Monday, November 17, 2014

Markets waver on mixed economic data

Dow rose 13, decliners over advancers 5-4 & NAZ lost 17.  The MLP index climbed 4+ to the 506s & the REIT index went up 1 to 317.  Junk bond funds sold off & Treasuries were a little lower.  Oil fell into the 75s & gold pulled back slightly.

AMJ (Alerian MLP Index tracking fund)

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CLZ14.NYM....Crude Oil Dec 14....75.52 Down ...0.30  (0.4%)

Live 24 hours gold chart [Kitco Inc.]

Monetary pollicy “appears to be far from causing excessive inflation” & price increases are likely to remain slow thru the end of 2016, according to resarch by the Federal Reserve Bank of San Francisco.  It’s also more probable that inflation will remain below the central bank’s 2% inflation goal than rise above it, according to the report published today.  “Persistent effects from the financial crisis are the main reason inflation is expected to remain low for so long,” the report said.  “The financial crisis disrupted the credit market, leading to underinvestment and underutilization of resources in the economy. This slowed the economic recovery and pushed inflation down more than 2 percentage points.”  Low inflation gives the Fed more room for accommodative policy even after holding the main interest rate near zero since Dec 2008.  The personal consumption expenditures index, its preferred price gauge, rose 1.4% in Sep from a year earlier & gains haven’t exceeded 2% since Mar 2012.  “Inflation is not expected to surge in the near future,” according to teh report.  “The risk of high inflation in the next one to two years remains very low by historical standards.”   “The model explicitly accounts for all policy tools the Fed has used recently,”  the report added.  “According to the model, there is little evidence that monetary policy constitutes a major source of inflation risk ”& the model shows “risks to the inflation outlook remain tilted to the downside,” suggesting that forces keeping inflation low should be transitory.  Monetary policy “played a stabilizing role in the recent past” by preventing inflation from falling further below the Fed’s 2% target.

Fed Researcher Sees Low Inflation Persisting Through 2016

Vytorin reduced the risks of 2nd heart attacks & strokes in patients already on aggressive therapy, making it the first medicine to improve on the current standard of care for lowering cholesterol.  The findings from the controversial 18K-patient study, under way for almost a decade, were presented today at the American Heart Assoc.  They found that Vytorin cut the rates of heart attack, stroke & death beyond the use of simvastatin, a powerful drug that has been a staple for 20 years since it was shown to reduce death rates 30%.  The results have immediate implications for the 1M Americans who suffer mild heart attacks or chest pain each year, said the lead researcher.  They may also make it easier for other experimental medicines from other companies to reach patients.  “This is all about cholesterol, with a very simple conclusion that lower cholesterol prevents heart attacks and strokes,” the report said.  “The benefit was proportional to the change in cholesterol.”  Heart attack, stroke, death from cardiovascular disease or the need for treatment for worsening chest pain occurred in 34.7% of patients on simvastatin, a generic cholesterol-lowering drug.  Adding Zetia (made by MRK) thru a combination pill, sold as Vytorin, reduced the risk by 6.4%, as 32.7% of those patients experienced the heart complications during an average follow-up of 7 years.  The biggest benefit in the study was preventing heart attacks & strokes, 2 of the most dreaded complications in cardiology.  Vytorin prevented 2 events for every 100 patients taking the drug rather than simvastatin alone for 6 years.  The findings should boost demand for Vytorin & its ingredient Zetia, which already generate about $4B annually.  But they lose patent protection by 2017.  MRK plans to submit the findings to US regulators & request approval to sell the drug to prevent cardiovascular events, said Daniel Bloomfield, VP of cardiovascular diseases.  The officials who write the guidelines for treating heart disease will have to determine if they will recommend the use of the drugs, he said.  The stock rose 39¢.  If you would like to learn more about MRK, click on this link:

Merck Says Its Vytorin Is First Cholesterol Drug to Further Cut Heart Risk

Merck (MRK)

Facebook is testing a version of its social network that will let people communicate & collaborate at work, a leaker said.  The product, which is in trials at several companies, will probably debut publicly in a few months.  Facebook at Work lets people communicate with their co-workers using the social network’s traditional tools, such as messaging & news feed, without mixing the professional posts with personal ones.  FB isn’t currently charging for the product, which displays no advertising.  FB workplace tool doesn’t currently allow communication with people at other companies, the leaker said.  The stock fell 64¢.  If you would like to learn more about FB, click on this link:
Facebook Is Said to Test Workplace-Collaboration Tools

Facebook (FB)

There were 2 major acquisitions announced today.  Actavis (ACT) will buy Allergan (AGN) for $66B & Halliburton (HAL) will buy Baker Hughes (BHI) for about $35B.  The acquisition stocks popped almost 10% each, but that buying did not extend to the rest of the stock market.  This is not a bull market.  Drab economic news & one crisis after another overseas makes matters worse.  As if that wasn't enough, the pres is shortly expected to grant amnesty to millions of illegals.  Such an action could bring a avery ugly fight in DC before the newly elected Rep senate arrives in Jan.  Worries & an uneven economic recovery haunt the stock market.

Dow Jones Industrials

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