Thursday, November 14, 2013

Higher markets after Yellen signals extending stimulus

Dow rose 54, advancers over decliners almost 2-1 & NAZ went up 7.  The MLP index (AMZ) rose 3+ to 449 & the REIT index went up 2 to the 271s.  But since late Mar, AMZ has pretty much been flat while other yield securities have sold off.  Junk bond funds fluctuated & Treasuries were a tad higher.  Oil was flattish & gold rose, remaining below 1300.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLZ13.NYM....Crude Oil Dec 13....93.58 Down ...0.30  (0.3%)

Live 24 hours gold chart [Kitco Inc.]

Yellen Says It’s ‘Imperative’ to Promote a Strong Recovery

Photo:   Bloomberg

JanetYellen said she is committed to promoting a strong economic recovery & will ensure monetary stimulus isn’t removed too soon.  “I consider it imperative that we do what we can to promote a very strong recovery,” she said in response to a question during testimony.  “It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero.”  She signaled that she is prepared to continue the strategies of Big Ben.  His actions have included the $85B monthly bond-purchase program, which is pushing the Federal Reserve assets toward a record $4T as officials debate when to begin winding it down.  Under 2 hours of mostly genial questioning, Yellen said the benefits of the bond-buying program still outweigh the costs.  While calling for stronger regulation to help protect the financial system, she said she’d like to see more progress in the labor market & that she doesn’t see an asset price bubble emerging in equities.  She said the asset purchases “have made a meaningful contribution to economic growth and improving the outlook” & that the program “will not continue indefinitely.”  She also emphasized her commitment to the 2% inflation goal & strengthening financial regulation.  “A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,” Yellen said. “Supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”

Yellen Says Fed Should Not Withdraw U.S. Stimulus Too Soon

Apple investors who were worried about the iPhone 5c eating into the company’s margins now have another report from the East that should help ease those concerns.  Taiwan-based market research firm TrendForce issued a report stating that combined shipments of the new iPhone 5s & iPhone 5c smartphones accounted for more than 60% of the 33.8M iPhones sold in Q3.  The firm also estimated that 5s & 5c shipments were split fairly evenly.  Moving forward, however, TrendFore says AAPL has slashed iPhone 5c orders by a substantial 11M units in Q4 due to slower than expected sales while the company increased iPhone 5s orders significantly to accommodate continued heavy demand.  As a result, the firm expects the 5c to account for just 24% of total iPhone sales in the holiday qtr while the iPhone 5s makes up the lion’s share of Q4 iPhone sales.  TrendForce expects total Q4 iPhone sales to grow to 48.9M units, up modestly from 47.8M last year.  The stock climbed $7+.

iPhone 5s sales far better than expected, 5c sales far worse

Apple (AAPL)

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McDonald's Drive-Thru

Photo:   Bloomberg

McDonald's, a Dow stock & Dividend Aristocrat, is losing out to rivals & racking up customer complaints about slow service, is adding a 3rd drive-thru window.  Called Fast Forward Drive-Thru, the reboot will start appearing in new & rebuilt stores next year, Lisa McComb a MCD spokeswoman said.  Customers now pay at the first window & pick up food at the 2nd.  Soon there will be a 2nd pick-up window.  “It enables customers to pull forward to receive orders at a third window when their order is not yet ready,” she said.  It “will enable us to better serve more customers quickly.”  Boosting drive-thru speeds could help CEO Don Thompson increase US same-store sales, which have gained 1% or less for the past year.  Ever since the company created its first drive-thru in 1975, fast-food chains have competed fiercely to shave seconds off order times, equipping workers with headsets, video cameras & clocks showing how long cars have been waiting.  Some make even made it a game.  Disgruntled diners have taken to Twitter to complain about slow drive-thru service at MCD.  About 32% of revenue last year came from the US, where it has more than 14,100 stores.  The stock slid 56¢.

Third Window a Charm as McDonald’s Patrons Twitter Grief

McDonald's (MCD)

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Stocks continue on their winning ways.  Even yield stocks found buyers today.  The most positive story today was Janet Yellen saying she will keep throwing money at the stock market.  However holiday retail sales are uncertain & the budget battle in deeply divided DC is not going away.  Dow continues flying to new record highs with a what con go wrong attitude. 

Dow Jones Industrials

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