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.