Dow fell 65 (clsoing near the lows) after jumping to 200 following the FOMC announcement, advancers over decliners 3-2 & NAZ rose 4. The MLP index gained 2+ to the 337s & the REIT index went up 3 to the 306s. Junk bond funds were strong & Treasuries rallied. Oil inched higher & gold had a good gain.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.22243413064051099)
The Federal Reserve (FED) kept its policy interest rate unchanged, showing reluctance to end an era of record monetary stimulus in a time of market turmoil, rising intl risks & slow inflation at home. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the FED said. The action signified more than anything the committee’s uncertainty about how global events translate into their outlook for US growth. The decision featured the first dissent this year by Richmond Fed pres Jeffrey Lacker as policy makers faced one of the toughest decisions of Chair Janet Yellen’s leadership of the FOMC. It also bears its own set of risks, such as the perception of a “Yellen put,” or the view that market volatility could stay the FED decision again. The US economy is posting steady job gains & solid household spending. Officials, anxious not to tighten policy prematurely & risk having to reverse course & cut rates back to zero, weighed solid domestic fundamentals against uncertainties about the international outlook. “The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad,” the statement said. Slowing growth in China has rippled across the world, hitting commodity-producing countries hard. The MSCI Emerging Markets Index, which captures stock markets in nations such as Brazil, Chile, Egypt and China, is down 14% this year.
Verizon, a Dow stock, said 2016 earnings could plateau at 2015 levels as the company focuses on mobile & digital media while shedding some landline telephone operations. CEO Lowell McAdam likened the shift to the telephone industry’s transition from copper to fiber-optic phone networks, which required a period of investment before a new sales growth. “We’re shifting the framework of this business more onto digital media than our traditional businesses,” McAdam said. “The comps will be a little difficult for us in 2016." The company will restart sales growth by 2017, McAdam added. During 2011-2014, VZ saw an average annual revenue growth of about 5%. For 2016, the company estimates 1.6% growth. The company is dealing with declining landline revenue, the sale of wireline operations& the ramp up of new business like mobile video. Last week, VZ began offering a free mobile video service (called go90) at teens & millennials. It invited 5M of its wireless users to the service & has signed 25K subscribers so far, McAdam said. VZ has staked a big part of its future on mobile video & new revenue from AOL’s ad-placement technology. The company is hoping "go90" users will help spread the word of the service “virally” with friends ahead of a more formal introduction at the end of the month. VZ company is also in the middle of negotiations with the Communications Workers of America to replace a union contract that expired last month. The stock lost 96¢. If you would like to learn more about VZ, click on this link:
club.ino.com/trend/analysis/stock/VZ?a_aid=CD3289&a_bid=6ae5b6f7
General Motors reached a settlement with the Dept of Justice that includes a $900M fine. Under the deal, GM admitted that it misled customers & failed to disclose the safety issue to regulators. The DOJ said GM concealed the defect from the National Highway Traffic Safety Administration from the spring of 2012 thru early 2014. Criminal charges of wire fraud & engaging in a scheme to conceal information from regulators will eventually be dismissed if GM complies with the terms. The settlement calls for GM to retain an independent monitor. Separately, GM said it would record a $575M charge in Q3 after settling civil lawsuits related to product recalls, including cars affected by the faulty ignition switches. “The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today,” CEO Mary Barra said. GM’s faulty ignition switches, which led to recalls for 2.6M older-model cars such as the Chevrolet Cobalt, have been connected to 124 deaths & 275 injuries. The company has allocated $625M for the fund, in addition to $2.5B to cover recall expenses. GM acknowledged that employees were aware at least a decade earlier that certain ignition switches could inadvertently turn keys to the “off” or “accessory” position, turning off the engine & cutting power to air bags. “Reaching an agreement with the Justice Department does not mean we are putting the issue behind us,” Barra said. “Our mission has been to take the difficult lessons from this experience and use them to improve our company. We’ve come a long way and we will continue to build on our progress.” The stock was up pennies. If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM?a_aid=CD3289&a_bid=6ae5b6f7
This was a highly unusual day for stocks & suggests dark clouds lie ahead. After the announcement of postponing the rate hike yet again, Dow shot up 200. Then a sense of reality hit traders & that gain evaporated just as quickly as it had arrived. The advance from gut reaction buying was not justified. A temporary need for low interest began almost a decade ago. Now the FMOC does not have the guts to do what is necessary, &, at least, increase interest rates 25 basis points, sending the message that the "temporary emergency" is over. Only in the gov can a temporary emergency last longer. There will never be a perfect time for that first increase. Never! Problems will always be out there. However, the FOMC lacks the courage to show it will take one small step & return interest rates to a sustainable level.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLV15.NYM | ....Crude Oil Oct 15 | ....47.17 |  ...0.02 | (0.0%) |
The Federal Reserve (FED) kept its policy interest rate unchanged, showing reluctance to end an era of record monetary stimulus in a time of market turmoil, rising intl risks & slow inflation at home. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the FED said. The action signified more than anything the committee’s uncertainty about how global events translate into their outlook for US growth. The decision featured the first dissent this year by Richmond Fed pres Jeffrey Lacker as policy makers faced one of the toughest decisions of Chair Janet Yellen’s leadership of the FOMC. It also bears its own set of risks, such as the perception of a “Yellen put,” or the view that market volatility could stay the FED decision again. The US economy is posting steady job gains & solid household spending. Officials, anxious not to tighten policy prematurely & risk having to reverse course & cut rates back to zero, weighed solid domestic fundamentals against uncertainties about the international outlook. “The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring developments abroad,” the statement said. Slowing growth in China has rippled across the world, hitting commodity-producing countries hard. The MSCI Emerging Markets Index, which captures stock markets in nations such as Brazil, Chile, Egypt and China, is down 14% this year.
Verizon, a Dow stock, said 2016 earnings could plateau at 2015 levels as the company focuses on mobile & digital media while shedding some landline telephone operations. CEO Lowell McAdam likened the shift to the telephone industry’s transition from copper to fiber-optic phone networks, which required a period of investment before a new sales growth. “We’re shifting the framework of this business more onto digital media than our traditional businesses,” McAdam said. “The comps will be a little difficult for us in 2016." The company will restart sales growth by 2017, McAdam added. During 2011-2014, VZ saw an average annual revenue growth of about 5%. For 2016, the company estimates 1.6% growth. The company is dealing with declining landline revenue, the sale of wireline operations& the ramp up of new business like mobile video. Last week, VZ began offering a free mobile video service (called go90) at teens & millennials. It invited 5M of its wireless users to the service & has signed 25K subscribers so far, McAdam said. VZ has staked a big part of its future on mobile video & new revenue from AOL’s ad-placement technology. The company is hoping "go90" users will help spread the word of the service “virally” with friends ahead of a more formal introduction at the end of the month. VZ company is also in the middle of negotiations with the Communications Workers of America to replace a union contract that expired last month. The stock lost 96¢. If you would like to learn more about VZ, click on this link:
club.ino.com/trend/analysis/stock/VZ?a_aid=CD3289&a_bid=6ae5b6f7
Verizon Says 2016 Earnings May Plateau at 2015 Levels
Verizon (VZ)
General Motors reached a settlement with the Dept of Justice that includes a $900M fine. Under the deal, GM admitted that it misled customers & failed to disclose the safety issue to regulators. The DOJ said GM concealed the defect from the National Highway Traffic Safety Administration from the spring of 2012 thru early 2014. Criminal charges of wire fraud & engaging in a scheme to conceal information from regulators will eventually be dismissed if GM complies with the terms. The settlement calls for GM to retain an independent monitor. Separately, GM said it would record a $575M charge in Q3 after settling civil lawsuits related to product recalls, including cars affected by the faulty ignition switches. “The mistakes that led to the ignition switch recall should never have happened. We have apologized and we do so again today,” CEO Mary Barra said. GM’s faulty ignition switches, which led to recalls for 2.6M older-model cars such as the Chevrolet Cobalt, have been connected to 124 deaths & 275 injuries. The company has allocated $625M for the fund, in addition to $2.5B to cover recall expenses. GM acknowledged that employees were aware at least a decade earlier that certain ignition switches could inadvertently turn keys to the “off” or “accessory” position, turning off the engine & cutting power to air bags. “Reaching an agreement with the Justice Department does not mean we are putting the issue behind us,” Barra said. “Our mission has been to take the difficult lessons from this experience and use them to improve our company. We’ve come a long way and we will continue to build on our progress.” The stock was up pennies. If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM?a_aid=CD3289&a_bid=6ae5b6f7
GM Settles DOJ Case for $900M
General Motors (GM)
This was a highly unusual day for stocks & suggests dark clouds lie ahead. After the announcement of postponing the rate hike yet again, Dow shot up 200. Then a sense of reality hit traders & that gain evaporated just as quickly as it had arrived. The advance from gut reaction buying was not justified. A temporary need for low interest began almost a decade ago. Now the FMOC does not have the guts to do what is necessary, &, at least, increase interest rates 25 basis points, sending the message that the "temporary emergency" is over. Only in the gov can a temporary emergency last longer. There will never be a perfect time for that first increase. Never! Problems will always be out there. However, the FOMC lacks the courage to show it will take one small step & return interest rates to a sustainable level.
Dow Jones Industrials
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