Economic Journal - Thursday, 1/31/2013

(As of 7:09 am PST)

 

Stocks are marching upward today with mixed economic data. Jobless claims came in higher than expected, but that was quickly overshadowed by a sharp increase in personal income. Chicago PMI, a key measure of industrial activity, was up sharply and well above expectations. Profit reports are generally coming in better than expected, adding to market momentum. Gold is down sharply and oil down slightly. Mortgage interest rates appear to be headed up,with 30 year rates averaging near 3.6%. It looks like a positive day today driven by good earnings reports and positive economic reports.

Economic Journal - Wednesday, 1/30/2013

(As of 7:39 am PST)

 

The market turned defensive this morning after US GDP showed a small but surprise drop in the 4^th quarter, attributed to a big drop in defense spending.  Consumer confidence was down as well as fears from the debt ceiling and the prospect of major budget cuts added to the shift in momentum.  Markets were down, but only by a small fraction.  There are some thoughts that the surprise contraction of GDP will give the Federal Reserve more argument to continue the quantitative easing programs, which have provided massive liquidity to markets.  Gold is up moderately, while oil is near unchanged.  It is hard to see any upside to today’s reversal of positive report trends.  Expect continuing deterioration as the day progresses.

Economic Journal - Tuesday, 1/29/2013

(As of 7:09 am PST)

 

It’s a pretty quiet day on the markets so far with stocks slightly higher after yesterday’s losses snapped an 8 session winning streak for the S&P500.  Investors are looking to the two day Fed policy meeting that kicks off today for any signs of policy action.  Most analysts expect the Fed to continue its bond buying program, known as QE3, while simultaneously keeping short term interest rates low.  The Case-Shiller Index of home prices in 20 major US cities was slightly higher in November, with year over year gains hitting 6 year highs.  A consumer confidence report showed confidence dropped in January to the lowest level since November 2011, likely with the payroll tax effecting consumers pocketbooks and attitudes.  Some big name companies have reported quarterly earnings recently including Yahoo, Ford, and Pfizer, with all 3 companies beating analyst estimates.  Amazon is set to report later this afternoon.  International news is light with European stocks lower and Asian markets mixed.  Oil and gold are both up nearly .75% while interest rates also are inching higher.  Expect another mixed day with movement coming on earnings and the Fed’s policy announcement tomorrow.

Economic Journal - Monday, 1/28/2013

(As of 7:24 am PST)

 

A robust durable goods report, coupled with a nice profit report from Caterpillar propelled the market to early gains.  Gains were short lived, however, as a middling housing sales report sapped momentum.  Most markets are slightly to the downside.  Oil is up, but losing energy.  Gold is down slightly.  It seems that a weary market will have trouble making much progress today.  There are a raft of profit reports due out this week and it seems that some positive surprises will be necessary to take the market higher from here.  Ten year yields on US bonds continue to drift higher and topped 2% in early trade.

Economic Journal - Friday, 1/25/2013

(As of 7:25 am PST)

 

Markets continue their slow drift up while Apple recovers to trade flat this morning.  In economic news, new home sales for December came in lower than expected with sales of single-family homes falling 7.3%.  However, November sales figures were revised up significantly, and the 8.8% year over year gain points to continued improvement in the housing sector.  Earnings continue to come in mostly positive, with strong results from Proctor & Gamble and Halliburton this morning.  In international news, European banks began repaying loans made by the European Central Bank back in 2011 and 2012.  Around 137.2 billion euros are set to be repaid by nearly 300 banks at the end of the month, a much larger-than expected figure.  European markets were optimistic about the report, indicating that conditions in the funding conditions of European banks are improving.  Oil is higher and gold down, while interest rates are drifting up.  Volatility is maintaining at historic lows.  It looks as if a positive day is in the making, as Apple’s tumble yesterday seems to have paused for the moment and economic reports are creating a positive undercurrent in this market.    

Economic Journal, Thursday, 1/24/2013

January 24, 2013

(Posted 7:06 AM PST) Apple results have overwhelmed positive economic reports and pulled down the Nasdaq to a loss of nearly 1%.  Apple stock itself was down 10% as the market opened.  Results were not that bad in the Apple profit report, but investors have been attuned to positive surprises over the years and were sorely disappointed.  Meanwhile an industrial measure of growth the PMI was very strong and jobless claims were at their lowest in five years. International news was benign except the report of Spanish unemployment at over 26%.  Gold was down and oil up a small amount.  Interest rates remain stable.  Outside of the Nasdaq, other markets were showing gains in the early session and I expect those gains to continue as the day wears on with Apple recapturing a part of the hefty loss at its opening.  Profit reports continue to surprise to the upside except for a few outliers like Apple.

Economic Journal - Wednesday, 1/23/2013

January 23, 2013

(Posted 7:14 PST) Profit reports are driving a mixed but mostly positive market this morning.  Economic reports on a macro basis are somewhat negative this morning highlighted by a reduction in the global growth forecast by the International Monetary Fund (IMF).  Profit reports have generally surprised to the upside, adding to January investment gains.  Reports of talks of a vote on the debt ceiling and the coming crucial vote are nothing more than a media circus generating pointless drama since the Republicans have already yielded the issue.  Markets are responding nicely as uncertainty is removed from the equation.  Gold and oil are near unchanged and interest rates remain stable.  Apple reports profits after the bell today and will likely be a driver of markets tomorrow.  Expect positive momentum to add to mild gains as the day wears on.

Economic Journal - Tuesday, 01/21/2013

January 21, 2013

(Posted 7:26 PST) US markets are down on a small home sales decline, but the decline is not very convincing and there is a feeling that a rally is in the cards.  Profit reports have been mixed thus far and there is little going on internationally to provide direction.  Gold and oil are near unchanged and interest rates are stable as well.  A recent report shows that investors are apt to put more money into equities over the next six months.  Worries over the debt ceiling debate are waning since it appears that House Republicans are not up to the task of investing political capital into the issue at this time.  As debt selling worries fade positive momentum should pick up.  Budget cuts are definitely on the horizon, but low interest rates seem to be fueling a robust global economic recovery that may linger.

Economic Journal - Monday, 1/21/2013

The US stock market is closed today in observance of Martin Luther King Jr. day.

Economic Journal - Friday, 1/18/2013

(As of 7:15 am PST)

 

Robust China data was not enough to overcome a pessimistic report from tech giant Intel.  Decreasing PC shipments put a big dent in Intel’s bottom line and future projections were also pessimistic for the company.  Industrial giant GE surprised analysts on the upside with an upbeat profit report.  Pending debt-ceiling, as well as budget cut negotiations, are putting a damper on bullish enthusiasm.  Markets were near unchanged.  Gold and oil are flat as well.  Interest rates are stable.  Expect positive data to help the market add gains as the day wears on.

Economic Journal - Thursday, 1/17/2013

(As of 7:19 am PST)

 

All 3 major indices are higher by 0.25% this morning after some strong economic data showed signs of improvement in the housing and labor markets.  The Commerce department reported new housing starts soared 12.1% in December, beating estimates and reaching levels not seen since 2008.  Also, building permits for future construction, a good determinate of future demand, rose in Dec. to the highest level in 4 years.  Homebuilder confidence hit a 6 year high reinforcing the momentum we’ve been seeing in the housing market recovery the past year.  Jobless claims dropped significantly last week, likely due to holiday hiring, but still a positive sign.  Corporate earnings continue to come in mixed.  Bank of America and Citigroup results disappointed dragging financial stocks lower, while EBay shares rose 3% on positive earnings.  In international news, we are just hearing reports of a militant attack at a natural gas facility in Algeria that killed 50 people.  Several Americans along with foreign workers were taken hostage and then killed during a rescue attempt gone wrong.  More details to come.  The attack has caused oil prices to surge this morning.  Gold is down and interest rates are up slightly.  There appears to be some positive momentum in the markets today as the economic picture continues to improve. 

Economic Journal - Wednesday, 1/16/2013

(As of 7:20 am PST)

 

Boeing is in the news again in a negative way.  Continuing problems with the new 787 has forced Japan Airlines to ground its fleet of 787s.  Boeing stock is down over 3%, pulling the Dow Jones Average down with it.  Combined with profit taking from the Japanese stock market and we have a negative opening for most US markets.  Apple Computer is a bright spot, up 2%, after taking a battering over the last month.  Goldman Sachs reported profit much better that expectations while JP Morgan fell a little short and is also weighing negatively on the Dow.  There is a heavy dose of profit reports which will likely set the tone for market direction today.  Despite the negative opening for markets I expect a gradual improvement throughout the day.  General economic reports continue to show a strengthening economic picture.  Gold is down moderately while oil is up slightly.  The US dollar is mixed against other foreign currencies.  Interest rates are stable.

Economic Journal - Tuesday, 1/15/2013

(As of 7:15 am PST)

 

Stocks are lower this morning after several economic reports give investors pause.  Retail sales for December surprised on the upside, rising 0.5% beating expectations and showing consumers were less concerned over the fiscal cliff as markets depicted.  Retail sales will likely be impacted this year as consumers are now seeing a hit to their paychecks from the expiration of the 2% payroll tax cut at the beginning of the year.  Other economic reports this morning showed manufacturing shrinking in the New York area and producer prices falling slightly in December, signaling continually low inflationary pressure.  Fears over the debt ceiling seem to be driving market direction today.  Fitch Ratings reiterated its threat of downgrade to the US AAA credit rating if the debt ceiling issue continued to see delay.  Also weighing on markets is Apple.  Continuing its slide from yesterday, shares of Apple are down 2.6%, breaking below $500 per share.  European markets are lower over the US debt concern and Asian markets were mixed.  Oil is down slightly and gold is drifting higher.  Interest rates are lower today and volatility is picking up.  Earnings will continue to play a major role in market direction, however as the first quarter drags on, expect concern to shift to the debt ceiling debate and spending cuts.

Economic Journal - Monday, 1/14/2013

(As of 7:15 am PST)

 

Positive news on the international front was not enough to move US market indexes into the green this morning.  A negative report on Apple Computer has sent shares down 4%, pulling markets down as well.  Oil and gold are up slightly along with most commodities.  The US dollar is mixed.  Interest Rates are creeping upward, including mortgage rates, which are under pressure from the Fed’s decision to stop the bond buying program later this year.  There are a very large number of companies reporting earnings this week and those announcements will likely determine market direction for the next couple of weeks.

 

Economic Journal - Friday, 1/11/2013

(As of 7:15 am PST)

 

It is a quiet day today with most markets tipping downward.  It feels like a small pullback on profit taking and not a real momentum changer.  The balance of payments deficit expanded significantly as imports soared in November in anticipation of holiday shopping.  Exports were up slightly.  There is a sense that there may be a stealth positive surprise in earnings this season because analyst’s projections for the quarter had already been greatly reduced.  Gold is down along with oil.  The dollar index is down with the dollar mixed against other currencies.  Interest rates continue to click upward but not significantly.  The extremely low interest rates seem to be lighting a fire under global economic activity and the positive momentum should continue until eyes turn to deficit limits and budget cuts.

Economic Journal - Thursday, 1/10/2013

(As of 7:20 am PST)

 

Stocks are adding to gains from yesterday as investors are shrugging off today’s jobless numbers to focus on earnings and surprising data out of China.  Jobless claims were not a big deal to investors, with claims rising 4,000 last week to 371,000.  We’re in an earnings dominated week, which generally shrugs off these types of reports.  Companies of note reporting today include Nokia, which released strong preliminary results, and grocery-chain Supervalu, which beat analyst’s estimates. Good news out of Europe showed signs that the recession is not worsening.  The dominant story of the day came out of China as Chinese exports rose 14.1% year-over-year in December.  These numbers blew analysts estimates out of the water and helped widen China’s trade surplus to $31.9 billion.  Many analysts question if the surge will continue into the new year, noting year-over-year trade data can be volatile.  However, the surprise increase was enough to lift global stocks and commodities.  Gold and oil are up nearly 1% and interest rates are higher.  It doesn’t appear that the ‘risk trade’ is on, however if positive earnings continue to come in today, we expect these gains to hold. 

Economic Journal - Wednesday, 1/9/2013

(As of 7:25 am PST)

 

Alcoa started out the parade of earnings reports with a positive and an optimistic projection for the year to come.  While Alcoa is usually not an accurate barometer of what the rest of earnings season might look like, there seems to be a shift in investor sentiment as a result.  Perhaps earnings season will not be as bad as analysts had projected.  Pessimism is being replaced by hope. Markets are up as a consequence and it looks like today’s gains will stick.  Oil is up slightly while gold is down, but near unchanged.  Economic reports have been good over the last six months and if progress can be made on the debt ceiling limit debate in Washington we could be in for a sustained rally.

Economic Journal - Tuesday, 1/8/2013

(As of 7:15 am PST)

 

Earnings season kicks off today with global aluminum maker, Alcoa, the first to announce.  Markets have been jittery so far as the outlook for Q4 earnings is flat.  Shares of Apple and Hewlett Packard are higher while Boeing made the headlines on an analyst downgrade, sending the stock lower.  There was not a lack of economic reports out of Europe today.  Euro-zone unemployment rose to 11.8% in November, hitting a euro-zone era high.  Retail sales rose less than expected and German exports were down.  On a brighter note, a sentiment reading showed economic optimism higher in December.  For the most part, European markets shrugged off the mixed data with stocks gaining on US earnings hopes.  Asian markets ended the day down.  Oil and gold are up today, while interest rates are down slightly.  Earnings will remain the focus for the week, providing a brief distraction from the fiscal cliff and upcoming debt ceiling debate.   

Economic Journal - Monday, 1/7/2013

(As of 7:11 am PST)

 

The markets are suffering from a New Year's hangover this morning.  Risk is down across the board as the realities of current challenges outweigh the euphoria of the 'fiscal cliff' resolution.  Two companies in the news are Bank of America, which agreed upon a $10 Billion settlement with Fannie Mae, and Amazon, whose stock was lifted by an analyst upgrade.  Oil and gold are down slightly, while most other commodities are near unchanged.  30 year mortgage rates seem headed back up with the 30 year now a hair over 3.5%.  The easy money days seem limited now that the Federal Reserve has indicated that it may stop mortgage bond purchases sometime in 2013.  Eyes are on earnings season, with Alcoa starting the parade after market close on Tuesday.

Economic Journal - Friday, 1/4/2013

(As of 7:07 am PST)

 

Stock markets have stabilized after surging based on a 'fiscal cliff' compromise package.  Yesterday's hint by the Federal Reserve that bond buying may end in 2013 sent shivers through the investment community because it indicated that massive economic stimulus may start to unwind.  Stimulus programs have aided markets since the crash of 2008, giving easy money leverage to hedge funds and other investors.  Any type of stimulus reduction would result in deleveraging and could cause markets to decline.  Currently markets are near unchanged.  Gold is taking a beating, down over 1%, while oil is down slightly.  Most commodities are down while the US currency is close to unchanged.  Interest rates are up over the last few days.  There are still some big challenges early this year, including the debt ceiling which will soon need to be extended and the implementation of forced budget cuts in the 1st quarter. 

Economic Journal - Thursday, 1/3/2013

(As of 7:16 am PST)

 

What a start to the new year!  After a day which saw the Dow soaring over 300 points, investors are taking some slight profits.  Stocks are mildly lower in the US, while Asian markets extended their gains, and European stocks are mixed.  Some economic reports showed several retailers missing expectations for holiday sales, with companies like Macy’s and Kohl’s lowering their Q4 outlook.  On the jobs front, payroll processor, ADP, reported the private sector added 215,000 jobs in December, much more than expected.  The report is much less reliable than tomorrow’s Non-farm payrolls report, which should give us the first sign of labor market conditions heading in to the new year.  With the President having now signed in to the law the 2012 Taxpayer Relief Act, the focus for the next two months will shift to the deficit and the $16.4 trillion debt ceiling in the US. 

Economic Journal - Wednesday, 1/2/2013

(As of 7:20 am PST)

 

All markets are in a rally mode after the passage of legislation that eliminates many of the negative effects of the fiscal cliff.  In a slick piece of political maneuvering President Obama and the Democrats put the Republican House of Representatives into a no-win situation, forcing the issue,  and resulting in the House approving a compromise packaged created in negotiations between the President and the Senate.  Key portions of the 'cliff' remain unresolved, especially the implementation of broad spending cuts, which were pushed down the road for two months.  The payroll tax holiday was not renewed resulting in a 2% tax increase for most wage earners. Gold, oil and most commodities are in a major rally, along with all stock markets.  The dollar is down with a 'risk on' strategy being the order of the day.  Volatility is down as well.  Economic reports are generally positive this morning, adding to investor enthusiasm.