Dow gained 103, advancers over decliners better than 3-2 & NAZ jumped up 90. The MLP index was fractionally higher in the 225s (following recent selling) & the REIT index fell 1+ to the 327s. Junk bond funds rose with stock & Treasuries lost ground. Oil dropped below 45 & gold drifted lower.
AMJ (Alerian MLP Index tracking fund)
China stepped up monetary easing with its 6th interest-rate cut in a year to combat deflationary pressures & a slowing economy, moving ahead of anticipated fresh stimulus by central banks. The one-year lending rate will be cut to 4.35% from 4.6% the People’s Bank of China said, while the one-year deposit rate will fall to 1.5% from 1.75%. Reserve requirements for all banks were lowered by 50 basis points, with an extra 50 basis point reduction for some institutions. Authorities are seeking to cushion an economy forecast to grow at the slowest annual rate in a ¼ century as old growth drivers such as manufacturing & construction falter & new drivers like consumption struggle to compensate. China’s reduction to record-low rates & anticipated stimulus in Europe & Japan add to monetary policy divergence with the US, where the Federal Reserve is considering its first rate increase in 9 years. Overall prices at a relatively low level give room for reduced interest rates, the PBOC said. The domestic & foreign situation remain complicated, & continued downward pressure on economic growth requires the fine tuning of monetary policy, it said. The PBOC also scrapped a deposit-rate ceiling that limited the rate banks could pay savers, saying the move was made possible by a decline in market-based interest rates. The need for new growth engines was underscored by data Mon that showed the economy expanded 6.9 % in Q3 from a year earlier. While beating estimates, the expansion benefited from an out-sized contribution from financial services after a surge in share trading from the year-earlier period. That prop is unlikely to endure, raising challenges to China's growth goal of about 7% this year.
China's Central Bank Is Using All Its Tools to Counter Slowdown
Falling prices & potentially weakening growth in the euro area are raising the prospect of more stimulus by the ECB. While the Markit Economics Purchasing Managers’ Index for manufacturing & services unexpectedly increased to 54 in Oct from 53.6 in Sep, signaling a pickup in activity, forward-looking indicators point to a risk of a slowdown, Markit said. Service-sector expectations for the year ahead fell to a 10-month low, while the factory orders-to-inventory ratio dipped to the weakest level in 9 months. The report underlines ECB pres Mario Draghi’s latest analysis of the economy. While pointing to resilient domestic demand, he suggested that more stimulus may be needed by year-end as a global slowdown threatens to weigh on growth. Average selling prices for goods & services fell for the first time in 3 months in Oct, partly as manufacturers tried to boost sales. Professional forecasters surveyed by the ECB cut their inflation projections thru 2017 & their 2016 growth outlook, according to a report published today.
Procter & Gamble, a Dow stock & Dividend Aristocrat, reported its biggest drop in quarterly sales in 7 qtrs, hurt by weak demand across product categories & a strong dollar. The company also cut its full-year revenue growth forecast, saying it now expected the strong dollar to have a bigger impact of 5-6 percentage points than the 4-5 percentage points anticipated earlier. PG has been focusing on more profitable brands including Gillette shaving products, Pampers diapers & Tide detergent, as it loses customers in markets outside North America. Sales in all product categories fell in double-digit percentage terms in its Q1, with beauty, baby care & grooming products recording the worst declines. P&G, which gets nearly 2/3 of its revenue from markets outside North America, was also hurt by a nearly 13% rise in the dollar. EPS was 91¢, versus 69¢ a year earlier. Net sales fell 12% to $16.5B. Excluding the impact of currency, divestitures & acquisitions, sales fell 1%. Excluding items, the EPS was 98¢. Analysts had expected EPS of 95¢ on revenue of $17.17B. The stock rose 1.72. If you would like to learn more about PG, click on this link:
club.ino.com/trend/analysis/stock/PG?a_aid=CD3289&a_bid=6ae5b6f7
Stocks extended their winning ways on the interest rate cuts in China & promise of more money thrown away by the ECB. Next week the FOMC meets & chances are these actions will give the FOMC more excuses not to raise interest rates (which is long overdue). As usual, the stock market is more interested in solving today's problems today, tomorrow will take care of itself. With this weeks' rally, Dow is down only 200 YTD.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLZ15.NYM | ....Crude Oil Dec 15 | ...44.47 |  .....0.91 | (2.0%) |
| GCV15.CMX | ...Gold Oct 15 | ......1,178.70 | ...12.10 | (1.0%) |
China stepped up monetary easing with its 6th interest-rate cut in a year to combat deflationary pressures & a slowing economy, moving ahead of anticipated fresh stimulus by central banks. The one-year lending rate will be cut to 4.35% from 4.6% the People’s Bank of China said, while the one-year deposit rate will fall to 1.5% from 1.75%. Reserve requirements for all banks were lowered by 50 basis points, with an extra 50 basis point reduction for some institutions. Authorities are seeking to cushion an economy forecast to grow at the slowest annual rate in a ¼ century as old growth drivers such as manufacturing & construction falter & new drivers like consumption struggle to compensate. China’s reduction to record-low rates & anticipated stimulus in Europe & Japan add to monetary policy divergence with the US, where the Federal Reserve is considering its first rate increase in 9 years. Overall prices at a relatively low level give room for reduced interest rates, the PBOC said. The domestic & foreign situation remain complicated, & continued downward pressure on economic growth requires the fine tuning of monetary policy, it said. The PBOC also scrapped a deposit-rate ceiling that limited the rate banks could pay savers, saying the move was made possible by a decline in market-based interest rates. The need for new growth engines was underscored by data Mon that showed the economy expanded 6.9 % in Q3 from a year earlier. While beating estimates, the expansion benefited from an out-sized contribution from financial services after a surge in share trading from the year-earlier period. That prop is unlikely to endure, raising challenges to China's growth goal of about 7% this year.
China's Central Bank Is Using All Its Tools to Counter Slowdown
Falling prices & potentially weakening growth in the euro area are raising the prospect of more stimulus by the ECB. While the Markit Economics Purchasing Managers’ Index for manufacturing & services unexpectedly increased to 54 in Oct from 53.6 in Sep, signaling a pickup in activity, forward-looking indicators point to a risk of a slowdown, Markit said. Service-sector expectations for the year ahead fell to a 10-month low, while the factory orders-to-inventory ratio dipped to the weakest level in 9 months. The report underlines ECB pres Mario Draghi’s latest analysis of the economy. While pointing to resilient domestic demand, he suggested that more stimulus may be needed by year-end as a global slowdown threatens to weigh on growth. Average selling prices for goods & services fell for the first time in 3 months in Oct, partly as manufacturers tried to boost sales. Professional forecasters surveyed by the ECB cut their inflation projections thru 2017 & their 2016 growth outlook, according to a report published today.
Falling Prices Meet Weakening Growth as ECB Prepares Action
Procter & Gamble, a Dow stock & Dividend Aristocrat, reported its biggest drop in quarterly sales in 7 qtrs, hurt by weak demand across product categories & a strong dollar. The company also cut its full-year revenue growth forecast, saying it now expected the strong dollar to have a bigger impact of 5-6 percentage points than the 4-5 percentage points anticipated earlier. PG has been focusing on more profitable brands including Gillette shaving products, Pampers diapers & Tide detergent, as it loses customers in markets outside North America. Sales in all product categories fell in double-digit percentage terms in its Q1, with beauty, baby care & grooming products recording the worst declines. P&G, which gets nearly 2/3 of its revenue from markets outside North America, was also hurt by a nearly 13% rise in the dollar. EPS was 91¢, versus 69¢ a year earlier. Net sales fell 12% to $16.5B. Excluding the impact of currency, divestitures & acquisitions, sales fell 1%. Excluding items, the EPS was 98¢. Analysts had expected EPS of 95¢ on revenue of $17.17B. The stock rose 1.72. If you would like to learn more about PG, click on this link:
club.ino.com/trend/analysis/stock/PG?a_aid=CD3289&a_bid=6ae5b6f7
P&G Posts Biggest Sales Drop in 7 Quarters
Procter & Gamble (PG)
Stocks extended their winning ways on the interest rate cuts in China & promise of more money thrown away by the ECB. Next week the FOMC meets & chances are these actions will give the FOMC more excuses not to raise interest rates (which is long overdue). As usual, the stock market is more interested in solving today's problems today, tomorrow will take care of itself. With this weeks' rally, Dow is down only 200 YTD.
Dow Jones Industrials
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