Join        Login             Stock Quote

Japan Launches Larger Than Expected Stimulus Program

 January 11, 2013 12:12 PM

The markets are slightly lower in early trading, though not by much.  The action this week has been pretty constructive this week with the S&P 500 closing at multi-year closing highs yesterday.

Overnight markets were mixed in Asia, with Japan rallying +1.4% after the govt. launched a 10.3 trillion Yen stimulus package that they hope will boost GDP by 2.0%.  China closed on the flip side with a large -1.8% decline on the heels of a hotter than expected CPI reading.  China's CPI rose 2.5%, which suggests higher inflation and could make further stimulus measures more difficult.

European markets are also mixed after some weak economic data.  Spain's industrial production fell -7.2%.  And in the UK industrial production declined -2.4%.  JPMorgan lowered Germany's Q4 GDP forecast and now expects a -2.0% contraction.  That would drag down overall GDP for the Eurozone as well.

[Related -Bank Stocks: The Misbegottenness of the Volcker Rule Truly Knows No Bounds]

In earnings news, INFY surprised the Street with a rare earnings beat and also raised guidance.  That is causing the stock to spike +18% higher so far, and is also boosting one of our portfolio companies CTSH (+4%).

Wells Fargo (WFC) topped earnings estimates, but lower net interest margins is leading to some profit taking and the stock is 1% lower this today.

And Chevron (CVX) raised its guidance saying earnings will be above consensus forecasts.

The euro is bouncing again and pushing the dollar index lower.  This usually boost commodities, but they are still lower today.  Oil prices are lower to $93 and gold prices are falling back to $1659.  I suspect commodities would be down more were it not for the weakness in the dollar.  Some of this might have to do with the concerns today about China, as materials stocks are trading lower as well.

[Related -Gold hasn’t lost its allure in my portfolio]

The 10-year yield is firm at 1.90%.  And the VIX is only fractionally higher still lingering near the $13.55 level.  Portfolio insurance is on sale, and it might not be a bad time now or in the near future to buy some put protection on portfolios for those that trade options.

Trading comment: The market did a good job this week not giving back any of last week's outsized gains.  But the S&P 500 is also running into resistance around the 1470 level.  We still expect some backing and filling as the market consolidates around these levels.  Ultimately we are looking for another push higher in the markets before see a more pronounced pullback, and we pretty much always get a Q1 correction at some point.  Additionally, more growth stocks are breaking to new highs so that is where we want to focus.  One caveat is to tread carefully ahead of earnings, but those stocks that show positive reactions to solid earnings and guidance should continue to do well.

KAM has long positions in CTSH and WFC



Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageBogle Says Indexing Destined To Win The Battle Of The Quants

Vanguard founder John Bogle gave a powerful speech last month at the Q Group’s Spring Seminar that lays out read on...

article imageVMAX and VMIN Poised to Be Most Important VIX ETP Launch in Years

REX Shares is launching two new VIX exchange-traded products on Tuesday in what is likely to be the most read on...

article imageThe April 29 Gold Triangle Breakout Update

If you’re just watching stocks, you may be missing this powerful Triangle Breakout surge in read on...

article imageSell In May, But It Is A Presidential Election Year

With May just around the corner, articles covering the "Sell in May' phenomenon are not in short supply and read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.