With the domestic economic calendar essentially empty and
nothing new on the 'Fiscal Cliff' front, the market's focus today
will likely be on developments beyond the U.S. shores. And on
that front, we got some positive news about the Chinese economy
and some disconcerting developments in Italy. Positive industrial
production numbers out of China adds to other data in recent
months indicating that the country's economy may already be on
Offsetting the favorable news out of China is the negative
spotlight on Italy, where the resignation of Mario Monti is
raising questions about the country's reform outlook. The
resulting uncertainty is pushing yields higher on benchmark
Italian government bonds and reminding investors that the
Euro-zone picture remains far from settled.
We didn't hear any details about the Sunday meeting between
President Obama and House Speaker Boehner, but negotiations
appear to be ongoing between the two sides. Stocks have held up
quite nicely in recent weeks despite the fiscal uncertainty,
hoping that some sort of deal will emerge at the last minute.
There appears to be growing support on both sides for a partial
deal that will extend the so-called middle class tax cuts and
defer resolution of other matters to early next year. But
developments on the ground don't show any progress towards that
We also have a two-day Fed meeting this week, with the central
bank expected to come up with a replacement for the expiring
Operation Twist with a new bond-purchase program. In Operation
Twist, the Fed was buying longer maturity treasury bonds with the
sale proceeds of shorter duration instruments, the goal being to
keep long-term rates low. The hope is that the central bank will
announce a new program in which it will continue buying longer
maturity treasury bonds.
The Fed has been thinking aloud for a while about coming up with
explicit economic targets that will make its conduct of monetary
policy more transparent for the markets. We may not see any
headway on that front in this week's FOMC meeting, but this is
definitely an issue that remains on the Fed's to-do list.
In corporate news,
) plans to spin-off its commercial and residential security
business as a stand-alone company. And
) plans to acquire
) for $600 million. The broader stock market indexes will likely
not do much in today's session, though the Italian news will
likely keep the bias to the downside.
HONEYWELL INTL (HON): Free Stock Analysis
INTERMEC INC (IN): Free Stock Analysis Report
INGERSOLL RAND (IR): Free Stock Analysis
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