Dow rose 101, advancers over decliners 3-1 but NAZ fell 7. The MLP index slipped a fraction to 460 & the REIT index went up 2+ to the 283s. Junk bond funds edged higher & Treasuries were flattish. Oil & gold advanced.
AMJ (Alerian MLP Index tracking fund)
Photo: Bloomberg
While Janet Yellen's timetable for higher interest rates sent markets reeling, investors may have missed an important caveat: it depends on inflation. On Wed, Treasury yields jumped after Yellen said in her first press conference that rates could rise “around six months” after asset purchases end, most likely in the fall. At the same time, she cautioned that a decision on interest rates “depends what conditions are like.” Yields on 2-year notes, the gov securities most sensitive to changes in interest-rate expectations, began to rise after the Fed released its economic projections. They jumped further after Yellen began the press conference, reaching the highest level since Sep & capping the biggest one-day gain since 2011. In her press conference, Yellen played down the importance of the forecasts & said the outlook for inflation would influence policy makers’ deliberations on interest rates. “If we had a substantial shortfall in inflation, if inflation is persistently running below our 2 percent objective, that is a very good reason to hold the funds rate at its present range for longer,” Yellen said. A measure of inflation watched by the Fed, the personal consumption expenditures index, rose 1.2% in Jan from a year earlier & hasn’t exceeded the 2% goal in 2 years. Fed forecasts released after the meeting showed inflation of 1.5-1.6% at the end of this year & 1.5-2% at the end of 2015.
Low Inflation Gives Yellen Room to Retreat From Key Rate Outlook
Photo: Bloomberg
China's economy slowed in Q1, with industries including retail & mining showing weaker revenue growth while loans thu non-traditional channels became more expensive, according to a private survey. Even with the moderation, the labor market & wage growth were little changed from Q4, according to the China Beige Book survey, published by CBB Intl. The report adds to signs that Premier Li Keqiang may face difficulties reaching an expansion target of 7.5% this year without stimulus. The State Council said this week it will speed up construction projects & other measures to support the economy after data showed moderating growth in industrial production & investment. The report, modeled on the US Federal Reserve’s Beige Book business survey, is based on responses from 2300 executives & 160 bankers between Feb 10 - Mar 3, & 27 in-depth interviews conducted last week. The proportion of retailer respondents reporting revenue growth fell 7 percentage points from the previous period to 54%, according to the CBB survey. There was a 7-point drop, to 39%, in the proportion of mineral producers reporting increased sales. Fewer companies in services & real estate said revenue rose. Sales gains were reported by 56% of manufacturers, down 1 percentage point from the previous qtr & up 5 points from a year earlier & fewer manufacturers reported revenue declines.
China Beige Book Says Economy Slowing
Tiffany forecast annual profit that fell short of estimates as it increases spending on improving its information-technology systems. Full-year EPS will rise to $4.05-$4.15 . Analysts projected $4.27. CEO Michael Kowalski said capital expenditures will jump 22% this year to $270M as the company invests in technology systems & worldwide sales would advance in the high single digits in percentage terms in 2014. Capital spending will be focused on global customer relationship management & more advanced order & inventory control. TIF also revamped its website last year. The EPS loss in Q4 was 81¢, compared with net income $1.40, a year earlier. TIF recorded a net pretax charge of $473M related to an arbitration award to Swatch Group after the watchmaker claimed a breach of contract at their joint venture. EPS excluding those expenses was $1.47, below the $1.52 forecast. Quarterly selling, general & administrative expenses rose 7.3% to $473M, on higher store-related & labor costs. Sales climbed 5.1% to $1.3B, matching the projection. Sales at stores open at least a year increased 6%. Higher prices accounted for the sales increase & the jeweler plans to raise prices again, in the single digits in percentage terms. Products with midrange & high prices sold the best, the company said & cited its Atlas, Ziegfeld & Harmony collections. In the Americas, comparable-store sales gained 7%. Sales were stronger at the Manhattan flagship than the branch stores, driven by tourists, particularly from China. In Asia-Pacific total sales advanced 8% to $275M & in Euorpe they climbed 10 % to $161M. But Japan sales dropped 12% to $169M because of the weaker ¥. The company also announced authorization to repurchase of $300M. The stock jumped 2.09. If you would like to learn more about TIF, click on the link for Trend Analysis:
http://club.ino.com/trend/?symb=TIF&a_aid=CD3289&a_bid=6ae5b6f7
Tiffany Profit Forecast Trails Estimates as Spending Rises
Stocks are having a good day & wrapping up a good week. Dow is up almost 400 this week, recovering the prior week's loss. There was no special news other than the Fed behaved pretty much as forecasted at its meeting. Tapering will continue & higher interest rates come next. The high yield sectors have been doing well in the new year, although the MLP index has been in a trading range (near record territory) for a year. If Dow manages a gain next week, it can finish Q1 in the black (finally).
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.05% | |
U.S. 2-year |
0.43% | |
U.S. 10-year |
2.76% |
| CLK14.NYM | ...Crude Oil May 14 | ...99.34 |  ...0.44 | (0.4%) |
| GCH14.CMX | ...Gold Mar 14 | ......1,338.00 | ...7.50 | (0.6%) |
While Janet Yellen's timetable for higher interest rates sent markets reeling, investors may have missed an important caveat: it depends on inflation. On Wed, Treasury yields jumped after Yellen said in her first press conference that rates could rise “around six months” after asset purchases end, most likely in the fall. At the same time, she cautioned that a decision on interest rates “depends what conditions are like.” Yields on 2-year notes, the gov securities most sensitive to changes in interest-rate expectations, began to rise after the Fed released its economic projections. They jumped further after Yellen began the press conference, reaching the highest level since Sep & capping the biggest one-day gain since 2011. In her press conference, Yellen played down the importance of the forecasts & said the outlook for inflation would influence policy makers’ deliberations on interest rates. “If we had a substantial shortfall in inflation, if inflation is persistently running below our 2 percent objective, that is a very good reason to hold the funds rate at its present range for longer,” Yellen said. A measure of inflation watched by the Fed, the personal consumption expenditures index, rose 1.2% in Jan from a year earlier & hasn’t exceeded the 2% goal in 2 years. Fed forecasts released after the meeting showed inflation of 1.5-1.6% at the end of this year & 1.5-2% at the end of 2015.
Low Inflation Gives Yellen Room to Retreat From Key Rate Outlook
China's economy slowed in Q1, with industries including retail & mining showing weaker revenue growth while loans thu non-traditional channels became more expensive, according to a private survey. Even with the moderation, the labor market & wage growth were little changed from Q4, according to the China Beige Book survey, published by CBB Intl. The report adds to signs that Premier Li Keqiang may face difficulties reaching an expansion target of 7.5% this year without stimulus. The State Council said this week it will speed up construction projects & other measures to support the economy after data showed moderating growth in industrial production & investment. The report, modeled on the US Federal Reserve’s Beige Book business survey, is based on responses from 2300 executives & 160 bankers between Feb 10 - Mar 3, & 27 in-depth interviews conducted last week. The proportion of retailer respondents reporting revenue growth fell 7 percentage points from the previous period to 54%, according to the CBB survey. There was a 7-point drop, to 39%, in the proportion of mineral producers reporting increased sales. Fewer companies in services & real estate said revenue rose. Sales gains were reported by 56% of manufacturers, down 1 percentage point from the previous qtr & up 5 points from a year earlier & fewer manufacturers reported revenue declines.
China Beige Book Says Economy Slowing
Tiffany forecast annual profit that fell short of estimates as it increases spending on improving its information-technology systems. Full-year EPS will rise to $4.05-$4.15 . Analysts projected $4.27. CEO Michael Kowalski said capital expenditures will jump 22% this year to $270M as the company invests in technology systems & worldwide sales would advance in the high single digits in percentage terms in 2014. Capital spending will be focused on global customer relationship management & more advanced order & inventory control. TIF also revamped its website last year. The EPS loss in Q4 was 81¢, compared with net income $1.40, a year earlier. TIF recorded a net pretax charge of $473M related to an arbitration award to Swatch Group after the watchmaker claimed a breach of contract at their joint venture. EPS excluding those expenses was $1.47, below the $1.52 forecast. Quarterly selling, general & administrative expenses rose 7.3% to $473M, on higher store-related & labor costs. Sales climbed 5.1% to $1.3B, matching the projection. Sales at stores open at least a year increased 6%. Higher prices accounted for the sales increase & the jeweler plans to raise prices again, in the single digits in percentage terms. Products with midrange & high prices sold the best, the company said & cited its Atlas, Ziegfeld & Harmony collections. In the Americas, comparable-store sales gained 7%. Sales were stronger at the Manhattan flagship than the branch stores, driven by tourists, particularly from China. In Asia-Pacific total sales advanced 8% to $275M & in Euorpe they climbed 10 % to $161M. But Japan sales dropped 12% to $169M because of the weaker ¥. The company also announced authorization to repurchase of $300M. The stock jumped 2.09. If you would like to learn more about TIF, click on the link for Trend Analysis:
http://club.ino.com/trend/?symb=TIF&a_aid=CD3289&a_bid=6ae5b6f7
Tiffany Profit Forecast Trails Estimates as Spending Rises
Tiffany (TIF)
Stocks are having a good day & wrapping up a good week. Dow is up almost 400 this week, recovering the prior week's loss. There was no special news other than the Fed behaved pretty much as forecasted at its meeting. Tapering will continue & higher interest rates come next. The high yield sectors have been doing well in the new year, although the MLP index has been in a trading range (near record territory) for a year. If Dow manages a gain next week, it can finish Q1 in the black (finally).
Dow Jones Industrials
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