- What Happened To Markets The Last 15 Times The Fed Tightened. One question has gripped investors perhaps more than any other: when will the Fed start tightening monetary policy, and what will happen when it does?
Deutsche Bank Chief U.S. Equity Strategist David Bianco says, “Don’t fear interest rate normalization.” That’s the title of one of his recent research notes, which takes a deep dive into what happened to markets each of the 15 times the Fed has embarked on policy tightening since 1965.
Bianco writes, “DB economists and rate strategists forecast an unchanged Fed Funds rate until 2014. However, they forecast a 3.0% 10yr Treasury yield at 2013 end. When QE ends it will likely be akin to early-cycle Fed tightening and the uptick in long-term yields will represent a cyclical rise in rates, both of which are bullish.”
10 Things You Need To Know Before The Opening Bell
- .Asian markets were mixed in overnight trading with the Shanghai Composite down 0.79 percent. The Nikkei was up 1.28 percent after positive Chinese data boosted stocks with exposure to the country. Europe is mixed and U.S. futures are modestly lower. Apple is expected to weigh on the Nasdaq after its earnings report.
- China HSBC flash manufacturing PMI climbed to a 24-month high of 51.9 in January, beating expectations. The sub-indices like new export orders and employment also showed improvement. The $2.1 trillion powder keg near the heart of the Chinese financial system >
- In Europe, French flash manufacturing PMI fell to 42.9 in January, and the composite output index declined to 42.7, showing deeper contraction. Meanwhile, German manufacturing PMI climbed to 48.8, but remained below the contractionary reading of 50. The composite output index however climbed to 53.6.
- Initial claims are out at 8:30 a.m. ET, followed by Markit PMI for January at 8:58 a.m. ET. Analysts polled by Bloomberg are looking for new claims to rise to 360K and for PMI to decline to 54.0.Follow the release at Business Insider >
- Apple shares are down over 9 percent in pre-market trading after yesterday’s earnings report. iPhone sales disappointed, coming in at 47.8 million, against expectations of 50 million. iPad and Mac sales also missed expectations, though iPod sales came in higher. The tech giant reported earnings of $13.81 per share, on revenue of $54.5 billion. Nomura: Apple could go as low as $336 >
- Netflix also reported earnings after the closing bell yesterday. The company beat expectations reportingearnings of $0.13 per share, on revenue of $945 million. It added almost 10 million global streaming members in 2012, raising its total global streaming subscribers to over 33 million. The earnings guidance also beat estimates and its stock is up a whopping 37.01 percent in pre-market trading. Here’s what America’s biggest companies are telling us about the global economy >
- Japanese exports fell 5.8 percent in the year to December, and imports were up 1.9 percent. The trade deficit came in at ¥641.5 billion. 2012 however saw a record trade deficit of ¥6.93 trillion.
- Spain’s Institute of National Statistics put Q4 youth unemployment, defined as those under the age of 25, at 59.8 percent. Spain’s unemployment rate climbed to 26 percent in the fourth quarter, with 5.97 million out of work.
- Kansas City Fed manufacturing index for January is out at 11 a.m ET. Analysts polled by Bloomberg are looking for the manufacturing index to rise to 2.Follow the release at Business Insider >
- Lockheed Martin reported fourth quarter earnings of $1.73 per share, missing expectations. It issued better than expected full-year earnings guidance from continuing operations of $8.60 – $9.10 per share. Microsoft is expected to report earnings of $0.75 per share. Deutsche Bank: These are the 30 best stocks right now >
- Bonus – Tiger Woods is reportedly dating Olympic skier Lindsey Vonn and is thinking of getting married again.
