Economic Journal - Friday, 1/29/2016

(as of 6:45 AM PST)

 

It looks like a nice ending to a forgettable trading month.  The bank of Japan shook up the economic world last night with a daring experiment in fiscal policy.  Japan lowered their central bank interest rate form zero to .1%.  One could infer from the move that it's now a better deal to put your Yen in a mattress rather than with the bank of Japan.  It is a desperate attempt by Japan to pull out of an economic malaise that has gone on for years.  Whether a good thing or a bad one in the long run, it seems to offer the promise of more global economic stimulus, which is always a welcome sign for investors.  As a result, the dollar is soaring along with global stock markets.  Oil is actually on the upswing as well, which has been a real positive for US stocks recently.  US corporate earnings are showing signs of weakness with Amazon reporting a big miss yesterday and retail giant Macys lowering profit guidance.  Precious metals prices are holding up, despite the very strong advance in the dollar against more other currencies.  The month of January has proven to be the worst in history, in terms of markets performance, but there does seem to be light at the end of the tunnel. 

Economic Journal - Thursday, 1/28/2016

(as of 7:20 am PST)

As oil goes, so goes the market…well, except for yesterday. The culprit for this change in a trend that has been going on for several weeks now was a report from the Federal Reserve following their meeting yesterday. Oil rebounded for the first time in several sessions with the markets following suit in early trading. The divergence between oil and stocks occurred yesterday afternoon after the release of the Fed’s latest rate decision, which darkened the mood and brought both the Dow and S&P500 down over 1%. So what did the Fed say to have such an immediate impact on investor sentiment? Essentially they weren’t as dovish as analysts would have liked, leaving the door open for a March rate increase while still using language that suggested they were cautious because of slow economic growth and increased global market turmoil. This hint of uncertainty sent markets downward in the late afternoon. Today however, we are back on the “follow the path of oil” trend. In early trading, all of the major indices are trading up as oil is up to $34 per barrel in response to news that Russia and OPEC may cut output. Positive earnings reports are boosting investor sentiment also today with Facebook leading the charge on strong results. It’s already been a busy day of economic reporting news with the December Durable Goods Orders reporting a decline of over 5%. Order declines were seen in just about every area but overall this report hasn’t diverted the markets attention from the positive movement in oil.

Economic Journal - Wednesday, 1/27/2016

(as of 7:00 AM PST)

 

It is surprising that US markets are holding up as well as they are given current events.  Market heavyweights Apple and Boeing disappointed investors with weak sales and profit projections for 2016.  Despite strong profit reports, above analyst expectations, sagging sales of iPhones and wide-body jets will make this year challenging for these two stellar companies.  Oil is on the way back down to $30 p/barrel, after a nice run-up over the last few sessions.  Excess inventories and anticipation of new oil entering markets from Iran might continue to plague oil prices.  For the most part, both Europe and Asia followed US stocks higher from yesterday's nice rally, but it could be a difficult day today on US markets.  The Federal Reserve Committee (FOMC) wraps up their meeting this afternoon, and it will be interesting to see if recent disruptions in global markets will force them to reevaluate their current strategy of increasing interest rates this year.  Precious metals are giving back some gains today after a nice start to the year.

Economic Journal - Tuesday, 1/26/2016

(As of 7:10 am PST)

US stock futures see-sawed premarket with momentum eventually swinging to the upside after a dramatic swing in oil prices overnight. Crude oil, which was on the decline earlier this morning is now trading slightly above $30 per barrel after reports that OPEC and non-OPEC members were considering production cuts to shore up supply issues and hopefully bring stabilization to prices. The turnaround in oil early this morning helped US stocks avoid facing sharp declines at the open as investors traded down an ugly close for Asian markets. The Chinese Shanghai composite index suffered its worst one day loss since the government removed its circuit breaker mechanism earlier this year. The Shanghai index was down 6.4% on the day. Economic data has been light today but mostly positive helping to sustain early gains. The November reading of the S&P/Case-Shiller home price index showed prices rising at their fastest pace in 16 months. Additionally, a report on consumer confidence in January beat expectations. Upbeat earnings reports are adding to today’s early upside bias. Reports form Proctor & Gamble, Johnson & Johnson, 3M, DuPont and Sprint all topped analysts’ expectations.  Apple Inc. will be under the spotlight later this afternoon as the iPhone maker gets set to report quarterly earnings after the bell today. Lastly, today begins the first day of the FOMC’s two day policy setting meeting with a statement due out Wednesday afternoon. Expect volatility to remain high throughout the week on the regular concerns over oil, China and central bank maneuvering. 

Economic Journal - Monday, 1/25/2016

(As of 7:15 AM, PST)

It’s a cold morning on Wall Street both outside in the snow storm aftermath and inside as investors have kicked off the week with a chilly start. After ending last week with the first positive weekly gains of 2016, the markets have opened down this morning with the culprit again being oil. Oil surged 9% on Friday and took the markets soaring higher with it. The familiar story of excess supply and weak demand have brought oil back to earth this morning as it is down over 3% in early trading. There will be a lot for investors to digest this week other than oil with earnings season kicking into full gear, a Federal Reserve meeting and a full slate of important economic data. Over 130 companies report Q4 earnings this week with Apple, Amazon, Boeing, Ford and Johnson & Johnson leading the way. The FOMC meeting begins Tuesday and could offer hints about the central bank’s outlook on the global economy. Economic data due out this week includes unemployment data and a reading of Q4 gross domestic product. With oil being the major market mover the past few weeks, maybe a busy week of news and economic reports can distract investors from the oil woes.

Economic Journal - Friday, 1/22/2016

(As of 7:25 AM, PST)

 

Stocks have opened the day with some welcomed gains putting US indexes on track to finish with the first positive week in nearly four weeks. Driving the upward movement today is a jump in oil prices which is moving the energy sector into positive territory. There doesn’t seem to be any specific news out there that’s pushing oil higher other than investors looking for bargains and news of stimulus measures by major central banks. There has been some speculation that the big snow storm making its way up the east coast may be another factor. Markets in Europe and Asian were all up overnight amid news from the European Central Bank and the Bank of Japan of stimulus in the near future. On the earnings front, American Express, General Electric and Starbucks all beat analysts’ expectations, but they were all trading lower in pre-market action with speculation that there are valuation and growth concerns. All in all, the landscape of economic news doesn’t seem to point toward what we are seeing this morning. Some experts are saying that what we are seeing is a bounce from short-term oversold conditions. Regardless, it’s nice to see some green on the board for a change.