Two officials from the European central bank stated that the ECB executive board proposed the implementation of a €50 billion monthly QE until the end of 2016. The ECB Governing Council is scheduled to meet tomorrow.
Seth Klarman Tells His Investors: Central Banks Are Treating Investors Like “Foolish Children”
"Surreal doesn't even begin to describe this moment," Seth Klarman noted in his second-quarter letter to the Baupost Group investors. Commenting on the market developments over the past six months, the value investor stated that events, which would typically occur over an extended time frame, had been compressed into just a few months. He noted Read More
In a telephone interview with Bloomberg, Rex Macey, chief allocation officer at Wilmington Trust Investment Advisors commented, “We’re going to see much market movement in response to central bank actions or inactions. Whichever way it goes, the effect of central bank stimulus has been supportive of markets, and we expect that to continue.”
Today, the Canada’s central bank surprisingly reduced interest rates amid the declining oil prices. The central bank trimmed the rate on overnight loans between commercial banks from 1% to 0.75%. It also lowered its estimated growth rate for Canada to 2.1% from 2.4%.
Macquarie Capital Markets strategist David Doyle commented that the Bank of Canada’s move was a “big shock.” According to him, “They’re going to try to provide the necessary medicine here for the soft landing from slowing debt growth, from slowing investment in the oil sands, and I think they thought it needed some stimulus here.”
In the United States, economic data showed that the construction of new residential homes was better than expected. The U.S. Department of Housing and Urban Development reported that privately-owned housing starts were 1.9 million, up 4.4% in December.
- Dow Jones Industrial Average (DJIA) – 17,554.28 (+0.22%)
- S&P 500- 2,032.12 (+0.47%)
- NASDAQ- 4,667.42 (+0.27%)
- Russell 2000- 1,166.25 (-0.34%)
- EURO STOXX 50 Price EUR- 3,269.73 (+0.76%)
- FTSE 100 Index- 6,728.04 (+1.63%)
- Deutsche Borse AG German Stock Index DAX- 10,299.23 (+0.41%)
- Nikkei 225- 17,280.48 (-0.49%)
- Hong Kong Hang Seng Index- 24,352.58 (+1.68%)
- Shanghai Shenzhen CSI 300 Index- 3,548.89 (+4.50%)
Stocks in Focus
Cree, Inc gained almost 5% to $33.88 per share after reporting financial results that exceeded the estimates of analysts. The company posted $0.33 in earnings per share on $413.2 million in revenue for its second quarter compared with the $0.22 in earnings per share on $412.5 million expected by analysts.
The stock price of Netflix surged more than 17% to $409.28 per share after the online video streaming company reported significant growth in international subscribers with 2.43 million net adds. The company plans to expand its presence in 200 countries with broadband internet services by the end of 2016. Netflix posted $1.35 in earnings per share on $1.3 billion in revenue for the fourth quarter.
International Business Machines declined more than 3% to $152.09 per share. The company posted better than expected earnings of $5.81 per share from continuing operations compared with the consensus estimate of $5.43 per share. IBM was negatively impacted by 2015 operating earnings forecast of $16.50 per share compared with the estimate of analysts in the range of $15.17 to $18.55 per share.