Economic Journal - Thursday, 2/28/2013

Miller Financial Group, LLC will be conducting an emergency contingency plan simulation today and will be out of the office most of the morning.  We will return to our regular blogging tomorrow morning.  Thank you for your patience.  Have a nice day!

Economic Journal - Wednesday, 2/27/2013

(As of 7:05 am PST)

 

Positive economic data is being muted by the coming sequester as the stock market searches for direction this morning.  Stocks are holding on to small gains after an upbeat durable goods report.  Although aircraft and defense orders pulled the index down, the core durable goods number came in at plus 1.9%, a fairly strong reading.  Gold is down along with oil by small amounts, while the US dollar index is down.  It is not likely that the market can hold onto gains with the drag of uncertainty the sequester (mandatory budget cuts) brings, coupled with European troubles from Italian elections. Mortgage interest rates have reversed their upward trend with the 30 year back to 3.5%. 

Economic Journal - Tuesday, 2/26/2013

(As of 7:25 am PST)

 

US markets are recovering from yesterday’s pummeling which saw stocks decline 1.5% on the day.  Strong US data, particularly in the housing sector, is pulling some investors back in.  Home prices rose in December to cap off the best calendar year since 2005.  New home prices jumped 15.6% in January recording the highest pace of activity since 2008.  Consumer confidence also surprised to the upside after falling in January.  Political turmoil in Italy continues to frustrate investors around the globe with inconclusive election results ushering in a fragmented government and renewed risks to the European debt crisis.  European markets were beaten down for a second straight day and Asian markets sold off following Wall Street’s slide yesterday. As Ben Bernanke takes the stand before congress today, investors will likely remain cautious as uncertainty around sequestration and now Europe prevails.

Economic Journal - Monday, 2/25/2013

(As of 7:19 am PST)

 

Stocks are on the mend this morning after turbulent trading last week.  It is a light day on the US data front as investors are turning to positive global reports today.  Despite a slowdown in Chinese manufacturing in February, investors were optimistic after a report showed that pro-stimulus leader Haruhiko Kuroda would likely become the next governor of the Bank of Japan.   The Japanese Nikkei hit a 4 year high after the news.  Optimism carried into European markets spurred also by a positive general election in Italy.  Wall Street has joined the global rally today with stocks higher on all three major indices.  The risk on scenario has lifted gold and oil and most other commodities as well.  Today’s market gains may be short-lived however as Ben Bernanke returns to the podium tomorrow in a two day congressional testimony of the Fed’s monetary policy and Friday’s sequester deadline rapidly approaches.

Economic Journal - Friday, 2/22/2013

(As of 7:09 am PST)

 

After an early surge out of the gate this morning, stocks are giving back gains quickly.  It is a mild day for economic news and profit reports are none too exciting.  The payroll tax increase seems to be taking a big bite out of consumer spending this year as retailers are noting flat sales.  Gold is slightly lower and oil slightly higher.  Interest rates are stable.  Lacking any strong reason to buy, investors are sitting on the sidelines.  The automatic government budget cuts (the sequester), coming on March 1^st, are looming larger.  Political negotiations to modify the spending cuts are going nowhere.  Uncertainty is a bad thing for markets and could weigh on market performance for the coming week.  International reports are slightly positive.

Economic Journal - Thursday, 2/21/2013

(As of 7:15 am PST)

 

A sharp reversal in market sentiment is pushing stocks lower this morning, continuing a sell-off that picked up speed as the day wore on yesterday.  Global markets are down across the board with weak economic data weighing on Europe and Asia markets which took their cue from the US stock slump yesterday.  The fear of a reversal of the easy money Federal Bank policy is one of the culprits of the sagging market.  The market reaction reminds us of how difficult it might be to wean the stock market off the steady diet of stimulus that has been the basis of much of the last few years’ gains.  Oil continues to plummet on oversupply fears and gold is down a small amount.  Long term mortgage rates are moving up in anticipation of the Fed cutting down on mortgage bond purchases.  It seems that market momentum has shifted abruptly to the down side after a long period of investor complacency.  Volatility is up sharply over the last couple of days.

Economic Journal - Wednesday, 2/20/2013

(As of 7:14 am PST)

 

Some mildly negative data on the housing front have caused a small pull back in stock prices.  Gold has lost its luster and is continuing its decline.  Oil is slightly to the positive.  Longer term mortgage rates have ticked up a small amount, while shorter term rates are stable to down a small fraction.   Housing starts were reported down 8.5% due mostly to reduced building of apartments.  Economic news is mixed out of Europe, but relative stability has provided attractive yields for struggling countries to issue debt on a favorable basis.  Projections are that Europe may pull out of its recession this year.  Expect prices to continue to mill around flat line while the market seeks a catalyst for its next run up.

Economic Journal - Tuesday, 2/19/2013

(As of 7:07 am PST)

 

Markets are up today on merger activity.  Office Max and Office Depot are in talks to merge sending both company shares higher.  Gold and oil are attempting to recover from heavy losses over the last few days.  The dollar is generally down against other currencies.  News is thin in financial markets.  After the initial surge due to merger enthusiasm it is likely markets will revert back to meandering around flat line.

Economic Journal - Friday, 2/15/2013

(As of 7:30 AM PST)

Generally positive economic data has the market up mildly in early trading.  Oil and gold are getting crushed, each down by over 1%.  International news is quiet.  There is a sense that the market is looking for a reason to sell-off.  Interest rates continue to tick up.  In a disturbing trend it appears that certain markets and securities are being influenced more and more by press releases of large hedge fund managers.  After taking a large position in a stock or commodity a hedge fund manager announces his position and other investors bid the position up or down in concert with that hedge fund manager, thus insuring a gain for that hedge fund.  It smacks of the type of behavior seen in insider trading, yet appears to be above board, in spite of the negative outcome for the average investor, who is generally late to the party.

Economic Journal - Thursday 2/14/2013

(As of 7:24 PST)

A big deal on the mergers and acquisitions front has been trumped by some just plain awful economic data out of Europe and Japan.  Europe continues to be mired in recession, with composite GDP coming in at a negative .6%, below the consensus view.  Japan’s GDP was similarly down at a negative .4%.  In a big acquisition, Heinz was purchased by Warren Buffet’s Berkshire Hathaway, with help from another hedge fund investor.  The premium on the deal was 20% over the closing price of Heinz yesterday.  It is hard to believe the market can dig out of the rubble of the European story, so look for markets to struggle throughout the day.  Gold and oil are near unchanged and interest rates continue to creep up as the 3.25% 30 year mortgage seems a distant memory. 

Economic Journal - Wednesday, 2/13/2013

(As of 7:25 am PST)

 

Stocks are slightly higher on the morning after President Obama’s State of the Union address.  In his address, Obama touched on issues ranging from the economy to climate change and gun control.  His agenda for reviving the economy included raising the minimum wage, focusing on infrastructure spending and a possible trade pact with the European Union that would boost exports and create jobs.  Throughout his address, he made clear his advocacy for the hard-working middle class and a more responsible Congress.  The market is responding with complacency this morning.  January’s retail sales report showed sales rose 0.1%, in line with expectations.  In corporate news, shares of Comcast rallied 9% after announcing a 20% dividend hike and the repurchase of $2 billion in stock.  Comcast also announced a deal to buy out General Electric’s 49% equity stake in NBC Universal, a deal valued at roughly $16.7 billion.  European markets are higher and Japan’s Nikkei shed 1%.  Interest rates continue to melt up with the 10 year treasury yield breaking over 2% and oil is also higher.  It appears another mixed day is in the making.

Economic Journal - Tuesday, 2/12/2013

(As of 7:20 am PST)

 

Stocks are modestly higher this morning after see-sawing in the first few minutes of trading.  With a lack of economic data due out today, investors are lacking direction and a bit of complacency seems to be setting in.  European stocks are higher gaining on an optimistic trading session on Japan’s Nikkei.   Stocks surged after comments made by Japan’s economic minister pointed to more government action to revive the economy.  In other global news, G-7 officials announced in a meeting that they don’t plan to target exchange rate policies.  This came ahead of the G-20 meeting scheduled for Friday where a broader conversation will likely take place on a potential global currency war.  US corporate earnings continue to trickle in this week with Coca-Cola reporting an earnings increase of 13%, just shy of analysts estimates.  Tonight, President Obama will address the nation in his annual State of the Union address.  There will be a laundry list of topics ranging from gun control issues to immigration, but investors will be looking for direction regarding congressional budget negotiations and the sequester set to hit March 1.

Economic Journal - Monday, 2/11/2013

(As of 7:20 am PST)

 

It’s a quiet day in the markets with most Asian markets closed for the week due to the Lunar New Year holiday.  US stocks are down as Europe has reentered the picture with political risk in Spain and Italy causing borrowing costs to rise.  We are weeks away from the US budget sequestration, and that too is adding some pressure to markets.  The economic report to watch for this week is Wednesday’s retail sales report.  Analysts expect retail sales for the month of January to rise a scant 0.1%, with rising oil prices and the expiration of the payroll tax cut tightening the wallets of many Americans.  Strong corporate earnings so far this quarter may support a stronger than expected retail sales number.  Gold is down 1% and oil down as well today.  Interest rates are flat and volatility edging up slightly.  With Asian markets closed and no economic reports to give direction, investors are being forced to linger on the issues of Europe and budget sequestration, taking some small profits as they wait.

US, China trade data surprises sending stocks higher

(As of 7:22 am pacific)

 

Stocks are trending higher this morning fueled by positive trade data out of the US and China.  Early this morning China released data that showed a trade surplus of $29.2 billion as exports rose 25% and imports climbed 28.8% from the year-ago period.  All three figures beat analyst estimates and sent stocks in most Asian markets and throughout Europe higher.  Shortly after, the US Commerce Dept. reported the US trade deficit fell 21% in December hitting the lowest level since January 2010.  US exports grew by 2.1% in December while imports declined 2.7%.  The lower deficit can be attributed to a significant change in petroleum flow as the US exported record numbers of petroleum products due to the recent oil boom.   A shrinking trade deficit is good for economic growth.  In other news, we’re keeping an eye on the Northeastern snow storm, Blizzard Nemo.  So far, over 2,700 flights have been cancelled.  Commodity prices are slightly higher and interest rates are lower.  After a back and forth week, it seems the market is poised to hang on to today’s gains.

Stocks are lower as jobless claims fall 5,000 last week

(As of 7:15 am PST - Thursday, 2/7/2013)

 

Stocks are retreating this morning as the Labor Department reported jobless claims fell 5,000 last week to a seasonally adjusted 366,000.   The number of people filing for unemployment benefits has been nearly unchanged for the past 6 months indicating that labor market conditions are showing little signs of improvement.  Another report showed that US productivity fell by 2% in the 4^th quarter, despite upward revisions to productivity in the 3^rd quarter.  Productivity for the year was 1%, lower than the 40 year average of 1.9%.  Wages for US workers rose an inflation-adjusted 0.3% in the 4^th quarter.  Investors are taking the opportunity to take profits as the market has rallied this year.   In Europe, stocks are mixed and Asian markets are lower with investors locking in gains ahead of next week’s Lunar New Year holiday.  Markets in China, Taiwan, and Vietnam will be closed all of next week.  Gold is lower by 0.6% and oil is slightly higher at $96.75 per barrel.

Stocks are lower as the back and forth week continues...

(As of 7:20 am PST - Wednesday, 2/6/2013)

 

The back and forth week continues for stocks as markets turned lower today after gaining nearly 1% yesterday.  The biggest story of the day is from Japan as the Nikkei index soared 3.8% to hit a 4 year high.  Japanese Governor Masaaki Shirakawa announced his plans to step down from his office in early March, several weeks before his term officially ended.  The buying came as investors interpreted the news to mean a more accelerated easing program from the Japanese Central Bank will likely occur earlier than expected.  Opinions show that the new administration is much more in favor of aggressive monetary policy.  Throughout the rest of Asia stocks were mostly higher, while European markets were in the red.  Gold is slightly higher and oil is down 1% ahead of an inventories report.  Interest rates are slightly lower with the 10 year treasury hovering just below 2%.  Today’s selling is hard to pin, but investors seem a bit reluctant to take this market higher as the S&P500 saw the best January start in almost 15 years. 

Stocks recover losses from yesterday as investors jump back in...

(As of 7:20 AM PST - Tuesday, 2/5/2013)

 

Stocks are rebounding this morning after recording the worst single day losses of the year yesterday.  News is light today with the most notable economic report, the ISM non-manufacturing gauge, signaling slowing growth in the services sector for January.  The slowdown in growth was better than economists estimates however and the market for the large part ignored it.  In company news, high-tech company Dell Inc. will end public trading after an agreement was reached for the company to be purchased by founder and chief executive Michael Dell and a private equity firm.  The deal will pay shareholders cash valued at a 25% premium over Dell’s closing price in mid January.  Around the globe, stocks rebounded in Europe as Euro-zone PMI data improved and Asian markets declined following yesterday’s Wall Street selloff over political tensions in Europe.  Gold is flat and oil higher.  Interest rates are slightly higher and volatility is back down.

European political risk dragging markets lower...

(As of 7:15 am PST - Monday, 2/4/2013)

 

Europe is back in the headlines this morning dragging stocks off their multi-year highs from last week.  Political uncertainty in Spain and Italy has sent jitters into the markets.  Spanish Prime Minister Mariano Rajoy is caught in a corruption scandal with allegations that he and members of his party received ‘secret payments’.  In Italy, popularity is growing for former PM Berlusconi, with current reforms at risk if he is elected.  Yields on Spanish and Italian bonds have been pushed higher as the already unstable economy’s deal with new political risks.  European markets were sent spiraling, and US markets so far are following suit.  Many analysts have projected a correction in US markets would be healthy for valuations, as stocks have had their best January start in nearly 20 years.   The S&P500 is up over 6% this year.  Generally economic reports have been positive while today’s selloff could be investors taking profits.  With earnings season winding down, expect the focus to shift to the budget wrangling and sequestration set to kick in on March 1^st. 

Economic Journal - Friday, 2/1/2013

(As of 7:15 am PT)

 

It has been a busy morning and a very positive one as far as economic data reports. Markets are robustly higher. Most reports beat expectations. New jobs created were higher although the unemployment rate ticked up to 7.9%. Consumer sentiment was higher and the ISM report came in better than expected. Positive momentum is on a roll, but it may pull back as the markets reflect on a raft of data, that although better than expected, is not strong enough to match market expectations. Gold is up over 1%, while oil is down. Interest rates have ticked down this morning. It seems like an odd combination of market, interest and commodities data.