Economic Journal - Tuesday, 4/30/2013

(As of 7:25 am PST)

 

Domestic economic data dominates today’s news and the market is on a roller coaster with conflicting signals.  Real estate prices are higher and Consumer Confidence has risen sharply, but the figure from Chicago PMI, a key measure of industrial activity fell to 49.  Any figure below 50 indicates a contraction.  The Chicago PMI figure startled the markets and has trumped other data resulting in mild market losses.  Oil, gold, commodities and the US dollar are all meandering around the unchanged mark.  Company earnings are mixed.  Expect the market to relegate the Chicago PMI to an anomaly status until it is confirmed by other data as Consumer Confidence wins the day and sends markets higher.

Economic Journal - Monday, 4/29/2013

(As of 7:07 am PST)

 

Consumer spending was weak in March, but slightly ahead of expectations.  There is no question that the sequester, the automatic budget cuts that took effect on March 1^st, has had an effect with economic reports coming in very soft over the last couple of weeks.  Still, there is some growth showing.  Asia and Europe look very stable.  The markets opened with a positive push, but have given up some of the gain as the session has progressed.  Gold is up 1% and oil is up moderately as well.  The US dollar is down against all other currencies.  Expect selling pressure as the week wears on.  The ‘sell in May and go away’ effect, an anomaly that speaks to the retail investor and belief that market returns subside during the May to October time frame, might result in mild market declines.

Economic Journal - Friday, 4/26/2013

(As of 7:20 am PST)

 

US stocks are mixed going into the weekend as investors digest GDP data announced by the government early this morning.  Gross domestic product for Q1 2013 expanded at a 2.5% clip, a significant increase from the dismal 0.4% pace seen in the 4^th quarter, however growth was slower than analysts expectations.  Consumer spending was surprisingly robust in Q1 with consumer purchases rising 3.2% from 1.8% in Q4.  Government spending declined for the second straight quarter with steep military cuts contributing to a slowdown in growth.  Imports also rose, meaning more dollars flowed out of the US as demand for domestic-made goods and services weakened.  The effects of the sequester and higher personal taxes will likely be seen in Q2’s GDP data as analysts expect growth to taper off to 1.8%.  The downbeat data caused stocks to open lower while treasury prices surged with rates on the 10 yr. falling to 1.68%.  Consumer sentiment data also weighed on stocks as data showed sentiment dropping in April to a 3 month low.  European stocks were in the red on US GDP data and Asian markets finished mixed.  Gold is having a comeback week, with prices up 0.5% today.  Expect some seesaw trading this morning as the markets figure out how to digest the GDP data.

Economic Journal - Thursday, 4/25/2013

(As of 7:20 am PST)

 

All smiles today as economic data and company earnings provide an early dose of optimism to markets. Jobless claims fell at a good rate this morning indicating that the economic recovery continues on track.  Gold is up big and has recovered half of its losses from the big swoon from last week. Oil is up marginally.  Mortgage interest rates are at record lows once again.  The risk appetite for investors is large this morning.  It looks like smooth sailing today.

Economic Journal - Wednesday, 4/24/2013

(As of 7:08 am PST) 

Markets are mixed this morning as investors wade through several big name earnings announcements.  All eyes were on Apple after the closing bell yesterday as the tech giant reported its much anticipated Q1 earnings.  Apple earnings dropped 18%, which was slightly better than analysts’ estimates, however squeezed margins and disappointing guidance for the June period sent the stock lower.  Apple also announced a dividend hike of 15% and said it would be adding $50 billion to its share buyback program.  In the after-market, Apple shares initially rose 5%, bumping up against the $430 level, then fell back to $400 where it’s been battling at the open.  Some other big names announced earnings today including Ford and Eli Lilly which beat estimates.  Proctor & Gamble missed and AT&T reported in line earnings but missed on revenues.  In economic news, durable goods orders slipped 5.7% in March, the largest decline since last August.  Stripping out the volatile airline and transportation industry, durable goods orders only fell 1.4%. Internationally, Asian markets finished up across the board with strong gains on Japanese and Chinese indices.  Europe is also higher thus far.  Commodities are higher with gold continuing to crawl its way back, up 1.5% today to 1430/oz.  Interest rates are flat and the US dollar is mixed.

Economic Journal - Tuesday, 4/23/2013

(As of 7:20 am PST)

 

Positive results from earnings season are pushing markets broadly higher this morning.  Economic data is mixed, but generally solid with existing home sales up 1.5% month to month and 18.5% from a year ago.  One measure of industrial activity called flash PMI was below expectations and down slightly from last month, but still showing growth.  The sequester is definitely having an impact, but the overall economic strength is dampening its effects.  Oil and gold are down this morning while the US dollar is mixed.  All eyes are on Apple Computer, due to announce earnings after the bell today.  Momentum has shifted dramatically over the last couple of days to the positive.  Interest rates continue to remain at extremely low levels.   Today’s exuberance might be a little overdone so watch for profit taking to take hold as the day progresses knocking stocks from these lofty levels.

   

Economic Journal - Monday, 4/22/2013

(As of 7:15 am PST)

 

US markets are mixed this morning on the heels of the G-20 meeting over the weekend.  Finance ministers and central bankers from the world’s 20 largest economies met over the weekend providing commentary on the global economic outlook.  Surprisingly, officials gave implied approval of Japan’s aggressive stimulus program and encouraged other policy makers in their efforts to boost economic growth.  The position on Japan sent most Asian markets higher including the Nikkei which was up nearly 2% on a weakening Yen.  European markets followed suit with the broad market indices all higher.  US stocks are mixed in early trading with the Dow lagging the S&P500 and Nasdaq.  Global bellwether, Caterpillar, reported an earnings miss and cut its full year 2013 outlook for sales and EPS.  Gold prices are surging, up over 2% after falling 7% last week, including the historic 9% one day drop last Monday.  Data Friday showed Hedge funds cutting their “short” positions in Gold and increasing their net “long” positions in the precious metal after a week of steep losses.   Apple shares are pricing in expectations of an earnings miss tomorrow, with traders keeping a close eye on the tech giant, which has tumbled the past 6 months.  The economic calendar is thin the rest of the day but will pick up with reports this week on jobless claims, durable goods, housing, and Friday’s GDP report.

Economic Journal - Friday, 4/19/2013

(As of 7:10 am PST)

 

All major financial headlines are being overshadowed today by the dramatic events unfolding in Boston as police and FBI search for suspects in the Boston marathon bombing.  A manhunt has ensued after a chaotic night in a Boston suburb that resulted in one of the suspects killed in a shootout.  An MIT police officer was also fatally shot during the chase.  The other suspect is reportedly armed and dangerous and believed to be hiding in a house in the suburb of Watertown, Mass.   The events have overshadowed most financial news this morning.  The opening bell of the stock market was a non-event as all major news outlets were covering the events in Boston.  Earnings continue to trickle in and will likely determine market direction today as major players like IBM, GE, and McDonalds are seeing movement in early trading.  IBM is weighing heavily on the Dow after missing on earnings and revenue.  International markets got a boost with Asian markets higher led by the Shanghai composite index which finished up 2.1%.  The European trade was also higher.  Gold is up by .75% and oil is also higher.   With the IBM slide, blue chips in the Dow are being held back while the S&P and Nasdaq appear to have upward momentum that looks to want to hold today.  

Economic Journal - Thursday, 4/18/2013

(As of 7:00 am PST)

 

Stocks are searching for stability.  Earnings have been mixed.  The commodities collapse continues to spill over to other markets.  Mixed news on the international scene is not helping.  Today’s new jobless claims number came in slightly higher but was pretty solid.  Gold and oil are both up, recovering after being trounced again yesterday.  The US dollar is generally down.  Comments from Federal Reserve governors have provided mixed signals to the markets, but the strongest reaction comes from influential Governor Lacker who is calling for an end to QE3.  Even the slightest hint of stemming the flow of liquidity sends shudders through the investment community.  However, expect the market to digest the news and turn positive as the day wears on.

Economic Journal - Wednesday, 4/17/2013

(As of 7:15 am PST)

 

The market has given back most of yesterday’s gains in the first hour of trading as investors reacted to disappointing earnings.  Bank of America missed earnings expectations dragging the stock down 3%.  Yahoo and Intel weighed heavy on tech stocks as Intel projected an 8% decline in revenue in the current quarter and Yahoo also missed on the top line.  Gold prices are trading nearly flat after gaining back 2% yesterday.  The precious metal is still under major pressure after dropping over $200 an oz. in two trading days, including a 9% selloff on Monday, the worst single day loss since the 1980’s.  Economic reports are light today, although later this morning the Fed will release its monthly Beige Book, with a survey of current economic trends and conditions.  Most of the 12 Fed districts are expected to report growth but perhaps at a slightly lower pace.  In international news, European markets are trading lower and Asia finished down except for Japan’s Nikkei.  The US dollar regained footing on the Japanese Yen after falling back earlier this week.  Interest rates are lower today and the volatility index is up substantially.  The gold selloff on Monday has sent some real jitters into the market with investors reevaluating the landscape and repositioning assets as we head in to the thick of earnings season. 

Economic Journal - Tuesday, 4/16/2013

(As of 7:08 am PST)

 

Markets were staggered yesterday by a commodities collapse and the terrorist event that occurred in Boston.  The early collapse in gold, silver and oil prompted a general wave of selling across the market.  The selling and market decline may have been the result of hedge funds and other investors deleveraging their portfolios to cover shorts, and possible margin calls.  The bombings at the Boston marathon occurred close to market close and accelerated the market decline.  Most indexes were down 2% or more by the closing bell.  Today’s market action is showing some stabilization, with the Dow up triple digits and other markets following.  Gold is on the mend, but the modest gain (comparatively speaking) may be just a bounce from the 10% decline yesterday.  Economic reports were mixed this morning.  Global and US domestic GDP estimates were reduced by the International Monetary Fund (IMF).  Manufacturing declined slightly, but it was a solid report, highlighted by robust auto sales. The dollar is mostly lower today except against the Japanese Yen, which continues a radical decline.

 

 

 

 

 

Economic Journal - Monday, 4/15/2013

(As of 7:15 am PST)

 

A major selloff in gold continues this morning as investors in the precious metal reacted to negative Chinese growth data.  Gold futures tumbled to their lowest level in 2 years, down 6% this morning, after closing down 4% on Friday.  Many factors are contributing to the metal’s decline including a break through a key downside support level that many technicians were watching on Friday.  Many banks have cut their target forecasts on gold prices and fears over central bank sales of gold have added to the breakdown.  Chinese GDP growth for the most recent quarter slowed to 7.7%, down from 7.9% in the 4^th quarter and well below the 8% expectation.  Chinese retail sales slowed as well in March.  Adding to the downward pressure, JP Morgan cut its outlook on China’s 2013 GDP to 7.8% growth from its previous forecast of 8.2%.  The World Bank, in a statement today, warned broader Asian economies of a risk of “overheating” and to consider abstaining from future stimulus measures.  The agency warned of risk of certain asset bubbles throughout the region as several stock market indices have surged over the past two years.  On the domestic side, the Empire State index showed manufacturing activity slowed in April, supporting other data we’ve seen recently of an anticipated slowdown in activity in the second quarter. The risk off sentiment has spread to global markets today with Europe and Wall St. trading in the red.  Interest rates are flat and volatility has picked up as the gold selloff has spooked investors that the QE/gold relationship may be breaking down.   

Economic Journal - Friday, 4/12/2013

(As of 7:12 am PST)

 

Stocks are down slightly at the start, mostly brushing off a very weak retail sales report.  Consumer sentiment also disappointed investors coming in at a nine month low.  The big story today is the selloff in the commodities arena with gold and oil both plummeting by nearly 2%.  Oil is down based on demand concern while gold is continuing a bearish trend which has been the story over the last few weeks.  Some good news to report is that wholesale prices actually went down in March, giving the Federal Reserve Bank more flexibility in its quantitative easing programs. Positive momentum continues to bubble up and one gets the feeling that stocks will drift to the plus side again today. 

  

Economic Journal - Thursday, 4/11/2013

(As of 7:16 am PST)

 

Domestic economic news continues to shine.  Jobless claims fell more than expected, soothing worries about last week's rise.  Data concerning lowered demand for personal computers has hit PC dependent companies hard, with Microsoft, HP, and Apple taking big hits.  International news is light, with Asian markets reflecting the surge in the US markets from yesterday.  Europe is quiet.  Gold is up slightly after yesterday's big hit, and oil is down.  The US dollar is also down against most other currencies reflecting the fact that investors are taking on more risk in this vibrant market.  Positive momentum is likely to persist for the day.

Economic Journal - Wednesday, 4/10/2013

(As of 7:20 am PST)

 

Stocks are trending higher for the second consecutive day ahead of an early release of the Fed’s most recent FOMC meeting minutes.  The rally has sent the S&P500 to intraday record highs over 1577.  The Federal Reserve confessed to sending out meeting minutes from its most recent March meeting to trade groups and congressional employees.  The report, which was set to come out at 2:00 pm Eastern will be released early.  The meeting minutes show a division among Fed governors regarding exit strategies of the large stimulus program, otherwise known as QE3.  One thing is for certain however, labor market conditions must improve before the Fed discontinues its bond-buying.  In other news around the world, China reported a surprise trade deficit in March after a shocking jump in imports.  Imports into China surged 14.1% while exports rose 10%.  Chinese trade data has been scrutinized lately by analysts who believe China has been overstating their exports.  The rise in imports is a positive sign for investors as it suggests a rise in domestic consumption in China.   The broad Asian markets finished higher, while European stocks also are rallying in late trading.  Gold and oil are both down and interest rates are up slightly.

Economic Journal - Tuesday, 4/9/2013

(As of 7:20 am PST)

 

Markets are flat this morning despite a positive kick off to earnings season from aluminum-producer, Alcoa.  The bellwether company reported better than expected earnings after the bell yesterday, with profits rising 59%.  Revenues came in near the lower end of expectations which kept the stock from soaring.  Many analysts expect this to be the trend for Q1 earnings, with corporate guidance, particularly revenue outlooks, dictating the market direction.  In other corporate news today, JCPenney CEO Ron Johnson stepped down from his post after a year-and-a-half at the struggling retailer while former CEO Mike Ullman will take back over as chief executive.  JCPenney shares are down 10% on the news.  On the international front, European stocks are mostly higher and Asian markets finished up.  China inflation cooled, easing market concerns of policy tightening.  Lower inflation allows pro-growth stimulus measures to continue in one of the world’s largest economies.  Gold is up slightly while oil prices are slipping.  Interest rates are lower with the 10 yr. treasury yield at 1.73% and the average 30 yr. mortgage rate at 3.56%.  Today’s data calendar is light but expect activity to pick up as the week progresses as retail sales and consumer sentiment cap the week.   

 

Economic Journal - Monday, 4/8/2013

(As of 7:15 am PST)

 

It looks like a quiet opening for today's stock market, but there are many diverse forces pushing and pulling at market momentum.  Japan continues to rise dramatically with the implementation of a massive quantitative easing program.  Other Asian markets are not being pulled along with Shanghai, in particular, falling hard.  News is negative from Europe, with several austerity measures having been thrown out the Portugal's high court and threats from the Euro bank of removal of financial aid as a result.  There is some merger activity in the US with GE buying energy company Lufkin.  It is a reminiscent feeling of merger Monday, a trend that boosted markets a couple of years ago.  There is certainly enough money on corporate balance sheets to think that we may see a spate of mergers.  Commodities are mixed as is the US dollar.  Gold and oil are near flat.  Mortgage interest rates are falling hard today.  Expect Japanese quantitative easing to win the day and eventually pull US markets higher.  It is hard to fight the result of the infusion of massive liquidity into the financial system.

Economic Journal - Friday, 4/5/2013

(As of 7:30 am PST)

The jobs report was awful this morning sending stocks into a tail spin.  Most markets are down over 1% as the economy added only 88,000 jobs, well below expectations.  Interestingly, the unemployment rate actually went down with more people abandoning their job search and thus reducing the overall work force.  It is a risk off scenario with investors fleeing to the safe haven of the US dollar.  Interest rates fell significantly this morning.  The only positive on the international scene was Japan, where new aggressive stimulus programs are injecting life into Japan's stock market.  Oil continues its string of down days, mirroring the glum economic news.  The only bright spot is gold which has broken out of its slump, up nearly 1%.  On the bright side, the weak jobs report is likely to quash recent talk about a reduction in QE3, providing a buffer to the rate of market descent.

 

Economic Journal - Thursday, 4/4/2013

(As of 7:30 am PST)

 

Investors were surprised this morning by news out of Japan.  The Bank of Japan initiated a massive easing program to break the grip of deflation that has caused economic stagnation for many years.  The flood of expected liquidity acted much the same as the US Quantitative Easing packages (We are currently in QE3), causing world markets to rise, especially Japan.  The Yen dropped by over 2% against the US dollar and other foreign currencies.  The news from Japan sent US markets higher in early trading, in what otherwise would have been a bleak market opening.  Jobless claims were up in the US and stories abound about cracks in the vibrant economic recovery that we have been experiencing here.  There has definitely been a shift in market momentum to the down side, in spite of today's rise.  Bears are coming out of the bushes predicting a reversal of what has been a multi-year rally.  There is also some discomfort as Federal Bank governors talk about how to ease out of QE3.  As stimulus is withdrawn it could signal a deleveraging phase for investments.  Gold continues to trend downward and oil is falling further from the large drop yesterday.  Interest rates are stable.

Economic Journal - Wednesday, 4/3/2013

The ADP jobs report disappointed investors this morning.  Though often an unreliable indicator, nonetheless, it was enough to throw water on what has been a significant rally thus far in 2013.  We are due for a round of profit taking and it would not be unusual to see the market correct on even slightly negative news.  Oil and gold are down a small amount, while interest rates are holding steady. The US dollar is down across the board so we are not looking at a ‘risk off’ scenario but a mild reaction to the employment report.  International financial news is quiet today.  Expect a down day as investors contemplate heady levels and record market closes and become nervous.

Economic Journal - Tuesday, 4/2/2013

(As of 7:18 am PST)

 

Markets recovered this morning after a downbeat day yesterday kicked off the second quarter.  Healthcare stocks are leading the charge after the Centers for Medicare & Medicaid Services announced late Monday that Medicare Advantage reimbursement rates will be boosted rather than cut, which many people had come to expect.  Shares of Humana Inc. rose 8% on the news.  Stocks continued to move higher as data on US factory orders showed orders increased 3% in February, after a 2% decline in January.  Ford and Chrysler reported strong sales for March giving investors confidence in the US auto sales report due out later today.  European markets are higher after being closed yesterday despite disappointing unemployment data and a final reading of the euro-zone manufacturing PMI that confirmed the deepening slowdown in manufacturing.  Asian markets are mixed with Japanese stocks sliding on a strong yen.  Oil and gold are both down nearly 1% while interest rates are ticking up.  It could likely be a back and forth week as investors await Friday’s key monthly jobs report.  The report could set an important tone going in to earnings the following week.

Economic Journal - Monday, 4/1/2013

(As of 7:20 am PST)

 

Stocks began the 2^nd quarter shifting between small gains and losses as investors awaited two important economic reports.  The first to come out was the ISM manufacturing survey which fell nearly 3 percentage points indicating manufacturing activity expanded at a slower pace in March.  Markets pulled back slightly then reversed course after data showed construction spending rising 1.2% in February.  So far it’s been a see-saw morning with the market struggling to find direction either way.  Disappointing manufacturing data out of China sent Asian markets lower and dampened the mood on Wall St. in early trading.  European markets are closed today for an extended Easter holiday break.  Gold is up slightly while oil is down 1%.  Interest rates are ticking up while volatility is also higher.  It’s a busy week chock-full of economic reports which may set the stage for some active trading as earnings season starts next week.