Dow crawled up 3 (to a new record close), decliners barely ahead of advancers & NAZ gained 21. The MLP index was off pocket change in the 464s & the REIT index slipped 1+ to the 288s. Junk bond funds were weaker & Treasuries pulled back in the PM. Oil is back over 106 & gold inched higher.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Federal Reserve Bank (FED) of Philadelphia President Charles Plosser said the FED should begin tapering its $85B in monthly bond buying in Sep & end the unorthodox stimulus by year-end. “I don’t want to do it all at once, but I think we should begin to taper very soon and hopefully end it by the end of this year,” Plosser said today. “That would be a healthy thing for the economy. We can do it gradually.” Big Ben said last month the FED is on track to begin reducing its bond buying later this year & halt the program by around mid-2014 if the economy performs in line with central bank forecasts. Plosser (who doesn’t vote on monetary policy this year) has repeatedly spoken out against additional easing by the FED. “I’d like for us to start in September” to taper the purchases, Plosser said. “We don’t want to create another housing boom,” & “we have to be careful of the unintended consequences of our policies.” The risks from QE are growing with the size of its balance sheet, currently at $3½T, Plosser said, & it will be “difficult” for the FED to change course on policy. In a speech today he said recent changes in the way the FED communicates its policy outlook have “likely caused more confusion than illumination.” Officials should make a clearer pledge to keep interest rates near zero as long as unemployment is above 6.5% & inflation is no more than 2.5%, he said in prepared remarks.
Fed’s Plosser Calls for Tapering of QE to Begin in September
Photo: Bloomberg
Photo: Bloomberg
UPS said that Q2 EPS, excluding special items, would be $1.13 per share. Analysts were expecting $1.20. For all of 2013, UPS lowered its profit forecast to $4.65-$4.85, down from a Jan prediction of $4.80-$5.06 per share . Analysts expected $4.98. UPS blamed the gloomier outlook on overcapacity in airfreight shipping, which pushes prices down; the shift to cheaper shipping options; a slowing US industrial economy; & "some slowing" in volume growth as a result of labor negotiations. "We expect the second-quarter market trends to persist, and UPS is adapting to meet these conditions," CFO Kurt Kuehn said in a statement. UPS has begun to respond to the trend toward lower-cost shipping options by reducing capacity in Asia, but the sluggish US economy has consumers & businesses here cutting back on spending too. Last month, FDX reported a 45% drop in quarterly profit due largely to intl customers trading down to cheaper forms of delivery & money that the company spent upfront in hopes of eventually reducing costs through, among other steps, offering buyouts for employees to quit. Lucrative intl priority shipments fell 2% during the qtr while less-expensive economy deliveries grew 11%. This sends a negative message about global business activity. The stock plunged 5.40.
UPS Full-Year Profit Trails Estimates on Slowing Economy; Shares Decline
Little happened in the markets although the BA news was not welcome. The 787 Dreamliner is the company's big investment in the future & it has been plagued with one problem after another which has cost the company $Bs. Next week there will be more earnings from big banks, starting with Citi (C), & major corporations. But the warning from FDX sends a chilling warning at the start of earnings season.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.03% | |
U.S. 2-year |
0.35% | |
U.S. 10-year |
2.60% |
| CLQ13.NYM | ...Crude Oil Aug 13 | ...105.95 |  ...1.04 | (1.0%) |
Photo: Bloomberg
Federal Reserve Bank (FED) of Philadelphia President Charles Plosser said the FED should begin tapering its $85B in monthly bond buying in Sep & end the unorthodox stimulus by year-end. “I don’t want to do it all at once, but I think we should begin to taper very soon and hopefully end it by the end of this year,” Plosser said today. “That would be a healthy thing for the economy. We can do it gradually.” Big Ben said last month the FED is on track to begin reducing its bond buying later this year & halt the program by around mid-2014 if the economy performs in line with central bank forecasts. Plosser (who doesn’t vote on monetary policy this year) has repeatedly spoken out against additional easing by the FED. “I’d like for us to start in September” to taper the purchases, Plosser said. “We don’t want to create another housing boom,” & “we have to be careful of the unintended consequences of our policies.” The risks from QE are growing with the size of its balance sheet, currently at $3½T, Plosser said, & it will be “difficult” for the FED to change course on policy. In a speech today he said recent changes in the way the FED communicates its policy outlook have “likely caused more confusion than illumination.” Officials should make a clearer pledge to keep interest rates near zero as long as unemployment is above 6.5% & inflation is no more than 2.5%, he said in prepared remarks.
Fed’s Plosser Calls for Tapering of QE to Begin in September
Photo: Bloomberg
2 Boeing 787 Dreamliner planes
ran into trouble in England on today, with a fire on one temporarily
shutting down Heathrow Airport & an unspecified technical issue
forcing another to turn back to Manchester Airport. The incidents
are unwelcome news for Boeing, a Dow stock, whose Dreamliners were
cleared to fly again in Apr after a 4-month grounding due to
concerns about overheating batteries. The fire at Heathrow involved an empty Ethiopian Airlines plane, which was parked at a remote stand of the airport after arriving
at the airport. British police said the fire is being treated as
unexplained, & that there were no passengers on board at the time of
the fire. A BA spokesman said in an email that the company had
personnel on the ground at Heathrow & that the company "is working to
fully understand and address" the situation. Soon after the fire at Heathrow, UK tour operator Thomson Airways confirmed that one of its Boeing 787 Dreamliner planes travelling from England to the US had to turn back after experiencing a technical issue. Thomson said that flight 126 travelling from Manchester Airport to Sanford, Florida had returned to Manchester "as a precautionary measure." It did not specify the nature of
the technical issue, but said all 291 passengers had disembarked from
the plane and engineers are inspecting the aircraft. The stock sank 5.30 & hurt the Dow.
Boeing (BA)
Photo: Bloomberg
UPS said that Q2 EPS, excluding special items, would be $1.13 per share. Analysts were expecting $1.20. For all of 2013, UPS lowered its profit forecast to $4.65-$4.85, down from a Jan prediction of $4.80-$5.06 per share . Analysts expected $4.98. UPS blamed the gloomier outlook on overcapacity in airfreight shipping, which pushes prices down; the shift to cheaper shipping options; a slowing US industrial economy; & "some slowing" in volume growth as a result of labor negotiations. "We expect the second-quarter market trends to persist, and UPS is adapting to meet these conditions," CFO Kurt Kuehn said in a statement. UPS has begun to respond to the trend toward lower-cost shipping options by reducing capacity in Asia, but the sluggish US economy has consumers & businesses here cutting back on spending too. Last month, FDX reported a 45% drop in quarterly profit due largely to intl customers trading down to cheaper forms of delivery & money that the company spent upfront in hopes of eventually reducing costs through, among other steps, offering buyouts for employees to quit. Lucrative intl priority shipments fell 2% during the qtr while less-expensive economy deliveries grew 11%. This sends a negative message about global business activity. The stock plunged 5.40.
UPS Full-Year Profit Trails Estimates on Slowing Economy; Shares Decline
United Parcel Service (UPS)
Little happened in the markets although the BA news was not welcome. The 787 Dreamliner is the company's big investment in the future & it has been plagued with one problem after another which has cost the company $Bs. Next week there will be more earnings from big banks, starting with Citi (C), & major corporations. But the warning from FDX sends a chilling warning at the start of earnings season.
Dow Jones Industrials
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