A Hot One
DOW + 115 = 15,882
SPX + 9 = 1868
NAS + 0.37 = 4472
10 Y + .04 = 2.02%
OIL + 1.50 = 29.85
GOLD + .20 = 1102.40
The European Central Bank announced today that they will hold interest rates at record lows of 0.3%. Mario Draghi said the European Central Bank may need to provide more stimulus programs as soon as March to address concerns about the euro-area recovery. Draghi said, “Downside risks have increased again amid heightened uncertainties about emerging-market growth prospects. It would therefore be necessary to review and possibly reconsider our monetary-policy stance at our next meeting.” Now remember that the markets just love free money, and that was essentially what Draghi promised.
China’s central bank cranked up cash injections in its money-market operations for the third week in a row, trying to counter capital outflows. The PBOC added $60 billion to the financial system using reverse-repurchase agreements, the most in three years. The Shanghai composite dropped 3.2%.
Brazil’s central bank kept policy on hold. The Central Bank of Brazil held its benchmark rate at 14.25%, surprising the consensus, which was calling for a 50-basis-point hike to 14.75%. The bank has been under pressure from politicians and local businesses to raise rates in an effort to combat inflation that is running at a 12-year high, above 10%.
Oil prices moved higher today. Yesterday the API report showed a U.S. crude inventory build of 4.5 million barrels last week – about double trade expectations. Today the U.S. Energy Information Administration reported crude inventories rose by 4 million barrels for the week ended Jan. 15. Now normally, you might expect prices to drop on news that inventories are growing, but the best explanation I can offer is that oil was a little oversold; even with today’s gain, prices are still under $30 a barrel.
Russia’s ruble fell more than 5% overnight, to hit a new record low of 85.97 per dollar. The country is suffering from the slump in oil prices, which has sparked widespread predictions of a second straight year of recession. Russia’s central bank has indicated it will not intervene to support the currency.
The number of applications for unemployment benefits unexpectedly increased last week to a six-month high. Initial jobless claims climbed by 10,000 to 293,000 in the week ended Jan. 16. The four-week moving average increased to 285,000, the highest since mid-April.
The Philadelphia Fed’s manufacturing index was in negative territory in January for the fifth month in a row. The index rose to negative 3.5 from negative 10.2
The first Friday of each month brings the report on non-farm payrolls, or the shorthand is the Jobs Report; a couple of weeks later we get a state by state breakdown. Today, the Arizona Department of Labor Stats reported Arizona’s seasonally adjusted unemployment rate dropped two-tenths of a percentage point from 6.0% in November to 5.8% in December.
The US seasonally adjusted unemployment rate remained unchanged at 5.0% in December. A year ago, the Arizona seasonally adjusted rate was 6.6% and the U.S. rate was 5.6%. The biggest job gains were found in trade, transportation, and utilities; the biggest job losses were in government and construction. Arizona employment grew by 2.5% (65,700 jobs) over the year ending in December.
January 21, 1970 marks the day of the first commercial flight of a Boeing 747. Today, Boeing announced plans to report a $569 million after-tax accounting loss as it cuts production of the iconic 747 jumbo jet in half. Boeing announced that it would lower its production rate on 747-8 jets to match demand in the cargo market.
In other words, it does not want to overproduce for a market that’s not demanding a lot right now. But demand for flight from the consumer economy are running above their recent trend. And this is really the whole economic story in a nutshell. In short, the outlook for consumers is solid while things are falling apart for manufacturers.
United Continental Holdings’ fourth-quarter profit missed analysts’ estimates as a strong dollar and weak economies in energy-dependent markets hurt demand from travelers. Adjusted earnings were $2.54 a share, missing estimates by 2-cents. Revenue dropped 3%.
Southwest Airlines reported it nearly tripled its profit in the final quarter of the year. The No. 4 U.S. airline by traffic said its fuel and oil expense dropped 37% in the latest quarter. Overall, the company posted a profit of $536 million, or 82 cents a share, up from $190 million or 28 cents a share a year earlier. Revenue was up 7.5%
Verizon Communications added 1.5 million new subscribers and exceeded analysts’ profit estimates even as rivals pushed price cuts and promotions to lure customers away. Fourth-quarter earnings excluding some items were 89 cents a share, a penny better than estimates.
Schlumberger reported better-than-expected fourth-quarter earnings and quarterly sales in line with Wall Street consensus. The company said it earned an adjusted 65 cents a share in the quarter, down from $1.50 a share in the year-ago period. Revenue hit $7.7 billion, down from $12.6 billion in the year-ago period. The company faced a continued decline in rig activity, project delays and cancellations and other problems stemming from lower oil prices. The good news is that it wasn’t worse news.
American Express reported its fourth-quarter earnings fell to $899 million, or 89 cents a share, from $1.45 billion, or $1.39 a share, a year earlier. AmEx beat earnings estimates. Revenue dropped to $8.3 billion from $9 billion a year ago.
Union Pacific Corp. reported quarterly earnings that missed analysts’ estimates for the third time this year as a freight slump accelerated. Net income fell to $1.31 a share, 11 cents less than the average of estimates. Revenue decreased 15 percent to $5.21 billion compared with a forecast of $5.44 billion. It was the biggest miss in at least 10 years. The weakness in rail cargo probably will last this year as coal demand continues to drop and U.S. production lags.
General Motors said it sold 9.8 million vehicles in 2015. The results represent a third consecutive year of record global sales for GM. North American deliveries rose 6% to 3.6 million cars, trucks and crossovers, and it also delivered 3.6 million vehicles in China, an increase of 5% from 2014.
Sharp is leaning toward accepting a rescue by government-backed Innovation Network of Japan over a potentially larger offer from Foxconn Technology. A deal with INCJ would allow the firm to keep its technology within Japan and cooperate more closely with domestic companies. Sharp’s stock climbed as much as 25% in Tokyo after Foxconn offered $5.3 billion to take it over.
The next installment of the Star Wars franchise, originally slated to debut on May 26, 2017, is now scheduled to be released seven months later on Dec. 15, 2017. Disney did not cite specific reasons for the push, but did note the success of Star Wars: The Force Awakens. The film has garnered more than $861 million domestically and $1.9 billion internationally – the third largest global release ever.
If you believe in math and gravity and other such “theories” there appears to be precise evidence of a big, fat planet spinning far beyond the planetoid Pluto. The clues started piling up when astronomers discovered a mini Pluto (aka, rocky Kuiper Belt object far out in the nether regions of the solar system) with an interesting orbital twist… literally. Astronomers then noticed other objects floating around in distance and in the angle of the orbit relative to the horizon of the solar system. So it was more than coincidence.
Using very sharp pencils two Caltech astronomers Michael Brown and Konstantin Batygin, not only have validated the existence of this mystery planet they’ve referred to as “Planet 9”, they have determined both its mass and exact orbit. Planet 9 from Outer Space is apparently about 10 times the mass of Earth with an orbit 20 times farther out from the sun than Neptune. The only thing really missing from “9” is a fuzzy picture and a real name.
A blizzard watch has been posted from Virginia to New York, for a storm that threatens to bring high winds and heavy snow starting Friday and lasting through the weekend. The snow should begin falling in Washington before sundown Friday, with heavier amounts arriving overnight. In New York, the heaviest accumulations will come on Saturday, which is when Boston may get some snow as well.
Last year shattered 2014’s record to become the hottest year since reliable record-keeping began, according to separate sets of records kept by NASA and the National Oceanic and Atmospheric Administration; 2015’s sharp spike in temperatures was aided by a strong El Niño weather pattern late in the year that caused ocean waters in the central Pacific to heat up. But the unusual warming started early and steadily gained strength in a year in which 10 of 12 months set records.
NASA reported that 2015 was officially 0.23 degrees Fahrenheit (0.13 degrees Celsius) hotter than 2014, the prior record year. NOAA’s figures showed slightly greater warming, of about 0.29 degrees Fahrenheit (0.16 degrees C) hotter than 2014. A quarter of a degree may not sound like much, but on a planetary scale it’s a huge leap. Most previous records were measured by hundredths of a degree.
The El Niño weather pattern of 2015 produced some of the hottest temperatures ever witnessed across swaths of the equatorial Pacific. Across the globe, El Niño triggered powerful typhoons, spoiled cocoa harvests in Africa, and contributed to vast fires in Indonesia. California is getting pummeled with floods, and residents on the U.S. East Coast are bracing for an El Niño fueled snow dump this weekend. Because a strong El Niño still is in place, 2016 is expected to be an exceptionally warm year, and perhaps even another record.