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Aug 14, 2013

ADVFN III Evening Euro Markets Bulletin August 14, 2013.


ADVFN III Evening Euro Markets Bulletin
Daily world financial news Wednesday, 14 August 2013

London Market Report
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A return to growth in the Eurozone wasn’t enough to buoy markets today with the FTSE 100 finishing down 24.51 points at 6,587.43 after a choppy session.

Eurozone gross domestic product figures showed that the single-currency region exited a recession in the second quarter by expanding 0.3%, ahead of the 0.2% forecast. A 'beat' was widely expected after GDP data from the euro area's two-largest nations, Germany and France, came in ahead of estimates earlier this morning.

“Investors were initially buoyed by the news as on face value it showed that the troubled area is not economically stagnant,” said Financial Trader Shavaz Dhalla from Spreadex.

“However, once the realisation kicked in that the overall GDP is probably skewed by economic powerhouses such as Germany, and in reality, nations like Greece are still in a dire economic state led to investors panicking and the sell-off began,” he said.

In other economic news, the UK unemployment rate remained unchanged at 7.8% in June as expected, but jobless benefit claims declined more than anticipated in July by 29,200, the Office for National Statistics said. Analysts were expecting a fall of just 15,000. The number of jobless claims has now fallen for nine consecutive months, taking the rate to its lowest in more than four years.

Minutes from the latest Monetary Policy Committee meeting were also released today, showing that while members voted unanimously on policy they were divided on the decision to give forward guidance.

FTSE 100: RBS leads banks higher after Fitch report

Royal Bank of Scotland Group topped the risers on the FTSE 100 on Wednesday after ratings agency Fitch said that a break-up of the state-backed UK lender into a ‘good’ and ‘bad’ bank is increasing unlikely as the costs would outweigh the benefits. Part-nationalised counterpart Lloyds was also making gains today.

Banking peer Barclays also gained despite confirming reports Financial Director Chris Lucas will step down this week for health reasons. Lucas was due to depart the company on February 28th 2014 but said he had to bring the date forward.

Pharmaceutical group GlaxoSmithKline rose after JPMorgan Cazenove raised its recommendation on the shares to 'neutral'. The broker said that the upside from upcoming catalysts balances out earnings risk.

Leading the downside was housebuilder Persimmon, pulling back after an impressive +50% rise in the share price since the start of the year ahead of today.

ENRC was also a heavy faller as it reported a decline in first-half revenue after trading was hit by poor pricing environment, higher finance costs, increased effective tax rate and impairments at Boss Mining. Sector peers Rio Tinto and Anglo American were also lower today.

Glencore Xstrata however was bucking the trend, trading higher after reporting increases in copper, gold and coal production in the first half, offset partly by a slight fall in zinc output.

Oil major Shell was trading lower after going ex-dividend, though downside was limited after Barclays Capital upgraded its rating on the stock to 'overweight' saying that it remains "our preferred 'MegaCap' stock". Beverage groups Diageo and SABMiller were also down after going ex-dividend today.

FTSE 250: Imagination rebound continues on Apple speculation

Chip designer Imagination Tech surged today as the stock continues to rebound after hitting a three-year low just two weeks ago. The stock, which has historically been strongly correlated with that of customer Apple, could have been given a boost by the US gadget giant making gains.

As the market gears up for the launch of the next iPhone model on September 10th, Apple has again been in the spotlight in recent days after billionaire investor Carl Icahn revealed he has built up a "large" stake in the company and said its shares are "extremely under-valued". He also called for the firm to increase its share buyback and has had conversations with Chief Executive Tim Cook.

Leading the downside was construction group Balfour Beatty after saying that operating profits collapsed 99% for the first half of the year, due to shortfalls from its UK construction and professional services arms.

FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 344.70p +3.51%
Weir Group (WEIR) 2,292.00p +1.96%
Lloyds Banking Group (LLOY) 77.14p +1.79%
Aberdeen Asset Management (ADN) 384.30p +1.56%
Aviva (AV.) 404.90p +1.56%
Randgold Resources Ltd. (RRS) 4,943.00p +1.56%
Imperial Tobacco Group (IMT) 2,154.00p +1.22%
Legal & General Group (LGEN) 200.00p +1.21%
Burberry Group (BRBY) 1,593.00p +1.21%
Schroders (SDR) 2,450.00p +0.99%

FTSE 100 - Fallers
Persimmon (PSN) 1,184.00p -3.50%
Eurasian Natural Resources Corp. (ENRC) 229.30p -3.04%
easyJet (EZJ) 1,310.00p -2.53%
Rio Tinto (RIO) 3,193.50p -2.13%
AstraZeneca (AZN) 3,249.00p -1.89%
Rexam (REX) 505.50p -1.84%
Royal Dutch Shell 'B' (RDSB) 2,150.50p -1.76%
Anglo American (AAL) 1,545.00p -1.75%
Royal Dutch Shell 'A' (RDSA) 2,058.50p -1.60%
BT Group (BT.A) 326.20p -1.54%

FTSE 250 - Risers
Imagination Technologies Group (IMG) 286.00p +15.09%
Rentokil Initial (RTO) 103.00p +6.13%
Bank of Georgia Holdings (BGEO) 1,890.00p +5.59%
Synthomer (SYNT) 227.00p +5.34%
Dialight (DIA) 1,325.00p +4.66%
Interserve (IRV) 556.00p +3.93%
PayPoint (PAY) 1,185.00p +3.49%
Henderson Group (HGG) 178.90p +3.35%
African Barrick Gold (ABG) 153.70p +3.15%
Beazley (BEZ) 214.80p +3.12%

FTSE 250 - Fallers
Balfour Beatty (BBY) 233.10p -6.80%
Hochschild Mining (HOC) 250.00p -5.62%
Countrywide (CWD) 570.00p -4.52%
Centamin (DI) (CEY) 37.25p -3.87%
Direct Line Insurance Group (DLG) 223.40p -3.83%
Restaurant Group (RTN) 533.00p -3.79%
Moneysupermarket.com Group (MONY) 160.00p -3.61%
Computacenter (CCC) 509.50p -3.32%
Telecom Plus (TEP) 1,356.00p -2.80%
Wetherspoon (J.D.) (JDW) 720.50p -2.70%

Europe Market Report
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FTSE 100EuronextDax perfCAC 40
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Stocks mixed as Eurozone exits recession
FTSE 100: -0.01%
DAX: 0.12%
CAC 40: 0.30%
FTSE MIB: -0.06%
IBEX 35: -0.22%
Stoxx 600: 0.12%

European stocks were little changed after data showed the Eurozone exited its 18-month long recession in the second quarter.

The region's gross domestic product expanded by 0.3%, slightly beating the consensus estimate for an increase of 0.2%. Growth was led by Germany and France which was up in the second quarter by 0.7% and 0.5% respectively. Economists had predicted GDP expansion of 0.6% for France and 0.2% for Germany.

Italy and Spain, however, contracted 0.2% and 0.1% respectively.

Capital Economics warned that while the Eurozone’s recession may be over the “debt crisis in the periphery is decidedly not. The return to modest rates of economic growth in the euro-zone as a whole won’t address the deep-seated economic and fiscal problems of the peripheral countries,” the economist said.

BoE minutes, UK unemployment

Bank of England policymakers were divided on new Governor Mark Carney’s decision to keep interest rates at their record low, minutes of last week’s policy meeting revealed on Wednesday.

Carney said interest rates would remain at 0.5% until the unemployment rate falls to at least 7.0%, provided inflation expectations and financial stability were not jeopardised.

However, minutes of the meeting showed some policymakers were split on Carney’s commitment to low interest rates.

Martin Weale, an external member of the Monetary Policy Committee, voted against the policy as he was concerned it could push up medium-term inflation expectations.

"(Weale) saw a particularly compelling need to do more to manage the risk that forward guidance could lead to an increase in medium-term inflation expectations, by setting an even shorter time horizon," the minutes said.

Data on Wednesday also showed the unemployment rate held steady at 7.8% in June, as predicted.

Yet jobless benefit claims declined more than anticipated in July by 29,200 compared to June when it fell a revised 29,400, the Office for National Statistics said.

Rentokil, RWE

Rentokil Initial’s shares jumped after hiking its dividend and reporting good progress in its second quarter and momentum in the second half.

RWE retreated after Germany’s second-largest utility said recurrent net income rose to €1.99bn from €1.67bn, missing estimates.

Celesio tumbled after the German pharmaceutical distributor cut its 2013 forecast to €405m to €425m, down from €445m to €475m, citing discount competition in the German wholesale market.

Glencore Xstrata advanced after posting an increase in first half copper production.

Other asset classes decline

The euro/dollar fell 0.13% to the 1.3246 dollar mark.

Brent crude futures dropped $0.595 to $109.170 per barrel on the ICE.

US Market Report
Markets edge lower as Macy's disappoints
US markets fell slightly in early trading on Wednesday despite subdued producer price inflation and decent data from the Eurozone, as retail bellwether Macy’s disappointed with its second-quarter earnings report.

Trader will also still be digesting comments from Dennis Lockhart, the President of the Federal Reserve Bank of Atlanta, who sparked gains on Wall Street last night after downplaying fears of a premature withdrawal of stimulus in the States. Lockhart, a non-voting member of the Fed, said that the economy's "uneven performance" makes it hard to determine whether the central bank should begin to taper quantitative easing at its next meeting in September.

US producer prices increased at a 2.1% annual rate in July, a slowdown from the 2.5% pace in June and below the 2.4% forecast. When compared month-on-month, producers prices were flat at a 0.8% gain in June (forecast: 0.3%). Core producer prices, which exclude food and energy, also came in below expectations.

Analyst Peter Newland from Barclays said that while the producer price data hints at further weakness ahead, “we continue to judge that the core consumer price inflation reached a trough on a year-on-year basis in June, and will gradually rise during H2. In large part this is likely to be driven by services components, such as shelter and medical care, which are not well covered by producer prices.”

Other economic data out today showed a 4.7% decline in applications for mortgage loans and refinancing during the week ended August 9th, according to the Mortgage Bankers Association. This was a sharp contrast to the 0.2% rise the week before.

Wall Street benchmarks were shrugging off the news that the Eurozone had exited its 18-month long recession in the second quarter - the region's gross domestic product expanded by 0.3%, slightly beating the consensus estimate for growth of 0.2%.

Macy’s slumped after the department-store chain reduced its full-year profit forecast following “softer-than-anticipated” sales in the second quarter, blaming consumers’ “continuing uncertainty about spending on discretionary items in the current economic environment”.

The company said that earnings this year would now be $3.80-3.90 a share, slightly below the previous guidance range of $3.90-3.95.

Retail titan Wal-Mart edged lower ahead of its earnings release tomorrow.

The world’s largest farm-equipment maker, Deere, fell despite beating expectations with its fiscal third-quarter results as it reported record earnings of $997m. The firm however did say that equipment sales would be down 5.0% in the final quarter of the year owing to tough comparatives with last year.

Cree plummeted after the maker of energy-efficient lighting products predicted earnings in the first quarter will be no more than $0.41 a share, missing estimates.

Broker Tips
Afren: Investec moves target from 160p to 170p and stays with its buy recommendation.

APR Energy: Investec places its target prev.: 900p under review and maintains a hold recommendation.

Aviva: Canaccord Genuity raises target from 385p to 460p upgrading from hold to buy.

Balfour Beatty: Investec puts its target prev.: 170p under review, while leaving its sell recommendation unchanged.

Bank of Georgia: Canaccord Genuity downgrades to hold with an unchanged target of 1610p.

Catlin Group: UBS shifts target from 475p to 470p and stays with its neutral rating.

Coca-Cola HBC: Goldman Sachs cuts target from 2000p to 1940p downgrading from buy to neutral.

EnQuest: Morgan Stanley lowers target from 140p to 135p reiterating its underweight rating. canaccord Genuity shifts target from 184p to 185p leaving its buy recommendation unaltered.

GlaxoSmithKline: JP Morgan shifts target from 1910p to 1900p, while upgrading from underweight to neutral.

Henderson Group: Berenberg ups target from 140p to 165p and upgrades from sell to hold.

International Consolidated Airlines Group: Nomura increases target from 283p to 335p and stays with a buy recommendation.

Ithaca Energy: Canaccord Genuity lowers target from 205p to 203p, while its buy recommendation remains unchanged.

Ladbrokers: Investec cuts target from 220p to 200p and reiterates a hold recommendation.

Mears Group: Jefferies raises target from 370p to 435p and retains a hold recommendation.

Michael Page: Bank of America takes target from 470p to 500p keeping a buy recommendation. Credit Suisse moves target from 360p to 420p and reiterates an underperform rating.

Robert Walters: Credit Suisse revises target from 250p to 320p, while leaving its outperform rating unaltered.

Royal Dutch Shell: Barclays upgrades to overweight with an unchanged target of 2400p.

Schroders: Morgan Stanley increases target from 2525p to 2650p and maintains an overweight rating.

Sports Direct International: Cantor Fitzgerald ups target from 480p to 680p, while its hold recommendation remains unchanged.

SVG Capital: Espirito Santo raises target from 459p to 538p keeping a buy recommendation.

Vedanta Resources: Goldman Sachs raises target from 1380p to 1500p retaining its buy recommendation.

William Hill: Numis upgrades to buy with a target of 550p.

NYT | Global Update August 14, 2013: Egypt's Assault on Protesters Kills Scores

August 14, 2013
Compiled 20:45 GMT

Global Update



TOP NEWS

Egypt's Assault on Protesters Kills Scores

By DAVID D. KIRKPATRICK
The scale and brutality of the attack on supporters of the ousted president, Mohamed Morsi, was the clearest sign yet that the old Egyptian police state was re-emerging in full force.

Egypt Bloodshed May Be Ill Omen for Broader Region

By RICK GLADSTONE
The violence on Wednesday reinforced fears that the political ideals once envisioned in the so-called Arab Spring revolutions may be unattainable.

Kerry Condemns Egyptian Military's Crackdown

By MARK LANDLER and MICHAEL R. GORDON
Secretary of State John Kerry, who was speaking on behalf of a vacationing President Obama, did not disclose any specific American response to the crackdown.
Arts

Video: Preserving Partition

The 1947 Partition Archive is gathering oral histories of those who lived through the violent split of India and Pakistan.
Opinion

Op-Ed Contributor

The Trauma of Colonialism

By MANJARI MILLER
For India and China, bitter memories of foreign domination play a vital role in how they perceive the outside world.
WORLD

Germany Fights Population Drop

By SUZANNE DALEY and NICHOLAS KULISH
As German towns work to hide the emptiness, demographers say a similar fate awaits other European countries, with frightening implications for the economy.

Merkel Enters Last Leg of Re-election Bid With a Push to Draw In Youths

By ALISON SMALE
With a month to go in her re-election campaign, Chancellor Angela Merkel faces disdain from Germany's intelligentsia and questions about American surveillance efforts.

Ahead of Peace Talks, Rocket Fire and Air Strikes

By ISABEL KERSHNER
Israeli war planes struck two sites in Gaza in response to rocket fire, demonstrating the steep obstacles the negotiations face.
BUSINESS

Euro Zone Economy Grew 0.3% in 2nd Quarter, Ending Recession

By DAVID JOLLY
The growth figure for the 17-nation currency zone was better than expected, largely because of strong performances by Germany and France.
DealBook

Government Charges Two Former JPMorgan Employees

By BEN PROTESS and JESSICA SILVER-GREENBERG
Federal authorities announced criminal charges against two former JPMorgan Chase employees, Javier Martin-Artajo and Julien Grout, who are accused of disguising losses on a trade.

Court Orders Review of German Cable Merger

By REUTERS
The ruling throws Liberty Global's now-completed €3.2 billion acquisition of KabelBW into doubt.
TECHNOLOGY
DealBook

New York and U.S. Begin Investigations Into Bitcoins

By NATHANIEL POPPER
The Senate's committee on homeland security and New York State's top financial regulator are investigating gaps in the oversight of upstart virtual currencies like bitcoin.

AOL Chief Apologizes Over Firing of Worker

By LESLIE KAUFMAN
The company's chief executive put out a statement to employees saying he made a mistake with his "emotional response."
Bits Blog

What Analysts Expect From the Next iPhones

By BRIAN X. CHEN
In an anticipation of a possible iPhone release this fall, analysts are predicting changes to the iPhone's size and its software.
SPORTS

76ers Owner Is Expected to Buy the Devils

By KEN BELSON and JEFF Z. KLEIN
Josh Harris, the principal owner of the Philadelphia 76ers, is expected to buy the Devils and assume their lease in Newark in a deal said to be worth more than $320 million.

U.S.T.A. to Put a Roof Over Arthur Ashe Stadium

By NAILA-JEAN MEYERS and LYNN ZINSER
The United States Tennis Association said it would provide details of its U.S. Open roof plan at a news conference on Thursday.
Yankees 14, Angels 7

The Yankees' Offense, Led by Soriano, Bails Out a Wild Sabathia

By JORGE ARANGURE Jr.
Alfonso Soriano homered twice and the Yankees scored 14 runs, their most since April 9, to end a laborious game for C. C. Sabathia, who walked six batters in six-plus innings.
U.S. NEWS

North Carolinians Fear the End of a Middle Way

By CAMPBELL ROBERTSON
With Republicans controlling all branches of the state government for the first time in more than a century, the legislature pushed through a range of conservative change.

Jesse Jackson Jr. Sentenced to 30 Months

By ASHLEY SOUTHALL
The latest step in a slow downfall for Mr. Jackson, who pleaded guilty to using $750,000 in campaign money for personal expenses.

U.P.S. Cargo Plane Crashes in Alabama

By TIMOTHY WILLIAMS
The aircraft, an Airbus A300, which was en route from Louisville, Ky., crashed as it was making its landing approach.
OPINION
Op-Ed Contributor

For Women, a Second Sentence

By PIPER KERMAN
The federal Bureau of Prisons plan to transfer women incarcerated in a Danbury, Conn., facility to other institutions across the country is like a second sentence.

Obama, Snowden and Putin

By THOMAS L. FRIEDMAN
The Russian president is doing more harm at home than anywhere else.
Op-Ed Columnist

Summers of Our Discontent

By MAUREEN DOWD
Can't the president find someone to run the economy who didn't help create the culture that ran it into the ground?

Wall Street at Close Report by MarketWatch August 14, 2013: U.S. stocks decline; Dow off over 100 points.

U.S. stocks decline; Dow off over 100 points

By Kate Gibson, MarketWatch 
 
NEW YORK (MarketWatch) U.S. stocks fell sharply on Wednesday, with the first triple-digit drop for the Dow since June, as investors worried about the recent spike in borrowing costs as well as the timing and pace of potential reductions in the Federal Reserve’s bond purchases. 

“It looks like tapering is going to begin in September,” with the consensus view expecting the Fed to cut its $85 billion in monthly bond purchases to between $60 billion and $65 billion a month, said Rick Robinson, regional chief investment officer for Wells Fargo Private Bank.
So, instead of buying a trillion on an annualized basis, the Fed’s asset purchases would be trimmed to between $700 and $750 billion, said Robinson. “That’s not tightening by any stretch of the imagination; they are still growing their balance sheet,” he added.

Watch Apple, Macy's
John Shipman joins the News Hub with a look at which stocks traders will be watching during market action, including Apple, Macy's and Cree. 

Pointing to Tuesday’s 10 basis-point move in the 10-year Treasury yield 10_YEAR -0.37%  back above 2.70%, Robinson said that “there is the slow realization that over time, and it’s not going to happen tomorrow, that rates are going to normalize, so we’ll see the 10-year slowly go above 3%.”
On Wednesday, the 10-year yield 10_YEAR -0.37% , used in setting mortgage rates and other consumer loans, fell 2 basis points to 2.711%.
After a 134-point drop, the Dow Jones Industrial Average DJIA -0.73% finished down 113.35 points, or 0.7%, at 15,337.66, with 22 of its 30 components in the red, led by home-improvement retailer Home Depot Inc. HD -2.52% , down 2.5%.
Cisco Systems Inc. CSCO -8.94%  erased losses, with the technology company and Dow component ending up 0.2% ahead of its quarterly results after the close.
The S&P 500 index SPX -0.52% lost 8.77 points, or 0.5%, to 1,685.39, with consumer discretionary the worst performing and technology faring the best among its 10 major sectors.
Apple Inc. AAPL -0.26% rose 1.8%, extending a rally that took place Tuesday after investor Carl Icahn tweeted about holding a large position in the consumer technology company.
Shares of Macy’s Inc. M -4.47%  fell 4.5% after the department-store operator cut its full-year outlook on disappointing sales.The less-than-hoped results from Macy’s raise “some questions regarding the health of the American consumer in a sluggish economy,” Fred Dickson, chief investment strategist at Davidson Companies, wrote in emailed research.
Wall Street will be looking to Wal-Mart Stores Inc. WMT -0.60%  for “further confirmation on the state of the consumer when the largest U.S. retailer reports quarterly earnings tomorrow morning,” Dickson added.
Steinway Musical Instruments Inc. LVB +7.89%  climbed 7.9% to $41.29 a share after it agreed to be taken private for about $512 million, or $40 a share, by Paulson & Co.
The Nasdaq Composite COMP -0.41% dropped 15.17 points, or 0.4%, to 3,669.27. 



Germany: Fastest growth in G-7
Germany's gross domestic product, the broadest measure of goods and services produced across the economy, swelled 0.7% in the second quarter of this year. Nina Adam analyzes the source of this expansion and if it is sustainable. 

For every share rising, just over two fell on the New York Stock Exchange, where 621 million shares traded. Composite volume neared 2.9 billion.
Benchmark indexes fell to session lows after St. Louis Federal Reserve President James Bullard expressed concern about low inflation readings, according to Dow Jones Newswires. Stocks then trimmed their decline as Bullard delivered a separate speech.
Ahead of Wednesday’s open, stock futures offered no perceptible reaction to a report from the Labor Department that had U.S. wholesale prices holding steady in July after a 0.8% gain in June. The core producer price index, which strips out energy and food, rose 0.1%, less than a 0.2% increase anticipated by analysts.
Gold futures GCZ3 +1.10% rose $12.90, or 1%, to $1,333.40 an ounce and crude futures CLU3 +0.16%  added 2 cents to $106.85 a barrel.
The dollar DXY -0.04%  edged lower against the currencies of major U.S. trading partners, including the euro EURUSD -0.01%  and the yen USDJPY -0.04%

Kate Gibson is a reporter for MarketWatch, based in New York.

Wall Street at Close Report by CNBC August 14, 2013: Stocks slump on Fed uncertainty; Apple jumps 2%

Stocks slump on Fed uncertainty; Apple jumps 2%

Name Price Change %Change
DJIA Dow Jones Industrial Average 15337.66
-113.35 -0.73%
S&P 500 S&P 500 Index 1685.39
-8.77 -0.52%
NASDAQ Nasdaq Composite Index 3669.27
-15.17 -0.41%

Stocks slumped on Wednesday as the market continued to gauge when the Federal Reserve might start to reduce its $85 billion in monthly bond purchases. Apple was a standout as some big investors took stakes in the smartphone maker.
The Dow Jones Industrial Average was firmly lower on the day, pressured by losses in Home Depot and Johnson & Johnson. Bank of America was the top gainer on the Dow 30.
The S&P 500 and the Nasdaq both closed with moderate losses.
In company news, Apple shares gained nearly 2 percent, a day after activist investor Carl Icahn revealed he had taken a large stake in the company. The stock pushed above $500 intraday but was unable to close above that mark.
Leon Cooperman's Omega Advisors also took a small 31,000 share stake in the company last quarter, according to its latest SEC filing. Cooperman told CNBC's Scott Wapner that he got back into the iPhone maker in the low $400s and that he agrees with Carl Icahn that Apple is cheap. Cooperman still thinks the best play in the space is Qualcomm, however.

Apple stock is up about 10 percent over the past three days, its strongest three-day winning streak since May 2010.

On the downside, Macy's whiffed on earnings, posting a profit of 72 cents a share that missed estimates by 6 percent. Guidance also was weak, sending shares tumbling and dragging down the broader consumer discretionary sector.

"To see Macy's miss by a wide margin is troublesome, speaking volumes about the health, or lack thereof of Middle America," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors.
In other earnings reports, Deere reported strong earnings of $2.56 a share, easily beating Wall Street expectations, but investors are concerned the farm cycle has peaked.
In deal news, Steinway Musical Instruments jumped on news that Paulson & Co. will purchase the company for $40 a share.

'Incredibly bullish' on tech, trader says
There's a new dynamic in the technology sector, as well as in Apple, Joe Terranova of Virtus Investment Partners says. 
Fed uncertainty persists
St. Louis Fed President James Bullard said on Wednesday the central bank needs to see more data in the second half of the year before it starts to cut back on its monthly bond purchases and that if it tapers while inflation is too low it risks deflation.
Bullard's comments follow a talk by Atlanta Fed President Dennis Lockhart on Tuesday which downplayed the notion that the central bank would begin winding down its stimulus program in September.
Data Tuesday showed U.S. retail sales rose by half a percent in July, their fastest pace in seven month, keeping talk alive that the Federal Reserve may begin tapering its asset purchases following the central bank's September meeting.

Markets have greeted positive growth with mixed emotions as it serves as a further harbinger that historically easy monetary conditions are winding down.

While investors have been anticipating the Federal Reserve will begin unwinding its monthly bond purchases as soon as September, economic data indicated that inflation, at least, is of little concern.
Producer prices excluding food and energy rose just 0.1 percent in July, while including those items put the index at flat.
"We believe the Fed will begin to dial back some of the stimulus but that is not the same thing as having an inflation scare drive yields up," Stephen Wood of Russell Investments told CNBC. "One is more controlled. The other one is less controlled."

Bullard also said that inflation was running low, and that it was important for inflation to hit the Fed's 2 percent target before it starts to taper or it could risk deflation.

"Inflation has been running very low. I have been concerned about low inflation," St. Louis Fed President James Bullard told a Rotary Club luncheon in Paducah, Kentucky. There has "not been much indication, so far, that it has been ticking back up toward target," he said. But he warned inflation could become excessive in the future.
In Europe, markets closed higher after data showed the euro zone expanded by 0.3 percent in the second quarter, quarter-on-quarter, marking an end to the region's recession.

Earlier in the day, Germany and France posted forecast-beating growth for the second quarter. Germany's economy grew by 0.7 percent, as domestic public and private consumption picked up, while France leaped out of recession, posting 0.5 percent growth.

"The euro zone still has a long way to go before positive growth numbers can honestly be called recovery, but relief should stand above skepticism, at least for one day," said Carsten Brzeski, senior economist at ING.

A Strategy of Splits: MoneyShow Investors Daily Alert August 14, 2013.


INVESTORS DAILY ALERT
The Daily Guru
A Strategy of Splits, Neil Macneale
Jim Jubak on MoneyShow.com
TOP PROS' TOP PICKS
Apple Still a Strong Buy, Geoffrey Seiler
GURUS' VIEWS & STRATEGIES
Nine Favorite Foreign ETFs, Richard Moroney
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IDEAS FROM AROUND THE WORLD
UAE Central Bank Might Break, Gregor Stuart Hunter
INVESTOR CLINIC
Today's Featured Video

BIV Today's Business News August 14, 2013: Union speaks out against “preferential treatment” for Verizon




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