Economic Journal - Friday, 11/30/2012

(As of 7:15 am pacific)

 

It is quiet in most markets today.  It is a bit of a surprise because political sniping is making the dive over the ‘fiscal cliff’ seem more likely.  It is possible that negative momentum may take hold today, unless there is progress in resolving this uncertainty.  Gold continues its downward plunge as it approaches $1700 p/Oz, while oil is slightly to the upside.  Interest rates are stable.  The trend of positive economic news is continuing as the Chicago PMI, a key measure of industrial activity points to a very slight economic expansion, though slightly below what analysts had predicted.  European news is good as the Greek rescue plan appears on course.

Economic Journal - Thursday, 11/29/2012

(As of 7:10 am pacific)

 

Exuberance was the best word to describe today’s market open.  An upwardly revised GDP figure of 2.7% growth from an initial 2% measure propelled the markets to an extension of yesterday’s rally.  The dollar is down and most commodities are up reflecting renewed optimism, not only for the US, but for the global economy.  Oil is up by over 2% while gold is moderately higher as well.  Interest rates are stable, as government buying seems to be overcoming what would normally be a spike in interest rates resulting from the good news.  Retail sales numbers from major retailers came in well below expectations and that dampened the initial enthusiasm, but Hurricane Sandy is being blamed for that ‘anomaly’, and markets are not reacting as negatively as would be expected with pessimism that should accompany such an economic report.  Positive vibes on ‘fiscal cliff’ talks are also adding a bit of positive momentum.  It looks like a good day for the bulls. 

Economic Journal - Wednesday, 11/28/2012

(As of 7:30 am pacific)

 

Yesterday’s surprise market drop, despite some very positive economic reports, raised red flags that all other news besides a resolution to the fiscal cliff is of little importance to investors.  Today we see a continuation and even acceleration to yesterday’s declines.  Oil and gold are down big as are most commodities and a disturbing ‘risk off’ scenario is taking hold.  The dollar is stronger as investors flock to safety.  Home sales news added fuel to the fire. Recently positive news was dampened by weakening home sales and price declines.  As we approach year end it is getting more apparent that a ‘lame-duck’ Congress may not have the time or the desire to solve the problem before year-end.  It could be a rocky road for the next few weeks.

Economic Journal - Tuesday, 11/27/2012

(As of 7:00 am pacific)

 

Markets opened tentatively this morning.  While the start has been slightly negative, all indications are that a very positive day is shaping up.  News is good out of China and there has been some resolution to the Euro/Greek budget and bailout impasse.  Retail numbers look outstanding, not only from Black Friday, but also Cyber Monday, which saw excellent growth from last year.  The ‘Fiscal Cliff’ is the key factor holding back what seems to be a very anxious anticipatory investor poised to get on the rally bandwagon.  Oil and gold are near unchanged while the Dollar index is mixed.  Durable goods orders appeared flat, but were somewhat positive after stripping out the volatile aircraft and auto sections. Housing prices were slightly higher, but close to unchanged. 

Economic Journal - Monday, 11/26/2012

(As of 7:20 am pacific)

 

Stocks are lower this morning as traders return to their desks and lawmakers return to Washington to tackle the fiscal cliff.  It was a record breaking weekend in terms of retail sales as nearly 247 million Americans shopped in some form over the weekend, whether by foot or online.  Retail sales are estimated at $59 billion, up 13% from the same period last year, in line with expectations.  It was not enough to lift investor confidence however as Greece debt woes and US fiscal issues dominated headlines.  European officials reconvene today in an attempt to release the next tranche of aid payment to Greece.  After failing to come to an agreement last week, pressure is on the group of finance ministers to come up with a plan to debt recovery and sustainability for Greece.  The immediate focus for the week is on the fiscal cliff as lawmakers have just a few short weeks to come up with a resolution to the $600 billion in automatic tax increases and spending cuts set to hit the US economy January 1, 2013.  Several republicans have broken away from a no-tax pledge in recent days, including a Georgia senator over the weekend, signaling a willingness to compromise.  As the weeks wind down in 2012, all eyes will be on Washington and whether or not these comments can be backed up with actions.

Economic Journal - Wednesday, 11/21/2012

(As of 7:25 am pacific)

 

It should be a quiet day with low volume today as many traders exit the market early for Thanksgiving travel.  News was negative out of Japan with a significant drop in exports, but the prospect of more economic stimulus as a result propped up markets.  The European Union is not yet settled on the continuing Greece rescue plan so things are unsettled there.  On the domestic front economic reports are mixed.  Reportedly lower jobless claims should be ignored until the effects of Hurricane Sandy are filtered out.  Leading economic indicators were up slightly at .2%, a meager gain.  The University of Michigan Consumer Sentiment Report was revised lower, but is still surprisingly high given the rhetoric surrounding the ‘fiscal cliff’ that is so widespread.  Oil is rebounding slightly based on continuing mid-East tensions while gold is flat along with most commodities.  The dollar is mixed.  Expect negative momentum to reemerge as hard negotiations on the fiscal cliff take place with each opposing party battling for political gain.  HAPPY THANKSGIVING!

Economic Journal - Tuesday, 11/20/2012

(As of 7:15 am pacific)

 

The market is reversing course after a bit of a relief rally yesterday.  Comments over the weekend by President Obama and congressional leaders were enough to give the market a brief boost, but investors are looking for substantive plans to resolve the issue.  Housing data released today showed that construction on new homes in October rose to the highest rate in more than 4 years.  Housing starts are up 42% from this time last year.  On the other hand, building permits (a sign of future demand), fell 2.7% in October.  Overall, the tone is that the housing market continues to slowly and steadily recover as consumers take better control of their balance sheets.  In company news, shares of Hewlett-Packard are getting crushed today as the company missed earnings and disclosed accounting errors made by a firm it acquired in 2011.  European stocks are mostly down as Moody’s downgraded the credit rating of France one notch late Monday.  Asian markets are slightly lower as well.  It appears yesterday’s rally was short-lived.

Economic Journal - Monday, 11/19/2012

(As of 7:05 am pacific)

 

Risk is on as hopes rise for a solution to the 'fiscal cliff' drama.  Most asset categories are up significantly, including oil and gold.  The stock market opened with gains of nearly 1%.  In company news, Intel announced that its CEO was retiring.  Asia and Europe markets reflect US optimism as well.  It looks like a turnaround for the markets today as positive momentum is picking up.

Economic Journal - Friday, 11/16/2012

(As of 7:15 am pacific)

 

All eyes are on the White House.  Economic reports and earnings announcements take a back seat to the all important meetings being held which include party leaders from the House and Senate, as well as business leaders.  It seems that global growth is contracting as the worries of the US fiscal cliff cross to other borders.  Europe has drifted back into a technical recession by a small margin. Key commodities are close to unchanged.  There is an overwhelming negative sentiment in the markets at this time, and barring a major breakthrough there it is likely to be another negative day on the markets. Tensions in the Middle East compound the economic turmoil.

Economic Journal - Thursday, 11/15/2012

(As of 7:05 am pacific)

 

It's shaping up to be another dismal day for markets. A short opening market bounce quickly faded as data that has been jumbled by hurricane Sandy poured in.  Retail is in the spotlight and it is not good, with Wal-Mart and Ross Stores falling on less than expected profit and growth.  Jobless claims were through the roof, but much of that was attributed to hurricane Sandy.  One can't help but feel however, that investors are getting jittery about the country's selection of President for the next four years, and whether we are in for more of the 'new normal'.  The dollar is mixed, gold is down, and oil is up, in reaction to Middle East tensions.  Europe news is depressing and Asia is abuzz as new leadership takes over in China.  It appears that it will take a solid, positive resolution to the fiscal cliff to turn this ship around.

Economic Journal - Wednesday, 11/14/2012

(As of 7:30 am pacific)

 

Stocks opened higher, propelled by a surprisingly positive report from tech giant Cisco after market close last night.  Cisco rose by 7%, pulling the Nasdaq up in early morning action.  Commodities are generally up, although oil is down slightly.  The US dollar index is down while interest rates have ticked up slightly this morning.  News from Europe is troubling, with strikes against austerity in several countries today.  Continuing uncertainty regarding the fiscal cliff will likely continue the negative momentum of the past few days.  GOP stringent calls against new taxes are wavering as politicians are starting to access the new political landscape.

Economic Journal - Tuesday, 11/13/2012

(As of 7:20 am pacific)

 

Markets are mixed this morning as volume picks up after traders return to their desks from Veteran’s Day holiday.  With no major economic reports due out today, the headlines are still being dominated by fiscal cliff fears.  Positive earnings from several retailers have helped buoy stocks this morning.  Dick’s Sporting Goods, TJ Maxx and Michael Kors all beat earnings and raised their full year guidance.  Home Depot reported positive earnings causing shares to rise 3.7% while Microsoft shares slid 4% after the company announced that the Windows chief is stepping down from the company immediately.  Euro-zone leaders, after approving the next round of aid for Greece last week, are now struggling to agree to the terms of release of the funding causing an unnecessary delay.  Euro-zone debt woes are now leaking in to countries like Germany and France and threatening another recession that could be devastating to the global economy.  Gold is down 0.5% and oil is down 0.6% slipping to $84.99/barrel as the IEA cut its demand outlook for the 4^th quarter.  The dollar is rising and interest rates continue to fall with the 10 yr. treasury back down to 1.58%.  Volatility has been cooling since the open.

Economic Journal - Monday, 11/12/2012

(As of 7:00 am pacific)

 

A 'risk on' scenario?  Not quite?  While most key investment categories are up this morning, it is a tentative bunch, with each hugging the near unchanged line.  News is diverse globally, with concern over Greece coming from Europe, a possible recession poised to grip Japan, and positive numbers out of China.  The US markets will be trying to recover from a drubbing last week.  A bipartisan conference called by President Obama, attended by Senate, House and Business leaders will test how much political flexibility exists to break the deadlock on the fiscal cliff.  Expect negative momentum to prevail until a positive outcome from this conference can break the hold that this fiscal uncertainty presents.

Economic Journal - Friday, 11/9/2012

(As of 7:20 am pacific)

 

The market is struggling to find direction this morning as investors weigh several economic reports with the growing anxiety surrounding the fiscal cliff.  A preliminary reading showed that consumer sentiment jumped to its highest level since July 2007, however the fiscal cliff continued to dominate headlines.  Concerns over the fiscal cliff were highlighted by the Congressional Budget Office yesterday who put out a report showing the impact of automatic tax hikes and spending cuts set to go in to effect on January 1, 2013.  Growth in the US economy would likely decline by 0.5% while unemployment would jump over 9% according to the CBO’s figures.  President Obama is set to address the topic of the fiscal cliff in a conference later this morning where he will likely respond to previous comments made by House speaker John Boehner, as well as provide guidance on Congress’ efforts moving forward on this issue.  European markets are down as growth concerns out of France and a possible delay in bailout funding for Greece sent stocks lower for the 3^rd straight day.  Some surprising reports out of China showed industrial output on the rise and retail sales soaring 14.5% in October.  The reports weren’t enough to lift stocks, however, as markets reflected the worries of Wall St. and what the fiscal cliff might mean for other global economies. 

 

***This issue will continue to dominate headlines for the remainder of the year, and as such, we’d like to direct you to the video we put out on the fiscal cliff back in September.  We did our best to unpack the issues at stake in way that is palatable to the everyday consumer.  Please click on the ‘Video’ tab of this blog and scroll down to our September video on the fiscal cliff.***

Economic Journal - Thursday, 11/8/2012

(As of 7:12 am pacific)

 

Yesterday’s large market losses were blamed on election results, but it was the emergence of the ‘fiscal cliff’ as a major economic obstacle that accelerated those losses as the day wore on.  Boeing announced facilities closures and a layoff of 30% of its executives in its defense segment.  That story brought emphasis to the coming large cuts in the defense budget on Jan 1, 2013.  Today it appears that we are in a recovery mode, but it may also be just a ‘dead cat’ bounce.  As the day wears on we will see if the negative momentum has been broken.  The US dollar is mixed today and most commodities are near the unchanged line including gold and oil.  News was good out of Europe, while Japan reported negative economic data.  US economic data has generally been good indicating a mild economic recovery but not good enough to weather the storm that will be created by falling off the fiscal cliff.

Economic Journal - Wednesday, 11/7/2012

(As of 7:20 am pacific)

 

It’s in the books.  Obama has won a second term.  Senate and House control have remained the same.  The status quo prevails today.  Investors and hedge fund managers have reacted with disappointment this morning, giving back yesterday’s gains.  Gold is up and oil is down, while the dollar rides higher against all other currencies.  Speaker of the House Boehner has thrown down the gauntlet again spouting ‘no new taxes’.  The ‘fiscal cliff’ is getting uncomfortably close and it’s not likely that a lame duck Congress will react with much vigor to change things.  Europe news is slanted to the negative this morning as well. But I believe that this morning’s market drop of triple digits is more related to the election than the fiscal cliff or European activity.  There are still several weeks for the market to absorb and react to the fiscal cliff, and today’s negative reaction to another 4 years for Obama will likely fade as the day wears on and investors replace disappointment with the optimism that comes when we say that it may not be as bad as we think.  There may be trouble ahead but it is not yet firmly in our headlights as we focus on peripheral events.

Economic Journal - Tuesday, 11/6/2012

(As of 7:22 am pacific)

 

Polls are shifting to the Obama side as most are now calling an Obama victory probable.  The clarity provided is boosting stocks even though analysts had suggested that an Obama victory would more likely boost the bond markets.  A Romney victory is more likely to rally stock markets according to analysts, but an Obama victory is likely to see a continuation of the ‘Helicopter Ben’ philosophy, the thought that economic malaise can be turned around by throwing massive amounts of stimulus dollars at the problem.  The dollar is down across the board while most commodities, including oil and gold are up moderately.  Interest rates are stable, while mortgage interest continues at be historically low.  Expect markets to give up gains today and finish close to unchanged.  

 

Economic Journal - Monday, 11/5/2012

(As of 7:00 am pacific)

 

All is quiet as Election Day approaches.  Uncertainty is creating a pause as investors anticipate the coming day’s changes.  Most markets are close to unchanged with the dollar up against most currencies.  It will be hard for the markets to mount much a rally here, so expect a day that reflects the negativity that uncertainty brings.  Expect a mildly down, but listless day that lacks direction.

Economic Journal - Friday, 11/2/2012

(As of 6:45 am pacific)

 

The news is mostly positive this morning and it looks like we will be adding to the gains of yesterday’s rally.  New jobs creation came in better than expected while the employment rate crept up from 7.8 to 7.9%.  This provides fodder for both Presidential candidates as the campaign winds down to next week’s election.  Besides the employment data, there were several positive earnings reports of note yesterday which should add to today’s positive momentum.  Gold is down nearly twenty dollars an ounce, oil is down slightly and interest rates are surging as the different markets react to better than expected news.  The dollar is generally stronger against other global currencies.  There is little investor concern at this point related to the coming election or the looming fiscal cliff.

Economic Journal - Thursday, 11/1/2012

(As of 7:23 am pacific)

 

Stocks are rising this morning on positive US economic data.  Consumer confidence is up and jobless claims are down.  Manufacturing numbers were slightly positive.  Earnings are mixed.  Gold and oil are close to unchanged while the dollar is falling moderately as traders seem ready to embrace more risk.  After one of the worst Octobers for the markets in the last few years, this has the feel of a relief rally in that economic reports are indicating that the economy is not struggling as much as previously thought. Positive economic stimulus from China and a lack of bad news out of Europe is further solidifying this positive momentum.  It looks like a good day for the markets.