The FOMC meeting resulted in an announcement of a $10 billion reduction in the committee’s asset purchases. They will add to its holdings of agency mortgage-backed securities at a pace of $25 billion per month rather $30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $30 billion per month rather than $35 billion per month. The bond tapering was expected, but the expectation of rates rising sooner was not. Thirteen of the 16 Fed officials see rates rising by the end of 2015 with an average prediction of a 1% rate. They further predicted that rates will be at 2.25% a year later.
To relate the Fed policy to the markets, here is a chart of the S&P 500 compared with Chicago Fed national Financial Conditions Leverage Subindex (NFCI). With a reading below zero, the financial conditions are still loose. The NFCI is a leading indicator for the economy.
China Mobile Holdings Ltd. (CHL) released its earnings report this morning. It was stated that profit dropped 5.9% due to competition and higher cost due to rolling out its 4G service. Despite the decreased profits, revenues increased by 5.4% and the number of customer accounts increased by 8%. China Mobile is at its 52-week low today and at historically low levels of price/book and price/sales. The stock is owned by 11 of the financial gurus that we follow.
Guru Held Stocks Near 52-Week Lows
HSBC Holdings Plc (HSBC) – HSBC provides various banking and financial products and services and is headquartered in London. It is owned by 11 of the gurus we are following and traded today at its 52-week low of $48.86.
Financial Strength: 7/10, Profitability & Growth: 7/10
Transocean Ltd. (RIG) – RIG provides offshore contract drilling services for oil and gas wells wordwide and is headquartered in Vernier, Switzerland. It is owned by 17 of the gurus we are following and is trading slightly above its 52-week low of $38.47.
Financial Strength: 6/10, Profitability & Growth: 7/10
Ensco Plc (ESV) – ESV provides offshore contract drilling services to the oil and gas industry worldwide and is headquartered in London. It is owned by 13 of the gurus we are following and is trading about 5% above its 52-week low of $47.85 after it rebounded from its negative start to the day.
Financial Strength: 7/10, Profitability and Growth: 8/10