Economic Journal - Monday, 12/31/2012

(As of 7:00 am PST)

 

Last minute negotiations are underway to avert the fiscal cliff.  The debt ceiling limit is about to be hit as well, and any negotiated settlement will need to include a debt ceiling extension.  Markets are optimistic, but tentative.  Gold is up slightly while oil is down.  Interest rates are lower.  Best guess is that there will be a negotiated structure of an agreement by year end, but it will wait for the new Congress to pass the deal, making it retroactive to January 1, 2013.  Today's market will be up and down based on current rumors with increased volatility.  

Economic Journal - Friday, 12/28/2012

(As of 7:07 am PST)

 

Markets are down but surprisingly stable in light of last ditch cliff negotiations.  Gold is off slightly, while oil is slightly up.  The US dollar is close to unchanged on currency markets.  International news is skewed to the positive.  Interest rates are stable.  If President Obama and Congress are able to put a patchwork partial deal together prior to Tuesday, there is likely to be an initial surge in the market, but the jumbled uncertainty could make for a rough start to the New Year.  The dysfunction of our political makeup is showing up big time as the country and the world watch with fascination and alarm.

Economic Journal - Thursday, 12/27/2012

(As of 7:20 am PST)

 

Stocks are seesawing this morning in the final hours of the fiscal cliff debate.  The market opened with a brief drift up as investors remained confident that the President’s shortened vacation signaled a fiscal cliff deal would be reached.  Negative sentiment returned shortly after the open as economic reports showed consumer confidence dropping in December to the lowest level in 4 months.  Senate majority leader Harry Reid is currently addressing members of the senate on budget negotiations, asking House Speaker Boehner to call his members home from vacation to get a deal done.  With the limit of the $16.4 trillion debt ceiling set to be reached on December 31^st, along with the automatic tax hikes and spending cuts set to occur on January 1^st, you could cut the tension on Capitol Hill with a knife.  Gold and oil are turning lower today, while interest rates are up slightly.  Volatility, which started the day down, has reversed course.  Negative momentum is taking hold with all three indices shedding .75%.  It’s going to be a closely watched next 48 hours.

Economic Journal - Wednesday, 12/26/2012

as of 7:00 AM, PST

December 26, 2012

Hope springs eternal!  Investors move the market forward hoping that President Obama’s shortened vacation means that there is hope for a ‘cliff’ solution prior to year end.  Oil is up sharply and gold is up moderately, with most other commodities mixed.  Short term interest rates have ticked up slightly, while the dollar is generally down against other currencies after the US was put on a negative credit watch.  Retail sales for the Christmas season were disappointing.  Expect a sharp rise in volatility as the week moves on.  

Economic Journal, Monday, 12/24/2012

December 24, 2012

(7:30 AM, PST) Stocks are drifting lower in very quiet trading on a holiday shortened market session. Gold is up slightly while other commodities, including oil, are slightly off.  Interest rates are up a small amount.  I don’t expect much firm direction one way or the other because most traders are taking the day off.  The ‘cliff’ draws perilously near and news out of Washington is likely to dominate market direction for the remainder of the week.  Have a very Merry Christmas!

 

Economic Journal - Friday, 12/21/2012

(As of 7:14 am pacific)

 

House Speaker Boehner could not put together the votes to pass what is termed ‘Plan B’. Fellow Republicans are rebelling, just as they did last year with the budget deficit extension bill.  The fiscal cliff is a near done deal and complacency may well give way to panic over the next few trading days.  Oil is down, while the dollar and gold are up with safe haven buying being in vogue today.  Today’s quadruple witching scenario may add severe volatility to markets.  The ‘witching’ term means the day when options and futures contracts all expire at the same time.  Downward pressure on markets should increase as the day wears on and investors head for the exits before the weekend.  It could be a very rocky road for the next few days.

Economic Journal - Thursday, 12/20/2012

(As of 7:20 am pacific)

 

Stocks are mixed this morning following yesterday afternoons selloff as fiscal cliff discussions have moved back in to a stalemate.  A bill, known as Boehner’s “Plan B” will go to the House for a vote today.  Even if it were to pass both the House and the Senate (which it almost certainly will not), President Obama has already said he would veto it.   After negotiations appeared to be making progress earlier in the week, congressional leaders dug in once again yesterday, with Republicans calling for more cuts and Democrats more revenues.  Despite the cloud of the fiscal cliff looming over the markets, some strong economic data continue to show signs of improvement.  Existing home sales rose to the highest rate since November 2009 this month, and the final reading of Q3 GDP showed the US economy growing at a 3.1% annualized rate.  US budget negotiations are the focus for all international markets.  Europe and Asia are mostly lower.  Gold is down 1% today and oil is also down.  After spiking yesterday, volatility is under control today.  Volume will likely slow down tomorrow as traders head in to the long holiday weekend.  However, as long as uncertainty remains over the fiscal cliff, expect the final week of the year to be a bumpy one.

Economic Journal - Wednesday, 12/19/2012

(As of 7:05 am pacific)

 

The market looks a little weary after surging over the last week.  Optimism continues as talks in Washington, DC appear headed in a direction that will avert the full effect of the fiscal cliff.  Gold continues its descent while oil continues to rally.  The dollar is generally down against other global currencies.  Oracle announced earnings that beat expectations giving the technology sector a boost.  Look for some profit taking today.  Interest rates have shown a slight increase over the last few days.  There is a lull in the action as markets look for more progress in tax and budget negotiations.

Economic Journal - Tuesday, 12/18/2012

(As of 7:13 am pacific)

 

Stocks are building on yesterday’s gains as Congress and the White House are finally showing signs of compromise on a fiscal cliff deal.  Last night President Obama and Democratic leaders proposed a plan that would allow Bush-era tax cuts to expire for those making over $400,000 per year, lifting their limit from the previously proposed $250,000.  They also extended a proposal that would result in $1.2 trillion in spending cuts.  The offer was a counter to recent moves by House speaker Boehner who proposed tax hikes on those making over $1 million.  Negotiations still have a long way to go, however moves in recent days suggest lawmakers are willing to compromise and likely come to an agreement before year end.  After a positive day yesterday that saw the S&P rise 1.2%, the markets remain cautiously optimistic.  International markets are mostly higher on positive US budget talks.  Gold is a touch lower and oil slightly higher while interest rates also bumped up slightly.  House speaker Boehner is expected to hold a press conference this morning which could potentially set the tone for the day.

Economic Journal - Monday, 12/17/2012

(As of 6:45 am pacific)

 

Financial matters take a back seat as the nation grieves for our tragic loss on Friday.  May our prayers and thoughts be for the victims and their families today. 

Economic Journal - Friday, 12/14/2012

(As of 7:19 am pacific)

 

All eyes are on Washington as markets disregard positive economic news from China and continuing good news on the domestic front.  US Industrial output is up and inflation seems well under control, giving the Fed more room for economic stimulus programs.  Apple computer is a big drag on markets as it continues to fall heavily.  Oil and gold are up slightly as are most commodities while the US Dollar is falling.  All US markets are slightly to the downside, but mostly unchanged.  There is a sense that the market wants to explode to the upside and may well do so if an agreement on the fiscal cliff is announced.

Economic Journal - Thursday, 12/13/2012

(As of 7:15 am pacific)

 

Markets are flat this morning while slightly positive economic reports weren’t enough to lift stocks.  Consumers spent more in November with retail sales edging up 0.3% after falling in October.  Energy prices meanwhile fell 4.6% in November – the biggest 1 month decline since March 2009.  Lower gas prices mean more dollars in the pockets of consumers and thus a good thing for the economy.  In other economic news, jobless claims fell last week to the second lowest level of the year.  Yesterday was an historic day as the Federal Reserve announced new targets regarding its interest rate policies.  The Fed announced it will keep interest rates near zero until the unemployment rate hits 6.5%, so long as inflation does not exceed 2.5%.  It showed the Fed is willing to continue accommodative policies as long as needed.  International markets are mixed today.  Commodity prices are lower with gold down 1.3% and oil off 0.5%.  Interest rates are slightly lower and volatility is slightly down.  Politicians remarked yesterday that they will work through Christmas to get a fiscal cliff deal on the table.  Until then, markets remain complacent.

Economic Journal - Wednesday, 12/12/2012

(As of 7:20 am pacific)

 

The days are dwindling in December as the fiscal cliff draws closer.  There is optimism both domestically and internationally that a deal will be reached before January 1.  Today’s activity show oil and gold with solid gains, interest rates ticking up and markets positive, but close to unchanged.  The Federal Reserve Bank is meeting and is likely to add to current stimulus programs.  Asia has been showing good positive momentum over the last few days and news is fairly mundane in Europe, slightly bent to the positive.  Expect volatility to increase and momentum to rapidly shift to the negative if solid progress on the fiscal cliff is not forthcoming by weeks end.  Complacency reigns despite the serious challenges ahead.

Economic Journal - Tuesday, 12/11/2012

(As of 7:20 am pacific)

 

The markets are drifting higher this morning as positive progress is seen in US budget talks.  The Wall Street Journal and other reports signaled that negotiations between Congress and the White House to avoid the fiscal cliff had made steady progress in recent days.  Attention also turned to Ben Bernanke and the Federal Reserve as a two-day policy meeting kicks off today.  The Fed is expected to announce plans for a fresh round of monthly treasury buying of $45 billion at the first of the year.  The new asset purchase program would begin just after the expiration of Operation Twist, the Fed’s program of artificially lowering interest rates.  Investors mostly shrugged off economic reports that showed the US trade deficit widened in Oct. as imports and exports both dropped.  European markets were higher on optimism over the fiscal cliff progress and a surprise reading out of Germany that showed investor sentiment rising.  Asian markets also saw broad gains after US stocks rose Monday.  Oil is higher but gold prices lower today.  Interest rates saw a brief jump and volatility is lower.  Today is shaping up to be a positive day as the rumors on fiscal cliff progress is bringing a jolt of confidence to the market.

Economic Journal - Monday, 12/10/2012

(As of 7:10 am pacific)

 

Stocks are mixed this morning with similar trading patterns to last week.  Shares of Apple continue their downward slide, holding back the tech heavy Nasdaq.  There are no economic reports on tap today, and all eyes remain on the fiscal cliff.  President Obama and House speaker John Boehner reportedly met in the White House yesterday, but a lack of information from the meeting have kept investors complacent.  European stocks are taking a beating as Italian Prime Minister Mario Monti announced he would step down effectively after Italy’s 2013 budget is approved.  The resignation sent jitters throughout the European markets.  Asian stocks were higher after a weekend of positive data out of China.  Chinese industrial output climbed 10.1% and retail sales were up 14.9%.  Trade data today showed Chinese exports slowed considerably in November as its two major buyers, the US and Europe, continued to struggle.  Oil and gold are higher and the US dollar is mixed.  The focus for the week will be on the fiscal cliff and an important two-day Fed policy meeting that kicks off tomorrow.  Expect much of the same as last week until a fiscal cliff resolution begins to form.

Economic Journal - Friday, 12/7/2012

(As of 7:20 am pacific)

 

Stocks are trying to breakout a rally on strong jobs data, but consumer sentiment and worries over the fiscal cliff are holding markets back. The US Labor Department reported that the private sector added 146,000 jobs in November, much higher than analysts expected. The unemployment rate fell in November to 7.7% from 7.8%, mostly due to 350,000 people dropping out of the labor force.   October and September jobs numbers were downwardly revised.  A preliminary reading of US consumer sentiment fell in December, likely due to fears over the fiscal cliff and higher taxes at the beginning of the year.  In Europe, markets were lower to start as the German central bank cut its 2013 GDP forecast from 1.6% growth to 0.4%.  Stocks bounced back later in the day after the US jobs data came in.  The big story out of Asia was of the 7.3 magnitude earthquake that hit just off the Northeast coast of Japan.  It struck just after the markets closed, having little impact on stocks and at this point there are no reports of casualty or damage.  Commodities are higher today with oil and gold edging up, while the dollar is also up.  Interest rates are higher and 30 yr. mortgage rates are lower as a result of Fed buying.  Volatility is down today.  It looks like a push and pull day as investors weigh the jobs report against the fiscal cliff drama.  

Economic Journal - Thursday, 12/6/2012

(As of 7:15 am pacific)

 

The markets are lacking direction this morning as investors remain worried over the fiscal cliff.  Some sharp comments yesterday from House republicans and the administration showed both sides are far from an agreement that would avert the automatic tax increases and spending cuts set to occur on January 1^st.  Thus, the “wait-and-see” mindset prevails in the markets.  On a positive note, jobless claims fell 25,000 last week.  After rising by 90,000 after Hurricane Sandy put people out of work, we are back down to pre-storm levels.  In corporate news, shares of Apple continue to get pummeled, down .5% today after falling over 6% yesterday, the worst 1 day drop since 2008 for the world’s largest company.  Most European markets are higher after the European Central Bank left its key interest rates unchanged and at historic lows.  However, the central bank is not expected to implement any new policy changes before the end of the year.  Asian stocks were mixed with Japan leading the way as political reports show the opposition party favored to win the upcoming election.  The Liberal Democratic Party favors more accommodative money policies, which the markets have come to love.  Oil is down 1% today, while gold is slightly higher.  The dollar is mixed and interest rates are slightly lower.  Volatility is creeping up since the open and there’s a sense the market wants to give back yesterday’s gains.   

Economic Journal - Wednesday, 12/5/2012

(As of 7:30 am pacific)

 

Headlines are rampant today; Mergers, economic reports, massive layoffs at a big bank, international optimism.  The bottom line is a mixed market.  Apple is down over 3 percent, pulling down the NASDAQ, in what otherwise might be a strong rally.  The Dow is up slightly while the S&P 500 is mixed.  US economic reports were strong with the ISM services index in healthy expansion territory and US productivity up.  These reports are the latest in a series of positive US economic reports that show a recovering economy.  The ‘fiscal cliff’ is the major factor that is keeping markets from breaking strong to the upside.  Oil is down slightly, gold up slightly, while interest rates continue to fall.  Citigroup announced layoffs of over 10,000 employees in a major restructuring.  There was big news in commodities as Freeport McMoran announced the potential acquisition of two rivals.  Expect continuing caution from investors as political talks intensify through the month. 

Economic Journal - Tuesday, 12/4/2012

(As of 7:15 am pacific)

 

With a lack of economic reports and data to sift through investors are zeroing in on fiscal cliff discussions in early trading.  Yesterday, House republicans offered up a plan that included $800 billion in new revenue, nearly half of what the Obama administration is calling for.  The political back and forth seems to be causing a feeling of complacency in the markets.  Commodity prices are noticeably lower today with oil down 1% and gold down over 1.25% on possibly some short selling out of Asia.  Asian markets ended today slightly higher as the Reserve Bank of Australia announced a rate cut to its key interest rate.  European stocks are higher ahead of their close.  Interest rates are lower and volatility is down.  With no economic reports on tap for today, look for market moves to be determined by fiscal cliff rhetoric.

Economic Journal - Monday, 12/3/2012

(As of 7:10 am pacific)

 

December opened with positive news on the international front.  Strong economic data from Asia and positive news from Europe spurred an early morning rally.  Strong rhetoric from dueling political parties is being downplayed relating to fiscal cliff talks.  The likelihood of a solution prior to year end is becoming widely accepted.  Complacency abounds.  Oil and gold are up moderately as are most commodities.  The dollar is down across the board.  Upbeat economic data both in the US and Internationally over the last few weeks have created a very solid base of positive momentum.  It should be a good day for markets.