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US midday: Cleveland Fed hints at possible tapering of QE

Date: Friday 15 Feb 2013

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- El Erian (PIMCO): Markets artificially high, time to take profits
- Fed (Pianalto): May be convenient to taper bond purchases

Dow Jones Industrials: -0.29%
Nasdaq Comp.: -0.33%
S&P 500: -0.35%

US equities are now registering slight falls and off their best levels of the day despite the release of several better-than-expected macroeconomic indicators. That comes on the heels of more aggressive remarks out of some Fed policy makers and warnings from some noted market-watchers.

Acting as a backdrop, perhaps, there is somewhat more market commentary to be seen of late regarding the lack of agreement needed to avoid automatic spending cuts in government outlays from ‘kicking-in’ come next March 1st.

That seems to be coinciding rather neatly with warnings out of some analysts regarding the risk of a short-term tactical ‘pull-back’. Mohammed El-Erian, the Co-Chief Executive of bond fund manager PIMCO, for one, is of the belief that markets are being artificially inflated. That opinion is shared by some strategists at Fidelity.

Of interest as well, in a speech delivered this evening the President of the Federal Reserve Bank of Cleveland, Sandra Pianalto, indicated that the US central bank may indeed opt to taper its asset purchases. In her own words “we could aim for a smaller sized balance sheet than would otherwise occur if we were to maintain the current pace of asset purchases through the end of this year, as some financial market participants are expecting. This course of action would be all the more attractive if the economic outlook continues to improve, as I expect it will.”

Those remarks mimicked similar ones out overnight from her peer, James Bullard, over at the US Federal Reserve Bank of St.Louis.

Wal Mart warns

Wal Mart is down sharply after warning of the worst start to a month – in sales – in seven years.

Shares of Herbalife are rocketing 22% higher after it was revealed that billionaire investor Carl Icahn has accumulated a 12.98% stake in the company.

Quarterly results out of JM Smucker, Campbell Soup and VF Corp. have come in below forecasts.

Marriott Intl. and Rockwell Collins have both announced share buy-back programmes.

BMO Securities downgrades Urban Outfitters to ‘market-perform.’

Better than expected economic data

The University of Michigan's preliminary consumer sentiment gauge for the month of February has come in at 88 (Consensus: 85.5), led by the current-conditions sub-index, which improved to 88 from 85 (Consensus: 85.5).

US industrial production contracted at a 0.1% month-on-month clip in January, but beat expectations when revisions to prior data are taken into account. Estimates for output from the manufacturing sector were revised higher particularly strongly.

The Federal Reserve Bank of New York’s manufacturing sector gauge for the month of February has come in at 10.04 (Consensus: -2).

Pull back in crude futures


West Texas crude futures are now falling by 1.47% to the $95.88/barrel level on the NYMEX.

10 year US Treasury yields are now flat and at the 2% mark.

S&P 500 - Risers
MeadWestvaco Corp. (MWV) $35.20 +11.11%
Monster Beverage Corp (MNST) $51.10 +7.15%
Best Buy Co. Inc. (BBY) $16.55 +5.35%
Gap Inc. (GPS) $32.65 +4.13%
VF Corp. (VFC) $157.83 +3.29%
Archer-Daniels-Midland Co. (ADM) $32.43 +3.28%
Sandisk Corp. (SNDK) $51.50 +2.94%
CBS Corp. (CBS) $44.13 +2.76%
Sealed Air Corp. (SEE) $19.47 +2.64%
Biogen Idec Inc. (BIIB) $168.25 +2.22%

S&P 500 - Fallers
Agilent Technologies Inc. (A) $42.50 -4.67%
Apache Corp. (APA) $76.83 -4.36%
Frontier Communications Co. (FTR) $4.07 -4.13%
Eog Resources Inc. (EOG) $127.84 -4.12%
St Jude Medical Inc. (STJ) $41.31 -3.95%
Newfield Exploration Co (NFX) $27.03 -3.84%
Sears Holdings Corp. (SHLD) $46.63 -3.78%
Hospira Inc. (HSP) $28.94 -3.69%
Peabody Energy Corp. (BTU) $24.21 -3.20%
Newmont Mining Corp. (NEM) $43.16 -3.12%

Dow Jones I.A - Risers
Coca-Cola Co. (KO) $37.33 +1.33%
United Technologies Corp. (UTX) $90.51 +0.91%
Walt Disney Co. (DIS) $55.37 +0.89%
Pfizer Inc. (PFE) $27.22 +0.59%
International Business Machines Corp. (IBM) $200.36 +0.36%
Merck & Co. Inc. (MRK) $41.33 +0.35%
Unitedhealth Group Inc. (UNH) $57.19 +0.25%
McDonald's Corp. (MCD) $93.58 +0.02%
3M Co. (MMM) $102.80 +0.02%

Dow Jones I.A - Fallers
Wal-Mart Stores Inc. (WMT) $68.84 -2.80%
Hewlett-Packard Co. (HPQ) $16.78 -1.44%
Chevron Corp. (CVX) $114.22 -1.28%
American Express Co. (AXP) $61.55 -1.27%
E.I. du Pont de Nemours and Co. (DD) $46.65 -1.22%
Bank of America Corp. (BAC) $11.99 -1.15%
JP Morgan Chase & Co. (JPM) $48.72 -1.02%
Intel Corp. (INTC) $21.03 -0.94%
Exxon Mobil Corp. (XOM) $87.83 -0.78%
General Electric Co. (GE) $23.24 -0.72%

Nasdaq 100 - Risers
Monster Beverage Corp (MNST) $51.10 +7.15%
Sandisk Corp. (SNDK) $51.50 +2.94%
Biogen Idec Inc. (BIIB) $168.25 +2.22%
Dollar Tree Stores Inc. (DLTR) $40.81 +2.22%
Activision Blizzard Inc. (ATVI) $14.28 +2.04%
Intuit Inc. (INTU) $61.94 +1.94%
Comcast Corp. (CMCSA) $41.06 +1.78%
Sba Communications Corp. (SBAC) $69.09 +1.44%
Akamai Technologies Inc. (AKAM) $38.39 +1.37%
NetApp Inc. (NTAP) $36.32 +1.28%

Nasdaq 100 - Fallers
Randgold Resources Ltd. Ads (GOLD) $85.99 -3.89%
Sears Holdings Corp. (SHLD) $46.63 -3.78%
Regeneron Pharmaceuticals Inc. (REGN) $164.12 -3.03%
Maxim Integrated Products Inc. (MXIM) $32.08 -2.61%
Nuance Communications Inc. (NUAN) $18.64 -2.56%
Starbucks Corp. (SBUX) $54.31 -2.24%
Micron Technology Inc. (MU) $7.91 -2.17%
DIRECTV (DTV) $49.20 -2.01%
Amazon.Com Inc. (AMZN) $264.07 -1.92%
Bed Bath & Beyond Inc. (BBBY) $57.69 -1.79%



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