Thursday, January 22, 2015

Higher markets after ECB announces €1 trillion stimulus

Dow climbed 116, advamncers over decliners 5-2 & NAZ added 33.  The MLP index went up 5 to the 456s & the REIT index advanced 4+ to the 351s (just 5 below the record reached 8 years ago).  Junk bond funds rose & Treasuries declined.  Oil was little changed & gold is now up, near to 1300.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...47.66 Down ...0.12  (0.3%)

GCF15.CMX...Gold Jan 15....1,283.60 Down ...10.10  (0.8%)


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Mario Draghi led the ECB into a new era with an historic pledge to buy gov bonds as part of an asset-purchase program worth about €1.1T ($1.3T).  He side-stepped German-led opposition to quantitative easing in a once-and-for-all push to revive inflation & the euro-area economy.  The central bank will buy €60B per month of securities until Sep 2016.  The ECB also reduced the cost of its long-term loans to banks.  A near-stagnant economy & the risk of deflation forced Draghi’s hand 6 years after the Federal Reserve took a similar step to inject cash into the US.  The gamble is that the benefits of quantitative easing outweigh the threat of a backlash in Germany.  The ECB “decided to launch an expanded asset-program encompassing the existing purchase programs of ABS & covered bonds,” Draghi said.  “We see sustained adjustment in the path of inflation which is consistent with our aim of achieving our aim of inflation rates close to but below 2 percent.”

Draghi Commits to Trillion-Euro QE Plan in Deflation Figh

Job Fair
Photo:   Bloomberg

More Americans than forecast filed applications for unemployment benefits last week, a sign of lingering holiday turnover.  Jobless claims decreased 10K to 307K, from a revised 317K in the prior period, according to the Labor Dept.  The forecast called for a decline to 300K.  Holiday staffing needs create swings in employment, making it difficult for the gov to seasonally adjust its weekly data this time of year.  The 4-week moving average, a less volatile measure than the weekly figures, climbed to 306K last week, the highest since mid Jul, from 300K.  The number continuing to receive jobless benefits increased 15K to 2.44M & the unemployment rate among people eligible for benefits held at 1.8%.

More Americans Than Forecast Filed Jobless Claims Last Week

US home prices rose more than estimated in Nov, a sign job growth is helping to boost housing demand.  Prices climbed 0.8% on a seasonally adjusted basis from Oct, the Federal Home Finance Agency said.  The estimate was for a 0.3% increase. Prices in November climbed 7.5% from a year earlier in the Pacific region, including California, Washington & Oregon; & 6.6% in the West South Central area (Texas, Oklahoma, Louisiana & Arkansas).   But the pace of home-price gains has slowed in the past year.

Home Prices Beat Estimates With 0.8% Gain in November

The advance today is somewhat muted.  It should have been greater, however the news about ECB was pretty well leaked so it was largely baked into the stock market.  REITs have been red hot lately & the index is closing on its record highs.  The yields remain high compared with many alternative investments & that attracts investors.

Dow Jones Industrials

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