Dow lost 114, decliners over advancers 3-1 & NAZ fell 25. The MLP index sank 4+ to the 459s & the REIT index tumbled 5+ to 280. Junk bond funds retreated & Treasuries were mixed. There was buying in oil, but not gold. The 2 month chart below for gold shows is still having a good year.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
The Federal Reserve (FED) gave itself room to keep borrowing costs low at least until next year by dropping a linkage between the benchmark interest rate & a specific level of unemployment. “A highly accommodative stance of monetary policy remains appropriate,” the FOMC said in a statement following a meeting. In determining how long to keep rates low, the committee will assess progress towards its goals of maximum employment & 2% inflation, it said. That assessment takes into account a “wide range of information,” including labor market conditions, inflation expectations & financial markets. The FED also reduced the monthly pace of bond purchases by $10B, to $55B. The FED is overhauling forward guidance after unemployment declined toward 6.5%, its previous threshold for a rate increase, faster than had been predicted. Yellen last month told lawmakers that the unemployment rate alone isn’t an adequate gauge of economic health & “there’s a great deal of slack in the labor markets still that we need to work to eliminate.” The FOMC repeated that it will reduce asset purchases “in further measured steps at future meetings.” At the same time, “asset purchases are not on a preset course.” “Growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions,” the FED said. Even so, “there is sufficient underlying strength in the broader economy to support ongoing improvement in labor-market conditions.”
Fed Links Rate to Range of Data, Vowing to Keep Policy Easy
Federal Reserve officials predicted their target interest rate will be 1% at the end of 2015 & 2.25% a year later, higher than previously forecast, as they upgraded projections for gains in the labor market. Most FOMC participants reiterated their view that the FED will refrain from raising the benchmark interest rate until 2015. The median rate among 16 FED officials rose from Dec, when they estimated the rate at the end of next year at 0.75%, & 1.75% for the end of 2016. “A highly accommodative stance of monetary policy remains appropriate,” the committee said, while releasing the economic projections of FOMC participants. Central bankers also adjusted their unemployment forecast after a drop in the jobless rate over the past 3 months. The previous projections included one additional policy maker. A majority of FOMC participants, 13 out of 16, expect the first increase in the main interest rate in 2015. One projected the first rate increase in 2014, while 2 forecast an initial move in 2016.
More Fed Officials See at Least 1% Main Rate at End of 2015
KB Home reported a fiscal Q1 profit that beat estimates as revenue & prices soared. EPS was 12¢, compared with a loss of 16¢ a year earlier. It was the first time KBH had a profit for its Q1 since 2007. The estimate was for EPS of 9¢. KBH, which was primarily focused on first-time buyers, has more recently been opening communities in land-constrained areas where incomes & demand for larger homes are generally greater. Homes sold for an average of $305K in the qtr, up 12% from a year earlier. “We are entering the spring selling season positioned with more communities open in attractive locations across the country,” CEO Jeffrey Mezger said. “We are confident that our balanced approach to sales price and pace, combined with our focus on both top-line growth and profitability, will produce strong results in the coming quarters.” Revenue increased 11% from a year earlier to $451M & the value of net orders was $600M, up 18%. The contract backlog, an indication of future sales, climbed 21% to $852M. The stock rose 1.04. If you would like to learn more about KBH, click on this link for Trend Analysis:
http://club.ino.com/trend/?symb=KBH&a_aid=CD3289&a_bid=6ae5b6f7
KB Home Rises Most in Year as Profit Beats Estimates; Builder Stocks Gain
Hints about higher rates did it, & stocks sold off. But there was a little buying after the gut reaction to the press release took Dow down 200. This talk should not come as a surprise. But too many have gotten used to low interest rates & expect this condition to last forever. Adjusting may take time, which means more selling lies ahead. This is a good time to line up attractive companies with better yields & wait for lower prices to bring higher yields. As a reminder, the rate on the 10 year Treasury has been around 4% for years (& even decades) while the stock market rose.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.05% | |
U.S. 2-year |
0.42% | |
U.S. 10-year |
2.77% |
| CLJ14.NYM | ....Crude Oil Apr 14 | ....100.35 |  ...0.65 | (0.7%) |
The Federal Reserve (FED) gave itself room to keep borrowing costs low at least until next year by dropping a linkage between the benchmark interest rate & a specific level of unemployment. “A highly accommodative stance of monetary policy remains appropriate,” the FOMC said in a statement following a meeting. In determining how long to keep rates low, the committee will assess progress towards its goals of maximum employment & 2% inflation, it said. That assessment takes into account a “wide range of information,” including labor market conditions, inflation expectations & financial markets. The FED also reduced the monthly pace of bond purchases by $10B, to $55B. The FED is overhauling forward guidance after unemployment declined toward 6.5%, its previous threshold for a rate increase, faster than had been predicted. Yellen last month told lawmakers that the unemployment rate alone isn’t an adequate gauge of economic health & “there’s a great deal of slack in the labor markets still that we need to work to eliminate.” The FOMC repeated that it will reduce asset purchases “in further measured steps at future meetings.” At the same time, “asset purchases are not on a preset course.” “Growth in economic activity slowed during the winter months, in part reflecting adverse weather conditions,” the FED said. Even so, “there is sufficient underlying strength in the broader economy to support ongoing improvement in labor-market conditions.”
Fed Links Rate to Range of Data, Vowing to Keep Policy Easy
Federal Reserve officials predicted their target interest rate will be 1% at the end of 2015 & 2.25% a year later, higher than previously forecast, as they upgraded projections for gains in the labor market. Most FOMC participants reiterated their view that the FED will refrain from raising the benchmark interest rate until 2015. The median rate among 16 FED officials rose from Dec, when they estimated the rate at the end of next year at 0.75%, & 1.75% for the end of 2016. “A highly accommodative stance of monetary policy remains appropriate,” the committee said, while releasing the economic projections of FOMC participants. Central bankers also adjusted their unemployment forecast after a drop in the jobless rate over the past 3 months. The previous projections included one additional policy maker. A majority of FOMC participants, 13 out of 16, expect the first increase in the main interest rate in 2015. One projected the first rate increase in 2014, while 2 forecast an initial move in 2016.
More Fed Officials See at Least 1% Main Rate at End of 2015
KB Home reported a fiscal Q1 profit that beat estimates as revenue & prices soared. EPS was 12¢, compared with a loss of 16¢ a year earlier. It was the first time KBH had a profit for its Q1 since 2007. The estimate was for EPS of 9¢. KBH, which was primarily focused on first-time buyers, has more recently been opening communities in land-constrained areas where incomes & demand for larger homes are generally greater. Homes sold for an average of $305K in the qtr, up 12% from a year earlier. “We are entering the spring selling season positioned with more communities open in attractive locations across the country,” CEO Jeffrey Mezger said. “We are confident that our balanced approach to sales price and pace, combined with our focus on both top-line growth and profitability, will produce strong results in the coming quarters.” Revenue increased 11% from a year earlier to $451M & the value of net orders was $600M, up 18%. The contract backlog, an indication of future sales, climbed 21% to $852M. The stock rose 1.04. If you would like to learn more about KBH, click on this link for Trend Analysis:
http://club.ino.com/trend/?symb=KBH&a_aid=CD3289&a_bid=6ae5b6f7
KB Home Rises Most in Year as Profit Beats Estimates; Builder Stocks Gain
KB Home (KBH)
Hints about higher rates did it, & stocks sold off. But there was a little buying after the gut reaction to the press release took Dow down 200. This talk should not come as a surprise. But too many have gotten used to low interest rates & expect this condition to last forever. Adjusting may take time, which means more selling lies ahead. This is a good time to line up attractive companies with better yields & wait for lower prices to bring higher yields. As a reminder, the rate on the 10 year Treasury has been around 4% for years (& even decades) while the stock market rose.
Dow Jones Industrials
I’m a huge fan of INO & from what I have seen so far, their service Marketclub! This isn’t a stripped down version, everything in MarketClub is available to you. I don’t want to give everything away, but you’ll have unlimited access to my favorite 3 tools: Trade Triangles, Smart Scan & Alerts!
The best part is that the MarketClub customer support team will be providing UNLIMITED support!
You can call or email for an instant response to any question, comment or concern.
Here’s that link:
https://club.ino.com/join/specialtrial/index_free.html?a_aid=CD3289&a_bid=359ef9a3
I’d recommend you jump on this now.
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