Growth Worries Take Center Stage - Ahead of Wall Street
22 Settembre 2011 - 11:04AM
Zacks
Thursday, September 22, 2011
The Fed came through as expected, but the markets seemed
unimpressed. In fact, the markets appear to have been spooked by
the Fed's action. Overnight reports about manufacturing weakness in
China and Europe add to concerns about the U.S. growth outlook from
the Fed statement.
The fear is that all the major global economies are slowing down in
a synchronized fashion. Having spent pretty much all of its
firepower already, there is little that Fed could do in the face of
such a development.
The Fed announcement turned out to be somewhat more aggressive than
was expected. The announcement of $400 billion in long-term
treasury bond purchases over the next 9 months was bigger than what
I wrote about the day before. This will extend the duration of the
Fed holdings by almost 2 years to 8 years.
They also came out with more support for the mortgage market than
was expected. The Fed came across sanguine on the inflation
question, but its discussion of the growth outlook appeared to show
a further downgrade from the last time around.
And it is this growth question that has the U.S. and global markets
worried. The fact that we have weak reports about China and Europe
today doesn't help the picture at all. China's September
purchasing-mangers index (PMI), comparable to the U.S.
manufacturing ISM report, fell below the prior month's level to
49.4. We also got a sub-50 PMI reading from the Euro-zone for the
first time in almost two years.
In the U.S., we got a sub-par outlook from economic bellwether
FedEx (FDX) and kind of an inline Jobless Claims
reading. Weekly Jobless Claims dropped by a greater than expected
9K for the week to 423K 428K. The prior-week's tally was revised
upwards to 432K from 428K. The relatively more stable 4-week
average increased by 0.5K last week to 421K.
The Jobless Claims numbers were not bad. But I don't think the
market will be able to read anything into them. The focus will
remain on the global economic slowdown, which gets an unhelpful
helping hand from this morning's FedEx earnings report. FedEx met
earnings expectations on a modest top-line beat, but provided weak
guidance, citing slowing global economic growth.
In other corporate news,
Discover Financial (DFS)
came out with better-than-expected results.
Hewlett-Packard's (HPQ) board is reportedly
contemplating booting out the company's CEO, Leo Apotheker,
following a series of mis-steps in his short 9 months at the job.
We will have earnings reports from
Nike (NKE)
after the close today.
Sheraz Mian
Director of Research
DISCOVER FIN SV (DFS): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
NIKE INC-B (NKE): Free Stock Analysis Report
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