Dow lost 17, advancers slightly ahead of decliners & NAZ fell 9. The MLP index went up pocket change to 451 while the REIT index did little in the 267s. Junk bond funds rose & Treasuries were a little higher. Oil drifted lower to an 8 month low while gold inched higher.
AMJ (Alerian MLP Index tracking funds)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Mario Draghi strengthened the ECB's pledge to keep interest rates low for as long as necessary & warned that it’s too soon to say the euro region is out of danger. “The Governing Council strongly emphasizes that it will maintain an accommodative stance of monetary policy for as long as necessary,” Draghi said after the ECB kept its key rate at a record low of 0.25%. Draghi is refusing to say the fight against Europe's debt crisis is won. The euro economy is still struggling to grow amid subdued prices & the threat of rising market rates as the US Federal Reserve tapers its own monetary stimulus. “It’s a recovery that’s gone from being based exclusively on export growth” to one that is “very gradually extending into domestic demand,” Draghi said. “But it’s still premature to declare any victory.” Draghi said the use of “firmer words” in his opening statement today “reiterates our decisiveness to act if needed.” The phrase “strongly emphasizes” wasn’t used in last month’s communique, & other new language include a “firm” reiteration of the ECB’s forward guidance. His comments highlight the risk the area’s fragile economic recovery could yet be derailed as improving confidence indicators & narrowing bond spreads are countered by subdued inflation & depressed lending. Draghi specified 2 factors that could prompt the ECB to cut rates again. “One is an unwarranted tightening of the short-term money markets, and the other is a worsening of our medium-term outlook for inflation,” he said. “That is what this firmer language is addressing.”
Draghi Strengthens Pledge to Keep Rates at Record Lows
Macy's forecast EPS for its next fiscal year ahead of estimates & disclosed a program to cut costs that includes eliminating 2500 jobs. EPS in the year thru Jan 2015 will be $4.40-$4.50, above the analyst estimate of $4.36, when job cuts & other actions will save about $100M annually. At a time when many retailers are struggling with restrained consumer spending, Macy’s CEO Terry Lundgren has kept profit growing by adding competitively priced exclusive merchandise & letting lower-level managers tailor assortments to local tastes. He’s also increased online sales by fulfilling Web orders from store inventory. The department-store chain maintained its forecast that EPS in the current fiscal year would rise to $3.80-$3.90, excluding charges related to its cost reduction measures & asset impairments. Sales at stores open at least a year will rise 2.3-2.5% in Q4 while analysts estimate 2.7%. The cost reductions entail combining its Midwest & North regions, eliminating some merchandise planning & store positions as well as central office & administrative jobs. The savings will take effect in the next fiscal year after $120-$135M of charges in Q4. Comparable sales for Nov & Dec rose 3.6% from a year earlier, the company said. The stock jumped 3.96 (8%).
Macy’s Forecasts Profit That Tops Estimates Amid 2,500 Job Cuts
No dramatic changes ahead of the jobs report tomorrow. Chances are that new jobs will be a good number which might be seen a negative, giving the Federal Reserve (FED) another reason to reduce its monthly bond purchases. Despite the favorable guidance from Macy's, holiday retail sales will not be pretty, giving more ammunition for the FED to maintain the $75B of monthly bond purchases. We'll see the reaction tomorrow.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking funds)
Treasury yields:
U.S. 3-month |
0.04% | |
U.S. 2-year |
0.43% | |
U.S. 10-year |
2.96% |
| CLF15.NYM | ....Crude Oil Jan 15 | ....87.00 |  ...0.41 | (0.5%) |
Mario Draghi strengthened the ECB's pledge to keep interest rates low for as long as necessary & warned that it’s too soon to say the euro region is out of danger. “The Governing Council strongly emphasizes that it will maintain an accommodative stance of monetary policy for as long as necessary,” Draghi said after the ECB kept its key rate at a record low of 0.25%. Draghi is refusing to say the fight against Europe's debt crisis is won. The euro economy is still struggling to grow amid subdued prices & the threat of rising market rates as the US Federal Reserve tapers its own monetary stimulus. “It’s a recovery that’s gone from being based exclusively on export growth” to one that is “very gradually extending into domestic demand,” Draghi said. “But it’s still premature to declare any victory.” Draghi said the use of “firmer words” in his opening statement today “reiterates our decisiveness to act if needed.” The phrase “strongly emphasizes” wasn’t used in last month’s communique, & other new language include a “firm” reiteration of the ECB’s forward guidance. His comments highlight the risk the area’s fragile economic recovery could yet be derailed as improving confidence indicators & narrowing bond spreads are countered by subdued inflation & depressed lending. Draghi specified 2 factors that could prompt the ECB to cut rates again. “One is an unwarranted tightening of the short-term money markets, and the other is a worsening of our medium-term outlook for inflation,” he said. “That is what this firmer language is addressing.”
Draghi Strengthens Pledge to Keep Rates at Record Lows
US banks & housing groups are
bracing for paperwork headaches & delays as major post-crisis
mortgage reforms take effect tomorrow. Lenders must be
prepared to verify that borrowers can repay their home loans, under
rules written by the Consumer Financial Protection Bureau & required
by the 2010 Dodd-Frank Wall Street oversight law. Banks will have to consider a
list of factors that show the consumer's financial health, including
income, existing debt obligations & credit history. The reform seeks to prevent a
repeat of the 2007-2009 financial crisis, when millions of
homes went into foreclosure, in many cases because the borrowers
received loans they could not afford. Banks have scrambled over
the last year to update technology, write new lending procedures &
train employees to comply with the requirements. Experts warn consumers
could see some disruptions over the next few weeks, including longer
mortgage application processing times & paperwork problems. The ability-to-repay rule had
been the most feared of a series of changes looming for mortgage lenders
because if borrowers' homes are foreclosed upon, they could claim their
banks should have known they could not afford the loans. After many revisions, the
consumer bureau said that for the first few years, any loans that are
eligible for purchase by Fannie Mae & Freddie Mac count as qualified. That means most of the loans made would get extra legal protection. One new headache for buyers.
Analysis: Housing experts warn of hiccups as new U.S. mortgage rules go live
Macy's forecast EPS for its next fiscal year ahead of estimates & disclosed a program to cut costs that includes eliminating 2500 jobs. EPS in the year thru Jan 2015 will be $4.40-$4.50, above the analyst estimate of $4.36, when job cuts & other actions will save about $100M annually. At a time when many retailers are struggling with restrained consumer spending, Macy’s CEO Terry Lundgren has kept profit growing by adding competitively priced exclusive merchandise & letting lower-level managers tailor assortments to local tastes. He’s also increased online sales by fulfilling Web orders from store inventory. The department-store chain maintained its forecast that EPS in the current fiscal year would rise to $3.80-$3.90, excluding charges related to its cost reduction measures & asset impairments. Sales at stores open at least a year will rise 2.3-2.5% in Q4 while analysts estimate 2.7%. The cost reductions entail combining its Midwest & North regions, eliminating some merchandise planning & store positions as well as central office & administrative jobs. The savings will take effect in the next fiscal year after $120-$135M of charges in Q4. Comparable sales for Nov & Dec rose 3.6% from a year earlier, the company said. The stock jumped 3.96 (8%).
Macy’s Forecasts Profit That Tops Estimates Amid 2,500 Job Cuts
Macy's (M)
No dramatic changes ahead of the jobs report tomorrow. Chances are that new jobs will be a good number which might be seen a negative, giving the Federal Reserve (FED) another reason to reduce its monthly bond purchases. Despite the favorable guidance from Macy's, holiday retail sales will not be pretty, giving more ammunition for the FED to maintain the $75B of monthly bond purchases. We'll see the reaction tomorrow.
Dow Jones Industrials
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