Economic Journal - Wednesday, 9/30/2015

(As of 7:15 am PST)

US equities are up to start Wednesday’s session, as investors digested mixed global data on the last day of the third quarter. Despite today’s opening move higher, markets remain on pace to record their worst quarter since 2011. The S&P500 enters today’s session down -2.5% for the week and -8.7% for the quarter. A strong report on Chinese consumer sentiment kicked things into gear early. Despite a fractured stock market, Chinese households are more optimistic than they’ve been in over a year according to the report. The sentiment number sent Asian markets rallying overnight with optimism spilling over into the European and US open. On the home front, economic data is mixed today. According to payroll processor, ADP, the private sector added 200,000 jobs in September, slightly better than expected. Friday’s non-farm payrolls report will give us a better picture of labor market conditions but for now the ADP report is helping to sustain the market’s opening gains. On a more disappointing note, manufacturing activity in the Chicago region fell into contractionary territory in September, as production fell to the lowest level since July 2009. Despite the negative report the markets are holding on to early gains, probably due to technical buying and end of quarter “window-dressing” from mutual fund managers. Gold is down 1% today, while oil prices are up slightly.

Economic Journal - Tuesday, 9/29/2015

(As of 7:15 am PST)

Markets are seesawing around the unchanged line Tuesday, a day after the S&P500 tumbled 2.6% to reach its lowest level since August 24. Global growth concerns sent a wave of selling pressure throughout equity markets Monday with investors caught up in a sea of red to start the week. Asian and European stocks took a beating yesterday, as did US stocks and commodity prices. About the only thing that was up Monday, was volatility, as investors grappled with further weakness in China as well as the issues facing Catalonia’s quest for independence in Spain. Today, markets seem indecisive in their direction (at least in the opening hour of trade). Economic data is light today although a report on US home prices showed prices rose 0.6% in July, in line with expectations. In other news, Goldman Sachs cut its year-end forecast for the S&P500 to 2,000 from 2,100 citing weakness throughout the global economy. Overseas, most Asian indexes finished lower with Japan’s Nikkei notching a 4% decline on the day. European markets are also down for the second consecutive day. Gold and oil prices are up slightly. It’s a tough call on where the market heads from here. With earnings season winding down, there’s not much good news to pull sentiment to the upside until October’s FOMC policy meeting. Expect heightened volatility to stick around until then.

Economic Journal - Monday, 9/28/2015

(as of 6:50 AM PST)

 

Weakness on the international scene is weighing on US equity markets with stocks down moderately to start.  Chinese economic data continues to look anemic with corporate profits in the country falling 8% in the last reporting period.  Europe has its own set of problems with the auto cheating scandal spilling over to Audi.  In addition, Spain is dealing with the restive Catalonia province, where separatists took control of the governing body in local elections.  Catalonia has long had a large and vocal contingent seeking an independent country in a separation from Spain.  That would have a huge effect on the European Union.  Domestic news is light this morning.  Inflation numbers look well under control while consumer spending seems to be picking up.  Merger and acquisition activity is providing some lift to markets, but not enough to overcome the negatives in international news.  Gold and oil are both in decline with the US dollar showing strength as investors seek safety.

Economic Journal - Friday, 9/25/2015

(as of 7:00 AM PST)

A strong profit report from sports giant Nike has juiced the overall market with indexes up over 1% to start the day.  Usually one stock doesn't move a market, yet Nike's better than expected results remind us that perhaps the US and even global economies are not as bad as reflected in the last six weeks of trading. Adding to investor optimism is that 2nd quarter GDP was revised to an impressive 3.9% rate of growth, higher than projected estimates.  Some of the shift from the negative momentum to the positive might be that Federal Chair Janet Yellen clarified her stance on raising interest rates later in the year.  She is definitely in the camp that sees a strong economy that warrants a small increase later this year.  That provides relief to investors and analysts in that it removes the muddled uncertainty that came with last week's Federal Reserve decision to leave rates unchanged.  It would seem that this rally is the opening to what might be a resurgence of bull market enthusiasm.  Oil is steady while gold is giving back some of yesterday's impressive gain.  Interest rates are moving up based on Yellen comments.

Economic Journal - Thursday, 9/24/2015

(As of 7:20 am PST)

US stocks opened to the downside Thursday with investor nerves on edge as disappointing data continued to trickle in furthering concerns around global economic growth. News that central banks in Norway and Taiwan surprisingly cut their key interest rates broke early Thursday and sent caution throughout the global equity markets. A less than stellar durable goods report added to the negative sentiment early, as orders fell 2.0% in August, the first decline in 3 months. Softening business investment and a slowdown in orders for autos, airplanes and machinery dragged on the report. In corporate news, Dow component Caterpillar Inc. announced that they would cut 10,000 jobs by the end of 2018 as a part of a corporate restructure. The mining and construction equipment maker, often viewed as a bellwether for global growth, also lowered its sales outlook for 2015 and 2016. Caterpillar’s announcement caused losses to accelerate in the first hour of trading. In overseas action, Asian markets finished mixed while European stocks traded firmly lower as markets continued to deal with the scandal involving Volkswagen and perhaps now other auto makers. Markets are also gearing up for a speech from Federal Reserve Chairwoman Janet Yellen later today as she speaks at a conference at UMass–Amherst on monetary policy. It is not expected for Yellen to provide clues on the Fed’s rate hike plan, however as usual her speech will be highly scrutinized and potentially market moving. Gold is seeing some safe haven buying today as is the 10 yr. treasury as yields fell to 2.09%.