STOCKS CLIMB AGAIN: Here's What You Need To Know

Sam Ro

 Jan. 22, 2013

floridapfe / Flickr

Stocks barely budged. But they continue to sit at their highest level in years.

First the scoreboard:

Dow: 13,712, +62.5, +0.4 percent

S&P 500: 1,492, +6.5, +0.4 percent

NASDAQ: 3,143, +8.4, +0.2 percent

And now the top stories:

• The economic data was mixed this morning.  Existing home sales unexpectedly fell 1 percent to an annualized rate of 4.94 million in December.  Economists were expecting a modest gain.  But there was good news behind the headline number.  Home prices climbed for the 10th straight month.

• The Richmond Fed index, however, was bad news all around.  The headline number plunged to -12 in January from last months' reading of 5.  The new orders sub-index plummeted to -17 from +10 in December.  "Nearly all broad indicators of activity fell into negative territory," they wrote. "Other indicators also suggested additional softness. Capacity utilization turned negative as did the gauge for delivery times, while backlogs continued its downward trend. In addition, finished goods inventories grew at a slightly quicker pace."

• Debt ceiling talks continue to rage on.  But it seems that the Republicans are increasingly caving.  Club for Growth, a conservatives grassroots organization feared by most Republicans, has given the GOP the green light to vote for the House debt ceiling bill Wednesday.

• One of the big unresolved issues of the fiscal cliff is the sequester, or the massive spending programs that were supposed to expire automatically at the end of the 2012.  While many think that cuts would be bad news for stocks, Deutsche Bank's David Bianco thinks otherwise. "As we argue in our note, contrary to most views, we believe significant sequestration is good for stocks and see the main threat to the rally as being the failure to put through any spending cuts in 2013," he wrote. "We see the upcoming deadlines as an opportunity to improve the deficit. Slowing longer-term spending is key to stabilizing debt/GDP, but material 2013 cuts are needed for credibility."

• Market guru Ed Yardeni also reiterated his bullish outlook for the markets. "I’m still targeting 1565 before the middle of the year, matching the record high on October 9, 2007," he wrote. "That would be an increase of 5.3% from Friday's close. My yearend target is still 1665, which would put the index up 16.7% for the year following last year’s gain of 13.4%"  

10 Things You Need To Know Before The Opening Bell

Mamta Badkar

 Jan. 22, 2013

Vince Bucci/Getty Images

Good morning. Here's what you need to know.

• Asian markets were mostly lower in overnight trading with the Nikkei down 0.35 percent after the Japanese central bank announced unlimited easing. The yen is up on the news. Europe is selling off and U.S. futures are flat.

• The Bank of Japan announced an open-ended asset purchase plan set to begin January 2014. The central bank will purchase 2 trillion yen worth of Japanese government bonds and 10 trillion yen worth of T-bills per month. It also adopted a 2 percent inflation target. 

• At his second inaugural address President Obama addressed some of his plans for the second term. These included gay rights, gun control, climate change, and immigration, and Obama showed that he was willing to take on the Republicans. He didn't spend a lot of time addressing the deficit or a "grand bargain"
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• German investor confidence surged to 31.5 in January, from 6.9 in December, the highest level in 2.5 years. The Bundesbank has said that there are signs that the economic recovery has begun.

• In earnings news, Johnson & Johnson is expected to announce fourth quarter earnings of $1.17 per share. Google is expected to announce Q4 earnings of $10.58 per share. 

• Existing home sales for December and the Richmond Fed manufacturing index for January will be out at 10 a.m. ET. Analysts polled by Bloomberg are looking for existing home sales to rise to a 5.1 million annual rate, and for the manufacturing index to hold steady at 5. 

• Research in Motion's stock is up nearly 9 percent in pre-market trading, after CEO Thorstein Heins told German publication Die Welt that the company will look into alliances with other tech companies after the release of its Blackberry 10 models, according to Reuters. He said RIM could sell its hardware production or licenses to its software.

• India raised its import tax on gold and platinum to 6 percent, from 4 percent, effective immediately. India has said that about 80 percent of its current account deficit is because of gold and has been enacting measures to reduce demand for the precious metal. 

• The UK budget deficit ex-support for banks, widened to £15.4 billion in December, compared with £14.8 billion a year ago. Spending increased 5.4 percent, and revenue was up 3.6 percent.

• The World Economic Forum's five-day gathering of executives, policymakers, and academics, begins in Davos this week. Ahead of the meeting, a Bloomberg Global poll found that international investors are most bullish on stocks in 3.5 years. 

Markets Tumbling, Yen Soaring After Historic Move By The Bank of Japan

Joe Weisenthal

 Jan. 22, 2013

Mandel Ngan/Getty Images

Good morning.

The big story: Late last night, the Bank of Japan unleashed its widely expected, but historic easing. It set an inflation target of 2%, and announced unlimited QE.

As it was expected, the yen spiked on the news, and the Nikkei eventually ended lower.

Meanwhile European markets are tumbling, with big indices off over 1%.

Here's Why The Yen Is Soaring, And People Think That The Bank Of Japan's Big Move Could Be Another Big Flop

Joe Weisenthal

Jan. 22, 2013

Wikimedia Commons

So the Bank of Japan announced a new, more aggressive inflation target, coupled with unlimited asset purchases, last night.

And yet the Nikkei fell and the yen is on a tear.

What gives?

Well, one, there's almost certainly a "sell the news" element, as this was seen for miles away.

But in terms of specific, the bank maybe didn't go as far as it could have.

SocGen currency strategist Kit Juckes explains that the action isn't aggressive as the headline suggests.

 Please Sir, I want more, said Oliver Twist, fed up with a diet of thin gruel. Such is the market's response to news in Japan. The Bank of Japan announced that from January 2014, it will embark on open-ended bond purchases, buying Y13trn in bonds a month (but only Y2trn a month in JGBs), until such a time as its new 2% inflation target is met. The new programme starts so far away because that is when the current round of bond-buying will have run its course, but the BOJ could have increased the pace of bond-buying immediately, and the 2% inflation target is viewed by some commentators overnight as disappointing because there is no specific timeline attached to it.

So disappointment on three fronts: The inflation target has no fixed time limit, the bond purchases are still skewed to the short end of the curve, and they don't start soon enough. Japan has consistently failed to achieve 1% inflation and increasing the target to 2% is reminiscent of an overweight currency strategist aiming for a greater weight loss, to make up for past failure to diet. The key is not the target but what is done to achieve it. However, a commitment to buy bonds until the target is reached will lead to substantial bond purchases and will eventually bear fruit, delivering a weaker currency. The relative growth rates of the Fed and ECB's balance sheets has been a driver of EUR/USD, and the BOJ is likely to be growing its balance sheet faster than other major central banks in the future, if only because hitting the 2% inflation target is going to be very difficult.

22 Jan 2013 Kuala Lumpur Closing Stock Prices

Close Prior Change % Change AMMB 6.36 6.42 -0.06 -0.93 BAT 58.60 59.50 -0.90 -1.51 C&uC 2.73 2.75 -0.02 -0.73 Genting 9.60 9.58 +0.02 +0.21 GenM 3.59 3.56 +0.03 +0.84 IGB 2.35 2.37 -0.02 -0.84 L&G 0.40 0.40 -0.01 -1.25 MayBank 8.87 8.86 +0.01 +0.11 MAS 0.70 0.70 +0.01 +0.72 PetGas 18.50 18.50 unch unch PbBank 15.60 15.80 -0.20 -1.27 RHBCap 7.68 7.77 -0.09 -1.16 Sime 9.22 9.22 unch unch Telekom 5.55 5.58 -0.03 -0.54 Tenaga 6.92 6.90 +0.02 +0.29 TopGlove 5.35 5.31 +0.04 +0.75 UMW 11.80 12.22 -0.42 -3.44 YTL 1.75 1.76 -0.01 -0.57

22 Jan 2013 Kuala Lumpur Most Actives

Volume Close Change % Change Patimas 98,189,400 0.130 +0.005 +4.00 Compugt 39,119,700 0.090 +0.005 +5.88 Tiger 34,511,900 0.330 +0.025 +8.20 Axiata 29,977,500 6.360 +0.060 +0.95 KAsset 27,655,800 0.075 -0.010 -11.76 Itronic 21,526,100 0.555 +0.040 +7.77 DiGi 20,880,700 4.910 -0.020 -0.41 SKPetro 18,115,100 2.940 +0.070 +2.44 Daya 17,310,100 0.845 +0.020 +2.42  Alam 17,310,100 0.845 +0.020 +2.42 Perisai 15,597,800 1.080 +0.050 +4.85 AirAsia 14,899,700 2.800 -0.050 -1.75 CIMB 14,656,400 7.220 -0.020 -0.28 Maxis 14,165,700 6.350 -0.070 -1.09 MayBank 14,031,700 8.870 +0.010 +0.11 Scomi 13,958,300 0.355 unch unch Telekom 13,855,200 5.550 -0.030 -0.54 KNM 12,727,800 0.505 +0.010 +2.02 UEMLand 12,677,600 2.150 -0.030 -1.38 ASuprem 12,410,300 0.190 unch unch THHeavy 11,420,300 0.495 -0.010 -1.98 AMMB 11,231,700 6.360 -0.060 -0.93 Astro 10,573,400 2.800 unch unch PbBank 10,254,700 15.600 -0.200 -1.27 Dialog 10,235,300 2.370 unch unch Flonic 9,405,000 0.090 +0.005 +5.88 Tenaga 8,186,700 6.920 +0.020 +0.29 XOX 7,467,500 0.155 +0.005 +3.33 TMS 7,467,300 0.090 +0.005 +5.88 RGB 7,188,000 0.080 -0.005 -5.88 YTL 7,126,600 1.750 -0.010 -0.57 FGV 7,077,500 4.500 +0.080 +1.81 Genting 6,877,200 9.600 +0.020 +0.21 Takaso 6,667,200 0.220 -0.005 -2.22 IngenCo 6,654,700 0.090 +0.005 +5.88 Glotec 6,583,000 0.070 unch unch Nextnat 6,377,300 0.095 unch unch Mtronic 6,183,100 0.110 unch unch JCY I 6,124,000 0.620 unch unch DRB-HICOM 6,030,600 2.590 unch unch GenM 5,706,100 3.590 +0.030 +0.84 E&O 5,637,700 1.510 +0.010 +0.67 Tebrau 5,530,900 0.830 +0.015 +1.84 MAS 5,333,900 0.700 +0.005 +0.72 PetChem 5,308,700 6.080 -0.140 -2.25 InchKen 4,847,700 1.050 +0.060 +6.06 AsiaMedia 4,829,500 0.175 -0.005 -2.78 Sime 4,819,100 9.220 unch unch R&A 4,780,700 0.060 unch unch WCT 4,681,500 2.240 -0.010 -0.44

21 Jan 2013 Kuala Lumpur Closing Stock Prices

Close Prior Change % Change AMMB 6.42 6.54 -0.12 -1.83 BAT 59.50 59.90 -0.40 -0.67 C&C 2.75 2.78 -0.03 -1.08 Genting 9.58 9.80 -0.22 -2.24 GenM 3.56 3.66 -0.10 -2.73 IGB 2.37 2.41 -0.04 -1.66 L&G 0.40 0.43 -0.03 -6.98 MayBank 8.86 9.00 -0.14 -1.56 MAS 0.70 0.72 -0.03 -3.47 PetGas 18.50 18.98 -0.48 -2.53 PbBank 15.80 16.14 -0.34 -2.11 RHBCap 7.77 7.92 -0.15 -1.89 Sime 9.22 9.39 -0.17 -1.81 Telekom 5.58 5.60 -0.02 -0.36 Tenaga 6.90 6.99 -0.09 -1.29 TopGlove 5.31 5.43 -0.12 -2.21 UMW 12.22 12.60 -0.38 -3.02 YTL 1.76 1.80 -0.04 -2.22