Economic Journal - Friday, 7/31/2015

(as of 7:10 AM PST)

 

Stocks are struggling at the open.  Major oil producers Exxon, Conoco and Chevron are all taking big hits with profits being battered by the plunge in oil prices.  In the meantime oil continues its downward pattern, now selling for $48 p/barrel.  Europe is stable, but nervous, with key players trying to cobble a Greek financial aid package.  Asia was mixed with the closely watched Shanghai market down another percent but less volatile than sessions of the last few weeks.  The dollar is falling heavily against most other currencies and that is giving a lift to the battered precious metals space.  The Chicago PMI, a key measure of Midwest economic activity came in at a very strong reading of 54, up from a weak 49 number last month.  Anything above 50 indicates economic expansion.  With big energy such a drag on indexes this morning it is hard to see anything good coming out of today's market numbers.

Economic Journal - Thursday, 7/30/2015

(as of 7:00 AM PST)

 

It has been a strong week until today with markets giving back much of the advance we have seen in the recent rally.  There were a good amount of profit reports yesterday and the majority of them disappointed, either in not meeting analyst estimates, or expressing cautious guidance going forward. China's Shanghai Index reversed to the negative, creating anxiety throughout the investment community.  Shanghai was down over 2 percent, leading most Asia markets lower.  European indexes were more upbeat, almost all showing to the positive.  The coming interest rate hike is sure to have a lingering negative effect on US markets as it seems more and more likely that September is the target for the first rate hike.  There is an uncomfortable complacency in the marketplace that could cause an acceleration in selling if investors and analysts turn bearish in a big way on seemingly mild data.

Economic Journal - Wednesday, 7/29/2015

(As of 7:15 am PST)

US stocks are looking to extend yesterday’s rally which saw the S&P500 rise 1.2% - its biggest gain in more than two months. There’s a cautious tone permeating the early trade however, as investors set up for this afternoon’s release of the Federal Reserve’s policy statement. The central bank wraps up a two day meeting at 2 pm EST today with a brief statement regarding its interest rate decision. While the Fed has made it clear that a July rate hike is unlikely, investors will be looking for any hints in the statement that point to a September hike. Yellen most recently has forecasted a rate hike to come later in the year, however with the recent turbulence in China, there’s also a chance that language surrounding a September hike could be downplayed. Economic data is light today with a disappointing report on pending US home sales adding to the cautious sentiment. Pending home sales dropped -1.8% in June, falling from a record pace set in May. In overseas action, European markets are heading towards a mixed close, while Chinese stocks recovered some of Monday’s losses with the Shanghai index adding back 3.4%. Commodity prices continue to tumble with gold falling to $1,090/oz. while oil trades around $47.60/barrel as of this writing. The US dollar index is inching higher today, as are interest rates.

Economic Journal - Tuesday, 7/28/2015

(as of 7:00 AM PST)

Stocks are attempting to rally this morning but the negative momentum of the past week is carrying over to the opening and stocks are barely over breakeven after what appeared to portend a stronger open.  Profit reports were generally good on the profit side, but weak on revenue, with the strength of the US currency cutting into international revenue figures.  Asia was mixed with the Shanghai Index particularly fragile, extending Monday's huge losses.  European markets were very strong and we expect that strength to eventually spill over to US markets and result in a  recovery from the last few down days.  Gold is stable after yesterday's modest recovery while oil continues downward appearing to be near a bottom.  Expect negativism to melt away, at least temporarily, as a relief rally appears later in the day.

Economic Journal - Monday, 7/27/2015

(As of 7:20 am PST)

US stock indexes are lower to start the trading week with pressure coming from a global selloff in equities that began in China overnight. China’s Shanghai Composite index plummeted 8.5% Monday – it’s worst one-day loss since February 2007 – as investors worried that Chinese authorities are beginning to pullback on accommodative stimulus measures aimed at supporting the market. Weak industrial data added to the selling pressure in China, where the Shanghai index now stands 28% below its multi-year closing high on June 12. Fears over Chinese volatility has spread to Europe, with most of the major benchmarks down over 2%. At home, there is not much data to distract US investors from the overnight Chinese developments. A report on US durable goods orders showed orders increased 3.4% in June, recovering from the previous month’s decline and in line with consensus estimates. Despite the report, US stocks continued to fall with the Dow down triple digits, reaching its lowest level since February this year. Commodity prices are mixed with oil falling to $47.50 per barrel, while gold added back $14/oz. to $1100 on a safe haven play. The US dollar is lower against other major currencies while interest rates are falling as investors fled to the safety of the US treasury.

Economic Journal - Friday, 7/24/2015

(as of 7:15 AM PST)

 

The drama this morning is in key profit reports with Amazon owning the spotlight with a surprise profit and revenue that exceeded expectations.  Shares were up a whopping $80 per share for a 17% gain from yesterday's close.  On the down side Biogen, a key biotech component, was down 13% after profits disappointed investors.  The indexes are near unchanged despite the activity generated by these key stocks.  International economic data has been less than sterling with Europe showing middling levels of industrial activity, but, even worse, China coming in with an awful PMI of 48.3 showing troubling contraction in manufacturing activity.  It seems that China, once considered the global growth engine, is now thought of as a drag on international growth.  With summer doldrums setting in it seems that weak economic data is keeping a lid on investor optimism and that stocks might continue to drift lower.  Gold continues its downward trend and oil is stabilizing after yesterday's drop caused by an apparent supply glut. 

Economic Journal - Thursday, 7/23/2015

(As of 7:20 am PST)

 

US stocks trimmed early gains Thursday and now trade near the unchanged line as investors geared up for another earnings heavy day. Economic data is light today, however a report on weekly jobless claims showed claims for last week plummeted to the lowest level since 1973. Economists warned not to read too much into the report as weekly data, particularly in July, is historically volatile. Market activity should be driven by earnings today as several big names are expected to report including General Motors, McDonalds, Starbucks, Caterpillar, and Amazon, who is set to report after the closing bell today. In overseas action, Asian markets finished mixed while European stocks are heading lower towards the close as Greece approved a second set of austerity measures ahead of official bailout talks with its creditors. Gold and oil are bouncing back today while interest rates and the US dollar are flat.

Economic Journal - Wednesday, 7/22/2015

(as of 7:00 AM PST)

Markets are down this morning although much of the damage is a result of a middling profit report that surprised investors, who are used to Apple easily beating projections.  The fact that the company chose to hide figures on the Apple watch sales also seemed to rattle Apple aficionados.  Things are holding up surprisingly well after yesterday's moderate sell-off.  Profit reports have definitely taken a turn for the worse over the last few days after what appeared to be shaping up as a sterling earnings season.  For all of the geopolitical worries of the last few weeks, it seems that the fundamentals of corporate earnings are of most worry to investors...which is how it should be.  Existing home sales came in above expectations and were the strongest since 2007.  Gold continues to slump, down another 1% this morning while oil is up slightly.  It looks like markets might overcome the Apple slump and strengthen to the upside as the day wears on.

Economic Journal - Tuesday, 7/21/2015

(As of 7:15 am PST)

Stocks opened mixed to kick off Tuesday’s trading session with the Nasdaq and S&P500 opening flat while the blue chip Dow traded 100 points lower. It looks to be an earnings dominated day with very little economic news competing for investor’s attention. With a recent relief rally underway, spurred by positive developments in the Greece saga, markets have come marching back with the Nasdaq Composite Index closing at an all-time record high on Monday. The ‘tech-heavy’ benchmark should see lots of activity today as several big name tech companies get set to announce Q2 earnings throughout the day. Headlining the earnings calendar is Apple Inc., which is scheduled to report earnings after today’s closing bell. The iPhone maker is expected to report fiscal third quarter earnings of $1.81 per share on revenue of $49.3 billion. Also on the schedule today are reports from Microsoft, Yahoo, and IBM. In other news, European stocks look on pace to finish a choppy session lower, which will snap a nine session winning streak for Europe’s Stoxx 600 index – its longest since April 2014. Asian markets finished Tuesday’s session higher. Gold prices are taking a breather today after tumbling near a five year low yesterday, while oil prices are up slightly. Interest rates and the US dollar are down slightly.

Economic Journal - Monday, 7/20/2015

(as of 6:45 AM PST)

 

It looks to be a quiet day.  No significant economic data is on the table.  Most US market indexes sit at or near record highs so a day of consolidation might be at hand.  Oil and gold continue to fall with gold taking a beating, down two percent and at levels not seen in years.  Europe is mostly up with Greece appearing to show financial progress by paying IMF liabilities.  Greek payments, however, are from another round of refinance arrangements, with no real progress yet by the financially embattled country.  Asia shows signs of much needed stability with the Shanghai index near unchanged. 

Economic Journal - Friday, 7/17/2015

(as of 7:00 AM PST)

 

Timeout!  After an amazing week of market gains fueled by good economic reports, encouraging geopolitical news and strong corporate profit news, investors are stepping back this morning.  While markets are mixed with the Nasdaq up on some strong individual stock performances, the general trend is down with investors taking money off the table.  The good news keeps coming with housing starts up strongly and a massive financial stimulation program to boost China markets, but it seems that investors are just tired and overbought.  Expect optimism to come into play again as the day wears on and for negative numbers to melt away.  Oil and gold continue to struggle, down almost one percent. Interest rates are stable but the rate hikes are coming!

Economic Journal - Thursday, 7/16/2015

(as of 7:05 AM PST)

It's smooth sailing at the start with most news and economic indicators pointing up.  Europe's Greek dilemma seems on the mend, although there is still much negotiating and number crunching yet to come.  China's Shanghai market is stabilizing with more stocks opening up for trade.  Jobless claims continue to show an improved economic environment.  And earning reports continue to come in above expectations.  Fed Chairwoman Janet Yellen painted a rosy economic future in her testimony to Congress yesterday, reiterating the coming interest rate hikes later in the year.  Homebuilder confidence is soaring.  One of very few negative points was the Philly Fed Index, a key measure of economic activity in the Northeast, and it fell and was well below expectations.  A single reading on the Philly Fed, however, is not likely to have a chilling effect on investors.  Geopolitical news also points up with the potential of Iran reentering the global economic community with much pent up consumer demand.  Things are looking as good as they have in some time and barring any negative surprises on the earnings or geopolitical front it looks like a very positive day shaping up.  Oil prices are flat, but the addition of Iranian oil to the supply inventory might  result in downward pressure over the long term.  Gold struggles as a surging dollar and a 'risk on' approach creates headwinds. 

Economic Journal - Wednesday, 7/15/2015

(As of 7:10 am PST)

Stocks opened flat Wednesday but are looking to keep their winning streak alive, with a 5^th consecutive session of gains on the line. Investors began the session on a cautious note after comments made from Federal Reserve Chairwoman Janet Yellen seemed to reiterate that the Fed will likely raise interest rates in 2015. Yellen, in her semiannual testimony before Congress this morning offered an upbeat view on the US economy highlighting a pickup in consumer spending and an improving labor market as evidence of the economy’s growth prospects. Yellen also commented on Greece, indicating the Fed has been considering Greece’s debt dilemma in its decision around the timing of a rate hike, but pointed to Greece’s recent resolution as a good sign that the Fed will push forward as planned. Economic data is also keeping investors busy today. U.S. producer prices rose 0.4% in June, better than expected, and pointing to a pickup in inflation. Manufacturing activity, as measured by the Empire State index, picked up in July recovering from a contraction in June. Industrial production picked up in June as did capacity utilization. In earnings related news, shares of Bank of America rose in the pre-market after the bank reported better than expected Q2 earnings. After the market closes today, reports from Intel and Netflix are due out. European stocks are mostly higher heading into the final hour of trade while Asian stocks finished mixed with China’s market down 3% despite a strong economic growth report. Gold and oil are both down today while interest rates are flat.