Economic Journal - Friday, 6/28/2013

(As of 7:22 am PST)

 

Robust market gains in Asia did not carry over to US markets this morning.  It feels like a bit of a hangover after three days of partying to the upside.  Profit taking is definitely the order of the day. The Dow is down triple digits and other indexes down a like amount.  Gold continues its fall off the cliff and oil continues its surprisingly strong run.  US economic data reports were not that bad this morning, but not enough to excite investors.  Chicago PMI, a key measure of economic activity, came in below expectations, but still at a level which indicates economic expansion.  Consumer confidence was down a small amount, but ahead of economist’s expectations.  Federal Reserve spokesmen are trying to stem the large increase in interest rates that occurred over the last couple of weeks, with limited success. Expect a down day as profit taking continues.

Economic Journal - Thursday, 6/27/2013

(As of 7:15 am PST)

 

Positive momentum continues to build as the fear of economic stimulus withdrawal lessens.  Markets are up for the third straight day, with the Dow up triple digits.  Mildly positive economic reports have added some stability.  Gold is near unchanged after being battered for the last few days and oil is near flat line as well.  Interest rates are trending down after last week’s dramatic rise.  International news and markets are mixed but steady.  It looks like a positive, but mostly quiet day in US markets.

Economic Journal - Wednesday, 6/26/2013

(As of 7:10 am PST)

 

Stocks are extending gains from yesterday despite a downward revision to first quarter GDP.  US GDP rose 1.8% in Q1, down from initial estimates of 2.4%.  The majority of the decline was fueled by a slowdown in consumer spending as consumers spent less on services such as health care, fast food, travel, and personal care.  Residential investment was revised upward reflecting the strength of the housing recovery.  Market gains were capped after the GDP report, but the Dow is holding on to triple digit gains for the second consecutive day.  Yesterday’s data which showed increases in durable goods orders, new home sales, and consumer confidence helped international markets today.  Asian markets finished mixed, while trade in Europe is strong to the upside.  Gold and other metals continue to take a beating on Fed fears.  Gold prices are down 3% today to $1,236 per oz., the lowest level seen since September 2010.  The US dollar continues to inch higher while interest rates dipped slightly with the 10 yr. treasury yield at 2.53%.  Expect gains to dissipate as the day wears on but remain in positive territory for the second consecutive day.

Economic Journal - Tuesday, 6/25/2013

(As of 7:24 am PST)

 

Solid economic data has reversed the decline in stock markets.  The durable goods orders index was up 3.6%, higher than estimates.  It was led by aircraft orders, which tends to make that index very volatile.  Buried in the data was the fact that business orders jumped by over 1%, a sign of a continuing steady, though muted recovery.  Another report showed that new home sales jumped by the largest amount since 2008, and the Case-Schiller Price Index showed the largest monthly gain in prices ever recorded at 2.5%.  Consumer confidence soared above estimates adding to investor confidence.  Gold and oil are near even for the day and interest rates appear to be stabilizing as well.  International markets stabilized overnight.  It looks like a day of solid recovery, but worries about the future of Federal economic stimulus will put a ceiling on gains.

Economic Journal, Monday, 6/24/2013

(as of 7:15 PST)

China’s steep market decline has spilled over to US stock markets, with most major indexes down over 1%.  An even bigger story, however, is the dramatic rise in interest rates this morning.  The ten year Treasury has skyrocketed to 2.65% and the thirty year mortgage rate has risen to over 4.25%.  Gold is down slightly while oil is near flat line.  It looks like markets will be mired in red ink today.  Will the Fed step up to the plate and try to restore investor confidence?  With fears that the Fed is losing control of interest rates, expect some strong language from Fed governors to stem the market selloff. 

Economic Journal - Friday, 6/21/2013

(As of 7:19 am PST)

 

What a difference a day makes.  Stocks are seeing a small rebound this morning after tumbling in the worst session of the year yesterday.  A light data calendar has investors reevaluating portfolio positions and looking tactically at how to move forward in lieu of yesterday’s events.  Gold is recovering, up nearly $10 per ounce after losing 6.5% yesterday.  Headlines are light across the globe as markets appear to be catching their breath before determining future direction.  Asian markets were mixed with the Nikkei up 1.7%.  Europe is seeing a choppy trade as well.  Oil prices continue to drop sharply with analysts calling for further price decline.  Treasury yields are edging up after soaring yesterday and the US dollar continues to climb as well.  With volatility falling back expect a calm day today as traders and portfolio managers catch their breath, evaluate allocations and chart their course for the summer.   

 

P.S.  If you missed out on the major events that caused yesterday’s selloff, please check out the video we recorded which is posted on the “Videos” tab of this blog.  Enjoy and send us your questions! 

Economic Journal - Thursday, 6/20/2013

(As of 7:28 am PST)

 

Anxiety reigns on Wall Street this morning.  Comments from Ben Bernanke, The Federal Reserve Bank Chair, sent markets reeling downward yesterday afternoon and the fallout has continued into this morning’s session, with most markets down over 1%.  The drop is happening in spite of some sparkling economic reports out of the US.  US home sales were up; the Leading Economic Indicators showed a small gain and the Philly Fed Index, a key measure of manufacturing activity soared to its highest level in months.  China manufacturing data was weak sparking concerns of a slowdown in that economy.  It is a definite risk off scenario, with investors flocking to the safety of US Treasuries and the US dollar is soaring on currency markets.  Expect markets to reverse today as fears of an early Fed exit from QE3 reverse, and solid economic reports prevail.  The strengthening dollar and fears of a withdrawal of stimulus has also caused gold, silver and oil to fall heavily in the commodities area.  Gold was down over $80 dollars per ounce before recovering a part of its losses.  All of this turmoil highlights the tremendous problem that the Federal Reserve faces as it attempts to wind down economic stimulus programs.  Even as the economy improves on Main Street, the steroid driven investment markets will face extreme volatility over the next few years when the Federal Reserve tries to normalize its monetary operations and exit from stimulus programs.

Economic Journal - Wednesday, 6/19/2013

(As of 7:17 am PST)

 

Investors are hesitant to put on new positions in early trade as they await the Federal Reserve’s monetary policy decision later this morning.  After two days of meetings, the Fed will provide guidance today on its plans to continue or taper its “easy money” bond-buying programs.  Most analysts believe poor economic data lately has provided room for the Fed to stay the course on its policies.  Talk about tapering perhaps was too soon as markets were bought up the past few days on rumors that the Fed would continue its QE programs as usual.  Markets will know for sure the Fed’s plans in just a few hours as the Fed will release a policy statement which will be followed by a Q & A style press conference with Bernanke himself.  Global markets are fixated on the Fed as well. Europe is cautiously lower while Asian markets ended the day on a mixed note.  Gold is up 0.5% and interest rates are nearly unchanged.  Look for volatility to pick up as the day progresses towards the Fed’s announcement.  As one headline read this morning, however, “Let’s get this over and done with, Fed.”

Economic Journal - Tuesday, 6/18/2013

(As of 7:15 am PST)

 

With inflation seemingly well under control there seems little need to dampen economic stimulus and stocks are up accordingly.  Housing starts were also higher adding to investor optimism.  Gold is down and oil is up reflecting continuing trends.  Interest rates continue to creep upward.  Europe and Asia are quiet.  There seems to be no market moving headlines this morning and it could make for a quiet day with markets meandering around the flat line.

Economic Journal - Monday, 6/17/2013

(As of 7:15 am PST)

 

A strong showing in European markets has carried over to US markets this morning.  Factors adding to investor enthusiasm were a couple of positive economic reports.  The Empire State Index, a widely followed measure of economic activity, was up and above expectations.  Homebuilder confidence levels came in at the highest level since 2006.  There is also sentiment that the Federal Reserve will leave Quantitative Easing unchanged.  Gold is down slightly, while oil is up on tensions over Syria.  Interest rate yields are down slightly.  It seems too far too fast this morning so look for a pullback from market tops, but a positive overall result.

Economic Journal - Friday, 6/14/2013

(As of 7:23 am PST)

 

Yesterday’s late day rally has not carried over into early trading today, with indecisive action in the first hour.  A Wall Street Journal report hit the wires late in the session yesterday suggesting that Ben Bernanke and the Fed are not looking to hike short term interest rates anytime soon.  Bernanke is set to hold a press conference next week after the Fed’s policy meeting, and communication will likely be directed at cooling those fears.  Stocks spiked late yesterday after the WSJ report.  International markets got a boost this morning keying off Wall Street’s finish.  Asian markets were higher with the Nikkei rallying 1.9% and Chinese stocks were up with rumors that the People’s Bank of China may lower its key interest rate over the weekend.  European stocks are also higher in a choppy session.  On the domestic side, a few economic reports are worth noting.  Industrial production was flat in May while wholesale prices climbed with energy and food leading the way.  Excluding those two volatile sectors, core prices rose a scant 0.1% showing signs of low inflationary pressure.   The US current account deficit rose by $3.8 billion to $106.1 billion in the first quarter.  Lastly, consumer sentiment fell in a preliminary reading for June, putting the brakes on the market.  As it stands, markets are flip flopping around the unchanged line.  Gold is up .8% and oil is up over 1% as interest rates are down slightly.  Expect a back and forth day as we head into the weekend.

Economic Journal - Thursday, 6/13/2013

(As of 7:30 AM PST)

A tsunami of selling in Asia overnight seemed to spell an opening loss for US markets as well, but solid economic data overcame the selling pressure and US markets opened higher.  It has not been a solid opening so far, with some volatility and fluctuations either side of the even mark, but it has been impressive given the Asia losses.  Oil and gold are down slightly and volatility indexes have calmed a bit, after several days of increases.  It is hard to know how the roiling Asia markets, particularly Japan, will translate to US investors.  There is a battle being waged between two factors.  The first is the continuation of the US economic recovery and the second is the worries that economic stimulus programs will be reduced as a result.  One gets the feeling that, at least for today, that economic data will prevail and propel markets higher.

Economic Journal - Wednesday, 6/12/2013

(As of 7:25 am PST)

 

Stocks started today with a small bounce back from yesterday’s disappointing performance.  There is not much in the way of economic data to guide the market this morning.  A mildly positive economic report from Europe and some merger activity are the highlights of today’s news in what appears to be a quiet day of trading.  Markets are stepping back from their triple digit gains as analysts continue to mull the chances of a tapering of economic stimulus.  Gold is down slightly, oil up slightly, and interest rates continue to rise.  Expect a flat day.

Economic Journal - Tuesday, 6/11/2013

(As of 7:25 am PST)

 

US Stock markets are following international markets lower this morning.  What started in Japan, with the status of continuing economic stimulus in question, spread across the globe to Europe and now into US markets.  The Dow opened down triple digits and other indexes followed suit.  Oil and gold are both down and interest rates are rising.  The dollar is mixed against most currencies, with the exception of the Japanese yen, which is rallying on the talk of reduced stimulus.  There is not much in the way of US economic data today, although there was one positive report this morning relating to small business optimism.  Expect the market to recover some losses as the day wears on.

Economic Journal - Monday, 6/10/2013

(As of 7:24 am PST)

 

Markets are struggling to find direction this morning.  A light data calendar has investors mulling over Friday’s ‘status quo’ jobs report.  Investors have been left wondering when the Fed would begin tapering its asset purchase program (known as QE3) and what that might mean for markets.  That question will persist over the coming weeks as the Fed gets set for its next policy meeting.  Meanwhile, headlines are light to start off the week.  Standard and Poor’s revised its US credit rating outlook from negative to stable, providing a brief boost to stock prices in early trading.  Gains were quickly erased as other international headlines were pondered.  Disappointing data out of China showed industrial production slowing in May and trade data was lackluster.  In Japan, the Nikkei surged 4.9% after 3 straight days of losses.  European markets were mostly lower as well.  Gold is taking a beating, down more than 2% on the US credit upgrade while oil is up to nearly $95.50 per barrel.  It’s difficult to tell where markets will settle out today.  Expect some volatility throughout the week with the Fed’s bond buying the focal point of investor’s buy or sell decisions.

Economic Journal - Friday, 6/7/2013

(As of 7:20 am PST)

 

Today’s much anticipated jobs report has left investors still scratching their heads over what the Fed will do next.  The Labor Dept. reported 175,000 private sector jobs were added in May, up from April’s report and slightly ahead of expectations.  The number wasn’t quite good enough to suggest the Fed will begin tapering back its stimulus package known as QE3.  On the other hand, it wasn’t awful enough to indicate they will continue full steam ahead with their bond purchases.  So where does that leave investors?  Confused.  One thing is for sure, the pace of growth remains muddled.  The unemployment rate ticked up in May from 7.5% to 7.6% largely due to a surge in the labor force where nearly 420,000 new people began looking for work.  The market has responded to the report positively with all three major indices up nearly 1%.  However, we’ve seen how volatile the first and last hour of trading can be, so it’s too soon to tell if we’re in full rally mode today.  Gold prices are off 2% while interest rates are higher and the US dollar is up.  With an inconclusive jobs report, we could be in for a back and forth couple of weeks until the next Fed policy meeting later in June.

Economic Journal - Thursday, 6/6/2013

(As of 7:05 am PST)

 

Markets are trying to shake off yesterday’s steep decline.  Economic data is good so far.  Jobless claims were down.  Market indexes are slightly to the positive Gold is lower while oil is higher, with US inventories coming in higher than expected.  Interest rates are a shade lower this morning as well.  Today’s investors will be looking for some signs of market stability.  Anxiety is high and there is concern that we may be looking at the all too familiar summer swoon.

Economic Journal - Wednesday, 6/5/2013

(As of 7:25 am PST)

 

Soft economic data continues as the week wears on.  Markets are down this morning, continuing the slide from yesterday.  Private jobs creation was weak, but on the plus side, labor costs were down the most in years.  Asian markets were mixed with the Japanese market falling over 3%, continuing its roller coaster performance of the last month.  On the US domestic side, it feels as if the effects of ‘the sequester’, the automatic budget cuts initiated in March of 2013, are hitting home.  Generally weak economic reports point to a slowdown in GDP growth and threaten the fragile economic recovery we have seen thus far.  On the plus side, there are more arguments in favor of continuing economic stimulus providing more fuel for investors.  Volatility, which has been very mild thus far in 2013, is starting to pick up.  Expect markets to shrug off today’s weakness and pick up steam as the day wears on, finishing on the plus side.    

Economic Journal - Tuesday, 6/4/2013

(As of 7:10 am PST)

 

Stocks opened mildly higher this morning after a late session rally yesterday saw the Dow finish with triple digit gains.  The only major economic report out today showed the US trade deficit rising 8.5% in April, led mostly by a surge in Chinese imports.  The trade gap widened less than expected sending treasury prices lower.  European markets are mostly higher midway through trading as a report on Spanish unemployment came in better than expected.  Asian markets are mixed with the Nikkei recovering some of yesterday’s losses.  The Reserve Bank of Australia announced it will keep its key interest rate unchanged at 2.75%, however with a low threat of inflation the central bank left the door open for future rate cuts.  It’s a quiet morning compared to yesterday, however activity should pick up as several Fed officials are due to speak later today on the economy and the government’s role in job creation.  Two of the speakers are voting members of the FOMC which makes decisions on monetary policies.  Investors will be paying close attention to signs of whether the Fed will begin tapering its monthly bond purchases.  With 20 straight weeks of Tuesday gains, can the market keep the streak alive?  We'll see!

Economic Journal - Monday, 6/3/2013

(As of 7:25 am PST)

 

After a tough end to the month of May, stocks are struggling to find direction in today’s early trading.  Some weak reports early on, including May’s ISM manufacturing index have actually caused a brief spike in stocks.  With the main concern on investor’s minds being the winding down of the Fed’s stimulus program, bad news appears to be good news as that means the Fed will likely continue its easy money policies.  International markets are lower, especially throughout Asia as conflicting reports on Chinese manufacturing concerned investors.  In Japan, the Nikkei dropped 3.7% as the yen strengthened and investors reacted to Friday’s selloff on Wall St.  European stocks are also lower despite mostly positive manufacturing data across the region.  Gold and oil prices are both higher while interest rates continue to ratchet up.  Expect volatility to continue in the market in this data rich week which culminates in Friday's much anticipated nonfarm payrolls and unemployment reports.