The Dow was up 11, decliners over advancers better than 2-1 & NAZ lost 34. The MLP index fell 3+ to the 457s & the REIT index inched up a fraction to go over 270. Junk bond funds were weak & Treasuries pulled back. Oil rose but gold pulled back.
AMJ (Alerian MLP Index tracking fund)
Rising market rates are posing a dilemma for ECB officials trying to keep their ultra-expansive monetary policy in place. Overnight borrowing costs for banks have surged above the benchmark rate even as policy makers argue that it’s not yet time to exit emergency stimulus. When officials meet next week they’ll have to assess whether the tighter financing conditions show a resurgence of tensions that warrant a policy response or simply increased confidence in the region’s economic recovery. Mario Draghi told business & political leaders on Sat that the central bank will act if it sees an unwarranted rise in money-market rates, which can influence loan costs for companies & households. While banks are predicting the ECB will cut its official rates by Mar, one Governing Council member signaled that assumption is premature. The key to any action will be the Governing Council’s interpretation of the “unwarranted tightening” that Draghi said would be one reason to ease policy. It also begs the question of what tools would be best suited to the task, with options ranging from rate cuts to long-term loans. “We are ready and willing to act if needed,” Draghi said. Officials are considering “all the instruments that our treaty allows,” Draghi added. The ECB cut its benchmark rate a quarter point to 0.25% in Nov & the cost of overnight secured lending among banks exceeded that level for 4 straight days thru Jan 21.
ECB Confronted by Banks Testing Exit, Threat to Recovery
If your would like to learn more about CAT, click here: club.ino.com/trend/analysis/stock/CAT?a_aid=CD3289&a_bid=6ae5b6f7
Caterpillar Forecast Tops Analysts’ Estimates Amid Construction Recovery
German business confidence rose to the highest level in more than 2 years & beat the forecasts in a signal that the expansion in Europe's largest economy may be accelerating. The Ifo institute’s business climate index, climbed to 110.6 in Jan from 109.5 in Dec. The forecast called for an increase to 110. It was the 3rd consecutive increase & the strongest reading since Jul 2011. The Bundesbank has predicted that the German economy will expand “strongly” in coming months after a weak start to Q4-2013. A measure of current conditions rose to 112.4 in Jan from 111.6 in the prior month & a gauge of expectations jumped to 108.9 from 107.4. The number of unemployed dropped for the first time in 5 months in Dec & the jobless rate held at 6.9%, near a 2 decade low. Private consumption, imports & exports all rose last year, & German manufacturing probably expanded for a 7th month in Jan. The nation still faces headwinds from the fragility of the recovery in the rest of the currency bloc. GDP probably grew by about a quarter of a percent in Q4 compared with 0.3 % in Q3, according to the Federal Statistics Office. Investor confidence unexpectedly declined this month from a 7 year high.
German Business Confidence Rises as Growth Pickup Seen
Stocks continue to struggle as they go into the last week of Jan. CAT earnings were good, but there was a cautionary tone about the forecast. Stocks are fluctuating with a bias to the downside. The FOMC meets this week which is making traders edgy. A $10B reduction in the bond buying program is baked into the market, but nobody is sure what will be decided at Big Ben's last meeting as its head. There will probably be little buying until Big Ben speaks.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.05% | |
U.S. 2-year |
0.35% | |
U.S. 10-year |
2.75% |
| CLH14.NYM | ...Crude Oil Mar 14 | ...97.08 |  ...0.44 | (0.5%) |
| GCF14.CMX | ...Gold Jan 14 | .......1,269.40 | ...4.90 | (0.4%) |
Rising market rates are posing a dilemma for ECB officials trying to keep their ultra-expansive monetary policy in place. Overnight borrowing costs for banks have surged above the benchmark rate even as policy makers argue that it’s not yet time to exit emergency stimulus. When officials meet next week they’ll have to assess whether the tighter financing conditions show a resurgence of tensions that warrant a policy response or simply increased confidence in the region’s economic recovery. Mario Draghi told business & political leaders on Sat that the central bank will act if it sees an unwarranted rise in money-market rates, which can influence loan costs for companies & households. While banks are predicting the ECB will cut its official rates by Mar, one Governing Council member signaled that assumption is premature. The key to any action will be the Governing Council’s interpretation of the “unwarranted tightening” that Draghi said would be one reason to ease policy. It also begs the question of what tools would be best suited to the task, with options ranging from rate cuts to long-term loans. “We are ready and willing to act if needed,” Draghi said. Officials are considering “all the instruments that our treaty allows,” Draghi added. The ECB cut its benchmark rate a quarter point to 0.25% in Nov & the cost of overnight secured lending among banks exceeded that level for 4 straight days thru Jan 21.
ECB Confronted by Banks Testing Exit, Threat to Recovery
Caterpillar, a Dow stock, posted a
stronger-than-expected quarterly profit as it aggressively cut costs to
offset continued sluggish sales of its earth-moving equipment. CEO Doug Oberhelman said CAT
was beginning to see "some signs of improvement in the world economy,
which should be positive for sales" down the road .
He said CAT expects economic growth to pick up in the world's
developing economies in 2014.
Even so, CAT
expects its mining customers to continue to reduce their investments in
new equipment in the coming year. In recent years, the sector had been
one of the company's most profitable, & CAT aggressively
doubled down on the business thru acquisitions. In the past year & a half,
mining customers, facing investor backlash over unpopular takeovers,
budget overruns & falling metal prices, slashed capital spending,
slowed development on some projects & shelved others, & postponed or
canceled new equipment orders. As a result, demand for mining equipment has plunged & the company expects those headwinds to
continue in 2014, with sales declining another 10%. The company would
"take additional actions in 2014" to cut costs. EPS was $1.54, up
from $1.04 a year earlier. Revenue fell 10% to $14.4B. Analysts expected EPS $1.28
on sales of $13.6B. CAT provided a preliminary outlook for 2014 profit that was
slightly better than investors had expected. EPS are forecasted at $5.85, before restructuring costs, 7¢
more than analysts estimated. "We see some signs of improvement in the world economy," Oberhelman said. The optimism includes emerging
markets, where CAT expects average economic growth to accelerate
to 5% in 2014, up from 4.5% in 2013. The stock jumped 5.22.If your would like to learn more about CAT, click here: club.ino.com/trend/analysis/stock/CAT?a_aid=CD3289&a_bid=6ae5b6f7
Caterpillar Forecast Tops Analysts’ Estimates Amid Construction Recovery
Caterpillar (CAT)
German business confidence rose to the highest level in more than 2 years & beat the forecasts in a signal that the expansion in Europe's largest economy may be accelerating. The Ifo institute’s business climate index, climbed to 110.6 in Jan from 109.5 in Dec. The forecast called for an increase to 110. It was the 3rd consecutive increase & the strongest reading since Jul 2011. The Bundesbank has predicted that the German economy will expand “strongly” in coming months after a weak start to Q4-2013. A measure of current conditions rose to 112.4 in Jan from 111.6 in the prior month & a gauge of expectations jumped to 108.9 from 107.4. The number of unemployed dropped for the first time in 5 months in Dec & the jobless rate held at 6.9%, near a 2 decade low. Private consumption, imports & exports all rose last year, & German manufacturing probably expanded for a 7th month in Jan. The nation still faces headwinds from the fragility of the recovery in the rest of the currency bloc. GDP probably grew by about a quarter of a percent in Q4 compared with 0.3 % in Q3, according to the Federal Statistics Office. Investor confidence unexpectedly declined this month from a 7 year high.
German Business Confidence Rises as Growth Pickup Seen
Stocks continue to struggle as they go into the last week of Jan. CAT earnings were good, but there was a cautionary tone about the forecast. Stocks are fluctuating with a bias to the downside. The FOMC meets this week which is making traders edgy. A $10B reduction in the bond buying program is baked into the market, but nobody is sure what will be decided at Big Ben's last meeting as its head. There will probably be little buying until Big Ben speaks.
Dow Jones Industrials
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