Dow fell 33 with selling into the close, decliners over advancers about 3-2 & NAZ was off 3. The MLP index dropped 3+ to the 248s & the REIT index fell 3+ to the 367s. Junk bond funds pulled back & Treasuries climbed higher. Oil rose pennies in the 55s & gold inched up 1 to 1330.
AMJ (Alerian MLP Index tracking fund)
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Construction on new houses sank 11% in Dec to a more than 2-year low, but builders applied for more permits in a sign that a rebound may be near. Housing starts tumbled to an annual rate of 1.08M in the final month of 2018 from a revised 1.21M in Nov. That is the lowest level since Sep 2016. The forecast called for starts to total 1.23M. Even though new construction hit a lull in Dec, permits to build additional houses edged up 0.3% to a 1.33M annual pace. It appears builders will break new ground at a faster pace in early 2019. Construction was flat in the Northeast & fell sharply everywhere else. The biggest decline occurred in multi-dwelling projects of 2 units or more. They took a 20% dive in Dec versus, a 6.7% decline for single-family homes, which account for the bulk of the housing market. Housing starts still rose to 1.25M last year from 1.2M in 2017, however. The decline in 2017 was the first since 2010. Because of delays caused by the partial gov shutdown, the Census incorporated updates into the latest housing-start figures that normally would have occurred later on. The result is that the initial Dec report should be more accurate than is typically the case on first look. The housing market slowed in H2-2018 largely because of rising mortgage rates & high home prices.
Macy's (M) said it will cut about 100 management jobs as looks trim costs & improve profitability amid declining sales. The department store chain was able to top lowered expectations for its Q4. But same-store sales came up short of expectations, as tourism spending weakened toward the end of 2018. Macy's was forced to cut its 2018 outlook last month, after dealing with a lull in Dec where the number of holiday shoppers dropped off at its stores. Gross margins also remain under pressure, as Macy's is looking for ways to better manage its inventory. The company is targeting $100M in annual cost savings, starting in fiscal 2019, with its new restructuring plan. It said part of this plan consists of reorganizing upper management, cutting 100 VP level or above roles, "to increase the speed of decision making." "The steps we are announcing to further streamline our management structure will allow us to move faster, reduce costs and be more responsive to changing customer expectations," CEO Jeff Gennette said. EPS in Q4 was $2.37, down from $4.38 a year ago. Excluding one-time items, EPS was $2.73, ahead of expectations for $2.53. This qtr was one week shorter than Q4-2017. Revenue fell to $8.46B from $8.67B a year ago, but came in ahead of the $8.45B that was expected. Sales at stores open for at least 12 months, on an owned plus licensed basis, were up 0.7%, short of expected growth of 0.9%. Online sales grew a double-digit percentage. Looking to 2019, Macy's is calling for same-store sales, on an owned plus licensed basis, to be flat to up 1%. Net sales should be about flat. EPS expected at $3.05-3.25. The forecast is calling for EPS of $3.29. "2019, like 2018, will be a year of investment," CFO Paula Price said. The stock rose 36¢.
If you would like to learn more about Macy's, click on this link:
club.ino.com/trend/analysis/stock/M?a_aid=CD3289&a_bid=6ae5b6f7
Macy's to cut 100 management jobs, trim $100 million in annual costs as sales continue to slump
Chairman Powell said the economy has been sending “conflicting signals” that justify a “patient approach” on future changes to interest rates. “While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell said. The Fed chairman pointed out that growth has slowed in some major foreign economies, particularly China & Europe. “The baseline outlook is a good one, a favorable one,” Powell added. “When growth is booming around the world, we feel that as a tailwind, when growth is slowing, we feel it as a headwind. We are feeling some of that now, and we may feel more of it.” Brexit & ongoing trade talks were added, he said. Lawmakers were not aggressive in teasing out the Fed's interest-rate strategy, so much so that Powell himself volunteered a clarification of his prepared testimony at the very end of the hearing. “When I say we’re going to be patient, what that really means is we’re in no rush to make a judgement about changes in policy,” he said. “I think we’re in a very good place to do that.”
As usual when the head of the Fed testifies, there is little new information for investors. Optimism is mixed with watching various problems in the economy. Stocks were sold in the last hour of trading. The big picture for stocks today was that they took a rest after the very long rally in 2019. Extending this rally will be a challenge for the bulls while economic data remains unimpressive.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Federal Reserve Chair Jerome Powell said that despite a strong US economy,
policymakers at the central bank will be “patient” with interest
rate hikes in the year ahead as he warned of emerging headwinds. “While
we view current economic conditions as healthy and the economic outlook
as favorable, over the past few months we have seen some crosscurrents
and conflicting signals,” Powell told the Senate Committee. In his
semiannual testimony, Powell noted that
the Fed is closely monitoring potential crosscurrents, including the
US-China trade war, Brexit uncertainties & the financial markets (in
Dec, the Dow posted its worst months in 10 years) for signs of an economic slowdown. It’s not the first time that Powell has addressed
concerns about weakening financial conditions & a volatile stock
market, which investors believe. In Jan, after its 2-day
meeting, the FOMC voted to leave the benchmark
federal-funds rate unchanged, issuing a dovish outlook in the year
ahead. "We still see sustained expansion of
economic activity, strong labor conditions and inflation near 2
percent," Powell said at the time. "But the crosscurrents suggest a less
favorable outlook.” However, Powell also
lauded some “welcome developments,” like job creation -- the
unemployment rate remained steady at 4% in Jan, while the
economy added 304K -- & signs of stronger wage growth. In
their meeting minutes, officials said
they believed a “patient approach” to rate hikes would give them more
time to assess the economic impact of the trade war, as well as the
severity of a slowdown in global growth. Although some participants, suggested that it
was “not yet clear” what adjustments to interest rates will need to be
made moving forward, others argued that rate increases “might prove
necessary only if inflation outcomes were higher than in their baseline
outlook.”
Fed's Powell again signals 'patient' rate hike approach, warns of crosscurrents
Construction on new houses sank 11% in Dec to a more than 2-year low, but builders applied for more permits in a sign that a rebound may be near. Housing starts tumbled to an annual rate of 1.08M in the final month of 2018 from a revised 1.21M in Nov. That is the lowest level since Sep 2016. The forecast called for starts to total 1.23M. Even though new construction hit a lull in Dec, permits to build additional houses edged up 0.3% to a 1.33M annual pace. It appears builders will break new ground at a faster pace in early 2019. Construction was flat in the Northeast & fell sharply everywhere else. The biggest decline occurred in multi-dwelling projects of 2 units or more. They took a 20% dive in Dec versus, a 6.7% decline for single-family homes, which account for the bulk of the housing market. Housing starts still rose to 1.25M last year from 1.2M in 2017, however. The decline in 2017 was the first since 2010. Because of delays caused by the partial gov shutdown, the Census incorporated updates into the latest housing-start figures that normally would have occurred later on. The result is that the initial Dec report should be more accurate than is typically the case on first look. The housing market slowed in H2-2018 largely because of rising mortgage rates & high home prices.
Housing starts sink 11% to two-year low in December, but rising permits point to rebound
Macy's (M) said it will cut about 100 management jobs as looks trim costs & improve profitability amid declining sales. The department store chain was able to top lowered expectations for its Q4. But same-store sales came up short of expectations, as tourism spending weakened toward the end of 2018. Macy's was forced to cut its 2018 outlook last month, after dealing with a lull in Dec where the number of holiday shoppers dropped off at its stores. Gross margins also remain under pressure, as Macy's is looking for ways to better manage its inventory. The company is targeting $100M in annual cost savings, starting in fiscal 2019, with its new restructuring plan. It said part of this plan consists of reorganizing upper management, cutting 100 VP level or above roles, "to increase the speed of decision making." "The steps we are announcing to further streamline our management structure will allow us to move faster, reduce costs and be more responsive to changing customer expectations," CEO Jeff Gennette said. EPS in Q4 was $2.37, down from $4.38 a year ago. Excluding one-time items, EPS was $2.73, ahead of expectations for $2.53. This qtr was one week shorter than Q4-2017. Revenue fell to $8.46B from $8.67B a year ago, but came in ahead of the $8.45B that was expected. Sales at stores open for at least 12 months, on an owned plus licensed basis, were up 0.7%, short of expected growth of 0.9%. Online sales grew a double-digit percentage. Looking to 2019, Macy's is calling for same-store sales, on an owned plus licensed basis, to be flat to up 1%. Net sales should be about flat. EPS expected at $3.05-3.25. The forecast is calling for EPS of $3.29. "2019, like 2018, will be a year of investment," CFO Paula Price said. The stock rose 36¢.
If you would like to learn more about Macy's, click on this link:
club.ino.com/trend/analysis/stock/M?a_aid=CD3289&a_bid=6ae5b6f7
Macy's to cut 100 management jobs, trim $100 million in annual costs as sales continue to slump
Chairman Powell said the economy has been sending “conflicting signals” that justify a “patient approach” on future changes to interest rates. “While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell said. The Fed chairman pointed out that growth has slowed in some major foreign economies, particularly China & Europe. “The baseline outlook is a good one, a favorable one,” Powell added. “When growth is booming around the world, we feel that as a tailwind, when growth is slowing, we feel it as a headwind. We are feeling some of that now, and we may feel more of it.” Brexit & ongoing trade talks were added, he said. Lawmakers were not aggressive in teasing out the Fed's interest-rate strategy, so much so that Powell himself volunteered a clarification of his prepared testimony at the very end of the hearing. “When I say we’re going to be patient, what that really means is we’re in no rush to make a judgement about changes in policy,” he said. “I think we’re in a very good place to do that.”
Fed chief Powell says economy sending ‘conflicting signals’
As usual when the head of the Fed testifies, there is little new information for investors. Optimism is mixed with watching various problems in the economy. Stocks were sold in the last hour of trading. The big picture for stocks today was that they took a rest after the very long rally in 2019. Extending this rally will be a challenge for the bulls while economic data remains unimpressive.
Dow Jones Industrials
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