Economic Journal - Friday, 1/30/2015

(as of 7:00 AM PST)

Markets are looking for a reason to be negative, but opening losses are melting away.  A big reason might be Amazon, which announced a blowout earnings quarter after the bell yesterday and is up 11%.  4th quarter US GDP came in below analyst expectations and seemed a good reason to send stocks lower, but the 2.6% growth rate is really not something for investors to fret about, and they quickly dismissed that number as a reason to sell.  So markets have recovered to being mixed and close to unchanged.  Perhaps the biggest negative story out there is that earnings growth of corporate America has slowed dramatically.  Some of that is due to a reduction in capital spending in the energy sector and some is related to the effects of a strong dollar for those companies that sell in international markets.  If corporate earning growth slows, it could bode negative for stocks moving forward this year.  Expect markets to drift lower today as investors continue to focus on what might go wrong.  Oil is up about 1% while gold has recovered slightly from the battering it took yesterday.

Economic Journal - Thursday, 1/29/2015

(as of 7:00 AM PST)

Investors are on edge this morning despite some sparkling economic data showing that the US economic recovery is expanding.  Jobless claims plunged to their lowest level since 2000 and was a much better report than analysts had expected.  There is still fallout from the Federal Reserve Boards announcement yesterday where they stood by their projection of a mid-year interest rate hike.  Interest rates hikes mean that easy money policies are reduced and investors must reduce their leverage on all types of investments.  Much of the last few year's market advance has been fueled by easy money policies of the Fed and any signs of tightening might result in selling assets in a broad spectrum.  Gold is down sharply today while oil has stabilized at low levels not seen in years.  Profit reports have shifted from positive to very soft, with many companies expressing caution about future quarterly profits.  While the Dow Jones Average is on the plus side, other indexes are down.  Surprisingly, there is more strength in international markets than US markets.  Expect some upward bounce as the day wears on as investors react to the Fed's view of a strengthening economy.

Economic Journal - Wednesday, 1/28/2015

(as of 7:00 AM PST)

It is a moderate opening for the stock market today.  Sterling profit reports from the likes of Apple, Boeing, Yahoo and others have temporarily overcome the strong negative storm that took yesterday's investors by surprise.  Markets closed down nearly 2% at yesterday's close and, clearly, there is some downward pressure still, if you take out yesterday's profit out-performers.  There is a good amount of negative economic news being digested and it will likely cut into gains as the day wears on. Oil has resumed its downward journey, off nearly 2%, while gold is down a small amount.  Interest rates are stable.  The Euro is down and likely to be continue to be weak because of the Greece situation. Greek markets are getting pummeled since the election of a left wing government earlier in the week.  Talk of a Greece exit from the Euro are as strong as ever.  

Economic Journal - Tuesday, 1/27/2015

(As of 7:15 am PST)

US stocks opened sharply lower today as markets took in surprisingly weak economic data including a disappointing report on durable goods orders.  US durable-goods orders fell 3.4% in December, much more than analysts expected, marking the fourth decline in the past five months. The November reading was also downgraded to a 2.1% decline from a 0.9% drop. Excluding the volatile transportation sector (namely aircraft orders), orders will still down 0.8% in December.  The recent weakness in durable goods has analysts worried about future business investment in 2015, which would impact GDP growth in the year ahead. Adding to the negative sentiment early was a string of disappointing earnings reports from Microsoft, Caterpillar, and Freeport-McMoRan. Also catching headlines is iPhone maker, Apple Inc., who is expected to report first-quarter earnings results after the bell today. International markets are not much better than at home. Asian indexes finished the day mixed, while European stocks are headed towards a negative close. Commodities are up while the US dollar is down. Interest rates are sharply lower with the 10 yr. treasury moving to 1.75% as investors flocked to the safe haven. Profit taking seems to be the order of the day for US markets. Hopefully losses will dissipate as the day wears on and the “smart money” moves in.

Economic Journal - Monday, 1/26/2015

(As of 7:20 am PST)

US stocks opened the week lower Monday as investors considered the election results in Greece over the weekend. Greek stocks fell Monday after the victory of the anti-austerity Syriza party ushered in all sorts of questions regarding the future of Greece. Fears that Greece could be forced to leave the euro-zone if it doesn’t comply with its lenders was the big question. European markets for the most part took the election results in stride, with investors still riding high on the ECB’s announcement of its bond purchase program last week. The dollar strengthened against the euro sending most commodities lower. The economic data calendar is empty today, but will pick up as the week wears on. After strong weekly gains last week, let’s hope the market can continue to the upside.

Economic Journal - Friday, 1/23/2015

(As of 7:10 am PST)

 

Stocks are lower heading into Friday’s session, but with yesterday’s rally the S&P500 and Dow remain firmly on track for solid weekly gains. Thursday’s rally came on the heels of a new stimulus program announced by the European Central Bank. Although the policy action was widely expected by global investors, the size and scope outpaced expectations and had markets cheering the “easy money”. Asian markets responded today with broad based gains, while European indexes also moved notably higher. Earnings results are mostly positive this morning with McDonald’s and General Electric beating forecasts. Economic data is light but mostly upbeat. Existing home sales showed sales rose 2.4% in December, while a report on leading economic indicators rose in December, beating expectations and pointing to steady growth for early 2015. Oil is down 1% today to $45.90 per barrel while gold is also down after closing above $1,300/oz. yesterday. It looks like US markets are set for a breather today after a week of strong gains.