News Column

Daily Wrap: S&P teases 1,900; Two die at Patriot mine

May 14, 2014

By Jim Gallagher And David Nicklaus, St. Louis Post-Dispatch

May 14--TODAY'S INDEXES -- Dow Industrials 16715.44 +19.97

S&P 500 1897.45 +0.8

Nasdaq 4130.16 -13.69

TOYING WITH 1,900: The S&P 500 Index pushed its nose over 1,900 for the first time Tuesday before closing a hair below that level. Other markets closed mixed as a weaker-than-expected report on retail sales dampened a week-long rally.

BANK LOAN BLUES: American investors fell in love with bank loan funds last year, now it may be time to reconsider, says Brian Rehling, chief fixed income strategist at Wells Fargo Advisors. "We see little upside in terms of price performance, while a negative environment could quickly move prices lower," he writes in a new report. Bank loan funds invest in business debt below investment grade. The upside: They pay a bit more in interest and the loans are variable rate. Interest payments will rise when the Federal Reserve finally begins raising short-term rates, perhaps next year. The worry: The funds are looking pricey now. Investors have started pulling a little money out of such funds. Prices could fall quickly if more investors decide to bail out.

DOGE GONE: Another virtual currency exchange has been hacked, with investors reportedly losing about $50,000. The latest victims had their money in something called dogecoin, a lower-priced and somewhat whimsical cousin of the better-known bitcoin. DogeVault, a virtual-wallet site, posted a notice saying attackers had "accessed and destroyed all data" on its servers.

LOCAL INDEX: The Bloomberg St. Louis Index slipped 4.12 to 894.02 .


American Railcar +2.33% Reliv International -6.06%

Huttig Building +1.59% Perficient -4.33%

SunEdison +1.34% Viasystems -3.69%

LOCAL LOSER: Patriot Coal, whose shares trade over-the-counter, fell 3 percent on news of a fatal accident at one of its West Virginia mines.

ANALYST'S INSIGHTS: Back in the depths of the Great Recession, the bond gurus at Pimco invented the term "new normal" to symbolize the sluggish economic miasma we endured as we paid down debt.

Now they've changed their tune a little, introducing the term "new neutral." It means that world growth will remain slower than the historical average, while interest rates stay low.

For investors, that means low return on investments, but also low risk. "PIMCO would agree that the rewards over the next 3-5 years will be exceptionally low when compared to historical norms. Financial repression as it continues for years to come will almost ensure that outcome. The risk, however, may be lower than normal if PIMCO's 'New Neutral' plays out. There may be lemonade to be made from those low returning lemons."

THE DAY AHEAD: Investors will start their day gazing at the Producer Price Index. Analysts expect a tame 0.2 percent monthly change, down from March's worrisome 0.5 percent number for this reading wholesale inflation.

Closing arguments may begin late Wednesday or early Thursday in the Francine Katz sex discrimination suit against Anheuser-Busch Inbev.

Analysts expect Macy's to report a 60-cent-a-share first-quarter profit before the market opens, which would be a 9 percent increase over last year's first quarter. Bloomberg notes that Macy's has beaten expectations in seven of the past eight quarters, although harsh winter weather may have caused some problems in the recent period.

Jim Gallagher is a reporter for the Post-Dispatch


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Source: St. Louis Post-Dispatch (MO)

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