Wednesday, March 11, 2015

Higher markets after yesterday's sharp decline

Dow gained 45, advancers over decliners 4-3 & NAZ added 3.  The MLP index fell 3 to the 426s (at the low end of its depressed trading range in recent months) & the REIT index went up fractionally to 326.  Junk bond funds were mixed & Treasuries pulled back after yesterday's gains.  Oil climbed higher in the 48s & gold was weak.

AMJ (Alerian MLP Index tracking fund)

CLJ15.NYM....Crude Oil Apr 15...48.89 Up ...0.60 (1.2%)

GCH15.CMX...Gold Mar 15....1,157.60 Down ....2.50  (0.2%)

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The Federal Reserve is already a "little bit too late" in the tightening process, with current economic conditions no longer justifying leaving rates at zero, said St. Louis Fed pres James Bullard.  "I think we have to move now or soon, in order to be in the right position as the economy continues to evolve," Bullard added Inflation is not that far below the Fed's 2% annual rate target excluding oil prices, he said, also dismissing concerns about the soaring dollar.  Recent soft data was likely due to cold & snowy conditions in the northeast, he added.  "To the extent we have had weakness in the first quarter it will probably bounce back in the second quarter, as it did last year," he said.  Bullard, who does not have a vote on the Fed's policy committee, has been on record pressing for quick Fed action this year.

Fed is already 'little bit too late:' Bullard

China’s economy is already behind target as monetary easing shows few signs of traction.  Industrial output, investment & retail sales growth missed estimates in Jan & Feb, suggesting more stimulus is needed to boost the economy.  A GDP tracker shows economic growth slowing to 6.3% in the period, the weakest pace since the start of 2009.  Premier Li Keqiang last week set the nation’s 2015 expansion target at about 7%, the slowest in more than 15 years, as China’s leaders grapple with the debt, pollution & corruption spurred in a 3-decade-long economic boom.  The central bank has sought to cushion the slowdown with 2 interest rate cuts and one reduction to banks’ reserve requirements in the past 4 months.  Factory production rose 6.8% in the 2-month period from a year earlier, the National Bureau of Statistics said, compared with a projection for 7.7%.  Retail sales advanced 10.7%, while fixed-asset investment increased 13.9%.  China combines data for industrial output, retail sales & fixed-asset investment for Jan & Feb due to distortions from the week-long Lunar New Year holiday, which has different timings.  This year, the holiday began Feb 18.  The 2-month industrial output reading shows the slowest start to a year since 2009.  Reflecting a housing slump that’s weighing on investment & retail spending, the value of property sales fell 15.8% in the 2 months from the same period a year earlier.  The People’s Bank of China will cut benchmark deposit & lending rates again next qtr as the economy slows.  The forecast is for a deposit rate of 2.25% & a lending rate of 5.10% in Q2.  The central bank announced its first interest-rate cut in 2 years in Nov & followed with another reduction 2 weeks ago.  It also lowered banks’ reserve ratio requirements last month.  Policy makers last week flagged a wider budget deficit this year, adding fiscal firepower to the monetary stimulus.

Chinese Factory Data Shows Weakest Start in Six Years

Funding costs for the Greek gov jumped as detailed talks about a reform program got underway.  Greece & its intl lenders need to agree on a range of economic reforms in order to unlock the next tranche of bailout money, or the country is at risk of running out of cash later this month.  Yields on 2-year Greek gov paper surged 1.81 percentage points to 17.67%, while the interest rate on 10-year debt rose 38 basis points to 10.56%.  Eurozone finance ministers have indicated that Greece's reform suggestions aren't comprehensive enough, urging the gov to stop wasting time.  The lack of funding is adding pressure on Greece's social security system. The Syriza-led gov is asking the country's social-security funds to hand over hundreds of millions of €s to safeguard pension & salary payments in Mar.

Greek borrowing costs spike as reform talks begin

Buyers are nibbling today, looking for bargains after yesterday's sell-off.  The gains by the stocks indices show there is little enthusiasm with a lot to digest.  The € is still under 1.06.  The strong dollar is very unsettling for intl trade.  Fighting continues in the MidEast & China is still trying to boost its growth.  Dow is  huffing & puffing, trying to get back over 18K.

Dow Jones  Industrials

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