Economic Journal - Monday, 3/31/2014

(As of 7:10 am PST)

 

Stocks are surging on the last trading of the quarter with markets getting a boost on hopes of new stimulus programs from the European Central Bank.  Speculation, which began last week, that the ECB and People’s Bank of China would announce additional quantitative easing measures has boosted US equity markets today.  Inflation in the euro zone fell to the lowest level since 2009, providing support for a stimulus package from the ECB.  Some are calling for a policy announcement as early as this week in Europe.  Economic data was largely ignored in the US as investors traded the stimulus hope.  Chicago PMI fell in March to the lowest level in over 6 months as employment declines and a drop in new orders held back business activity.  Markets shrugged off the report.  A speech by Fed Chair Janet Yellen is also drawing attention today with markets keying in on any transparent remarks around the Fed’s policy decisions.  Asian markets finished the day mostly higher while European indexes are also up. Gold and oil are flat while interest rates are on the rise.       

Economic Journal - Friday, 3/28/2014

(As of 7:10 am PST)

 

The US stock market is higher to start Friday, but losses from earlier sessions are likely to keep indexes down for the week.  Economic reports today showed a slight tick up in consumer spending and personal incomes.  The Thomson Reuters/Univ. of Michigan consumer sentiment gauge declined to 80 in March (the lowest level since November) from a final reading of 81.6 in February.  The report crossed the wires at 7:00 am PST and had little effect on what appears to be some upward momentum on the trading day.  Asian markets finished the day mostly higher and European indexes look as though they’ll lock in gains as well.  Rumors of additional stimulus measures seem to be what’s propping up markets globally. Comments from Chinese President Li indicate Beijing is ready to implement additional stimulus programs. Also, many analysts in Europe today are suggesting that the European Central Bank could announce additional quantitative easing at the ECB press conference next week.  Other encouraging data on consumer sentiment in Europe is helping ease worries over the impact the Ukraine crisis has had on neighboring Europe. Gold is down this morning while oil is back over $102 per barrel.  Interest rates are higher as treasuries sold off on the risk trade.

Economic Journal - Thursday, 3/27/2014

(as of 7:15 AM PST)

Data has generally been good this morning.  It has not been enough to shift negative momentum which was evident in yesterday's market decline. Stocks are down modestly at the open.  Jobless claims were down more than expected, indicating that job growth is likely to pick up in the near term.  Last quarter's GDP was revised upwards by a small amount.  The governments grading of the strength of bank balance sheets was very strong after yesterday's market close with the notable exception of Citigroup which fell heavily at the start of market action.  But the good news was muted by overhanging issues.  Ukraine is a huge geopolitical threat which could ignite in conflict at any moment.  The withdrawal of economic stimulus as the economy strengthens is another concern.  It has been a long rally and it seems that investors are seeing many stocks as overvalued and are hesitant to increase holdings.  It could be a tough day as investors focus on the negative.  Gold is down again, falling below $1300 per ounce while oil is up over 1%.  Interest rates and the US dollar are near unchanged.

 

Economic Journal - Wednesday, 3/26/2014

(As of 7:20 am PST)

 

US stocks are higher at the open, continuing yesterday’s positive run which saw most broad indexes higher on the day.  Today’s optimism is being fueled by rumors of additional stimulus measures throughout Europe and Asia as well as a positive reading on US durable goods orders.  Durable goods orders rose a stronger-than-expected 2.2% in February receiving a positive response from markets this morning.  However, digging a layer deeper sheds light on some underlying weaknesses.  The rise in orders last month was largely derived from increases in aircraft orders, a sector that is known to be highly volatile.  Stripping out transportation, orders rose only 0.2%.  Also troubling, was a decline in core capital goods, a broad measure of business investment.  Many economists are now forecasting a drag on 2014 GDP growth if business investment continues to be lackluster.  Markets mostly shrugged off the report embracing the hopes for an additional round of stimulus in Europe and China.  International markets were higher on the news.  Gold is flat and oil higher while interest rates are down on the day.

Economic Journal - Tuesday, 3/25/2014

(As of 7:20 am PST)

 

Markets are rebounding from yesterday’s losses as investors waded through economic data that included reports on housing and consumer confidence.  Reassurance from Philadelphia Fed President Charles Plosser gave markets a boost early, as Plosser commented on Yellen’s time table to hike short term interest rates.  Other Fed officials are set to speak later in the day on the FOMC’s recent policy decisions.  Economic reports have been mixed early.  US home prices declined for the third consecutive month as unusually harsh winter weather continues to effect short term growth. Consumer confidence rose to 82.3 in March from an upwardly revised 78.3 in February, better than economist expectations. In corporate news, shares of Walgreens are rallying, with the stock up 4.5% after reporting earnings. Stocks in Asia finished the day mixed while Europe is marching towards a strong finish despite disappointing data out of Germany. Rumors of a new bond buying program buoyed stocks in Europe.  Gold is up slightly while oil is down to $99.20 per barrel.

Economic Journal - Monday, 3/24/2014

(As of 7:20 am PST)

 

Stocks are lower to start the week as markets took in manufacturing results from around the world.  China’s HSBC manufacturing PMI fell from 48.5 to 48.1. A reading below 50 signals contraction.  The disappointing report was overshadowed by news that new stimulus could be coming from Beijing.  Asian markets rallied on the news.  European indexes are trading lower as Eurozone manufacturing activity slipped across the board.  In the US, a flash reading of manufacturing PMI showed activity falling to 55.5 in March from 57.1 in February, but still showing growth and improvement.  The data calendar is light today but will pick up as the week goes on with reports on consumer confidence, home sales, durable goods orders, and an estimate on GDP all scheduled.

Economic Journal - Friday, 3/21/2014

(As of 7:15 am PST)

 

After a nice bounce back yesterday from Wednesday’s losses, the main indexes are on track to record their second consecutive week of gains.  The economic data calendar is empty with sector moves coming today on several earnings announcements.  Shares of Nike are down over 3% after providing soft guidance for the year despite a solid earnings beat on the recent quarter.  Tiffany & Co. and Darden Restaurants reported below expectations earnings but shares at this moment are higher on the day.  Attention today will be likely on several Fed officials who are scheduled to give speeches on the state of the economy and the Fed’s current policies.  International markets are mixed with Asian indexes finishing mostly higher and European markets struggling for direction in the final hour of trading.  Gold and oil and most other commodities are higher.  Today is ‘quadruple witching’ day, a phenomena that happens 4 times per year when index futures, index options, stock options, and stock futures all expire on the same day.  As investors scramble to open and close positions, often volatility can occur.  With little to trade on today, expect market action to be mixed.

Economic Journal - Thursday, 3/20/2014

(As of 7:25 am PST)

 

Stocks are attempting to rebound this morning after yesterday afternoon’s quick selloff caught investors by surprise.  Markets closed lower Wednesday after Fed Chair Janet Yellen signaled (perhaps mistakenly) that an interest rate hike could come sooner than expected.  In her first policy statement as the new Federal Reserve Chair, Yellen surprised markets by commenting that a rise in short term interest rates could come as early as 6 months after the taper ends.  Some analysts are calling her transparent remarks a “rookie mistake” as markets sold off on the unexpected announcement.  The FOMC also determined to drop it’s 6.5% target for unemployment before rates are hiked.  After trading flat most of the day Wednesday, markets sold off in the afternoon.  Stocks are rebounding today on mostly positive economic reports.  Jobless claims rose slightly last week from 315,000 to 320,000.  Existing home sales fell 0.4% in February to the slowest pace since July 2012.  These reports were muted by a strong rebound by the Philly Fed index which showed manufacturing activity improving well ahead of consensus estimates.  A report on leading economic indicators also came in strong.  International markets are mostly lower on Yellen’s comments yesterday.  Gold is down 1% and interest rates are ticking up slightly.  We’ll see how well the market digests Yellen’s comments from yesterday. It could be a choppy day on Wall St.

Economic Journal - Wednesday, 3/19/2014

(as of 7:25 AM PST)

It is a quiet day this morning on most markets.  Investors seem to be digesting this week’s gains and awaiting the results of the Federal Reserve meeting that will wrap up this afternoon.  Analysts expect the bank to continue the tapering of bond purchases, shaving another ten billion.  A few months ago the Federal Reserve was buying $85 billion of government bonds.  The expected new reduction will reduce that total to $55 Billion.  Surprisingly, the reduction has had minimal impact on interest rates.  Fears were that rates would rise from extreme lows as more supply was absorbed into the bond marketplace, but that has not occurred.  Mortgage interest rates continue at very favorable rates and the real estate recovery continues to roll on.  Markets are near flat-line early on.  The only casualty looks to be precious metals, with gold off another 1%.  Any surprise from the Federal Reserve is likely to be a negative to the marketplace but the status quo seems what will be the order of the day.

Economic Journal - Tuesday, 3/18/2014

(As of 7:15 am PST)

 

US stocks are marching higher today after the Dow recorded triple digit gains yesterday. The move higher is being supported by this morning’s speech from Russian President Vladimir Putin, in which the president signaled Russia is not seeking “a partition of Ukraine.”  Global markets moved higher on the comments.  Housing data in the US also have given stocks a lift in early trading.  Housing starts fell slightly in February, however building permits (a sign of future demand) climbed 7.7% to the highest rate since October as plans to build multi-dwelling units like apartments and condos picked up. Today marks day one of the two-day Federal Open Market Committee policy meeting.  A lot of attention will be given to new Fed Chair Janet Yellen as she announces the Fed’s next step in the wind-down of its bond-buying program tomorrow afternoon.  Gold prices are getting hit today ahead of the meeting as the precious metal has been bid up in recent weeks.  Interest rates are flat for the moment while the US dollar index is up.  It’s been a good start to the week, but any surprise move by the Fed this week could spark a return to volatility.

Economic Journal - Monday, 3/17/2014

(as of 7:30 AM PST)

Markets are in the rally mode to start the week.  Despite international tensions from Crimea’s referendum to join Russia, stocks are in a risk-on scenario.  Perhaps investors are sensing that the Ukraine situation will be handled diplomatically, rather than through the use of force.  Sanctions against Russia seem to be a token effort on the part of the west and it seems that US and European protests are lacking substance.  There are some positive economic reports helping the rally.  The homebuilders’ confidence index rebounded sharply this month, and industrial production also had a strong showing.  There may also be thoughts that last week’s market declines were overdone.  Gold is pausing after last week’s big gains while oil continues to retreat.  The dollar is stable as are interest rates.  It would seem that the unsettled international situation could put a dent into this rally at any moment.

Economic Journal - Friday, 3/14/2014

(As of 7:10 am PST)

 

Stocks are in a back and forth pattern early this morning as the storyline of international woes continues.  Disappointing data out of China this week has sent worries throughout global markets that the world’s second largest economy is on a path to economic slowdown.  Meanwhile, Russia-Ukraine tensions persist with an important vote coming over the weekend that may have some considerable implications for markets as citizens of Crimea are likely to vote to secede from Ukraine.  US economic data is light today, however a report on consumer sentiment showed sentiment falling to the lowest level since November.  It’s been a disappointing week for markets, which was highlighted by yesterday’s sharp selloff. US equities are on pace to finish with the worst weekly declines in seven weeks.    

Economic Journal - Thursday, 3/13/2014

(As of 7:15 am PST)

 

The US stock market opened higher this morning as investors welcomed a round of upbeat economic reports.  First off, retail sales climbed 0.3% in February, the first time in over 3 months as the increase reflected broad based gains across the retail sector.  Secondly, a report on jobless claims showed a surprise drop in the number of people filing for unemployment benefits last week.  Jobless claims fell 9,000 to 315,000 marking the lowest level in 3 months.  The positive US data helped stomach another round of disappointing data out of China. China on Thursday reported industrial production slowed to 8.6% growth in January versus 9.7% the month prior while retail sales dipped to 11.8% from 13.6%. Today’s reports added to recent data that suggests China’s economic growth is slowing.  Asian and European markets were mixed on the day.  Ukraine-Russia tensions are continuing to add caution to the international markets.  Gold and oil prices are lower today as is the US dollar. Interest rates are slightly higher. 

Economic Journal - Wednesday, 3/12/2014

(As of 7:20 am PST)

 

US stocks are falling in early action as worries about China’s slowdown and continued Russia-Ukraine tensions have sent investors selling.  The global selloff began in Asia with all major indexes finishing the day in the red.  Most notably, Japan’s Nikkei shed 2.5% while the Hang Seng index in Hong Kong was also down over 1.5%.  The selling spilled over into the European open with the broad market trading sharply lower for most of the day.  US stocks have followed suit. Among the big losers, shares of Fannie Mae and Freddie Mac are down over 10% following yesterday’s proposal from US lawmakers that would include reforming and possibly shutting down the two entities.  In other news, shares of biopharmaceutical company, Oxigene, doubled, at one point soaring 130% higher after the company released positive results from a clinical trial to treat ovarian cancer. Gold is higher by 1.5% amidst the selling while interest rates are lower as money flowed into the safe-haven treasury. Today is shaping up to look quite a lot like yesterday with the S&P500 looking to extend its losing streak to 3 straight days. 

Economic Journal - Tuesday, 3/11/2014

(as of 7:30 AM PST)

It is a very quiet day.  Stocks struggle for direction at the start.  Still near record highs, indexes are looking for something new to maintain positive momentum.  Gold is up on increasing international tensions and oil is down a small amount.  The US dollar is up slightly as are interest rates.  News is scarce…so are traders.  If markets maintain today it will be a positive.

Economic Journal - Monday, 3/10/2014

(as of 7:10 AM PST)

Stocks are holding up surprisingly well in light of international news.  China markets fell heavily when trade surplus numbers missed estimates by a large amount.  China exports were far less than expected and their imports surged creating a startling balance of payments deficit and indicating that their economy might be slowing more than expected.  It also shows that China might be turning from an export driven economy to a consumer based economy as the growing middle class exercises it economic clout.  US stocks took the news in a ho-hum manner and are only down fractionally.  Oil is down, reflecting the China data, while gold is near even, ignoring tensions in Ukraine.  There is no significant economic data to report today.  Patterns of the last few weeks lead one to believe that markets will reverse to the positive, although it looks like a very quiet day is shaping up.

 

Economic Journal - Friday, 3/7/2014

(As of 7:20 am PST)

 

Equity markets are struggling to find direction this morning as investors dug into the Labor Department’s nonfarm payrolls report.  According to the report, the US economy added 175,000 new private-sector jobs in February, well above estimates and the biggest increase in 3 months. The unemployment rate ticked up, however, from 6.6% to 6.7% as the labor force (people actually looking for jobs) increased for the second straight month.  Unemployment has risen by an average of 54,000 per month in 2014 compared to an average drop of 160,000 per month in 2013.  After congress cut off unemployment checks for nearly 2 million people in 2014, many estimates called for a decreasing labor force and thus a drop in the unemployment rate.  This all matters because the Federal Reserve has said it would begin raising short term interest rates once the unemployment rate hit 6.5%.  Therefore, February’s bump up has given the Fed more “wiggle room” in setting rates.  All in all, the report paints a muddied picture of the labor market.  Markets are divided on the day with the Dow gaining momentum to the upside, while the Nasdaq is down and S&P500 up slightly.  Gold is lower and oil higher.  Interest rates shot up after Treasuries sold off on the perceived good news of the jobs report. It looks like a back and forth day is shaping up.

Economic Journal - Thursday, 3/6/2014

(as of 7:10 AM PST)

Markets are pretty much writing off the significance of economic data this morning.  Whether good or bad, it is being attributed to the anomaly of horrible winter weather which has clobbered the East and Midwest over the past two months.  Thus markets are higher this morning due in large part to Europe and comments from the European Bank (ECB).  It held rates steady and indicated that it is willing to use other tools at its disposal to put a floor in place if the economy stumbles back into recession.  Once again, economic stimulus, or the mention of it, has investors very bullish.  Gold is up moderately, while oil is holding steady.  Interest rates have ticked up a small amount.  The US dollar is down and it seems we are in a ‘risk on’ scenario, ignoring the geopolitical tensions of Ukraine drama.

Economic Journal - Wednesday, 3/5/2014

(As of 7:10 am PST)

 

After a strong performance yesterday, US stocks wobbled at today’s open with most indexes trading lower.  A report from payroll processor ADP showed the private sector added just 139,000 jobs in February, up from 127,000 in January but well below analysts estimates and certainly off the pace from February 2013.  The ADP report is often a poor predictor of the government’s nonfarm payrolls report, however the disappointing ADP jobs data today could be sending some nerves into the market ahead of Friday’s jobs report.  There’s a lot of anticipation surrounding Friday’s report.  Uninspiring economic data in 2014, the Fed taper and a record high market has investors questioning the strength of the bull run we’ve been on.  The economy continues to grow at a moderate pace, but not convincingly.  With tightening money, international tensions and mixed corporate and economic data, expect the back and forth between the bulls and the bears to persist for some time.  International markets are mixed today with commodity prices and the US dollar down.  Interest rates are up slightly.      

Economic Journal - Tuesday, 3/4/2014

(As of 7:10 am PST)

 

Markets have taken back nearly all of yesterday’s losses as Ukrainian-Russian tensions eased overnight.  Russia’s Vladimir Putin, in his response to an international threat of sanctions, defended his case for the use of force in Ukraine, but also stated he saw no need to send forces into Ukraine just yet.  Russia’s defense minister early Tuesday ordered Russian soldiers to return to their bases despite the situation in Crimea remaining tense.  Not much has changed, but the perception of easing tensions was enough to soothe markets globally. Russian stocks leapt on the news while Asian markets and Europe moved higher as well.   US markets have taken all of yesterday’s losses back, and then some, with the S&P500 hitting a new intraday high above 1868.  The data calendar is light today with little to trade on.  In corporate news, shares of RadioShack are getting pummeled, down 20%, after the electronics retailer missed quarterly earnings and announced the closing of 1/5 of all its stores.  Shares of JCPenney are higher by 5% on a boosted outlook from S&P, while Tesla Motors is also higher after announcing plans to expand in Europe.  Gold and oil prices are lower while interest rates are up.  With lots of uncertainty remaining, expect gains to deteriorate as the day wears on.

Economic Journal - Monday, 3/3/2014

(as of 7:10 AM PST)

 

Geopolitical tensions are high with Russia gathering troops near the Ukraine border in what looks like a move to invade Ukraine and possibly reinstall the deposed leader.  Markets were down internationally and the investors’ concerns have shifted to US markets at the opening.  The Dow is down triple digits, but losses are stabilizing in early trading.  The Russian currency is plummeting and the Russian central bank has intervened by raising interest rates from 5.5% to 7%.  Gold is soaring and most other commodities are rising, including oil.  There is a flight to safety and therefore the US dollar is strengthening as well as precious metals.  Economic reports have been overshadowed by global news, but there has been some positive data out this morning.  US personal spending rose well above estimates, and inflation has once again proven to be well in check.  February was a banner month for investors, recouping all of January’s hefty losses and this political event could be a reason for investors to take profits.  In individual company news, Apple has announced a new car technology which has allowed its stock to escape the early morning downturn.  Overall, we could be in for a rocky road this week.