Economic Journal - Thursday, 3/31/2016

(As of 7:10am, PST)

Today marks the end of the month and the first quarter and the markets are on track to close with the first monthly gain since November and the largest gain since October. After one of the worst starts to a year in history, the end of the quarter is looking to be positive for both the Dow and S&P500. Stocks are relatively flat this morning in response to unemployment reports and ahead of tomorrow’s payroll data. Many experts are attributing the turnaround this month to stimulus from the European Central Bank and recent news that the Federal Reserve will not raise rates in April. The reality will set in as we begin the new quarter with earnings reports. The number of Americans that applied for unemployment benefits through the end of March rose more than expected and hit the highest level in two months. Layoffs remain low as companies continue to add new jobs. Investors aren’t reacting too negatively to the report as they wait for the closely watched nonfarm payrolls report to come out tomorrow. Action was mixed around the world overnight with Europe mostly in the red and Asia mixed. Oil is up in early trading.

Economic Journal - Wednesday, 3/30/2016

(As of 7:20am, PST)

A dovish speech by Federal Reserve Chair Janet Yellen revived a relatively flat day of trading yesterday and it looks like her remarks on the state of the economy have provided momentum to keep the buying trend going into today. Stocks have opened mostly higher in early trading with the Dow up 128 points and the S&P500 up 13. Fed Chair Yellen’s comments softened previous public comments made by other Fed voting members who had hinted at a rate increase as early as April. Yellen expanded the committee’s benchmarks beyond a 2% inflation mark and an unemployment rate of below 6.5%  here at home toward looking at concerns of the global economy as part of the equation affecting whether the committee will raise rates or not. Yellen’s comments will be the only market moving news for investors to digest for the next couple of days as the economic calendar is fairly light. The next wave of news will be the non-farm payrolls report on Friday followed by the beginning of the earnings season which will kick into high gear the second full week of April. Both the European and Asian markets were up impressively overnight while the dollar took a hit from Yellen’s comments.

Economic Journal - Tuesday, 3/29/2016

(as of 7:00 AM PST)

The two primary drivers of market direction that we have seen over the last few months are in play again this morning and the results are dull downward drift in most markets.  Oil seems the primary culprit, down nearly three percent on supply glut fears.  Most markets are off about a half percent, with negative momentum continuing to build from yesterday's weak showing.  Fed chair Janet Yellen speaks today and her message looks to be one of continuing US economic recovery with hints that inflation is making a mild comeback.  Both are factors that indicate another rate hike is right around the corner.  In a market that has proven to be driven by financial stimulus, the move downward we are seeing is an obvious result, but it is important to look back at the last rate hike and note that the market protest was short lived, and a rally quickly ensued.  For the moment, however, pessimism seems to be setting in and a day of boring negative drift seems likely.  Asian markets were mostly down overnight, with Japan the lone positive story on a surprise increase in retail sales.  Europe is mostly down, also seeming to anxiously await Janet Yellen's comments.  Precious metals are making a mild comeback and the US dollar is stronger today against most major currencies.

Economic Journal - Monday, 3/28/2016

(As of 7:10 am PST)

Stocks opened higher Monday with the broad indexes looking to get back on pace after ending a five-week winning streak last Thursday. Rising oil prices had equity investors in the buying mood early with oil rising above $40 briefly Monday morning. A report early Monday showed a decline in active US oil rigs which sent oil prices higher to start the week. Gains have slowly dissipated yet hitting the key level of $40 per barrel was enough to kick start some early buying activity. Economic data is keeping investors busy to start the week. A report on inflation showed the PCE index rising just 1% year over year in February, slightly below January’s 1.2% pace. The slowdown in inflation lends itself to a slow path for rate hikes from the Fed in 2016. The Fed has made it clear that it wants to see inflation rise near its 2% target before aggressively moving to raise rates again. Other data this morning showed personal income and spending rising by 0.2% and 0.1% respectively, in line with expectations. A report on pending home sales showed pending sales rose 3.5% in February, much better than expected. The international scene is quiet this morning. European markets are closed Monday in observance of the Easter holiday while Asian markets finished on a mixed note to kick off the week. Gold and precious metals are down today while interest rates and the US dollar are down slightly. After a holiday shortened week last week, expect volume to pick up this week as investors move to take on positions ahead of earnings season which gets under way in less than two weeks.

Economic Journal - Thursday, 3/24/2016

(As of 7:20 am PST)

Falling oil prices are continuing to weigh on stocks early Thursday as the main US benchmarks opened lower for the third consecutive session putting them on track to snap a five-week winning streak. Disappointing economic data added to the gloomy picture Thursday sending investors scurrying to the sidelines ahead of the long Easter holiday weekend. US orders for durable goods fell 2.8% in February following a 4.9% increase in January marking the third decline in four months. The decline was mostly in line with expectations but sparked concern over the impacts that a weak global economy and tumbling oil prices are having on the US manufacturing sector. All major industrial sectors except for automakers showed declines. Core capital goods, which excludes the volatile energy and transportation sectors, declined 1.8% marking the second drop in three months. Other data out today showed jobless claims rose slightly in the prior week. On the global scene, Asian markets finished Thursday’s trading in the red, while European stocks headed toward a negative close as investors remained risk averse after the terror attacks in Brussels earlier this week. Oil prices are down over 2% today sending shares of energy companies tumbling and dragging the broad market lower. Interest rates are down slightly. Expect a quiet afternoon as traders head out for a long holiday weekend. As a reminder, the stock market will be closed tomorrow in observance of Good Friday, but will be open again on Monday.

Economic Journal - Wednesday, 3/23/2016

(As of 7:25am, PST)

U.S. stocks have opened lower today after ending a seven session rally yesterday following the tragic news of yet another terrorist strike in Europe. Investors appear to be cautious following the news from Brussels but the culprit for today’s pullback is once again oil. In the early going, oil is down almost 2% and all of the major indices are following suit. Oil’s drop is being fueled by a report from the American Petroleum Institute report that showed an 8.8 million barrel build in crude inventories stirring up concerns of a supply glut.  On a positive note, the New Home Sales report for February was just released and it contained some signs that there is still life in the housing market. New home sales hit their highest level since December. The median sales price in February was $301,400 which was up 6.2% compared to January. Stocks to keep an eye on today are Nike and Krispy Kreme. Nike is off nearly 5% today after a report yesterday revealed that their revenue fell short of expectations. Krispy Kreme shares were down 9% following a report of weaker-than-expected revenue growth during the holiday quarter. Investors will have a lot to chew on in the coming weeks as earnings season gets underway. The global markets showed some resiliency overnight despite the tragedy in Belgium with Asian and European markets only down modestly. Gold prices are down today as are interest rates.