Tuesday, October 28, 2014

Markets surge ahead of FOMC meeting

Dow jumped 187 closing at the highs, advancers ahead of decliners better than 4-1 & NAZ shot up 78.  The MLP index went up 2+ to 512 & the REIT index climbed 1 to the 515s, eaking out a new yearly high.  Junk bond funds were mixed & Treasuries pulled back.  Oil crawled higher & gold slipped a tad.

AMJ (Alerian MLP Index tracking fund)

CLZ14.NYM....Crude Oil Dec 14....81.46 Up ...0.46 (0.6%)

Live 24 hours gold chart [Kitco Inc.]

Home prices in 20 US cities rose at a weaker pace in the year ended in Aug as borrowing standards remain tight and wage gains fail to accelerate.  The S&P/Case-Shiller index of property values increased 5.6% from Aug 2013, the smallest gain since Nov 2012, after rising 6.7% in the year ended in Jul.  The projection called for a 5.7% advance.  Nationally, prices rose 5.1% year-to-year after a 5.6% gain in Jul.  Property costs are appreciating more gradually as investor participation wanes & still-tight credit restrains first-time home buyers from entering the market.  The fastest pace of payroll growth since 1999 may help bring stronger wage advances, helping to keep homeownership in reach for more Americans.  Home prices in the 20-city index adjusted for seasonal variations decreased 0.1% in Aug from the prior month & unadjusted prices rose 0.2%.  Nationally, prices rose 0.4% in Aug from the prior month & increased 0.2% in unadjusted terms.  Each of the 20 cities in the index showed a year-over-year gain, led by a 10.5% advance in Miami & a 10.1% pickup in Las Vegas.  Borrowing costs flirting with record lows may help draw more buyers into the market.  “The deceleration in home prices continues,” the S&P index report said.  “Continued labor market gains, low interest rates and slower increases in home prices should support further improvements in housing.”

Home Prices in U.S. Show Slower Year-to-Year Increase in August

Apple’s Tim Cook & Alibaba’s (BABA) Jack Ma speaking separately at a technology conference yesterday, said they’re open to working together on projects that would turn phones into tools for buying & selling stuff.  Cook & Ma, spoke of collaboration on mobile payments.  “I’m very interested in that,” Ma said when asked if it made sense for his company’s Alipay Wallet mobile system to team with Apple Pay.  “As always, a good marriage needs both sides hard working. I respect Apple and respect Tim very, very much.”  Cook, who had been sitting in the audience, took to the stage afterward & was asked about the possibility of a partnership.  “We’re going to talk about getting married later this week,” said Cook.  “I love what he’s done, I think he’s a brilliant guy.  I think he has brilliant people at the company so if we can find some areas of common space, I love it. I love partnering with people like that.”  The talk of partnership follows Cook’s visit to China last week where he discussed plans to more than double the number of stores it operates in the Greater China region in the next 2 years to 40 as the company expands its business.  Cook called it “a skirmish,”adding “We’re just getting started but the early ramp looks fantastic.”  More than 1M cards were activated within the Apple Pay system during the first 72 hours, Cook said.  Credit card companies told AAPL that it’s already the leader in contact-less mobile payment at the point of sale.  AAPL stock rose 1.63 & BABA went up 1.89.  If you would lilke to learn more about either company, click on this first link for AAPL & the 2nd link for BABA.
(1)  club.ino.com/trend/analysis/stock/AAPL?a_aid=CD3289&a_bid=6ae5b6f7

(2)  club.ino.com/trend/analysis/stock/BABA?a_aid=CD3289&a_bid=6ae5b6f7

Apple’s Tim Cook, Alibaba’s Jack Ma Talk Marriage of Mobile Payments

Apple (AAPL)

Alibaba Group (BABA)

Coach predicted a continued plunge in revenue this year & posted slower sales in Asia, signaling that its turnaround effort is still far from complete.  Comparable-store sales will decline in the mid- to high-20% range, the company said.  It predicted total revenue will fall in the low double-digits.  Sales growth in China, meanwhile, slowed to 10% last qtr, & revenue in Japan declined 7% when adjusting for currency changes.  COH has been trying to pull out of a slump by reducing discounts, & revamping stores & merchandise.  It also rolled out a new marketing campaign last month, aiming to recapture market share lost to competitors.  Profit topped estimates when excluding restructuring costs.  EPS amounted to 53¢, ahead of the estimated 45¢.  While North American same-store sales fell 24%, that was slightly better than the 25.5% drop predicted by Consensus Metrix.  CEO Victor Luis said in Jun that Coach would close 70 of its North American locations.  Most of the planned closures will happen in the fiscal H1, with restructuring costs incurred in the fiscal year 2015.  At the same time, COH plans to open new locations or remodel the main stores in its 12 biggest markets & reduce involvement in online flash sales.  The company also has cut 150 jobs.  The retailer is touting itself as “modern luxury” by adding more fashionable accessories & apparel that were presented at New York fashion week.  It is also layering in higher-priced goods as it tries to become a lifestyle company.  The stock dropped 2.15 (6%).  If you would like to learn more about COH, click on this link:

Coach Declines After Handbag Company Forecasts Continued Plunge in Sales

Coach (COH)

There was nothing dramatic going on today but that didn't stop buyers from coming out in droves.  Everybody expects tomorrow Janet will announce the end of its bond buying program, but the future of low interest rates is murky.  To the extent that economic data is favorable, that should give the Fed encouragement to raise interest rates sooner.  Its forecast is for the benchmark interest rate, currently near zero, to be 1.375% next Dec.  That's only 14 months away & was given minimal thought today.

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