Dow lost 38, decliners barely ahead of advancers & NAZ climbed 3. The MLP index slid a fraction to 464 & the REIT index went up fractionally to the 276s. Junk bond funds did little & Treasuries were pretty much flat. Gold fluctuated & gold rose to a 2 week high in the
longest rally since Aug, as US jobs data missed
estimates & Chinese buyers returned from a holiday.
AMJ (Alerian MLP Index tracking fund)
The euro zone probably notched up, a 3rd qtr of growth in Q4-2013, in a recovery that has yet to convince the ECB what to do with stimulus. With GDP forecast to have risen just 0.2% in Q4 after climbing 0.1% in Q3, Mario Draghi has cited that data due this week as a focus for officials. They are preparing forecasts & a menu of possible policy measures for their decision in Mar. Uncertainty is priming the car industry for its first year of expansion since 2007, underscoring the turnaround in the economic outlook. Sales last year dropped to their lowest level since 1995 as Europe’s debt woes provoked the region’s longest recession since the 2008 financial crisis.
Euro Area Crawls in Recovery as Car Sales Hint at Growth
China's central bank signaled that volatility in money-market interest rates will persist & borrowing costs will rise, underscoring the risk of defaults that could weigh on confidence & drag down growth. “When the valve of liquidity starts to tame and curb excessive credit expansion, money-market rates, or the cost of liquidity, will reflect that,” the People's Bank of China (PBOC) said on Sat. “The market needs to tolerate reasonable rate changes so that rates can be effective in allocating resources and modifying the behavior of market players.” The near-default of a shadow-banking product last month & 2 cash crunches last year highlight the challenge for policy makers pursuing twin goals of deregulating interest rates & reining in an unprecedented credit boom. Higher & more volatile interbank borrowing costs may squeeze speculative & wasteful lending even as it leaves some banks and debt providers with funding difficulties. The benchmark 7 day repo rate, a gauge of interbank funding availability, surged to a record 10.77% on Jun 20 as institutions struggled to obtain funds amid a PBOC crackdown on shadow finance & more than doubled in Dec to 8.84% as lenders hoarded cash to meet year-end regulatory requirements. It was fixed at 5.25% last week Policy makers are stepping up efforts to rein in financial risks & squeeze speculative lending as concerns increase that a surge in borrowing over the last 5 years will tip the country into a crisis. At the same time, the PBOC needs to ensure enough credit to sustain economic growth above Premier Li Keqiang's “bottom line” of 7%.
China Signals Volatility in Money Markets Will Persist
Photo: Bloomberg
McDonald's, a Dow stock & Dividend Aristocrat, sales at established US stores fell for the 3rd straight month as severe weather & waning consumer confidence kept diners at home. Sales at stores open at least 13 months slid 3.3% last month, came in worse than the 1.6% forecast. The Jan decline follows drops of 3.8% in Dec & 0.8% in Nov. With 14K domestic locations, MCD has recently struggled to attract Americans amid fierce restaurant competition & declining consumer sentiment. Global same-store sales rose 1.2% as the overseas business improved. Analysts estimated a 0.7% increase. Same-store sales gained 2% in Europe (the largest regional market) & 5.4%in the Asia Pacific, Middle East & Africa region. Analysts estimated gains of 1.3% & 2 %, respectively. The company, which gets 2/3 of its revenue outside the US, has been expanding overseas & attracting European consumers with less-expensive snacks & new drinks. This year, the fast-food chain plans to spend $1.5B to open 1600 new locations, including 320 in Europe & 300 in China. MCD will try to draw Americans with breakfast foods & new McCafe drinks. It’s also planning to sell packaged coffee in grocery stores this year in a partnership with Kraft Foods Group (KRFT). Jan sales fell “amid broad-based challenges including severe winter weather” in the US. The stock fell 82¢. If you would like to learn more about MCD, click on this link:
club.ino.com/trend/analysis/stock/MCD?a_aid=CDXXX&a_bid=6ae5b6f7
Without significant news, stocks don't know where to go. They are looking for direction. Yield sensitive secruites are finding buyers. The Alerian MLP Index is very close to the record high reached last year & REITs are doing a little better. Even junk bond funds are up this year. The Treasury warned the debt ceiling must be raised by the 27th. There is general agreement in congress but there are few workdays left for them to sign off. This could be another nail-biter.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasurry yields:
U.S. 3-month |
0.09% | |
U.S. 2-year |
0.31% | |
U.S. 10-year |
2.68% |
| CLH14.NYM | ...Crude Oil Mar 14 | ...99.63 |  .,,..0.25 | (0.3%) |
| GCH14.CMX | ...Gold Mar 14 | ...,,1,274.00 | ...10.80 | (0.9%) |
The euro zone probably notched up, a 3rd qtr of growth in Q4-2013, in a recovery that has yet to convince the ECB what to do with stimulus. With GDP forecast to have risen just 0.2% in Q4 after climbing 0.1% in Q3, Mario Draghi has cited that data due this week as a focus for officials. They are preparing forecasts & a menu of possible policy measures for their decision in Mar. Uncertainty is priming the car industry for its first year of expansion since 2007, underscoring the turnaround in the economic outlook. Sales last year dropped to their lowest level since 1995 as Europe’s debt woes provoked the region’s longest recession since the 2008 financial crisis.
Euro Area Crawls in Recovery as Car Sales Hint at Growth
China's central bank signaled that volatility in money-market interest rates will persist & borrowing costs will rise, underscoring the risk of defaults that could weigh on confidence & drag down growth. “When the valve of liquidity starts to tame and curb excessive credit expansion, money-market rates, or the cost of liquidity, will reflect that,” the People's Bank of China (PBOC) said on Sat. “The market needs to tolerate reasonable rate changes so that rates can be effective in allocating resources and modifying the behavior of market players.” The near-default of a shadow-banking product last month & 2 cash crunches last year highlight the challenge for policy makers pursuing twin goals of deregulating interest rates & reining in an unprecedented credit boom. Higher & more volatile interbank borrowing costs may squeeze speculative & wasteful lending even as it leaves some banks and debt providers with funding difficulties. The benchmark 7 day repo rate, a gauge of interbank funding availability, surged to a record 10.77% on Jun 20 as institutions struggled to obtain funds amid a PBOC crackdown on shadow finance & more than doubled in Dec to 8.84% as lenders hoarded cash to meet year-end regulatory requirements. It was fixed at 5.25% last week Policy makers are stepping up efforts to rein in financial risks & squeeze speculative lending as concerns increase that a surge in borrowing over the last 5 years will tip the country into a crisis. At the same time, the PBOC needs to ensure enough credit to sustain economic growth above Premier Li Keqiang's “bottom line” of 7%.
China Signals Volatility in Money Markets Will Persist
McDonald's, a Dow stock & Dividend Aristocrat, sales at established US stores fell for the 3rd straight month as severe weather & waning consumer confidence kept diners at home. Sales at stores open at least 13 months slid 3.3% last month, came in worse than the 1.6% forecast. The Jan decline follows drops of 3.8% in Dec & 0.8% in Nov. With 14K domestic locations, MCD has recently struggled to attract Americans amid fierce restaurant competition & declining consumer sentiment. Global same-store sales rose 1.2% as the overseas business improved. Analysts estimated a 0.7% increase. Same-store sales gained 2% in Europe (the largest regional market) & 5.4%in the Asia Pacific, Middle East & Africa region. Analysts estimated gains of 1.3% & 2 %, respectively. The company, which gets 2/3 of its revenue outside the US, has been expanding overseas & attracting European consumers with less-expensive snacks & new drinks. This year, the fast-food chain plans to spend $1.5B to open 1600 new locations, including 320 in Europe & 300 in China. MCD will try to draw Americans with breakfast foods & new McCafe drinks. It’s also planning to sell packaged coffee in grocery stores this year in a partnership with Kraft Foods Group (KRFT). Jan sales fell “amid broad-based challenges including severe winter weather” in the US. The stock fell 82¢. If you would like to learn more about MCD, click on this link:
club.ino.com/trend/analysis/stock/MCD?a_aid=CDXXX&a_bid=6ae5b6f7
McDonald's (MCD)
Without significant news, stocks don't know where to go. They are looking for direction. Yield sensitive secruites are finding buyers. The Alerian MLP Index is very close to the record high reached last year & REITs are doing a little better. Even junk bond funds are up this year. The Treasury warned the debt ceiling must be raised by the 27th. There is general agreement in congress but there are few workdays left for them to sign off. This could be another nail-biter.
Dow Jones Industrials
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