In its monthly report, the German Bundesbank said that it is open to adjustments to the ECB's policy of absorbing liquidity from its existing SMP bond purchases if it is done in order to stabilize money-market and liquidity conditions. If the ECB chose to take this route, it would cease sterilization of its purchases -- designed to make the bond holdings liquidity-neutral -- and add back about 175 billion euros of liquidity.
Japanese markets rallied strongly overnight following news from the Bank of Japan that it was doubling the size of its bank-loan facility and extending the maturity of these loans to four years from one to three years. The Nikkei (INDEXNIKKEI:NI225) rose 3.13% and the Japanese Mothers Index (INTEXTYO:MOS) only rose 1.5%.
US markets were generally mixed today: tech performed strongly but consumer and telecom stocks lagged. The S&P 500 (INDEXSP:.INX) gained 0.12% while the Nasdaq-100 (INDEXNASDAQ:NDX) rose 0.68%. US Treasuries rallied strongly after the poor NAHB housing data was released. The 5-year yield declined the most, down 4.5 basis points to 1.48%.
Coca-Cola (NYSE:KO) took a 3.79% hit after global sales continued to slow in the fourth quarter and despite the announcement of a further $2.5 billion to $3 billion share repurchase program in 2014. Additionally, Coke's management said on its earnings conference call that it will recommend a dividend increase this year.
The NAHB survey of homebuilder and real estate broker sentiment fell precipitously in the month to an index reading of 46 from 56. The month's reading below 50 -- the level that would be considered a neutral reading -- was the first time since May of last year. Present and future single-family-home sales prospects all showed very sizable drops along with concerns over prospective buyer traffic. The takeaway is whether or not this drop in prospective sales is due to the weather or a lack of demand since home sales plateaued last summer.
A new version of the monthly producer price index will be released tomorrow. The index will show a new level of price growth -- final demand -- that will represent about 75% of the prices in the economy rather than about 35% in the previous index. Also scheduled to be reported is January housing starts and building permits, and the minutes of the FOMC's meeting three weeks ago.
The UK ILO unemployment rate is scheduled for release early tomorrow morning. Economists expect the 3-month average rate will remain unchanged at 7.1%, near the 7.0% threshold set out by the Bank of England. The minutes from the central bank's meeting two weeks ago will also be released.
Twenty-four major US companies are scheduled to report earnings tomorrow. Notable reports include MGM Resorts (NYSE:MGM), Marriott (NYSE:MAR), Avis Budget (NASDAQ:CAR), Tesla (NASDAQ:TSLA), Goodrich Petroleum (NYSE:GDP), and Six Flags Entertainment (NYSE:SIX).
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