recent data, including a drop in initial jobless claims to the lowest in 3 years, has prompted some to raise forecasts for the Q4 growth rate. “A comparison of 2011 with the experience of 2004 through 2007, for example, suggests that an upswing in inflation at this stage of the business cycle is typically long-lasting,” Lacker said. His projection for growth is based on continued gains in jobs, which will aid consumer confidence & growth at a “less torrid pace” for business investment. Housing will probably remain “relatively dormant” & gov spending won’t aid the economy, while export demand is likely to slow because of the slowdown in Europe.
Fed’s Lacker Predicts Moderate 2012 Growth
Mohamed El-Erian, CEO at Pimco, said the first part of 2012 will be “risk off” as Europe's sovereign-debt crisis encourages demand for safety. “The ECB has made it very clear that it doesn’t believe in the bazooka,” El Erian said. “It believes in the national governments’ and other institutions’ getting their acts together first.” Last week ECB President Dragh damped speculation among some investors that policy makers will step up bond purchases to tame rising borrowing costs, saying that the bank can’t overstep its mandate. 2012 looks to be a challenging year with the European debt crisis at the center of investor attention.
Pimco Predicts ‘Risk Off’ in First Part of 2012 on Europe, El-Erian Says
Illinois Tool Works projected Q4 & fiscal-year profits roughly in line with current predictions & its prior prediction. ITW expects EPS of 86-94¢ in Q4 on revenue growth of 9.5-12.5%. The guidance projects revenue of $4.57-$4.69B. Analysts, are expecting Q4 EPS 89¢ on $4.4B in revenue. For the full year, ITW expects EPS of $4.04-$4.12, including 33¢ from a one-time tax benefit. Excluding that gain, the midpoint of the range would be $3.75. Revenue is expected to increase 15.1-15.9% implying 2011 revenue of $18.27-$18.39B. ITW said demand for its products remained stable in Nov in several worldwide end markets, but European markets continued to be "challenging." The stock fell 38¢ & yields 3.2%. Earlier in Dec, it became a Dividend Aristocrat.
llinois Tool projects 4Q, annual profits, sales
The vibes out of Europe are bad. The ECB is towing a hard line, refusing to throw away more money. Italy is scrambling to pass legislation to show it is serious about solving its debt mess. At the same time, the US has more than its share of worries. The House intends to vote down a 2-month extension of the payroll tax cut that cleared the Senate last week. It's tired of the Scotch-Tape approach to fix problems. But undoing tax breaks & unemployment extensions will be a kick in the head for the economic recovery. I think Santa has already sold his stocks, so he can wait out this turmoil.
Dow Jones Industrial Average
S&P 500 Financials Sector Index
| Value | 166.37 | |
| Change | -3.95 (-2.3%) |
The MLP index was up 1 to 375 but the REIT index fell 2½ to the 221s. Junk bond funds were mixed but Treasuries rose on more uncertainty coming from the European debt mess. The 10 year Treasury bond yield has fallen to 1.81%, nearing the lows set 3 months ago. Oil & gold didn't do much, getting caught up with the negative bias from the stock markets.
AMZ Alerian MLP Index
DJR Dow Jones Equity REIT Index
Click below for the latest market update:
Treasury yields:
U.S. 3-month | 0.000% | |
U.S. 2-year | 0.234% | |
U.S. 10-year | 1.810% |
| CLF12.NYM | ..Crude Oil Jan 12 | ...93.78 | ... 0.25 | (0.3%) |
Photo: Bloomberg
Jeffrey Lacker, President of the Federal Reserve Bank of Richmond predicted the economy will grow 2-2½%% next year, with inflation likely to meet goals though posing a risk. He said that the recent cooling in prices “is likely to prove as transitory, as did the acceleration we saw earlier in the year.” “Despite this year’s run-up, I believe the inflation outlook is reasonably good” though “I still view the risks to inflation as tilted to the upside.” Last week, the FOMC said the economy was expanding moderately despite “apparent slowing in global growth,” adding market strains pose “significant downside risks.” Recent data, including a drop in initial jobless claims to the lowest in 3 years, has prompted some to raise forecasts for the Q4 growth rate. “A comparison of 2011 with the experience of 2004 through 2007, for example, suggests that an upswing in inflation at this stage of the business cycle is typically long-lasting,” Lacker said. His projection for growth is based on continued gains in jobs, which will aid consumer confidence & growth at a “less torrid pace” for business investment. Housing will probably remain “relatively dormant” & gov spending won’t aid the economy, while export demand is likely to slow because of the slowdown in Europe.
Fed’s Lacker Predicts Moderate 2012 Growth
Mohamed El-Erian, CEO at Pimco, said the first part of 2012 will be “risk off” as Europe's sovereign-debt crisis encourages demand for safety. “The ECB has made it very clear that it doesn’t believe in the bazooka,” El Erian said. “It believes in the national governments’ and other institutions’ getting their acts together first.” Last week ECB President Dragh damped speculation among some investors that policy makers will step up bond purchases to tame rising borrowing costs, saying that the bank can’t overstep its mandate. 2012 looks to be a challenging year with the European debt crisis at the center of investor attention.
Pimco Predicts ‘Risk Off’ in First Part of 2012 on Europe, El-Erian Says
Illinois Tool Works projected Q4 & fiscal-year profits roughly in line with current predictions & its prior prediction. ITW expects EPS of 86-94¢ in Q4 on revenue growth of 9.5-12.5%. The guidance projects revenue of $4.57-$4.69B. Analysts, are expecting Q4 EPS 89¢ on $4.4B in revenue. For the full year, ITW expects EPS of $4.04-$4.12, including 33¢ from a one-time tax benefit. Excluding that gain, the midpoint of the range would be $3.75. Revenue is expected to increase 15.1-15.9% implying 2011 revenue of $18.27-$18.39B. ITW said demand for its products remained stable in Nov in several worldwide end markets, but European markets continued to be "challenging." The stock fell 38¢ & yields 3.2%. Earlier in Dec, it became a Dividend Aristocrat.
llinois Tool projects 4Q, annual profits, sales
ITW Illinois Tool Works
The vibes out of Europe are bad. The ECB is towing a hard line, refusing to throw away more money. Italy is scrambling to pass legislation to show it is serious about solving its debt mess. At the same time, the US has more than its share of worries. The House intends to vote down a 2-month extension of the payroll tax cut that cleared the Senate last week. It's tired of the Scotch-Tape approach to fix problems. But undoing tax breaks & unemployment extensions will be a kick in the head for the economic recovery. I think Santa has already sold his stocks, so he can wait out this turmoil.
Dow Jones Industrial Average
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