Tag Archives: U.S economy

Jobs Help Seal U.S. Spring Rebound

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:

Main Trading Event Of The Day: U.S. ISM Manufacturing @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Jobs Help Seal US Spring Rebound

The United States has finally consigned its weather-beaten start to the year to history this week as jobs data is expected to show a strong end to the second quarter. The U.S. economy contracted at a 2.9 percent annual rate, the sharpest decline in five years, in the first quarter of this year. An extremely severe winter, the expiration of long-term unemployment benefits and a notable slowdown in restocking by businesses combined to negatively impact the world’s largest economy, but these factors are expected to have faded by April. Monthly jobs data, arguably the most important gauge for both the Federal Reserve and the American people, is expected to show U.S. firms are continuing to hire at a solid pace as economic activity and growth takes hold. U.S. employment already returned to its pre-recession peak in May, with nonfarm job gains of 217,000 which would be a fifth straight month of job gains above 200,000, a run unmatched since the Sept 1999-Jan 2000 period. The jobs figures on Thursday are also set to feature a steady 6.3 percent unemployment rate.

Meanwhile forecasts for the influential ISM (Institute for Supply Management) manufacturing and services reports due today, point to a further acceleration of growth, with respectively a fifth and fourth consecutive rise in the monthly indices. Economists predict growth could top an annualized 5 percent in the April-June period due to a rise of inventories, a rebound of investment and a boost from trade. Less optimistic economists suggest the jobs and ISM reports should at least provide a counterbalance to muted consumer spending in May. Consumer spending rose by just 0.2 percent in the month following a flat reading in April, prompting some economists to cut their estimates for second-quarter growth to as low as a 2.2 percent pace from as high as 4.0 percent before.

Japan Business Sentiment Takes A Negative Hit

Business sentiment in Japan took a negative impact in the three months to June but is expected to recover in the months ahead, as revealed in the Bank of Japan’s tankan survey on Tuesday - another sign the economy should weather a rise in the country’s sales tax. The headline index for big manufacturers’ sentiment slipped by five points from three months ago to plus 12 which reflects the drag on consumer spending and the economy from the April 1 increase in Japan’s sales tax to 8 percent from 5 percent which was the first rise in the consumption tax in 17 years. However, big manufacturers said they expect business conditions to improve in the following quarter. The closely-watched tankan report also showed big firms plan to raise their capital spending by 7.4 percent for the fiscal year that started in April. Japan’s blue-chip Nikkei stock index opened 0.12 percent higher, while the yen was little changed around 101.35 per dollar.

Google Designs A Safer Car Touchscreen

Car manufacturers are increasingly integrating touchscreens into vehicles to the dismay of safe-driving advocates, who fear people are already too distracted by phone calls and texts while driving. Tech companies are, however, responding by designing what they say are safer ways for customers to stay focused on their favorite apps and online services behind the wheel. Google’s Android, for example, is working on an interface to make it safer and more user-friendly through a platform called Android Auto, which allows maps, music, and personal organization functions on your phone to be accessed through a larger screen in the car. Followers are describing it as Android’s answer to Apple’s CarPlay. Interest in designing a smart screen for the car is growing increasingly popular with 28 carmakers already in the Open Automotive Alliance working with Android Auto. For Google, using Android Auto means drivers will continue using its services during their commute.

That sums up today’s highlights! We hope you have a profitable day on the markets.

U.S. Economy Back On Track

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets.

WHAT WE’RE WATCHING TODAY

U.S. Economy Back On Track As Strong Retail Spending Adds To Momentum

The U.S. economy is back on track after a difficult first quarter and it is not expected to cool off again anytime in the near future. A number of economic reports this week, spearheaded by sales at retail stores, are expected to show a faster pace of growth in April and May. Furthermore, trends point to the nation’s gross domestic product increasing in the second quarter after little growth in the first quarter of the year. Part of the snapback in growth reflects spending and investment that normally would have taken place in the first quarter had it not been for the severe weather. The prospect of the momentum extending beyond the second quarter is likely to rest mainly on whether companies continue to add workers. Job gains have averaged 238,000 a month since February which is the second best three-month stretch since the recession ended.

However, the recovery has been uneven since it began in mid-2009 and analysts are not ready to declare good times are here to stay after years of disappointing growth. The unexpected hiccup in the housing market is one of the biggest threats to the rosy scenario for the U.S. economy beyond the second quarter. Sluggish sales could dampen demand for a variety of goods that new owners need to buy for their homes and hurt retailers in the process. In April, economists predict that builders started work on more new homes and permits for new construction also rose. However, both permits and new construction are still likely to remain below the post-recession highs set in November and December.

CBI: U.K. Interest Rates Will Rise From Early-2015

Encouraging signs that the U.K. recovery is becoming more broad-based has led the Confederation of British Industry to raise its 2014 and 2015 growth estimates for the U.K. It now expects the U.K. economy to expand by 3 percent this year and by 2.7 percent in 2015, up from previous expectations of 2.6 percent and 2.5 percent respectively. Interest rates are expected to start rising in the first quarter of 2015. In the first quarter of this year, Britain posted GDP growth of 0.8 percent quarter-on-quarter, marking the fifth consecutive quarter of expansion.

However, as 2015′s general election looms, the CBI warned that political uncertainty could threaten the U.K.’s recovery and that the priority for the next government should be to keep the deficit reduction strategy on track, to tackle the U.K.’s economic challenges and to reform public services. The CBI also highlighted that business investment in the U.K. was on the rise. In the final quarter of 2013 it was 8.7 percent higher than the year before, and the trend is gaining momentum. It now expects business investments to grow by 8.3 percent this year and by 9.1 percent in 2015.

Is Beats Electronics Worth $3.2 Billion? Some Analysts Say Why Bother?

It was reported last week that Apple would be interested in acquiring Beats Electronics, the well-known headphone maker and music streaming distributor, for $3.2 billion founded by Dr. Dre. Although, at $3.2 billion this would be Apple’s largest acquisition to date, $3 billion is less than two percent of the company’s cash and less than ten percent of its annual free cash flow, in the overall scheme of things, it’s not a deal that is going to have a material impact on results. However, the change in Apple’s acquisition strategy will generate some questions for management and the Board of Directors. Some are struggling to see the rationale behind this move. Beats would undoubtedly bring a world class brand in music to Apple, but have pointed out that Apple already has a world class brand and has never acquired a brand for a brand’s sake. Beats does not have any intellectual property that would drive the acquisition justification beyond the brand. Instead, analysts believe that Apple’s cash should be utilised for acquisitions in the internet services space, which happens to be Apple’s biggest weakness. Traders will be watching the market for news…If Apple completes a $3.2 billion acquisition of Beats, Carlyle Group which owns just under 50% of Beats will bank a near $1 billion profit.

That sums up Monday’s highlights!

We hope you have a profitable day on the markets!

Dollar Gains But Euro Weaker As ECB Considers Easing

Here’s Friday’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Event Of The Day: GBP Current Account @ 09.30 GMT

WHAT WE’RE WATCHING TODAY

Dollar Gains But Euro Weaker As ECB Considers Easing

The dollar gained against the euro on Thursday as investors bet the Federal Reserve will start hiking rates before Europe’s central bank, which has signaled it could loosen monetary policy soon. Fed Chair Janet Yellen said that the central bank could potentially raise rates after a period of about six months from the end of its bond-buying program. That puts the first hike as early as next spring and has surprised market participants. At the same time, the euro has been under pressure on rising expectations the European Central Bank will move to further ease monetary policy in an effort to stave off deflation. The euro EUR/USD changed hands at $1.3744, down 0.3% on the day. The shared currency has weakened since ECB officials this week signaled the central bank would consider negative deposit rates and a move toward outright quantitative easing. The U.S. dollar added slightly to gains after the Labor Department said the number of people who applied for first-time weekly jobless benefits fell by 10,000 to 311,000 in the week ended March 20, the lowest level in four months. Economists had forecast claims of 320,000.

Gold Near 6-Week Low; Heading For Second Weekly Loss

Gold recovered slightly on Friday after sharp overnight declines but the metal remained near six-week lows and on track for a second straight weekly decline, as improving sentiment over the U.S. economic outlook dented its safe-haven appeal. Bullion has dropped about $100 an ounce from a six-month high in the last nine trading sessions on strong U.S. economic data and comments by Federal Reserve chairman Janet Yellen that interest rates could rise in the first half of 2015. The sharp drop in prices in the last few days is expected to bring physical buyers back into the market and help gold prices consolidate although some analysts have expressed concern that there could be a further downside ahead for gold and that the metal will struggle in the face of weak demand and forecasted rising real interest rates in the U.S.

Is Social Media The Future Of Trading?

Stock prices are driven largely by mass psychology while social media enhances people’s ability to share opinions and news on a large scale. As more individuals join the social networks Facebook, Twitter, or LinkedIn, their role in spreading information will increase. Market information will be more easily shared amongst consumers of social media, decreasing the time it takes for potential investors to react to changing conditions. Simultaneously, the reaction time of potential investors to opinions will decrease. If there are rumours surrounding a stock or other investment and no factual information to check them with, social media users will consume the rumours as a substitute for fact. The mass psychology of the investing community will be more heavily dictated by social media. Looking to the future, traders will rely on social media for trading matters more and more.

That sums up Friday’s highlights! Keep up with all the trading news for the day via Facebook, Twitter, Google+ and LinkedIn. We hope you have a profitable day on the markets.

Dollar Holds Biggest Advance in Seven Months

Here’s Thursday’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Event Of The Day: USD Unemployment Claims @ 12.30 GMT; USD Existing Home Sales @ 14.00 GMT

WHAT WE’RE WATCHING TODAY

Dollar Holds Biggest Advance in Seven Months

The dollar held its biggest gain in seven months after Federal Reserve policy makers signaled that they’ll probably raise interest rates by the middle of next year. The dollar was trading at $1.3836 per euro after climbing 0.7 percent yesterday to $1.3833. The Federal Open Market Committee discarded a jobless-rate threshold for considering when to increase borrowing costs and said it will look at a wider range of data. Policy makers also reduced monthly bond-buying by $10 billion to $55 billion and added that it will slow purchases in further measured steps. Fed Chair Janet Yellen indicated a period of around 6 months between the end of the stimulus and the first rate increase. The rally in the U.S. dollar on the notion that U.S. interest rates could rise sooner rather than later may just be getting started, according to strategists and the outlook for the pace of policy tightening is faster than markets have priced in. The Fed’s announcement confirms the view that the rising-dollar trend will accelerate in the six-month to one-year term and that as long as upcoming U.S. economic data confirms the Fed’s confidence that recent weakness in data is related to unusually cold weather, the dollar should head higher. If data disappoints, that could trigger the dollar to unwind some of the gains, but data is expected to start improving and that means the dollar gains should be built on.

Gold Hovers Near 3-Week Low While Stocks End Lower On Fed

Gold hovered near three-week lows on Thursday as the U.S. dollar jumped on expectations the Federal Reserve could end its bond-buying programme later this year, tarnishing the metal’s safe haven appeal as a hedge against inflation. Although concerns about the Ukraine crisis could lend support, the bullion market was suffering from a lack of physical buying from top gold consumer China following a sharp drop in its currency. The market may recover and rally from here but analysts believe the upside will be limited and that gold could still fall back to about $1,300 an ounce. Sentiment was mixed following the move by the Fed to reduce bond-buying which could overshadow the impact from tensions in Ukraine.

Meanwhile, stocks eased off session lows but still finished firmly in the red on Wednesday after Federal Reserve Chair Janet Yellen suggested interest rate hikes would happen about six months after quantitative easing ends. The Dow Jones Industrial Average slumped 114.02 points to close at 16,222.17, initially tumbling nearly 200 points after Yellen’s rate hike comment. The blue-chip index had been trading in a lackluster 50-point range prior to the decision. The S&P 500 declined 11.48 points to finish at 1,860.77 while the Nasdaq fell 25.71 points to end at 4,307.60.

U.S. Existing Home Sales & New Claims For Unemployment Expected To Drop

Pending home sales have reportedly been weaker lately, with a 0.1% increase in January only just offsetting the 5.8% decline in December, suggesting limited momentum for completed sales. With fewer pending contracts in the pipeline, the pace of existing home sales is likely to have remained soft in February. Total housing inventory was up in January, although the number of homes for sale was still low, indicating that constraints on the supply side are also likely to continue to hold back the sales pace.

The number of new claims for unemployment benefits unexpectedly dropped 9,000 last week to a seasonally adjusted 315,000, the best reading since November. Economists expected a rise in claims to a level of 334,000. The four-week average fell 6,250 to 330,500, the lowest since early December with improved weather conditions apparently having contributed to the improvement in the job data. The number of people still receiving benefits after an initial week of aid fell 48,000 to 2.86 million in the week ended March 1, the lowest level since December. A small rise to 327,000 is forecasted.

That sums up today’s highlights! Stay in touch for all the latest financial news. Find us on Facebook, Twitter, Google+ and LinkedIn.

We hope you have a profitable day on the markets!

Fed Outlook: Geopolitical Concerns, Rates Set To Rise

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Event Of The Day: Several today including USD FOMC Statement @ 18.00 GMT & GBP Annual Budget Release @ 12.30 GMT

WHAT WE’RE WATCHING TODAY

Fed Outlook: Geopolitical Concerns, Rates Could Rise At Turn Of The Year

Janet Yellen will chair the FOMC today with wide agreement on Wall Street over the outlook for policy this year and a forecast for stronger U.S. growth this year and next. There are some divisions over what happens to Federal Reserve policy in 2015 with a cloud of geopolitical concern hanging over the outlook but most analysts see the Fed tapering at the meeting today and at each of the remaining meetings this year. On average, analysts see the Fed tapering by around $10 billion at each meeting. The Fed currently is purchasing $65 billion in assets every month to try and drive down interest rates and stimulate the economy. It has signaled it would reduce or taper its purchases by $10 billion at each meeting this year, which would effectively end its purchase program by December. However, investors pricing in a federal funds rate hike in mid-2015 could get caught off guard, according to former Federal Reserve Governor, Robert Heller. Heller believes that markets will force the Fed to tighten a little bit earlier than that, probably around the turn of the year as we approach 2015, which is around the time that the tapering operation should be finished. The Federal Reserve has kept its benchmark interest rate near zero since 2008, when a global financial crisis that plunged financial markets into turmoil. As the Fed now unwinds its massive stimulus program and the U.S. economy recovers, markets anticipate an interest rate increase to follow not too long after the end of tapering. According to Heller, as investors become more become more bullish about the domestic recovery, yields on U.S. government bonds will be pushed higher, encouraging the Fed to follow suit. Other factors being taken into consideration are the recent weak U.S. economic data due to extreme weather conditions and new economic risks on the horizon, particularly China and Ukraine. Nevertheless, the general feeling is that Wall Street is reasonably comfortable with its outlook for Fed policy.

FOMC Statement/Press Conference @ 18.00 GMT

UK Budget 2014: Osborne Supporting A Resilient Economy

George Osborne will set out his plans to support a “resilient” economy in today’s Budget, which will be focused on boosting economic security and aspiration. The budget comes against a backdrop of a strengthening economic recovery, with unemployment and inflation falling and growth this year projected to be the among the strongest of any Western economy. Business groups have forecast that the UK’s total economic output will exceed its pre-recession peak in the second quarter of 2014 after the economy grew by 1.9% in 2013. Osborne is expected to address the UK’s historic economic weaknesses, particularly the need to increase manufacturing output and improve the UK’s balance of payments by boosting exports. He is also expected the chancellor to unveil schemes, incentives and tax breaks for some businesses. Alongside details of proposed tax and spending changes, Osborne will announce the Office for Budget Responsibility’s latest forecasts for economic growth and government borrowing for the years ahead. Deficit reduction remains his number one priority, with the ultimate goal of delivering an annual budget surplus before 2020.

Stocks: Google To Launch New Smartwatch Platform

Google announced earlier this week that smartwatches based on its Android mobile software will be available later this year, enlisting a variety of partners including Samsung Electronics, LG Electronics and Intel, signaling the company’s intent to play a leading role in what could be the next big computing market. Android Wear will allow people to speak into their watches to check sports scores, control music, send replies to text messages and even open their home garages. By aligning itself with a broad spectrum of partners to develop the smartwatches, Google is hoping to replicate the success that helped make its free Android software the most popular smartphone operating system, analysts said. Many believe wearable computers represent the next big shift in technology. More than 130 million smart wearable devices are predicted to ship by 2018.

That sums up today’s highlights! It’s a busy day on the markets so make sure you keep up to date with all the events via our Facebook, Twitter, Google+ and LinkedIn pages.

We hope you have a profitable day on the markets!

Just A Minute!

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Events Of The Day: Several today including EUR CPI Flash Estimate y/y @ 10.00, USD Prelim GDP q/q @13.30 & GBP BOE Gov Carney Speaks @15.30 GMT

WHAT WE’RE WATCHING TODAY

Big Cuts Anticipated In U.S. Fourth-Quarter GDP Growth

The U.S. government looks set to slash its estimate of fourth-quarter growth as exports and restocking by businesses were less robust than previously thought. Gross domestic product growth will probably be lowered to a 2.5 percent annual rate, down from the 3.2 percent pace reported last month. If economists’ forecasts are correct, today’s revision will leave GDP just above the economy’s potential growth trend of between a 2 percent and 2.3 percent pace. Trade is expected to account for a large chunk of the revision. A report earlier this month showed exports fell in December, leading to a bigger trade deficit in the fourth quarter than the government had assumed. Economists expect trade’s contribution will be cut down to about 1.0 percentage point. Inventories, previously reported to have risen by $127.2 billion in the fourth quarter, are also likely to be revised down. The reported increase in the stocks of unsold goods in the fourth quarter was the largest in nearly 16 years but economists expect the contribution to growth from inventories, which the government put at 0.42 percentage point a month ago, could be revised to just about two-tenths of a percentage point.

Downward revisions are also expected to consumer spending after data showed weak retail sales in November and December. Consumer spending had been estimated expanding at a 3.3 percent rate in the fourth quarter, the fastest in three years. This could be lowered to a pace of about 3 percent. As a result, final domestic demand is likely to be revised weaker than the 1.4 percent rate previously reported. Government spending is likely to be revised downward, but the impact will probably be offset by upward revisions to investment in residential construction, nonresidential structures and business spending on equipment.

Currency News

The dollar fell against Japanese yen on Friday, after the release of a set of stronger than expected economic data. The dollar USD/JPY slid to ¥101.81 from ¥102.17 late Thursday. Japanese government data released Friday morning showed the jobless rate held steady at 3.7%, while factory output in January climbed 4% from the previous month. Meanwhile, the core consumer price index rose 1.3% last month from a year earlier, beating the 1.2% projections and marking the eighth straight month of gains for the core CPI. This indicates that the economy may be close to winning its decades-long fight with deflation. However, compared to December, the core CPI slipped 0.3%, sparking some concerns that momentum is easing.

The GBP meanwhile, firmed against the dollar after Federal Reserve Chair Janet Yellen told U.S. legislators monetary authorities were concerned with soft economic indicators though monetary policy remains on course for now. Disappointing weekly jobless claims numbers also softened the dollar. In U.S. trading on Thursday, GBP/USD was trading at 1.6680, up 0.06%, up from a session low of 1.6617 and off a high of 1.6698. More GBP news; BOE Governor Mark Carney speaks @ 15:30 GMT at a financial symposium in Frankfurt. Remarks which are more hawkish than expected will be bullish for the pound.

Will Google’s Project Ara Go On Sale Next Year?

Google’s Project Ara modular smartphones could arrive early next year, according to reports. A team within the company, which is developing the project to make smartphones composed of small, swappable pieces of hardware reportedly plans to finish a functioning prototype within weeks and begin preparation on a version for consumer sales beginning in the first quarter of 2015.

The central idea of Project Ara is to help smartphone users take handset customisation beyond ringtones, wallpaper, and body colours to the devices’ very form and function. An endoskeleton, or structural frame, would hold the smartphone modules of the owner’s choice. Google is pushing for the endoskeleton to cost $50. It will come only with Wi-Fi and no cellular connection. Users could then build up the phone how they like with various modules, like a camera, high-speed processor, speakers, and more. Developers will also be encouraged to make modules for its ambitious new phones. It will be interesting to watch developments unfold over the coming months while keeping an eye on price of Google stock.

That sums up today’s highlights! We hope you have a profitable day on the markets.

Just A Minute!

Here’s Thursday’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Events Of The Day: Several today including USD Core Durable Goods Orders m/m & Unemployment Claims @ 13.30 and Fed Chair Yellen Testifies @ 15.00 GMT

WHAT WE’RE WATCHING TODAY

Yellen Testifies As Weekly Jobless Claims Expected To Hold Steady

Yellen testifies before the Senate Banking Committee today with more focus expected to be on banking regulation and “too big to fail” institutions as well as the batch of bad housing data which appears to be signaling a more structural problem than just the weather effect. It is anticipated that Yellen will veer away from providing much more insight into what she thinks may be going on in the economy. The Fed has said it will consider altering short-term rates when unemployment reaches 6.5 percent - it was at 6.6 percent in January, hence there is now a problem in that it communicated a specific rate that might soon be overtaken. Fed Chair Yellen Testifies @ 15.00 GMT.

Besides Yellen’s testimony, markets will be watching durable goods orders and jobless claims, both at 13:30 GMT. American manufacturers have experienced a slowdown in orders over the past few months and the trend is likely to reflected in January’s report on durable goods. Analysts forecast a 2.5% drop in new orders for durable goods following a preliminary 4.2% decline in December.

Weekly jobless claims are forecast to hold steady at around 335,000. The number of people applying for jobless benefits has clung to a narrow range lately, suggesting little improvement or deterioration in the nation’s labour market.

The dollar was near a two-week high against a basket of its major peers before Fed Chair Yellen speaks today amid prospects the central bank will continue to scale down its bond purchases while gold extended a decline from the highest level in 17 weeks as U.S. housing data that beat estimates supported expectations the Federal Rerserve will keep to its plan to reduce stimulus.

Oil Prices Ease Ahead Of Yellen Testimony

Oil prices eased in Asian trade Thursday as investors await a testimony by the US central bank chief for fresh clues on the state of the world’s biggest economy. “Despite the fact we saw a bit of a rally last night, crude is really still within the range of the last couple of days,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “There’s a chance we’ll see it lose a bit ground from here in the short term.”

New York’s main contract, West Texas Intermediate (WTI) for April delivery, was down 23 cents at $102.36 in mid-morning Asian trade, while Brent North Sea crude for April was 15 cents lower at $109.37. Equity markets as well as oil prices were boosted after Yellen’s inaugural testimony to House representatives on February 11 when she said the bank would continue its market-friendly, low-interest rate policies. The US Department of Energy’s weekly petroleum stockpiles report Wednesday showed commercial crude oil supplies rose only 100,000 barrels last week, one-eighth of what analysts expected.

Google Denies $10 Billion Bid For WhatsApp

Google has reportedly denied rumours that it approached WhatsApp for an acquisition before Facebook grasped the opportunity. It was rumoured that Google had offered a reported 10 billion dollars, almost half of Facebook’s 19 billion dollars for WhatsApp, according to reports. Although, there had not been any formal bid from Google, it doesn’t necessarily mean that the search giant wasn’t interested in a deal as media reports had earlier pointed out that WhatsApp was asking Google for 1 billion dollars. There were also indications that Google CEO, Larry Page met with WhatsApp co-founder and CEO Jan Koum in an attempt to convince him not to hook up with Facebook CEO Mark Zuckerberg. Usually, there’s no smoke without fire, so even if these ‘rumours’ were to a lesser or greater extent false, it will be interesting to observe Google’s moves towards other messaging apps in the market.

That sums up today’s highlights. Keep an eye on all upcoming important trading events via Facebook, Twitter, Google+ and LinkedIn. We hope you have a profitable day on the markets!

Just A Minute!

Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the markets:

Main Trading Events Of The Day: USD Existing Home Sales @ 15.00 GMT

Earnings Reports: N/A

WHAT WE’RE WATCHING TODAY

U.S. New Home Building Plunges As Existing Home Sales Due To Disappoint

U.S. new home construction - housing starts - recorded their biggest drop in almost three years in January, probably weighed down by harsh weather, but the third month of declines in permits pointed to some underlying weakness in the housing market. The Commerce Department said starts plunged 16% to a seasonally adjusted annual rate of 880,000 units, the lowest level since September. The percentage drop was the largest since February 2011. Starts for December were revised up to a 1.05 million-unit pace from the previously reported 999,000-unit rate. Economists had expected starts to fall to a 950,000-unit rate in January. Freezing temperatures have been blamed for the sharp slowdown in hiring in December and January although there is evidence that the economy was already losing momentum towards the end of the fourth quarter.

Meanwhile, January’s existing home sales are due to be reported today are expected to show a decline of 3.5 percent to 4.7 million. Stocks rallied Thursday and bonds fell, as investors ignored a weak report from the Philadelphia Fed, which showed a plunge in new orders and a surprise contraction in manufacturing activity. Analysts believe that there is a choppy picture in the very short term but housing is basically in good, solid shape from an intermediate point of view, and that with fairly moderate mortgage rates – assuming the economy starts to come back in the spring, a lot of the pent up demand for housing may get stronger as hiring picks up.

China’s Stocks Fall as Yuan Weakens

China’s stocks fell the most in six weeks, while the yuan headed for its biggest weekly slide since 2011 as a manufacturing slowdown fuelled concerns the economic expansion is weakening. Analysts believe the market is worried that the government may tolerate a bigger decline in economic growth amid the restructuring of the economy. The yuan dropped 0.3 percent today to 6.0837 per dollar, extending this week’s loss to 0.8 percent. The currency fell 0.1 percent to 6.089.

In the meantime, as finance ministers and central bank chiefs from the Group of 20 (G20) gather ahead of a weekend meeting in Sydney, the world’s rich nations pushed back against emerging market complaints about the spillover effects of their monetary policies, saying that they had to get their own houses in order and get on with the agenda of lifting global growth. Emerging nations want the U.S. Federal Reserve to calibrate its winding down of stimulus so as to mitigate the impact on their economies. Developed members reply that the troubles in the emerging world are mostly homegrown and domestic interest rates have to be set with domestic recoveries in mind. That was a sentiment very much echoed by the finance ministers of Japan, Britain and Germany. The head of the U.S. Treasury called on China, Japan and Europe to make domestic demand the engine room of growth.

Google Announces Project Tango, A Smartphone That Can Map The World Around It

Google has just announced, under a new initiative called Project Tango, a prototype Android smartphone that can learn and map the world around it. Google says that the phone will learn the dimension of rooms and spaces just by being moved around inside of them. Walking around your bedroom, for example, would help the phone learn the shape of your home. Google hopes that by creating a robust map of the world, the phone could eventually give precise directions to any given point that needs to be reached. The goal of Project Tango is to give mobile devices a human-scale understanding of space and motion. Google has 200 devices that it’s preparing to give out to developers who want to build mapping tools, games, and new algorithms that take advantage of the phone’s sensors, and it expects to send them all out by March 14th. Google stresses that the technology is still in early stages, but it still sees it as on the way to reaching millions of people down the road. Watch out for a major rollout in the future!

That sums up today’s highlights! We hope you have a profitable day on the markets.

Just A Minute!

Here’s Tuesday’s ‘Just A Minute’ bringing you a 60 second summary what’s happening in the markets today:

Main Trading Events Of The Day: U.S. Fed Chair Yellen Testifies @ 15.00 GMT; U.S. JOLTS Job Openings @ 15.00 GMT

Earnings Reports: Look out for AIG coming up Thursday.

WHAT WE’RE WATCHING TODAY

Analysts Expecting Janet Yellen To Emphasise Continuity

All eyes will be on Federal Chair Janet Yellen later today as she testifies on monetary policy and the U.S. economic outlook. Financial markets will be watching closely for any signal that Yellen is contemplating policy changes even though economists think such a signal is highly unlikely. Yellen’s appearance is of particular interest because it follows two weak monthly jobs reports and a spate of market volatility largely tied to turmoil in emerging markets. Her testimony comes four days after the release of the government’s nonfarm payrolls report, which had the economy creating a lower-than-estimated 113,000 jobs in January and the unemployment rate falling to 6.6 percent, a five-year low and not all that far from the Fed’s threshold for reducing stimulus. Stocks ended with modest gains on Monday as investors digested recent market gains and looked ahead to new Federal Reserve Chair Janet Yellen’s first testimony before lawmakers.

Asian Stocks In Biggest Leap Since November

Asian markets continued to climb ahead of Janet Yellen’s first public appearance as chair of the US Federal Reserve. Major indices in the region were positive, with Hong Kong’s Hang Seng leading with a 1.8 per cent gain, its third climb in four sessions. The Shanghai Composite added 0.9 per cent to Monday’s 2 per cent gain while South Korea’s Kospi was on pace for a fifth straight daily gain with a 0.5 per cent rise. The solid gains were notable following a less than enthusiastic session on Wall Street, where the S&P 500 nudged forward 0.2 per cent. Blue chips were relatively unmoved. A gauge of Asian stocks outside Japan rose, heading for its biggest advance since November. Investors believe that Yellen is going to be dovish given the recent weakness in U.S. employment numbers and that long term investors could start accumulating Chinese shares. Valuations are cheap but investors need to bear in mind that financial conditions might remain tight as the government reins in excessive credit growth.

Is Cash Cow Microsoft A Good Buy?

Microsoft is a great cash cow of a company and has a strong position in cloud computing, a growing market. The company’s stock has risen by more than 10% since Ballmer announced he was stepping down. Compared to other tech giants, Microsoft is relatively cheap and pays a healthy dividend, so, should you buy? There are one or two signs to cautious of. Microsoft faces a serious long-term challenge that may prove very damaging. First of all, there’s Microsoft’s weak position in smartphones and tablets which is certainly a major problem but the main concern is that Microsoft’s near monopoly on desktop operating systems is under threat. Asus has just launched a budget desktop PC in the U.S. that is retailing for just $179, almost 50% cheaper than the cheapest PC produced by Hewlett-Packard. It manages to do this using Google’s Chrome OS operating system, which Google gives away free. By contrast, the Hewlett-Packard PC uses Windows which is not free; Hewlett-Packard has to pay a licence fee to Microsoft. Two of the three top-selling laptops on Amazon.com over Christmas were Chromebooks, powered by Chrome OS and this is a trend expected to continue. If you are considering investing in Microsoft, remember that although it is still early days for Chrome OS, the momentum as we have seen, is beginning to build.

That sums up Tuesday’s highlights! We hope you have a profitable day on the markets.

S&P 500 Advances Most This Year on Retail Sales

The Standard & Poor 500 Index has recorded its biggest gain of the year on rising U.S. stocks amidst better-than-expected retail sales and a corporate merger that boosted confidence in U.S. economy.

Technology companies were lead in gains by Inter Corp. and Jabil Circuit Inc. with rises of at lease 4 percent as analysts posted upgrades. Google (GOOG) Inc. advanced 2.4 percent following its purchase agreement for thermostat maker Nest Labs Inc. for $3.2 billion in cash. Time Warner Inc. refused an acquisition offer from Charter Communications Inc. and added 2.7 percent. JPMorgan Chase & Co. and Wells Fargo remained at their previous levels following fourth-quarter reports.

The S&P 500 (SPX) climbed 1.1 percent, its biggest increase since 18th December and one that erased nearly all of yesterday’s loss. The Dow Jones Industrial Average advanced 115.92 points, or 0.7 percent. In terms of share numbers, about 6.5 billion of them were bought and sold on U.S. market yesterday, moving at 7.7 percent above the 30-day average.

Yesterday, the S&P lost 1.3 percent, the greatest amount since November, as investors reconsidered their valuations following the record levels the index reached last year on a 30 percent valuation. The benchmark index lost 1.6 percent from the start of the year through yesterday, making this its worst beginning to a year since 2009.

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