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Retailers Continue to Produce Subpar Holiday Results


Today's financial recap and tomorrow's financial outlook.

The Bank of Japan announced that it would continue to expand the country's monetary base by 60 to 70 trillion yen in 2014, the same amount that it did in 2013. In addition, the central bank removed language from its statement that the country's economy was facing uncertainty and said it should recover moderately in the coming years. However, the impending sales tax hikes should crimp consumer demand, which should keep inflation closer to 1.25% for longer than expected. Even though it appeared the central bank was falling short of its goals, investors seemed unfazed as the Nikkei (INDEXNIKKEI:NI225) gained 0.16%.

The UK's 3-month unemployment rate fell to 7.1%, perilously close to the Bank of England's 7% threshold for raising its policy rate. In the minutes from its Monetary Policy Committee meeting two weeks ago, released today, central bank officials noted that they saw no need to raise the policy rate even if unemployment fell below 7%. The pound rose 0.6% against the US dollar today to $1.6576, a new 52-week high.

US equities remained near the flat line for the fifth session, despite choppy trading intraday. The Dow Industrials (INDEXDJX:.DJI) lost 0.25% due to poor earnings from IBM (NYSE:IBM) yesterday. IBM's 5.95% decline accounted for 39.7 points of losses in the index. The benchmark S&P 500 (INDEXSP:.INX) was up 0.06%. Trading volume continues to be much higher than last year, however. Total trading volume on US exchanges has averaged 13.9 billion shares in 2014 compared to an annual average of just under 10 billion for 2013.

Coach (NYSE:COH) reported earnings in the pre-market, missing significantly. North American same-store sales declined by 13.5% and the company reported significant traffic deceleration in its stores, a worsening trend from the prior quarter. The stock traded down 6.5% today.

Tomorrow's Financial Outlook

Tomorrow will be the busiest day of the week in terms of economic data coming out of the US. Scheduled to be reported are jobless claims, Markit's preliminary survey of US PMI, December 2013's FHFA home price index, December 2013 existing home sales, and the Kansas City regional manufacturing survey. Of note, existing home sales are expected to rise to a seasonally adjusted annualized rate of 4.92 million, up from 4.9 million in the month prior, though economists are fully expecting the results to fall short of expectations due to the abnormally cold weather during the month.

Two manufacturing PMIs are also scheduled for release across the globe. China and the eurozone will both release their preliminary January indices. Also scheduled for release are Canadian retail sales and January eurozone consumer confidence.

The heavy pace of earnings continues again tomorrow. There are 30 earnings reports scheduled tomorrow from major US companies. Notable names include McDonald's (NYSE:MCD), Lockheed Martin (NYSE:LMT), Union Pacific (NYSE:UNP), Fifth Third Bancorp (NASDAQ:FITB), Microsoft (NASDAQ:MSFT), and Starbucks (NASDAQ:SBUX).

Twitter: @Minyanville

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