Dow sank 318 (closing at the lows), decliners over advancers 7-1 & NAZ fell 90. The MLP index was off 3 to just over 460 & the REIT index lost 3+ to the 269s. Junk bond funds were weak & Treasuries rose, taking the yields to 8 week lows. Oil
decreased for the first time in 5 days as equities declined
on concern that growth in emerging economies will slow, reducing
fuel consumption. Gold scored its 5th-straight weekly gain, as
losses in US equities helped lure investors to the perceived safety of
the metal.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
The Argentina peso is poised to extend losses as the gov said it will relax controls on the currency, a day after allowing the biggest devaluation since 2002 to arrest a decline in foreign reserves. Argentines will be able to buy dollars for savings in proportion to their income, Cabinet Chief Jorge Capitanich said. The peso’s 12% plunge yesterday marked the latest effort by President Cristina Fernandez de Kirchner to shore up an economy buffeted by inflation running at 28% & reserves at a 7 year low. Without a broader policy change to bolster confidence by restraining spending & raising interest rates, the peso is likely to depreciate further. Intervention by the central bank helped trim yesterday’s losses to 9.4%, the biggest daily decline since the financial crisis that followed the country’s record $95B default in late 2001. The peso closed at 7.8825 per dollar, & changed hands in the black market at 13 pesos per dollar. The central bank has spent $5.9B in the last year to control the peso’s decline. This year, the peso has weakened 17% against the dollar, more than any currency in the world. In the same period last year, the peso depreciated less than 1%. This is one of the many global problems causing stocks to sell off around the world this week.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.04% | |
U.S. 2-year |
0.34% | |
U.S. 10-year |
2.74% |
| CLH14.NYM | ....Crude Oil Mar 14 | ....96.53 |  ...0.79 | (0.8%) |
The Argentina peso is poised to extend losses as the gov said it will relax controls on the currency, a day after allowing the biggest devaluation since 2002 to arrest a decline in foreign reserves. Argentines will be able to buy dollars for savings in proportion to their income, Cabinet Chief Jorge Capitanich said. The peso’s 12% plunge yesterday marked the latest effort by President Cristina Fernandez de Kirchner to shore up an economy buffeted by inflation running at 28% & reserves at a 7 year low. Without a broader policy change to bolster confidence by restraining spending & raising interest rates, the peso is likely to depreciate further. Intervention by the central bank helped trim yesterday’s losses to 9.4%, the biggest daily decline since the financial crisis that followed the country’s record $95B default in late 2001. The peso closed at 7.8825 per dollar, & changed hands in the black market at 13 pesos per dollar. The central bank has spent $5.9B in the last year to control the peso’s decline. This year, the peso has weakened 17% against the dollar, more than any currency in the world. In the same period last year, the peso depreciated less than 1%. This is one of the many global problems causing stocks to sell off around the world this week.
Argentina Seen Extending World’s Biggest Currency Decline
Kansas City Southern tumbled the most in almost 14 years after Q4 profit & sales fell short of estimates as coal shipments declined. Energy revenue slid 17%, chiefly because of dwindling coal loads. EPS of $1.03 on $615.6M in sales trailed the $1.09 estimate & the sales projection was $618.6M. Coal volume at US carriers have been damped by power companies switching to cheaper natural gas, eroding sales from a cargo that has been an industry mainstay. The stock plunged 17.57 (15%).
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Kansas City Southern Falls Most Since 2000 After Earnings Miss
Kansas City Southern (KSU)
Starbucks advanced the most in almost 6 months after posting earnings that topped projections as pumpkin-spice lattes & other seasonal drinks helped boost US sales. The company reported fiscal EPS of 71¢, exceeding the 69¢ estimate. CEO Howard Schultz is advertising seasonal beverages, higher-quality baked goods & opening Teavana stores across the Americas to maintain sales growth. Sales at stores open at least 13 months rose 5% in the region, which includes the US, Canada & Latin America. “Contributing to Americas’ performance was the success of our holiday beverage offerings, including both pumpkin-spice latte and our holiday beverage trio and strong food sales,” Schultz said. The new bakery items, which include croissants & caramel pecan sticky buns, will be in all US locations by the end of fiscal 2014. Revenue in fiscal Q1 increased 12% to $4.24, trailing the projection of 4.29B. “December is really where we saw just a little bit of softening in our traffic growth,” Chief Financial Officer Troy Alstead said. There’s been “an accelerating pace of movement of shoppers moving from bricks and mortars and the malls to online,” which meant those people weren’t refueling at Starbucks during the holidays, he said. SBUX is also facing a tougher consumer environment domestically. Sales at stores open at least 13 months advanced 5% globally, trailing the estimate for a gain of 5.9%. Same-store sales advanced 5% in Europe, the Middle East & Africa & 8% in China & Asia Pacific region. The company increased its forecast for EPS excluding certain items in the year thru Sep to as much as $2.67. The company previously projected as much as $2.65 & the estimate calls for $2.66. SBUX is opening more cafes & plans to add 1500 globally in fiscal 2014, including 600 in the Americas region. The stock climbed 1.57.
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Starbucks Gains as Profit Tops Estimates on Pumpkin Latte Demand
Starbucks (SBUX)
The was one of the worst declines for stocks since the recession lows 5 years ago. Overlooked by many is the stock market is extremely overbought. A sell-off is needed to clear out those who have been buying assuming nothing will stop further advances. But there are also fundamentals getting in the way of further advances. The global economic & financial health has become more shaky lately. That's enough to unnerve many investors. In additon, earnings reports are nothing to write home about. Dow dropped (below the important 16K support level) almost 500 in 2 days & 570 this week. Grr!!! Next week has the makings of another ugly week.
Dow Jones Industrials
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