Thursday Morning Cheat Sheet: 3 Stories Moving Markets
The markets were mixed in Asia overnight. Japan’s Nikkei index was relatively flat, climbing less than a tenth of a percent after a sharp decline yesterday. The index has rallied since November and now traders are expressing concern that a massive round of stimulus spending may overheat the economy. The Hang Seng dropped fractionally while the S&P/ASX 200 rose 0.38 percent.
The European markets were also mixed heading into the opening bell in New York City. The Stoxx 50 and the FTSE 100 were in the green while Germany’s DAX was off just about 5 basis points. Brent crude was up about half a percent to $110.25 per barrel.
Futures at 8:00 a.m.: S&P: +0.18%, Dow: +0.12%, NASDAQ: +0.26%.
1) After giving a speech titled “Ending ‘Too Big to Fail,'” Dallas Federal Reserve President Richard Fischer told reporters that he believes the Fed’s ongoing asset-purchasing program “is increasingly having a lesser impact as we go through time.”
His comments come after the central Fed pledged to keep purchasing $85 billion in Treasury and mortgage-backed bonds last month until U-3 unemployment dropped to 6.5 percent, and as long as the economic engine didn’t heat up beyond 2.5 percent inflation. Minutes of the Fed’s December 11-12 meeting showed that several members believed the much-questioned policy should come to an end this year. With the official unemployment rate not expected to drop below 7 percent this year, it’s unclear how long the bond-buying program will last…
2) “It’s too early to declare victory,” said Greece’s finance minister Yannis Stournaras in an interview with Reuters. “We are facing a huge crisis, we have not yet left the hot zone of bankruptcy. We are doing better but we can’t say we have escaped all danger.”
European finance ministers and the International Monetary Fund, who created a series of bailout packages and fiscal reforms to guide the Greek economy back in line, have commented that the worst may be over, but Greece’s unemployment rate is still about 26 percent, and its debt load is over 170 percent of its GDP. A recovery will take years.
3) Coal’s share of the energy market will come close to surpassing oil by 2017, argues a report by the International Energy Agency. An “insatiable demand for power from emerging markets” will fuel the demand for coal in nearly every part of the world, but notably not the United States.
Cheap and clean domestic natural gas is expected to gradually displace coal in the U.S. market. To compensate, American coal companies are expected to turn to exports. The IEA predicts that even a modest global economic recovery would be able to revitalize the struggling coal industry.
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