Everything You Gotta Know About the Dow's 1st 2014 Win

Good morning, good lookin'. Here are the three things you need to know on Jan. 8.

Jan 8, 2014 at 6:00AM
Your first slow dance. Your first behind-the-back lacrosse goal. Your first silk boxers. Nothing beats 'em. That's why the MarketSnacks team is celebrating Wall Street's first win of the New Year -- the Dow Jones Industrial Average (DJINDICES:^DJI) popped 106 points Tuesday after three down days to unimpressively kick off a freezing cold January.

1. Netflix drops 5.6% on Morgan Stanley downgrade
Two thumbs down for Netflix after investment bank Morgan Stanley (NYSE:MS) downgraded the stock target price from $333 per share to $310, citing tough ratings competition from HBO Go and Amazon.com's (NASDAQ:AMZN) Amazon Instant. Your favorite college pastime, video-streaming service Hulu, is also worrying Morgan Stanley's well-dressed analysts.
It's a two-front battle against Netflix. HBO GO is a force in the movie world, and with the endless sitcoms and dramas available on Hulu, it's serving up a day-after-airing TV buffet from the major network channels that Netflix can't offer (our 2014 wish is for the last season of Breaking Badto finally hit the 'Flix). Morgan Stanley fears growth will slow in 2014 for Netflix.
Streaming is huge, and even after falling 5.6% Tuesday, Netflix is still a $20 billion company. So 2014 will be fun as Google, Apple, Amazon, and HBO all continue their battle royale to win in binge-viewing.
The bottom line is that Netflix was the top stock in the S&P 500 in 2013, with growth of more than 300%. Things are cooling down now as investment advisors worry it's been overbought. But the big thing to watch is whether America "cuts the cord" and commits to a monogamous relationship with streaming video.  
2. Janet Yellen confirmed as first Fed chairwoman
The U.S. Senate approved Janet Yellen late Monday night to be the next chairperson of the Federal Reserve. Yellen will begin leading the nation's central bank at the end of this month. She's expected to continue the "taper" policy of slowing stimulus support for the economy, but to generally keep interest rates low for some time.
It's one large step for women in the world of finance. Yellen's not the first female chief of a major central bank (Israel, Russia, and South Africa have one), but the Fed influences world policy like Batman influences the Justice League (Superman knows where he stands ... next to Robin). It's a landmark achievement for ladies, though, in a financial and economic world mostly populated with Vineyard Vines tie-wearing dudes.
Will Yellen continue Bernanke's policies? That's largely expected to be a big, fat "yes." She's been Bernanke's second-in-command since 2010 and helped craft the latest rounds of quantitative easing stimulus policies. Good luck, Ms. Yellen -- and it's been a nice eight years, Mr. Bernanke.
3. Narrowing trade deficit shocks Wall Street
Uncles Sam's stars-and-stripes pants are in style lately. According to the monthly International Trade Report, U.S. exports rose and imports fell way more than expected in November, narrowing the deficit (the difference between the two) to $34.3 billion. Growing demand abroad for the American muscle of industrial supplies and commercial airlines led the big change.

The takeaway is that econ data across a whole bunch of sectors (housing prices, job gains, and manufacturing activity) have been increasingly improving into the New Year -- and now Wall Street is picking up on the trend. Following the Trade Report, some top analysts revised their GDP projections for the U.S. because the surprise pop in exports means America's manufacturing mojo was movin' more than initially anticipated last quarter.

  • The ADP Employment report previews Friday's big jobs report
  • Minutes from the Fed's last meeting
  • Consumer credit report
As originally published on MarketSnacks.com

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