Economic Journal - Tuesday, 12/31/2013

(as of 7:50 AM PST)

 

We wish you all a Happy and Prosperous New Year!!!

The last trading day of the year started with mild gains on most indexes.  Gold is finishing the year with another down day and reflects a total loss of 30% for the year.  Oil is down slightly.  Data reports were generally positive.  Consumer confidence was up and home prices were also higher.  The Chicago PMI, a key manufacturing index was down a small amount, but still showed good strength.  Interest rates continue their slow but steady rise as we enter the New Year of the ‘taper’ as the Federal Reserve starts to pull back on its bond buying program.  The economy looks stronger than it has in many years as we enter 2014.

Economic Journal - Monday, 12/30/2013

(As of 7:20 am PST)

 

It’s another quiet day on Wall Street as stocks open flat on this holiday shortened week.   The Dow Jones opened up slightly while the S&P500 and Nasdaq are slightly below the unchanged line.  A report on housing today showed pending home sales ticked up in November, the first gain in 6 months and another positive indicator of the steady housing recovery.  There are no other economic reports due out today.  Social media stocks are taking a beating today after an analyst downgraded Twitter from neutral to underperform.  The stock is down 6% today after Friday’s 13% plunge.  Other social media stocks like Facebook and LinkedIn are being dragged lower.  Asian markets finished the day mixed while European markets are trending lower.  Gold is lower and treasuries gained sending the 10 yr. back below 3%.  Expect another quiet week this week with markets closed on Wednesday for New Year’s Day holiday.

Economic Journal - Friday, 12/27/2013

(As of 7:15 am PST)

It’s another quiet day on the markets with no economic data to report.  All 3 indexes are up as the Dow is poised to set its 51^st record high of the year.  Social media stocks are slipping this morning after an analyst downgrade to Twitter brought the social network’s stock down 4% after surging 76% on the month.  Facebook and LinkedIn followed course, but tech giants IBM, Intel, and Oracle helped keep the Nasdaq in the green.  International markets are also higher with Asia finishing on a positive note, and European markets rallying after being closed for a two day Christmas break on a surging Euro. Oil prices are higher ahead of supply data and gold is also notching higher. The 10 yr. treasury yield finally busted through the psychologically important 3% level, trading at its highest level since July 2011. A thinly traded market will persist through today and next week, as investors shore up portfolios and strategies for the new year. 

Economic Journal - Thursday, 12/26/2013

(As of 7:15 am PST)

US markets continue to march upward with the broad indexes eyeing more records in this session.  It’s a very quiet day news-wise.  The Labor Department released its weekly jobless claims report today which showed jobless claims dropped a whopping 42,000 last week to the lowest level in over a year.  Weekly changes, especially during the holidays, tend to be volatile but the trend lately is that labor market conditions are improving.  Shares of Twitter continue their incredible run, up 2% today, while several retail stocks like Fossil and Bed Bath & Beyond are also higher.  Historically, the week between Christmas and New Year’s is a positive one for the markets.  The ‘Santa Claus’ rally as it’s often referred to often has to do with end of year portfolio shuffling, investor confidence after holiday shopping and the absence of large traders who are on vacation.   If things continue, it’ll be a nice way to end the year.  Gold is higher by 1% today, while oil is slightly up.  Interest rates are higher with the 10 yr. treasury nudging the 3% line.  Expect a quiet finish to the week for the markets.

Economic Journal - Tuesday, 12/24/2013

(As of 7:05 am PST)

 

Stocks are off to another positive start on this holiday shortened trading session, with the blue chip Dow eyeing its 5^th straight record close.  A positive report on durable goods gave the market a boost early.  The Commerce Dept. reported US durable goods orders surged 3.5% in November due to a large increase in aircraft and other transportation orders.  Excluding the volatile transportation sector durable goods still rose 1.2%, better than expected.  Orders for core capital goods (an indicator of business investment) rose 4.5%, a very good sign for business investment in the year to come.  A report on housing showed new home sales declined 2.1% in November but remained close to its fastest pace since 2008.  International markets are higher and gold and oil prices are up while the 10 yr. treasury yield continues to creep toward 3%.  It looks to be another quiet day on the markets. 

 

The stock market is closing at 1 pm ET today and will be closed all of Christmas Day.  From all of us at Miller Financial Group, LLC, we wish you and your families a safe and Merry Christmas!

Economic Journal - Monday, 12/23/2013

(as of 7:35 AM PST)

Apple Corp was in the news and helped the stock market open strongly this morning.  Apple signed a much anticipated deal with China Mobile, which should strengthen Apple’s position in the China phone marketplace.  The stock opened up over 3%.  Consumer sentiment was strong, but slightly below estimates, while consumer spending edged upward.  Generally data has been positive overall, and mostly in line with market expectations.  Gold is down slightly while oil is near unchanged.  Interest rates have edged up slightly, but are surprisingly stable in light of the news that the Fed will soon begin a small tapering of government bond purchases.  Markets should be very quiet this holiday shortened week.

Economic Journal - Friday, 12/20/2013

(As of 7:25 am PST)

All 3 major US indexes are higher today with another upbeat economic report fueling investor optimism.  US 3^rd quarter GDP was raised to 4.1%, the fastest pace in over two years as consumer spending and business investment picked up.  The previous reading was reported at 3.6%.  The report sent the Dow Jones Industrial Average up 60 points and on pace for its third straight record close.  The S&P500 is also on pace for a record close.   After getting pummeled yesterday, gold prices have stabilized with the precious metal trading at $1,196 per oz.  Meanwhile oil prices are down as is the dollar and interest rates are flat.  Asian markets finished the week mixed and Europe is up despite a credit downgrade from Standard and Poor’s.  It’s a quiet day and expect next week to be the same as traders take off for the holiday shortened week. 

Economic Journal - Thursday, 12/19/2013

(As of 7:10 am PST)

 

Stocks are retreating after yesterday’s rally as investors digest Fed decision to taper bond purchases.  At 2 pm EST yesterday markets were greeted with a statement from the FOMC signaling that the Federal Reserve would begin tapering back its asset purchases to the tune of $10 billion a month starting in January.  Markets cheered the decision and welcomed the Fed’s increasing confidence in the US economy.  Investors also cheered the accommodative stance signaled by the central bank by its assurance that short term interest rates would remain low through and beyond the tapering process.  As far as the scale and pace at which the Fed will cut back its $85 billion-per-month stimulus program, Chairman Ben Bernanke stated those decisions would remain data dependent.  It was quite an afternoon for the markets and for Mr. Bernanke who answered questions about the Fed’s decision in a nearly 2 hour press conference, his last as chairman of the Federal Reserve.  Economic reports today are slightly disappointing.  Jobless claims rose to their highest level since March and US existing home sales declined for the third straight month in November.  A sharp move downward for gold has investors attention, with the precious metal breaking through $1200 per ounce as the Fed taper sinks in.  Interest rates and the US dollar are also moving higher with the 10 yr. treasury approaching 3%. 

Economic Journal - Wednesday, 12/18/2013

(As of 7:20 am PST)

 

More positive data continues to flow in as investors await this afternoon’s highly anticipated announcement from the Federal Reserve.  This time the upbeat data came from the housing sector.  After a strong recovery this year for housing, things continue to improve.  Housing starts in November surged by 22.7% to 1.09 million annualized, the highest rate of growth since February 2008.  Improving data over the past few months has many investors and money managers expecting the Federal Reserve to begin tapering its stimulus program before the end of the year.  The much talked about debate has had markets on pins and needles the past couple weeks.  At 2 pm EST today the Fed will announce its policy decision on when and how much to begin tapering.  Many analysts believe the Fed will continue to purchase $85 billion per month in bonds, while others maintain the stance that the recently improving economy is ready for a slow, steady exit from quantitative easing.  Market volatility has been low and recent fluctuations surrounding the taper have more to do about the uncertainty of the taper than the taper itself, one could argue.  How will the markets bid Mr. Bernanke farewell?  I guess it depends on what he says at 2 pm EST today.

Economic Journal - Tuesday, 12/17/2013

(as of 7:25AM PST)



Stocks opened mixed this morning after yesterday’s surge.  Inflation numbers looked very tame and the other significant report of the day was the Homebuilders’ Confidence Index, which hit its highest point in 4 months.  With the imminent reduction in Government Bond purchases (the taper), it is hard to see the markets rallying much from this point.  Positive action in the form of dividend increase and plans for more corporate buybacks are adding strength.  Boeing was the latest company to raise their dividend and add to its stock buyback program.  Gold is down slightly after several up days, but it still is near its lowest point in months.  Oil is up, mostly on international concerns.  Expect a quiet day today.

 

 

Economic Journal - Monday, 12/16/2013

(As of 7:30 am PST)

Stocks are off to a great start this week as investors applauded upbeat manufacturing data ahead of the Fed’s final policy meeting of the year.  After a quiet week last week, markets welcomed a barrage of economic data to kick off trading this week.  Manufacturing activity in the New York area, as measured by the Empire State Index, recovered after slipping in November.  Industrial production climbed 1.1% in November, the highest 1 month gain in over a year and surpassing its pre-recession high.  Utilities output soared in November likely due to the unusually cold weather that persisted throughout the nation.  Capacity utilization, which is a measure of productivity, rose as well in November.  Tomorrow kicks off a two day policy meeting from the Federal Reserve which will have the attention of global investors.  For weeks now, the “taper talk” has been focused on this week, with many analysts and money managers disagreeing on the Fed’s next course of action.  Asian markets finished the day lower, while Europe is riding higher on the heels of the optimism in the US.  Gold is higher as is oil.  Interest rates have ticked higher while the US dollar is down.  It’s a good start to the week, but with a lot of action still ahead, we’ll see if the markets can hold on to these gains. 

Economic Journal - Friday, 12/13/2013

(As of 7:05 am PST)

US stocks have opened slightly higher today, looking to snap a three day losing streak.  The Dow and S&P500 are on pace for their second consecutive down week, while the tech heavy Nasdaq is also on pace for a 1% weekly decline.  Today’s data calendar is light with a report on US wholesale prices showing November prices declining indicating inflationary pressure remains subdued.  The main story continues to be the “will they or won’t they” dialogue of the Fed’s decision to taper asset purchases at next week’s policy meeting.  The uncertainty surrounding the Fed’s decision has led to selling in recent weeks.  Year-end consolidation of gains and tax loss selling of losers has also contributed to the recent down market.  Economic reports have been positive and the outlook for 2014 seems to make the case for this bull market to continue.  As we’ve said before, a pullback from these frothy highs could be a good thing for the market overall.  Gold is higher today by 0.5% while oil is down.  Interest rates are flat and the US dollar is up.  It looks to be a fairly quiet Friday the 13th.

Economic Journal - Thursday, 12/12/2013

(As of 7:20 am PST)

Stocks are lower again this morning after a mixed batch of economic data has investors speculating on whether or not the Fed will taper out of next week’s meeting.  Encouraging retail sales data in November indicates holiday shopping is off to a good start.  Retail sales rose 0.7% in November, the largest increase since June and consistent with many recent economic reports that suggest the US economy is improving.  Jobless claims jumped by a whopping 68,000 last week, worse than expected but overshadowed by the retail sales report.  A narrative has been forming for weeks now that the US economy is improving at such a pace that the Fed’s stimulus programs are likely to end by the end of the year.  The easy-money addicted market has developed a “good news is bad news” mindset and we’re seeing that again today.  Gold is getting crushed today, down 2.5%.  After a disappointing year for the precious metal, the recent downward pressure could be from tax loss selling as investors look to offset large capital gains on the year.  Taper notwithstanding, a short term pullback could be healthy for this overheated market and could prove to be a positive for investors in the long run.

Economic Journal - Wednesday, 12/11/2013

(As of 7:10 am PST)

 

Markets are edging lower this morning as investors dissected the details of a bipartisan budget deal announced late Tuesday.  Led by Republican Senator Paul Ryan and Democrat Patty Murray, the deal would set spending levels for the next 2 years and would avert another government shutdown next month.  The budget must pass the House and Senate but is seeing positive support from both parties of Congress.  Markets are reverting back the “good news is bad news” theory today viewing the positive budget deal as a further sign that the Federal Reserve will begin tapering its asset purchases at its Dec. 17-18 meeting.  For some time now, fiscal uncertainty has led investors to believe the Fed would wait to make any policy changes.  With recently improving economic reports, including better jobs numbers, and now what appears to be a budget deal, investors are feeling confident the taper is coming soon.  There is very little economic data to report today so investors are choosing to focus on the budget deal.  In company news, shares of Mastercard are up 4% after announcing a 10-for-1 stock split, an 83% dividend increase and a $3.5 billion stock buyback.  News on Mastercard has pulled Dow Componenet Visa higher, as well as American Express.  International markets are mixed, with most indexes in the red.  Both gold and oil are down as is the US dollar.  It appears momentum is shifting to the downside today with more profit taking underway.

Economic Journal - Tuesday, 12/10/2013

(As of 7:15 am PST)

 

Stocks are lower on another quiet session on Wall Street.  With little economic data out today, market direction is difficult to predict.  Taper speculation has increased following yesterday’s Fed speeches where comments seemed to suggest the central bank could very likely begin tapering out of its Dec. 17-18 policy meeting.  In a surprise move gold prices are higher by 2.5%.  In the past gold has been negatively correlated with the taper talk as a tightening of the loose money supply would be a negative for gold, traditionally viewed as an inflation hedge.  Perhaps we’re seeing a foreshadowing of the market’s reaction to the actual event of the taper and that it’s fairly priced in at this point.  In any case, the market has run up nicely at the end of the year and it wouldn’t be a surprise to see more profit taking as the week goes on.  In other news, European stocks are mixed and Asian markets finished lower on disappointing Chinese data.  Oil is up 1% on an expected drop in supply inventories.  Interest rates are down as is the US dollar.

Economic Journal - Monday, 12/9/2013

(As of 7:20 am PST)

 

Stocks are slightly higher today after Friday’s rally surprised investors.  It’s a very quiet day which has investors paying particularly close attention to the final three Fed speeches of the month before the December 17-18 policy meeting.  The Fed presidents of Richmond, St. Louis, and Dallas are set to speak today, providing the Fed its last chance at a coordinated communication effort of its plans to begin tapering asset purchases before the end of the year.  Investors will be keying in on any clues that the taper will begin out of the Dec. meeting.  In other news, budget negotiations in Congress seem to be moving along with a chance of a deal being struck before year-end.  In Europe, markets are mixed, while Asian markets finished the day higher after a surprise beat on Chinese export data.  Gold is higher by 0.5% and oil is down below $97.50 per barrel.  Interest rates and the US dollar are also down.  It looks like a quiet day and week is shaping up barring any surprises from today’s Fed speeches. 

Economic Journal - Friday, 12/6/2013

(As of 7:10 am PST)

 

Stocks are surging this morning on the heels of a positive jobs report that exceeded expectations.  The US nonfarm payrolls report showed the private sector added 203,000 jobs in November, much higher than analysts expected.  Meanwhile the unemployment rate dropped from 7.3% in October to 7% in November, the lowest it’s been in 5 years.  Perhaps more surprising than the reports themselves is the market reaction.  The past 5 trading days have played to the tune of “good news is bad news” as positive economic reports over the last week have spurred talks of an early Federal Reserve taper.  Many analysts were calling for a positive jobs report today as a catalyst for further correction.  Today’s report certainly supports the notion that the economy is improving enough to argue for a December Fed taper, but the positive reaction by the market has caught many by surprise.  Perhaps, as some analysts are now suggesting, the market will take the taper in stride, favoring a return to fundamentals over a liquidity dependent market.   Adding to the optimism this morning was a positive reading of the Univ. of Michigan/Thomson Reuters Consumer Sentiment index which showed consumer sentiment in November surging to its highest level since July.  It’s too early in the session to tell if this rally has some legs.  The question for most investors remains – will the taper jitters get the best of this market?

 

 

 

 

 

Economic Journal - Thursday, 12/5/2013

(as of 7:15 AM  PST)

 

Markets are recovering from opening losses.  Interestingly, most economic data has been positive.  Leading the way was a report that 3^rd quarter GDP grew at 3.6%, a much greater rate than previously thought.  Concerns about the bond buying being tapered over the next year are the main culprit in the initial pullback.  A strengthening economy is bad for the economic stimulus programs that are fueling investor speculation.  Gold is also feeling the pinch, down almost 2%, giving back all of yesterday’s gains. Big news is that mortgage rates are on the rise.  30 year rates are near 4.5%, and likely to go higher if bond purchases are cut back.  Oil is up on supply concerns, with US inventories showing a sharp drop.  Investors appear to be looking for opportunities to take profits.  December could be a rocky month.

Economic Journal - Wednesday, 12/4/2013

(As of 7:20 am PST)

 

US stocks opened lower today with the Dow Jones and S&P500 on pace for a fourth consecutive day of losses.  A slew of economic data has left investors scratching their heads.  The market opened to good data on jobs as payroll processor ADP reported 215,000 private sector jobs were added in November, much higher than the 178,000 expected.  Also, a positive report from the Commerce Dept. showed the nation’s trade deficit fell 5.4% in November.  Initial market reaction at the open was negative as ‘taper fears’ carried over from yesterday and were supported by a better than expected jobs report.  At 10 am EST, another round of data hit the wires which bolstered stocks.  Housing data showed new home sales leaping in October by 25.4%.  Also, the ISM non-manufacturing survey showed activity slowed in November, but still was in expansionary territory.  The housing data pulled all 3 major indexes back into the green.  Gold and oil are both higher and interest rates ticked up with the 10 yr. treasury yielding 2.84%.  It’s difficult to tell where the momentum is today as investors try to shake out whether “good news is bad” and what an improving economy means for the stock market.

Economic Journal - Tuesday, 12/3/2013

(as of 7:15 PST)

 

Markets are down this morning for the third straight day.  Sales on Cyber Monday were robust and gave a boost to retailers, but negative momentum has investors on the defensive.  It has been quite a run this year for stocks and it is not surprising that investors are tired and ready to cash in on some profit taking.  Apple Inc is a bright spot, up almost 2% on an upgrade by UPS and it is helping the NASDAQ stay close to breakeven.  Gold continues to drift lower, along with most other commodities.  Oil is up over 1%, reclaiming some of sharp loses in has seen over the last few weeks.  Mortgage interest rates are on the rise, with the 30 year rates near 4.5%. It’s hard to see a catalyst on the horizon that will spark another stock boost, so don’t expect a Santa Claus rally this year.

Economic Journal - Monday, 12/2/2013

(as of 7:30 PST)

Upbeat economic data about the general economy is competing with disappointing consumer sales from the Black Friday weekend to leave stock indexes mixed at the start of business today.  Manufacturing and construction data were robust, but sales ticked down by over 2% from last year’s Black Friday weekend.  Gold is getting hammered again this morning, down over 1% and oil is making a small comeback, up almost 1%.  December’s stock performance might hinge on retail sales numbers as they continue to trickle in.  Cyber Monday, the day that retailers target internet consumers, might provide a lift as more shoppers turn to the internet for their holiday shopping.

 

Economic Journal - Wednesday, 11/27/2013

(as of 7:15 AM PST)

Mixed economic data this morning has stocks slightly higher.  The jobless claims number came in above expectations, with claims dropping by 10,000.  Durable goods orders looked very weak, with a 16% decline, but most of it was due to aircraft orders, which always skews the volatility of that number.  Without the volatile transportation sector, orders were down less than 1%.  Gold is up moderately and oil continues its downward track as investors evaluate the effect of more Iranian oil on the market.  Interest rates are stable. 

We’d like to take this opportunity to wish you all a very Happy Thanksgiving.  We are especially thankful for all of our wonderful clients!

Economic Journal - Tuesday, 11/26/2013

(as of 7:00 AM PST)

 

Stocks are quiet today.  Positive housing data has provided a small boost.  Housing starts surged and real estate prices were up slightly.  Oil and gold are near unchanged.  Interest rates are stable.  Consumer confidence fell slightly and was below expectations. Don't expect much movement in this holiday shortened week.

Economic Journal - Monday, 11/25/2013

(as of 7:30 PST)

 

A deal between Iran and the major economic powers of the world has created a buzz in the investment world today.  There is a question about the reception that the deal will receive by both Democrats and Republicans in Congress, but, at least for now the, story is creating activities on several investment fronts.  Oil is falling heavily since a deal would release more Iranian oil into the marketplace.  Gold is falling moderately since the deal seems to represent a reduction in international tensions.  Stocks are mixed but there is a clear indication that positive momentum is on the upswing adding juice to a market that appeared tapped out and ready for a bout of profit taking.  International stock markets are responding favorably to the news, boosting investor enthusiasm.

Economic Journal - Friday, 11/22/2013

(as of 7:30 PST)

It is very quiet today.  No significant economic data is being released.  Stocks are up, but only a small amount.  Most other asset categories hover around the unchanged mark.  Individual profit reports make up the headlines.  Retail continues to look very weak.  Don't expect much movement one way or the other in this sleeper session.

We'd like to take this moment to welcome India Lee Newell  to the world.  Born November 20th at 9:35 am, She checked in at 8 lbs. and 20 3/4 inches. Perfect and healthy!  Congratulations Ben and Amanda!!

 

 

Economic Journal - Thursday, 11/21/2013

(as of 7:20 PST)

 

Investors were jolted into action this morning.  A surprising good number on a reduction in jobless claims has provided market indexes a boost after yesterday's negative day.  International news overnight was mixed, but solid overall.  Gold continues its tailspin, down nearly 2% while oil is near unchanged.  Projections of a 10% drop in markets from Goldman Sachs has been the buzz this morning. Retail numbers and sales projections for the following quarter continue to be weak.  Inflation appears well in check giving the Federal Reserve more options for quantitative easing.

Economic Journal - Wednesday, 11/20/2013

(as of 7:30 PST)

 

It is an eerie feeling this morning as the trading day begins.  It seems that investors are on edge, waiting for that selling signal;  poised for what seems to be on the horizon;  that market correction that everyone thinks is coming.  The data says otherwise and markets opened grudgingly higher this morning, though with slight gains.  Economic data has been sound.  Retail sales were more than expected and even troubled retailer JC Penney came in with a profit report above expectations.  Housing sales were down, perhaps reflecting the rise in mortgage interest rates that we have seen over the last few weeks. The consumer price index was lower for the first time in six months, a development which might give The Federal Reserve Bank more latitude in its quantitative easing program.  Gold is down over one percent, continuing its recent slide, and oil, as well, continues its downward trajectory.  Today's rise feels like the last gasp of a rally that is running on fumes.

Economic Journal - Tuesday, 11/19/2013

(as of 7:10 PST)

 

Stocks are struggling out of the gate this morning.  Mega investor Carl Icahn threw water on the positive momentum by calling for a correction.  Though known mostly for his calls that benefit his own investment positioning, his comments sent shivers through the investment community as traders ponder if we have come too far too fast.  Gold is up slightly while oil continues its downward trend. Interest rates are stable.  International economic bodies have reduced future GDP growth prospects for 2013 and 2014.  Interest swirls around the new virtual currency known as BITCOIN.  Extreme price swings in the value of BITCOIN have occurred as the US Congress has hearings of the idea.  Could we be looking at a new global reserve currency to rival the US dollar?  Way too early to tell, but the fact that that the establishment is even dealing with it is a giant positive for the future of the BITCOIN.

Economic Journal - Monday, 11/18/2013

(As of 7:15 am PST)

 

Stocks are retreating from their day highs which saw the Dow briefly trade over 16,000 and the S&P500 over 1,800.  There is not a lot of domestic data to trade on which has investors looking elsewhere for news.  Asian markets surged late Friday afternoon and today as investors further reacted to the details of China’s plenum reforms.  The market’s initial reaction last week to the broad sweeping plan of the Chines Third Plenum was a big disappointment.  Over the weekend however, details began leaking out on the specifics of the reform policies which turned investor sentiment positive.  A 60-point list of policy actions ranging from finance to the one-child policy in China, exceeded expectations and gave investors confidence in the direction China’s new leaders are going.  Equity markets in Asia rallied late Friday and into Monday.  The optimism carried over into Europe and briefly at the open on Wall Street.  Later today, investors will be tuning in to speeches from several Fed members for clues on the eventual exit of the Fed’s bond purchases.  For now, markets seem content with monetary policy direction and the accommodative stance of Fed chair nominee Janet Yellen.  Gold is lower and oil is slightly lower at just under $94 per barrel.  Profit taking and sell limits will likely act as the governor on the market’s upside momentum for the rest of the year, putting the brakes on a breakout rally.

Economic Journal - Friday, 11/15/2013

(as of 7:20 PST)

Investors continue to cheer the presumptive Fed nominee Janet Yellen by pushing stocks up yet again.  Speculation about continued easy money policies has trumped mildly negative economic data and indexes are higher in early action.  The Empire State Index, a widely followed measure of economic activity, was down and other figures relating to industrial activity were mildly disappointing.  It seems there is no stopping this upward momentum.  Oil and gold are up slightly and interest rates are stable.  The thirty year mortgage rate has been steadily climbing and now sits at about 4.35%.  Momentum is a fickle thing and can turn quickly.  Now might be a good time to lock in profits.

Economic Journal - Thursday, 11/14/2013

(as of 7:20 PST)

The market is trying to push forward this morning.  Positive comments from Federal Reserve Chair nominee Janet Yellen have found favor with investors.  Continuing economic stimulus appears in the cards during her reign and that always seems to cheer things up.  Progress is being held back by cautious business projections by key players.  Walmart, Kohls and Cisco are all seeing slow growth next quarter, with Cisco, in particular, falling hard, down over 10%.  Continuing claims for unemployment were below forecast, further dampening enthusiasm.  Gold is up sharply on prospects for the continuing stimulus and oil continues its downward drift.  Gas prices are the lowest in years.  With most market indexes at record highs, don’t be surprised to see some profit taking as the week finishes up.

Economic Journal - Wednesday, 11/13/2013

(As of 7:15 am PST)

 

Stocks continue their march lower with markets around the world taking profits on disappointing China news and confusion over the next Fed policy move.  Asian markets began the selling overnight as investors reacted to the conclusion of a four-day meeting among Chinese leaders known as the Third Plenum.  The meeting was expected to provide some detailed reform plans for the course of the Chinese economy, but instead a broad sweeping plan left investors disappointed.  The selling carried over into Europe as markets reacted to the possibility of a rate hike by the Bank of England as UK unemployment dropped unexpectedly.  US stocks are lower on the China news and also as investors positioned themselves ahead of tomorrow’s testimony from the Federal Reserve’s Janet Yellen.  After upbeat October data suggested the US economy remains on steady footing, markets are expecting the Federal Reserve to begin tapering their bond buying as early as the end of the year.  Expect volatility to pick up as the year winds down and investors consolidate gains ahead of a perceived tightening of the ‘loose money’ spigot.

Economic Journal - Tuesday, 11/12/2013

(As of 7:15 am PST)

 

It’s another quiet day for markets today.  A lack of economic data has investors reconsidering these market tops.  Other signs of complacency are showing up in the options markets and on the volatility index.  Investors seem hard-pressed to find value as stocks are trading near all-time highs and also with valuations exceeding their normal historic range.  Also adding to the cautious sentiment is the return of the ‘taper talk.’  Dallas Fed President, Richard Fisher, reminded investors in an interview with CNBC this morning that a stimulus reduction is a strong likelihood.  He remarked that the Federal Reserve cannot sustain buying bonds at this pace and that at some point the stimulus must slow.  With a steadily improving economy and new Fed Chair Janet Yellen taking the helm at the beginning of the year, a taper may come sooner than expected.  Gold is flat today and oil is lower.  Interest rates are slightly lower today after soaring since Friday.  After etching its 36th record high of the year yesterday, it appears the Dow and other indexes are taking a breather today. 

Economic Journal - Monday, 11/11/13

(as of 7:05 PST)

It is likely to be a quiet day for financial news.  It is Veteran’s Day and fixed income markets are closed.  There are no economic reports due out today.  Gold and oil are near unchanged.  Interest rates have spurted up over the last couple of trading days.  The talk of a Federal Reserve Bank reduction of its aggressive bond buying program is creeping back into financial news and is one reason for the surge in interest rates.  Stocks are up a small amount, but don’t expect much movement on a day that many traders are staying at home.

Economic Journal - Friday, 11/8/2013

(As of 7:15 am PST)

 

The equity markets appear disjointed today after the Labor department released an impressive October jobs report that surprised most investors.  According to the nonfarm payrolls report, the US economy added 204,000 jobs in October, nearly double Wall Street’s forecast.  Immediately, stock futures declined, as concerns of an early Fed taper returned to the markets.  Shortly after the opening bell, markets recovered, but now are slipping off the highs of the day.  The street is having a hard time trading this report.  On the one hand, the jobs report surge is a great sign that the economy continues to strengthen despite the October government shutdown.  On the other hand, the strengthening of the labor market favors an early taper of the Federal Reserve’s bond purchase program, which means less stimulus and an increase in interest rates.  Talks of a December taper have returned to the lips of investors and analysts alike.  In other news, European and Asian markets are lower.   Interest rates on the 10 yr. treasury spiked and the US dollar also strengthened while gold shed $20/oz.  All these moves reflect the markets fear of a “sooner than later” Fed taper. 

Economic Journal - Thursday, 11/7/2013

(as of 7:00 AM PST)

Positive economic data is pushing stocks higher this morning.  A very strong revised 3^rd quarter GDP number surprised the market.  The 2.8% increase was higher than expected.  Lower jobless claims also added fuel to the fire.  A surprise rate cut of .25% by the European Central Bank caused the Euro to fall sharply against the dollar, which is also stronger against all other currencies.  The ‘Twitter’ IPO is generating a buzz this morning.  The popular tech messaging company is expected to rise though its 26 dollar IPO price.  For all of the buzz this morning, market gains are less than robust.  It may be another sign that this extended rally is wearing out investors.  Gold and oil are down.

 

Economic Journal - Wednesday, 11/6/2013

(As of 7:30 am PST)

 

Equity markets are advancing this morning with the Dow Jones and S&P500 reaching all time record highs in early trading.  Stocks have retreated from their highs of the day but are maintaining some solid gains.  There’s not a lot of news to report, so it’s difficult to interpret today’s open.  Reports swirling out of Europe are suggesting that the European Central Bank is expected to announce further easing measures on Thursday.  Also, good reports on UK factories caused European stocks to advance.  Economic data is light in the US.  A composite report of leading economic indicators came in higher in September, marking the second consecutive month of gains.  Earnings reports continue to come in mixed as well.  Investors are taking a cautious stance heading into Friday’s nonfarm payrolls jobs report.  With markets trading at record highs it’s difficult for buyers to take on new positions at this point.  

Economic Journal - Tuesday, 11/5/2013

(as of 7:20 PST)

 

It is a tired stock market.  Indexes are falling today.  Earnings season is running down and as investors reflect on how far stocks have come in the last year it is only to be expected that a bout of profit taking is in the cards.  The one key piece of economic data, the ISM Services number, came in strong, and stemmed the downward slide somewhat, but it certainly feels like buyers are few and far between.  Consolidations and downward adjustments are a healthy part of market advances and today’s market losses are no surprise.  Oil and gold are both down small amounts and the US dollar is mixed against other currencies.  The yield on the 10-year bond is up this morning.   Expect an orderly retreat as investors ponder the next market moving event.

Economic Journal - Monday, 11/4/2013

(As of 7:20 am PST)

 

Markets are slightly higher despite a lack of data as investors continue to sift through corporate earnings reports.  Nearly 80 companies are set to report this week with notable names such as Walt Disney, Tesla Motors and Whole Foods set to announce later in the week.  So far, earnings season has been nothing to write home about.  74% of companies to report have beat on the bottom line (earnings) while only 53% of companies have exceeded revenue expectations.  In other stock related news today, investors are eagerly awaiting the Twitter IPO set for Thursday.  According to a Monday filing with the SEC Twitter set an IPO price range of $23 to $25 per share.  There’s a sense of caution creeping in to the markets as all 3 US indexes are trading near all-time record highs, having just come off the best October since 2011.  A pullback from these levels could be a good thing for this frothy market.  Gold and oil are slightly higher while interest rates ticked down.  Expect a quiet day today as investors try to figure out where to go from here.

Economic Journal - Friday, 11/1/13

(as of 7:15 PST)

 

After a day of profit taking and consolidation markets are gearing back up with positive momentum reestablishing itself.  Economic data has provided a lift.  The October ISM manufacturing number came in at a strong reading of 56.4, a robust number that exceeded expectations.  Talk in Europe of the need to stimulate more inflation seems to indicate that further economic stimulus is in the cards for that region.   Gold is down along with oil.  Prices at the gas pump are down significantly, following the drop in oil.  Lower gas prices may make for an uptick in consumer spending in other areas, a real positive for our economy going forward. Interest rates continue to drift downward.  It looks like another strong day for the stock market.

Economic Journal - Thursday, 10/31/2013

(as of 7:30 PST)

 

It seems we are in for a ghoulish day on most markets.  Risk seems to be off the table as most asset classes are showing moderate to heavy losses.  A vibrant report on Chicago PMI was not enough to stem an early drop in stock indexes.  Gold is taking heavy losses while oil continues on its downward glide.  Chicago PMI, a key measure of industrial activity, came it at a whopping 65, strongly higher than the expected 54 number, and one of the highest readings in some time.  Corporate profit reports were mixed with Facebook garnering the most headlines.  Initial reports sent the stock skyward with a 14% gain in yesterday’s aftermarket, but it ended with a thud, giving back all gains and then some as analysts picked through the Social Media statistics.  A day of profit taking might be healthy for these markets which have experienced an extended rally and might be a little tired.

Economic Journal - Wednesday, 10/30/2013

(as of 7:10 PST)

It is a quiet day in the markets this morning.  What would normally be drama because of the Federal Reserve meeting is absent.  There is little anxiety this time because the dominant view is that nothing substantial will come since the Fed is in the middle of a leadership change.  Federal Reserve nominee Janet Yellen has yet to be confirmed but it is widely assumed that her nomination will occur without major opposition.  Profit reports came in mostly positive yesterday extending the trend of the last couple of weeks.  Markets are up slightly.  A day or two of consolidation after record highs might be expected and could be healthy for this market.  Gold is up and oil is down.  Interest rates are stable.

Economic Journal - Tuesday, 10/29/2013

(As of 7:20 am PST)

Stocks opened the day higher but are slipping off their highs as investors considered earnings and economic data ahead of a two day Fed meeting.  Apple was the buzz in yesterday’s after-market trading as the tech giant reported mixed earnings.  The iPhone maker reported its third consecutive quarter of earnings declines despite revenues coming in higher than the street expected on several new product launches.  Apple’s guidance on gross margin for the December quarter caused investors the most concern.  All in all, it was a rather unexciting report and reaction.  Shares are slightly lower this morning.  Today investors are navigating several  economic reports.  Retail sales fell in September for the first time in 6 months with auto sales leading the decline.  US home prices also lost some momentum, with the average home price rising 1.3% in August according to the S&P/Case-Shiller Index.  A report on wholesale prices showed inflation remains in check as core wholesale prices rose a scant 0.1%. The last report to cross the wires showed consumer sentiment plunging in October to the lowest level in 6 months.   There’s a cautious tone in the market today as the Fed kicks off a two day policy meeting.  The market expects the Fed to remain loose in its monetary policy as the recent government shutdown and weak economic data have put the brakes on the central bank’s plan to taper its asset purchase program.

Economic Journal - Monday, 10/28/2013

(As of 7:15 am PST)

 

It’s a data rich week with economic reports, Fed meetings, and big name earnings all on tap.  US stocks wobbled at the start but are inching towards positive territory as investors looked ahead to Apple’s earning report after the bell today.  Economic data released in early trade showed industrial production rising better than expected in September, while pending home sales in September fell to the lowest level in nine months.   Investor focus today is on Apple as the tech giant gets set to report earnings after the bell.  Since the company’s last report in July, shares have rallied 25% as new products have been introduced and rumors of a share buyback have propelled shares higher.   Investors will be looking for guidance for the December quarter as the key driver of trade this week.  Markets have a lot to digest on the economic front as well this week.  Reports on retail sales, auto sales, jobless claims, and the Chicago PMI will give investors plenty of information to trade on.  Not to mention a Fed meeting this week should affirm investor sentiment that a taper will likely not be seen until 2014.  There are a lot of positive drivers for the market this week, but also a cautious tone as market indexes reach or exceed all time record highs.

Economic Journal - Friday, 10/25/2013

(As of 7:15 am PST)

Markets have opened much like they did yesterday with modest gains as big names continue to report earnings.  Tech stocks are pacing gains with the Nasdaq up .7% as Microsoft and Amazon both reported strong earnings beats sending shares up 6% and 10% respectively.  Other companies who reported include Zynga, UPS, and Proctor & Gamble all in line or exceeding expectations.  There is some economic data out this morning worth noting.  US durable goods orders rose 3.7% in September led for the most part by a large increase in aircraft bookings.  Stripping out the volatile transportation sector, durable goods declined by 0.1% and core capital goods slipped 1.1%, a lackluster report.  Also released this morning was the Univ. of Michigan/Thomson Reuters Consumer sentiment index which showed the final reading of consumer sentiment in October falling to 73.2 from 77.5 in September.   Sentiment hit the lowest level since last December, likely due to the government shutdown and political squabbling of the past month.  European markets are mixed as they near the close of trade while Asia took a beating on poor Chinese earnings.  Gold is lower and oil higher while interest rates continue to slide with the 10 yr. treasury yield dipping for a moment just below 2.5%.  

Economic Journal - Thursday, 10/24/2013

(As of 7:10 am PST)

 

International news is triggering some movement in the US markets while earnings are impacting sector moves.  News out of China was upbeat as the world’s second-largest economy reported a rise in manufacturing activity that was greater than expected.  Asian markets were mixed most of the trading day but finished the day down.  Europe is higher on the China news and US company earnings.  The US equity markets are slightly higher as investors continued to wade through earnings reports.  Some names worth noting today include Ford, who provided an optimistic profit guidance that has propelled shares higher.  3M beat estimates as did AT&T and Southwest Airlines.  Tech giants Microsoft and Amazon are set to report after the closing bell today.  It’s nice to see a defined trade on earnings, instead of large macro events swinging the markets.  Expect earnings to overshadow economic data for the remainder of the week.

Economic Journal - Wednesday, 10/23/2013

(As of 7:30 am PST)

 

Markets are moving lower and picking up steam this morning after a slew of disappointing earnings reports hit the wires.  Perhaps the most disturbing was equipment maker, Caterpillar, which historically is seen by the market as a bellwether for global economic conditions.  CAT reported misses on both the top and bottom lines, but its lowering of its full year 2013 guidance concerned investors the most.  Broadcom also guided lower, overshadowing an earnings beat and sending the stock lower.  Boeing shares surged higher after reporting 3^rd quarter earnings that rose 12% and raising its EPS estimates. Pharmaceutical company, Eli Lilly, missed on earnings while revenues rose and Bristol-Myers Squibb beat estimates.  Several other companies reported in a mixed bag day that has the market taking profits after an historic run.  International markets are also taking a breather.  Asia finished lower and European stocks are trading down on earnings and ECB bank stress test news.  Expect market direction over the coming weeks to be driven by earnings as macro events slip into the background for now.

Economic Journal - Tuesday, 10/22/2013

(As of 7:20 am PST)

 

Markets are rallying this morning on a ‘bad news is good news’ sort of move.  The US nonfarm payrolls report for September came in much lower than expected.  The private sector created 148,000 jobs in September, lower than estimates of 185,000.  The unemployment rate ticked down from 7.3% to 7.2% while the labor force participation rate (which measures how many people are looking for work) remained near a 35 year low.  The jobs report, which was delayed by 18 days due to the shutdown, signaled an economy that is growing at a modest pace.  September’s report and the impacts of the government shutdown will likely dampen growth for the remainder of the year.  Why is this good for markets?  Investors are now speculating that the tepid growth signals the Fed will likely push back their bond tapering plans until at least spring of 2014, maybe later.  Let the easy money continue to flow.  Signs of this trade are evident in the treasury market today with treasuries rallying as interest rates dropped.  Besides the jobs report, investors are trading a big earnings day.  Netflix reported a beat yesterday, while Texas Instruments reported falling profits.  DuPont, Coach, Delta Air Lines, Harley-Davidson, Lockheed Martin, and RadioShack are some other names expected to report today.  Gold prices are higher by 1% as Fed taper worries subside.  We’ll see if the market can hold this rally today.

Economic Journal - Monday, 10/21/2013

(As of 7:15 am PST)

 

Stocks opened near the unchanged line but are inching higher in early trade as investors look to a peak week in earnings and upcoming economic data.  It’s a big week for earnings with names like McDonald’s, Proctor & Gamble, Microsoft and AT&T set to report.  It’s been a mixed bag for Q3 earnings so far.  Of the 93 companies that have reported from the S&P500 so far, 53% have topped Wall St. estimates on the revenue line, which is slightly below the 4 year average of 59%.  On the bottom line (earnings), 69% have topped estimates compared with a 4 year average of 73%.  Most reports have slid past markets as the government shutdown and debt ceiling debate took over headlines the past month.  Besides earnings, investors are looking ahead at a full week of economic data.  Several reports which were delayed by the government shutdown will be released this week including the Labor department’s key US nonfarm payrolls report.  This week’s report (delayed by 18 days) will not reflect the impact of the shutdown so market reaction will be difficult to interpret.  In any case, a return to fundamentals, including earnings and economic data, should determine price direction for this week and hopefully the remainder of the year.

Economic Journal - Friday, 10/18/2013

(As of 7:10 am PST)

 

It’s back to business as usual on Wall St.  With the threat of default and a reopening of the US government in the rearview mirror investors are turning to earnings and economic data for direction from these multi-year highs.  It’s all earnings today with some big names reporting.  General Electric beat estimates ahead of the bell with shares moving higher by 2%.  Morgan Stanley swung to a Q3 profit beating estimates.  Yesterday, Google surprised investors with a 36% year-over-year earnings increase which resulted in shares soaring 10% in after hours.  Also, a high flyer today are shares of Chipotle which reported revenues better than expected.  It’s been awhile since we have seen reliable economic data as the government shutdown delayed several reports.  Next week should be chock-full of reports with Tuesday’s important non-farm payrolls report kicking things off.  There appears to be some positive momentum right now with earnings coming in better than expected and the shutdown pushing talks of a Fed taper further out into next year.  There’s a lot of data yet to sift through but sentiment has improved since earlier in the week as investors game plan for the final two months of the year.

Economic Journal - Thursday, 10/17/2013

(as of 7:00 PST)

 

The deal was done.  It was very anti-climactic.  Markets rallied yesterday when it was all but assured.  But this morning negativity started the day.  Canvasing the political and economic landscape it is hard see that any significant good was accomplished from a huge expenditure of resources and emotion.  It is quite natural to feel that empty negativity.  But markets should quickly pick up the pieces and get back to the business at hand.  Economic reports and corporate earnings will now take center stage and markets should claw back from early morning declines.  Gold is up over 2% on the day while oil continues its downward trend.  The dollar is down across most currencies on the prospect of continued stimulus.  Interest rates have ticked higher. Expect a relatively quiet day as investors take stock of the situation.

Economic Journal - Wednesday, 10/16/2013

(as of 7:30 PST)

Investors see the collapse of the House GOP Plan as a positive and are driving up stock prices as if it is a done deal on reopening the US government and raising the debt ceiling.  The dysfunctional Republican caucus in the House was not able to put together a plan that would pass with its members, thus leaving the Senate Plan as the ‘only game in town’.  House speaker Boehner has indicated that he will put the bipartisan Senate Plan to a vote, almost assuring that the small group of radical Republicans, whose voice has been heard in a loud way, will be finally be silenced for the time being.  Details are currently being worked on, but things look very positive.  The Dow is up triple digits, with other markets following along.  Gold is off slightly and oil is near unchanged.  Interest yields are up a small amount.  Once this crisis is in the rearview mirror, investors will be able to focus on company earnings reports and other economic data.

Economic Journal - Tuesday, 10/15/2013

(As of 7:13 am PST)

 

Today’s open is similar to yesterdays with stocks trading modestly lower.  Investors remain cautiously optimistic about reaching a deal to fund the government and avoid a default this week.  Senate leaders Harry Reid and Mitch McConnell both made positive statements about reaching a deal yesterday that lifted stocks in the afternoon.  There’s still a lot of progress that needs to be made, but we’re in the red zone of a budget agreement it seems.  In other news today, the Empire State index, which measures manufacturing activity in the New York region, improved in October but by its slowest pace in 5 months.   Earnings have been mixed so far today with some big names reporting.  Citigroup missed estimates, while Johnson and Johnson beat and Coca-Cola met expectations.  Yahoo is set to report after the bell today.  Expect markets to become more earnings driven after we get through this budget impasse.  Until then, all eyes remain locked on congress over the next 48 hours.    

Economic Journal - Monday, 10/14/2013

(as of 7:00 PST)

Uncertainty persists with the market opening moderately down this morning.  Expectations are high that a compromise will be in place by Thursday’s deadline but investors are watching nervously.  Gold is rebounding from last week’s large losses and oil continues on its downward path.  Interest rates are stable.  There are no significant economic reports out this morning, so action will be driven by earnings reports and headlines out of Congress today.

 

Economic Journal - Friday, 10/11/2013

(as of 7:10 PST)

 

The dramatic shift in market sentiment is still evident in today’s morning action.  It appears that a resolution of the debt ceiling and a reopening of the US Government after a budget compromise will happen today. Unfortunately, at least for the debt ceiling issue, it is a short term solution, bound to continue to cause headaches into the winter months.  Gold and oil are getting hammered today, both continuing a string of declines over the last week.  Markets are continuing to rally, but are mostly digesting yesterday’s huge market jump.  Attention is likely to focus now on when the Federal Reserve will begin tapering its government and mortgage bond buying.  For the time being investors can breathe a little easier.

 

Economic Journal - Thursday, 10/10/2013

(As of 7:17 am PST)

 

A bit of a relief rally has come in to the markets today as lawmakers showed signs of moving closer to a deal that would avoid a US default.  Stocks jumped at the open after slight gains yesterday as investor optimism grew.  For the first time since the government shutdown began 10 days ago, President Obama is scheduled to sit down with House Republicans today at the White House to discuss proposals on a budget solution.  Also swirling around Capitol Hill are rumors that House Republicans have come up with a short term fix of raising the debt ceiling for 6 weeks, allowing more time for budget negotiations.  A report on jobless claims showed claims surging last week from 308,000 to 366,000 partially due to the shutdown but mostly impaired by computer miscues in California.  Either way, markets seem to be sidestepping the report and cheering the progress in Washington.  So far earnings have been fair with only a few companies reporting so far.  If an agreement is struck in the coming days and earnings are decent as we hit the meat of the calendar, expect markets to rally from these current prices.  Still a long way to go, but today is providing a glimmer of hope (at least from the markets point of view).