By Carlos Guillen
Equity markets have continued to slowly sink after last Friday's rather discouraging jobs data. However, the slide is not that bad, and indexes are trying to make a comeback.
After rising to a record closing high of 14,662.01 last Tuesday, the Dow Jones Industrial Average is down nearly one percent from that high and down a bit over a half a percent after the jobs report was released this past Friday. From a bird's eye view however, the Dow is actually up 11.2 percent from its year-ago closing price, as stronger than expected company profits and the Fed's ongoing monetary easing policy have continued to support stock values. Perhaps a bit counter intuitive is that the more bad economic data is posted the more the Fed will be inclined to extend its bond buying programs further, giving stocks a stronger upward component. We will get a glimpse of what the Fed is planning to do with respect to its monetary policy, as Fed Chairman Ben Bernanke is scheduled to give a speech after the close of today's trading session.
In other market items BioCryst Pharmaceuticals Inc. (NASDAQ:BCRX) shares have jumped over 14 percent after China sped up the approval of its anti-influenza drug Peramivir. And Lufkin Industries Inc. has risen almost 38 percent after the General Electric Co. (NYSE:GE) said it would acquire the manufacturer of oil-well pumps for about $3.3 billion, or $88.50 a share. Also, aluminum producer Alcoa Inc. (NYSE:AA) will be the first member of the Dow Jones Industrial Average to release financial results for the March quarter when the company reports after the closing bell today. Although it has been tradition to have a strong focus on the results from Alcoa, the company's financial result have had little correlation to what overall markets have been doing, so we suggest not taking Alcoa's results too seriously.
Yen Says Sayonara
By David Urani
Last week the Bank of Japan laid out its historically big QE program that will see trillions of yen dumped into the economy over the next couple of years at a rate of over $80 billion per month, or approximately the same as the Fed's current QE program except in an economy about a third the size. It's intentional currency suicide and it's working.
Check out the dive in the yen, which is down another 1% versus a basket of currencies today. Just in the past three trading days the yen has sunk more than 6%. At this level, the yen is now edging towards 100 per $1, which it hasn't seen since 2009.
Of course, since the recession Japan has watched other nations around the world race to deface their currencies and that's perhaps gone against their wish to try to pull out of the deflationary spiral they've been stuck in for years. But this latest BoJ move could potentially give the yen impetus to plunge yet further as it makes up for lost ground (well, technically it gained ground which almost seems taboo for any central bankers these days) over the past several years.
You could certainly argue that Japan's new campaign, essentially Keynesianism on steroids, will end up in disaster down the road. But at least you could also say that if rampant inflation is somehow going to be good for anybody it's Japan. We shall see about that.