Dow dropped 158 (closing near the lows), decliners over advancers more than 3-1 & NAZ lost 33. The MLP index plunged 8+ to 287, a new multi year low, & the REIT index dropped 6+ to the 319s. Junk bond funds slid lower & Treasuries traded lower. Oil fell after gov data showed a 10th straight week in crude builds & gold also retreated (shown in the chart below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.024350365390357287)
Janet Yellen said she’s confident in the outlook for economic growth & warned that waiting too long to end the era of near-zero interest rates could force the central bank to tighten too quickly, which would risk disrupting financial markets & the 6-year expansion. “Were the FOMC to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals,” Yellen. “Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession.” Her comments are the latest sign that the policy-setting FOMC is poised to raise interest rates at its Dec meeting. “On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market,” Yellen said. That “helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term.” Yellen emphasized that policy makers will receive a range of data on the labor market, inflation & economic activity between now & the Dec meeting that will influence their decision. “We have seen a welcome pickup in the growth rate of average hourly earnings for all employees and of compensation per hour in the business sector,” she said. “While it is too soon to conclude whether these more rapid rates of increase will continue, a sustained pickup would likely signal a diminution of labor market slack.”
Yellen Signals Confidence in Economy Ahead of Fed Rate Decision
The economy expanded modestly across most of the US in Oct & Nov amid rising consumer spending, while a stronger dollar helped keep inflation in check, a Federal Reserve report showed. 8 of the 12 Fed districts called the expansion “modest,” while the Minneapolis region reported moderate growth, according to the Beige Book. Conditions were “steady” in the Kansas City district & “leveled off” in NY, while growth reported by the Boston Fed was “somewhat slower.” “Consumer spending increased in nearly all districts,” with robust car sales & lower gasoline prices boosting purchases of trucks & larger vehicles, the report said. While “labor markets continued to tighten modestly,” prices were “generally steady.” Pay gains were described as “generally stable to increasing,” with most districts saying wage pressures were only building for skilled workers & employees in short supply. The report coincides with Janet Yellen’s comments (see above) that she is increasingly confident the economy is growing sufficiently to achieve labor-market improvement & higher inflation. Many districts said the recent pickup in hiring was driven by temporary staffing agencies. The exception was the Chicago region, where “activity had slowed” at temporary-help firms. Cheap energy costs & a rising dollar were weighing on prices. The Dallas Fed noted that a trucking company was passing on lower fuel costs to consumers, while contacts in Boston reported the stronger currency “put downward pressure on prices.” Manufacturing was “mixed,” while the housing market improved at a “moderate pace.” Commercial loan demand strengthened in most areas.
Target, a Dividend Aristocrat, will pay more than $39M to banks & credit unions for losses from a 2013 holiday-season data breach that led to the exposure of as many as 40M payment cards. The financial institutions sued the retailer to recover an estimated $200M in costs stemming from the hack, including issuing replacement cards. The banks & credit unions will contribute more than $20M to a general settlement fund & more than $19M to a separate recovery program handled by MasterCard (MA). The accord requires court approval is scheduled Wed. TGT said the retailer is “pleased that the process is continuing to move forward.” The Consumer Bankers Association said member costs for card replacements & other expenses stand at about $172M. The Credit Union National Association said its members have already paid $30.6M. The stock fell 88¢. If you would like to learn more about TGT, click on this link:
club.ino.com/trend/analysis/stock/TGT?a_aid=CD3289&a_bid=6ae5b6f7
A glum day in the stock market. Janet's assessment of the economy is that it is doing well & telegraphed once again to get ready for a rate hike in 2 weeks. The markets did not like what they heard & stocks sold off. Tomorrow, she talks to Congress & the ECB may throw more money out to stimulate growth, something it knows how to do but with elusive results. Dow is up a meager 66 since the start of Oct.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CLF16.NYM | ....Crude Oil Jan 16 | ....40.01 |  ...1.84 | (4.4%) |
Janet Yellen said she’s confident in the outlook for economic growth & warned that waiting too long to end the era of near-zero interest rates could force the central bank to tighten too quickly, which would risk disrupting financial markets & the 6-year expansion. “Were the FOMC to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals,” Yellen. “Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession.” Her comments are the latest sign that the policy-setting FOMC is poised to raise interest rates at its Dec meeting. “On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market,” Yellen said. That “helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term.” Yellen emphasized that policy makers will receive a range of data on the labor market, inflation & economic activity between now & the Dec meeting that will influence their decision. “We have seen a welcome pickup in the growth rate of average hourly earnings for all employees and of compensation per hour in the business sector,” she said. “While it is too soon to conclude whether these more rapid rates of increase will continue, a sustained pickup would likely signal a diminution of labor market slack.”
Yellen Signals Confidence in Economy Ahead of Fed Rate Decision
The economy expanded modestly across most of the US in Oct & Nov amid rising consumer spending, while a stronger dollar helped keep inflation in check, a Federal Reserve report showed. 8 of the 12 Fed districts called the expansion “modest,” while the Minneapolis region reported moderate growth, according to the Beige Book. Conditions were “steady” in the Kansas City district & “leveled off” in NY, while growth reported by the Boston Fed was “somewhat slower.” “Consumer spending increased in nearly all districts,” with robust car sales & lower gasoline prices boosting purchases of trucks & larger vehicles, the report said. While “labor markets continued to tighten modestly,” prices were “generally steady.” Pay gains were described as “generally stable to increasing,” with most districts saying wage pressures were only building for skilled workers & employees in short supply. The report coincides with Janet Yellen’s comments (see above) that she is increasingly confident the economy is growing sufficiently to achieve labor-market improvement & higher inflation. Many districts said the recent pickup in hiring was driven by temporary staffing agencies. The exception was the Chicago region, where “activity had slowed” at temporary-help firms. Cheap energy costs & a rising dollar were weighing on prices. The Dallas Fed noted that a trucking company was passing on lower fuel costs to consumers, while contacts in Boston reported the stronger currency “put downward pressure on prices.” Manufacturing was “mixed,” while the housing market improved at a “moderate pace.” Commercial loan demand strengthened in most areas.
Economy Expanding Modestly Across Most of U.S., Beige Book Says
Target, a Dividend Aristocrat, will pay more than $39M to banks & credit unions for losses from a 2013 holiday-season data breach that led to the exposure of as many as 40M payment cards. The financial institutions sued the retailer to recover an estimated $200M in costs stemming from the hack, including issuing replacement cards. The banks & credit unions will contribute more than $20M to a general settlement fund & more than $19M to a separate recovery program handled by MasterCard (MA). The accord requires court approval is scheduled Wed. TGT said the retailer is “pleased that the process is continuing to move forward.” The Consumer Bankers Association said member costs for card replacements & other expenses stand at about $172M. The Credit Union National Association said its members have already paid $30.6M. The stock fell 88¢. If you would like to learn more about TGT, click on this link:
club.ino.com/trend/analysis/stock/TGT?a_aid=CD3289&a_bid=6ae5b6f7
Target Settles With Banks Over 2013 Data Breach for $39 Million
Target (TGT)
A glum day in the stock market. Janet's assessment of the economy is that it is doing well & telegraphed once again to get ready for a rate hike in 2 weeks. The markets did not like what they heard & stocks sold off. Tomorrow, she talks to Congress & the ECB may throw more money out to stimulate growth, something it knows how to do but with elusive results. Dow is up a meager 66 since the start of Oct.
Dow Jones Industrials
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