Economic Journal - Wednesday, 10/31/2012

(As of 7:25 am pacific)

 

After a two-day trading hiatus due to Hurricane Sandy, and the pent up demand for trading that built during that period, the stock market opened ‘not with a bang, but a whimper’.   Several big companies posted numbers that beat expectations and news from Asia was good, while Europe was benign.  All in all, what had been a nervous anticipation transitioned into dull routine that left markets mixed.  Some notable stories are that GM beat expectations in spite of lower profits and Apple is experiencing continuing growing pains as a purge of senior executives seems to be taking place with Tim Cook firming his grip at the reins of the tech titan.  The tipping point for this market might be next week’s election and the urgent deadlines for action that rapidly follow.  Uncertainty is bad for markets and there is a lot of it baked into the next eight weeks.  Don’t be counting on a Santa Claus rally this year!

Economic Journal - Tuesday, 10/30/2012

(As of 7:25 am pacific)

 

The market is closed for the second consecutive day as Hurricane Sandy devastates lower Manhattan and much of the Eastern seaboard.  It is the first time since 1888 that the stock market has closed for two consecutive days due to weather related issues.  Some experts are estimating damages done by Sandy of over $20 billion.  It is certainly too early to tell, but expect at least some short term tumult in the market before returning to “normal.”  Several companies have postponed earnings this week and the Labor Dept. is expected to postpone their October jobs report, which was due out Friday, until next week.  Meanwhile, one report was released showing that US home prices rose 0.9% in August reaching the highest level since 2010.  European markets are higher this morning on positive earnings and Asian markets are mixed after the Bank of Japan added 11 trillion yen to its stimulus program.  Oil and gold are slightly higher as a result of Sandy.  The exchanges are expected to open tomorrow at least for a short session anyways.  It is the end of the month and the end of the fiscal year for many mutual fund managers, who will likely unload positions as a normal “window-dressing” process at the end of a year.  The return of traders and the uncertainty surrounding the economic impacts of Sandy will likely bring some short term volatility to the markets this week.

Economic Journal - Monday, 10/29/2012

(As of 7:00 am pacific)

 

Equity markets in New York are closed as Hurricane Sandy blasts the city.  Mild economic numbers and weakness in Europe had set the stage for what looked like a negative opening on Wall Street.  Most commodities are near unchanged and the dollar is up against most currencies.  The economic effects of Hurricane Sandy should be significant as insurers batten down the hatches for a tsunami of damage losses.  'The fiscal cliff' should be coming more into play as the election nears and attention is refocused on this serious looming problem.

Economic Journal - Friday, 10/26/2012

(As of 7:05 am pacific)

 

While markets appear to be quiet at the opening this morning, nothing could be further from the truth.  There has been a dramatic reversal overnight from negativity generated by big misses in both Apple and Amazon earnings after the market closed yesterday.  While it appeared that we would be looking at 1% plus losses this morning, a couple of things happened along the way.  The first is that US GDP came in slightly above expectations at 2% growth.  While this is nothing to write home about, it is more of a relief to investors that it was not worse.  The second is that investors chose to ignore the current earnings miss and look into the future of the two huge companies, Amazon and Apple, giving them a 'free pass' on this one occasion.  Bad news had already been priced into both stocks and future projections look pretty rosy.  One can't help but think that this is a continuation of a fairly weak earnings season and that we will see continued deterioration of stock prices as the day progresses with stocks finishing negative to end the week.

Economic Journal - Thursday, 10/25/2012

(As of 7:20 am pacific)

 

Positive news from Asia and Europe is propelling the market forward this morning after a five day streak of losses.  Jobless claims came in lower than expected, but still too high to have an impact on employment numbers.  Good numbers on earnings have temporarily tabled the gloom of earnings season.  Gold is up moderately as are most commodities.  Oil is recovering from a string of down days.  It is a mini 'risk on' scenario, but there remains caution and restraint as there is the feeling that the market might reverse itself and continue its downward trend.  Uncertainty is the rule as of late as the close Presidential election and the looming fiscal cliff have investors on edge.

Economic Journal - Wednesday, 10/24/2012

(As of 7:15 am pacific)

 

After the worst daily decline in months, the market has seen a slight bounce this morning.  Positive earnings from Boeing and Facebook have added some optimism, with Facebook shares up over 20%.   Healthcare giants Eli Lilly and Bristol Meyers Squibb both missed on top line revenues and AT&T reported quarterly earnings that were in line with expectations.  In economic news, new home sales rose in October by 5.7% adding to the recovery effort in the housing market.  The Fed will wrap up a policy meeting this afternoon with investors looking to language on the economy and some outlook for interest rate direction from the Fed.  There have been rumors this week of the Fed upping the size of its QE3 program but it appears those rumors are far too premature.  European markets had a positive day despite some negative economic reports.  A key report in Germany showed that business confidence fell to the lowest level since February 2010 and manufacturing throughout the euro-zone continues to slip.   China reported a similar report which showed their manufacturing activity actually increased in October, hitting a 3 month high and cooling concerns of a Chinese “hard landing.”  Oil is down and gold slightly higher as the US dollar is mixed.  Interest rates are slightly higher.  Volatility is down today after jumping 15% during yesterday’s sell off.  There seems to still be a negative tone on the street over company earnings and the slight bounce we are seeing this morning could just be traders “buying on the dip” of yesterday.  

Economic Journal - Tuesday, 10/23/2012

(As of 7:18 am pacific)

 

It's an ugly opening for the market as corporate earnings were a big disappointment and news from Spain has brought back into play European jitters.  It is a 'risk off' scenario as investors are dumping most investments and moving to a more conservative position.  The US Dollar index is up strongly, while oil, gold and most other commodities are down.  Interest rates are down slightly as investors seek safety in US Treasuries. The Presidential debate, which appeared to be a win for Obama, but not a knockout punch, seems to be having little effect, but uncertainty about the coming 'fiscal cliff' is looming larger.  While corporate earnings generally disappointed, there were some bright spots and I would expect the markets  to adjust from what seems an overreaction, and recover some of its losses.

Economic Journal - Monday, 10/22/2012

(As of 7:05 am pacific)

 

It is very quiet this morning as the market tries to stabilize after Friday's significant market drop.  There is not much in the way of economic data, so it seems that the market direction will go as earnings go today.  Europe is stable, with some evidence of dissention, but nothing of import.  Asian markets were up overnight.  Oil, gold and other commodities are close to unchanged as is the US dollar.  Caterpillar announced a weak projection for the rest of the year, adding negativity to the early going.  Political activity is having an impact as the third and final Presidential debate is on tap and investors contemplate the fiscal cliff that is fast approaching.  It appears that a very quiet day is on tap.

Economic Journal - Friday, 10/19/2012

(As of 7:25 am pacific)

 

A long list of earnings misses has knocked the market down this morning.  The Dow is down near triple digits after names such as Microsoft, Chipotle, E-Trade, GE and others disappointed investors.  News from Europe is mixed and a non-factor thus far, while Asia continues to shine.  Oil is up, while metals are down.  The dollar is generally up today.  Interest rates are slowly creeping up, as generally positive economic reports are adding upward pressure.  Existing home sales came in lower than expected and capped what had been a series of positive real estate reports adding further downward pressure.  It looks like a significantly down day is on tap as earnings and economic data pile on.

Economic Journal - Thursday, 10/18/2012

(As of 7:08 am pacific)

 

Chinese data buoyed Asian markets overnight and spilled over into US markets.  US markets are down slightly based on a jump in jobless claims, but the data from China has limited the losses.  Earnings are coming in better than expected especially in the financial arena, and we are not seeing the dismal 4th quarter projections which were expected to depress the markets during this earnings season.  Stability is the watchword thus far.  In today's market, gold is down along with oil.  The dollar is up slightly against most currencies.  Mortgage rates have risen slightly.  It feels like jobless claims will weigh on markets today and that losses will accelerate to a moderate decline for the day.

Economic Journal - Wednesday, 10/17/2012

(As of 7:15 am pacific)

 

Stocks are fighting for gains this morning after two straight days of 100 pt. gains on the Dow.  Earnings continue to depict market direction with economic data continuing to come in positive.  The tech sector is dragging on markets today as tech giants IBM and Intel reported disappointing earnings after the bell yesterday and Intel lowered its revenue outlook for next quarter.  Shares are down 3-4% this morning.   On a positive note, the housing recovery continues to show signs of strengthening as today the Commerce Dept. reported that new housing starts surged 15% in September while building permits for new construction rose to a 4 yr. high.  You get the sense the market wants to rally on the strong housing numbers, but earnings are holding markets back today.  In Europe, Moody’s held Spain’s credit rating one level above ‘junk’ bond status citing the ECB’s willingness to buy Spanish bonds making the credit supposedly less risky.  This much anticipated news helped lift stocks and confidence in Europe with the euro hitting a 1 month high.  The US dollar is down against most currencies while interest rates are slightly higher.  Gold and oil are both up and the volatility index is down.  It could be a back and forth day as investors weigh the positive housing data with not so positive earnings reports today.

 

Economic Journal - Tuesday, 10/16/2012

(As of 7:10 am pacific)

Positive earnings surprises continue to add to yesterday's market rally.  Banks continue to lead the way as Goldman beat estimates handily due to hefty investment gains.  In other banking news, the head of Citigroup resigned, in a move that surprised Wall Street. International news is quiet.  Gold is up slightly and oil is near unchanged.  The dollar is mostly down against other currencies, while interest rates hold near historic lows.  The Dow could be headed for its second consecutive triple digit gain as enthusiasm for positive earnings surprises build.

Economic Journal - Monday, 10/15/2012

(As of 7:00 am pacific)

 

It is a quiet start to the week.  Markets have eked out a small gain as retail sales came in better than expected and Citibank earnings beat estimates, which had been significantly reduced over the last quarter.  The Empire State Manufacturing Index continued to show contraction, although it was slightly better than last month.  China exports showed a recovery over the weekend, boosting Asia.  Oil is down as is gold, while the US dollar index is close to unchanged.  Mortgage interest rates are falling and are near historic lows.  Expect market action to be driven by earnings and, more importantly, earnings projections for the following quarter.  Expect the market to reverse itself and struggle to finish positive today as earnings outweigh mildly positive data. 

Economic Journal - Friday, 10/12/2012

(As of 7:00 am pacific)

 

News is quiet ahead of a wave of earnings reports.  There was marked relief when JP Morgan Bank announced and beat earnings estimates in spite of a huge trading loss incurred by a rogue trader.  The dollar was down as were most commodities.  Gold is down slightly and oil is up slightly.  Interest rates are stable.  News out of Asia was mixed and Europe had some positive data to report, although nothing has moved the markets much this morning.  It feels like the calm before the storm as an unnatural stillness persists.

Economic Journal - Thursday, 10/11/2012

(As of 7:00 am pacific)

 

Jobless claims dropped to the lowest level in 4 years surprising analysts, while the stock market has taken a ho-hum approach with only a small to moderate gain.  The dollar is down significantly against most currencies while oil and gold are up, along with most other commodities.  It looks like, but doesn’t feel like a ‘risk-on’ scenario.  There is a lot of skepticism among investors waiting for direction from earnings season.  Import prices were up last month.  Mortgage interest rates have ticked slightly high, but are still near historic lows.  PC shipments are down significantly this year as the explosion of Tablet Devices seems to have cut into market share.  From global reaction to US claims numbers, it would seem that the market will cast off its skepticism (at least for today) and move forward with a strong advance.

 

Economic Journal - Wednesday, 10/10/2012

(As of 7:30 am pacific)

 

Alcoa kicked off earnings season last night with a whimper.  In a report convoluted with one time charges, the bottom line on profit beat expectations, but projections, especially due to China growth worries, was anemic and set the stage for a weak opening of markets this morning.  Commodities were mixed with gold and oil trading close to unchanged and the dollar index up slightly.  Mortgage interest rates ticked up a small amount.  It is a quiet morning, with the beige book report likely to provide direction for the markets.  Momentum is negative as pessimism persists in the wake of a flood of earnings reports.

Economic Journal - Tuesday, 10/9/2012

(As of 7:04 am pacific)

 

Investors are jittery this morning over earning season, which kicks off today when Alcoa announces after market close.  European news trickling in also has investors on edge although little of substance is transpiring.  China introduced a new stimulus package which boosted its markets by 2% last night, but other Asian markets lagged, especially Japan.  The dollar index is up while gold is down, oil is higher and other commodities are slightly positive.  Interest rates are stable, although there was a minute rise in mortgage interest rates, the first in several weeks.  Markets started the day down slightly, but very quiet.  I expect improvement as the day wears on and investors become less pessimistic about reduced quarterly earnings.  Expect the next few weeks to be very much driven by corporate earnings and expect earnings to be better than current pessimistic projections.  Markets, on the other hand, will likely react more to 4^th quarter projections than the announced third quarter earnings. 

Economic Journal - Monday, 10/8/2012

(As of 7:20 am pacific)

 

In a quiet day of trading there is little news of import today.  The Treasury market is closed because of Columbus Day and I suspect that many traders are taking the day off.  Over the weekend there have been many stories about how weak the earnings season will be for the third quarter.  That concern is driving markets lower today though the retreat has been moderate.  From projections and analyst’s comments, earnings growth might actually decline for the first time in years.  What will further define market direction for the near term will be the growth projections that companies put out there for the 4^th quarter, which is currently expected to be a return to robust profit growth.  If future forecasts are reduced along with current earnings declines, it could make our October rally a distant memory.  Gold and oil are down today as the dollar is strengthening.  Interest rates continue to run at historic lows. 

Economic Journal - Friday, 10/5/2012

(As of 7:24 am pacific)

 

It’s all about the numbers today.  The employment numbers that is.  The unemployment rate came down sharply to 7.8%, the lowest reading in years.  But the question has to be asked; is the number politically doctored?  The job creation was not that great and it just seems very coincidental that the month prior to the Presidential election that the rate should experience a surprise drop, with very little backup supporting numbers.  I don’t think the markets will continue the positive response elicited from this one statistic, but there certainly is a momentum carry-forward from prior positive news.  The markets are up marginally today.  Gold and oil are down moderately as is the dollar.  Interest rates continue to recede to more historic lows.  Markets are ignoring very weak numbers out of Asia, and discounting the European debt crisis.  It seems that traders are experiencing a bit of euphoria.  While numbers have been good, I sense it that very much is expected of a still marginal situation with a lot of potholes in the road ahead.

Economic Journal - Thursday, 10/4/2012

(As of 7:10 am pacific)

 

The market is higher this morning after a report showed that jobless claims rose to 367,000 last week, slightly below analysts expectations.  In Europe, ECB President Mario Draghi announced that the central bank will leave its key lending rate unchanged at 0.75%.  Meanwhile at a press conference earlier this morning Draghi reiterated that the ECB stands ready to buy bonds as soon as a euro-zone country requests aid.  Draghi’s comments had a stabilizing effect in Europe and helped lift the euro against the dollar.  Commodities are up across the board, including gold up 0.5% and oil adding 1% as the US dollar is down.  Interest rates are flat and volatility is lower today.  With a lack of economic reports out today, there is a lot of discussion surrounding last night’s Presidential debate as many pundits are giving the victory (for the debate that is) to Governor Romney.  The bounce we’re saying in the market today may be a result of that, but not likely.  There seems to be a growing optimism in the market as recent reports have been positive.  All in all, it seems to be a quiet day today, and is shaping up to be a repeat of yesterday.    

Economic Journal - Wednesday, 10/3/2012

(As of 7:10 am pacific)

 

The US dollar is strengthening against all currencies.  As a result most commodities are down except for gold, notching a small gain.  European and Asian fears are impacting the markets.  The ADP employment index beat expectations, but it is often unreliable.  Oil is down about 1.5%.  The markets opened with a small positive burst and then quickly became mixed and quiet.  Interest rates continue to decline to historically low levels. The ISM services report beat expectations and will likely provide the positive momentum needed to keep the market in the black today.  But it is clear that there is not much conviction on the part of investors at this point.

Economic Journal - Tuesday, 10/2/2012

(As of 7:09 am pacific)

 

It is quiet today.  Most markets are near unchanged.  Investors seem hesitant to commit to mostly positive news from the US economy.  Europe is solid this morning, with Spain continuing to be the main topic as it looks to seeking a bailout from the ECB.  October is a sometimes volatile month hence the hesitancy to commit at this point.  Stories of a possible arrangement to avoid the fiscal cliff are leaking out setting a more positive tone to that lingering uncertainty.  Expect a slow advance as the day wears on.

Economic Journal - Monday, 10/1/2012

(As of 7:22 am pacific)

 

The US ISM Index came in above expectations at 51.5 indicating a positive growth mode for the US economy.  That strong news, coupled with European ISM data, which came in better than expected, although still tepid, has caused markets to open the new quarter with a bang.  The Dow is up triple digits with other markets following suit.  It is a surprise rally after last week’s relatively weak performance and might have caught market bears in a bit of a short squeeze.  Short sellers may have to liquidate short positions thus adding to the intensity of buying demand and strengthening the rally.  Gold and oil are up along with most commodities and the dollar is weakening as capital protection takes a back seat in today’s market action.