Economic Journal - Monday, 12/31/2012

(As of 7:00 am PST)

 

Last minute negotiations are underway to avert the fiscal cliff.  The debt ceiling limit is about to be hit as well, and any negotiated settlement will need to include a debt ceiling extension.  Markets are optimistic, but tentative.  Gold is up slightly while oil is down.  Interest rates are lower.  Best guess is that there will be a negotiated structure of an agreement by year end, but it will wait for the new Congress to pass the deal, making it retroactive to January 1, 2013.  Today's market will be up and down based on current rumors with increased volatility.  

Economic Journal - Friday, 12/28/2012

(As of 7:07 am PST)

 

Markets are down but surprisingly stable in light of last ditch cliff negotiations.  Gold is off slightly, while oil is slightly up.  The US dollar is close to unchanged on currency markets.  International news is skewed to the positive.  Interest rates are stable.  If President Obama and Congress are able to put a patchwork partial deal together prior to Tuesday, there is likely to be an initial surge in the market, but the jumbled uncertainty could make for a rough start to the New Year.  The dysfunction of our political makeup is showing up big time as the country and the world watch with fascination and alarm.

Economic Journal - Thursday, 12/27/2012

(As of 7:20 am PST)

 

Stocks are seesawing this morning in the final hours of the fiscal cliff debate.  The market opened with a brief drift up as investors remained confident that the President’s shortened vacation signaled a fiscal cliff deal would be reached.  Negative sentiment returned shortly after the open as economic reports showed consumer confidence dropping in December to the lowest level in 4 months.  Senate majority leader Harry Reid is currently addressing members of the senate on budget negotiations, asking House Speaker Boehner to call his members home from vacation to get a deal done.  With the limit of the $16.4 trillion debt ceiling set to be reached on December 31^st, along with the automatic tax hikes and spending cuts set to occur on January 1^st, you could cut the tension on Capitol Hill with a knife.  Gold and oil are turning lower today, while interest rates are up slightly.  Volatility, which started the day down, has reversed course.  Negative momentum is taking hold with all three indices shedding .75%.  It’s going to be a closely watched next 48 hours.

Economic Journal - Wednesday, 12/26/2012

as of 7:00 AM, PST

December 26, 2012

Hope springs eternal!  Investors move the market forward hoping that President Obama’s shortened vacation means that there is hope for a ‘cliff’ solution prior to year end.  Oil is up sharply and gold is up moderately, with most other commodities mixed.  Short term interest rates have ticked up slightly, while the dollar is generally down against other currencies after the US was put on a negative credit watch.  Retail sales for the Christmas season were disappointing.  Expect a sharp rise in volatility as the week moves on.  

Economic Journal, Monday, 12/24/2012

December 24, 2012

(7:30 AM, PST) Stocks are drifting lower in very quiet trading on a holiday shortened market session. Gold is up slightly while other commodities, including oil, are slightly off.  Interest rates are up a small amount.  I don’t expect much firm direction one way or the other because most traders are taking the day off.  The ‘cliff’ draws perilously near and news out of Washington is likely to dominate market direction for the remainder of the week.  Have a very Merry Christmas!

 

Economic Journal - Friday, 12/21/2012

(As of 7:14 am pacific)

 

House Speaker Boehner could not put together the votes to pass what is termed ‘Plan B’. Fellow Republicans are rebelling, just as they did last year with the budget deficit extension bill.  The fiscal cliff is a near done deal and complacency may well give way to panic over the next few trading days.  Oil is down, while the dollar and gold are up with safe haven buying being in vogue today.  Today’s quadruple witching scenario may add severe volatility to markets.  The ‘witching’ term means the day when options and futures contracts all expire at the same time.  Downward pressure on markets should increase as the day wears on and investors head for the exits before the weekend.  It could be a very rocky road for the next few days.

Economic Journal - Thursday, 12/20/2012

(As of 7:20 am pacific)

 

Stocks are mixed this morning following yesterday afternoons selloff as fiscal cliff discussions have moved back in to a stalemate.  A bill, known as Boehner’s “Plan B” will go to the House for a vote today.  Even if it were to pass both the House and the Senate (which it almost certainly will not), President Obama has already said he would veto it.   After negotiations appeared to be making progress earlier in the week, congressional leaders dug in once again yesterday, with Republicans calling for more cuts and Democrats more revenues.  Despite the cloud of the fiscal cliff looming over the markets, some strong economic data continue to show signs of improvement.  Existing home sales rose to the highest rate since November 2009 this month, and the final reading of Q3 GDP showed the US economy growing at a 3.1% annualized rate.  US budget negotiations are the focus for all international markets.  Europe and Asia are mostly lower.  Gold is down 1% today and oil is also down.  After spiking yesterday, volatility is under control today.  Volume will likely slow down tomorrow as traders head in to the long holiday weekend.  However, as long as uncertainty remains over the fiscal cliff, expect the final week of the year to be a bumpy one.

Economic Journal - Wednesday, 12/19/2012

(As of 7:05 am pacific)

 

The market looks a little weary after surging over the last week.  Optimism continues as talks in Washington, DC appear headed in a direction that will avert the full effect of the fiscal cliff.  Gold continues its descent while oil continues to rally.  The dollar is generally down against other global currencies.  Oracle announced earnings that beat expectations giving the technology sector a boost.  Look for some profit taking today.  Interest rates have shown a slight increase over the last few days.  There is a lull in the action as markets look for more progress in tax and budget negotiations.

Economic Journal - Tuesday, 12/18/2012

(As of 7:13 am pacific)

 

Stocks are building on yesterday’s gains as Congress and the White House are finally showing signs of compromise on a fiscal cliff deal.  Last night President Obama and Democratic leaders proposed a plan that would allow Bush-era tax cuts to expire for those making over $400,000 per year, lifting their limit from the previously proposed $250,000.  They also extended a proposal that would result in $1.2 trillion in spending cuts.  The offer was a counter to recent moves by House speaker Boehner who proposed tax hikes on those making over $1 million.  Negotiations still have a long way to go, however moves in recent days suggest lawmakers are willing to compromise and likely come to an agreement before year end.  After a positive day yesterday that saw the S&P rise 1.2%, the markets remain cautiously optimistic.  International markets are mostly higher on positive US budget talks.  Gold is a touch lower and oil slightly higher while interest rates also bumped up slightly.  House speaker Boehner is expected to hold a press conference this morning which could potentially set the tone for the day.

Economic Journal - Monday, 12/17/2012

(As of 6:45 am pacific)

 

Financial matters take a back seat as the nation grieves for our tragic loss on Friday.  May our prayers and thoughts be for the victims and their families today. 

Economic Journal - Friday, 12/14/2012

(As of 7:19 am pacific)

 

All eyes are on Washington as markets disregard positive economic news from China and continuing good news on the domestic front.  US Industrial output is up and inflation seems well under control, giving the Fed more room for economic stimulus programs.  Apple computer is a big drag on markets as it continues to fall heavily.  Oil and gold are up slightly as are most commodities while the US Dollar is falling.  All US markets are slightly to the downside, but mostly unchanged.  There is a sense that the market wants to explode to the upside and may well do so if an agreement on the fiscal cliff is announced.

Economic Journal - Thursday, 12/13/2012

(As of 7:15 am pacific)

 

Markets are flat this morning while slightly positive economic reports weren’t enough to lift stocks.  Consumers spent more in November with retail sales edging up 0.3% after falling in October.  Energy prices meanwhile fell 4.6% in November – the biggest 1 month decline since March 2009.  Lower gas prices mean more dollars in the pockets of consumers and thus a good thing for the economy.  In other economic news, jobless claims fell last week to the second lowest level of the year.  Yesterday was an historic day as the Federal Reserve announced new targets regarding its interest rate policies.  The Fed announced it will keep interest rates near zero until the unemployment rate hits 6.5%, so long as inflation does not exceed 2.5%.  It showed the Fed is willing to continue accommodative policies as long as needed.  International markets are mixed today.  Commodity prices are lower with gold down 1.3% and oil off 0.5%.  Interest rates are slightly lower and volatility is slightly down.  Politicians remarked yesterday that they will work through Christmas to get a fiscal cliff deal on the table.  Until then, markets remain complacent.

Economic Journal - Wednesday, 12/12/2012

(As of 7:20 am pacific)

 

The days are dwindling in December as the fiscal cliff draws closer.  There is optimism both domestically and internationally that a deal will be reached before January 1.  Today’s activity show oil and gold with solid gains, interest rates ticking up and markets positive, but close to unchanged.  The Federal Reserve Bank is meeting and is likely to add to current stimulus programs.  Asia has been showing good positive momentum over the last few days and news is fairly mundane in Europe, slightly bent to the positive.  Expect volatility to increase and momentum to rapidly shift to the negative if solid progress on the fiscal cliff is not forthcoming by weeks end.  Complacency reigns despite the serious challenges ahead.

Economic Journal - Tuesday, 12/11/2012

(As of 7:20 am pacific)

 

The markets are drifting higher this morning as positive progress is seen in US budget talks.  The Wall Street Journal and other reports signaled that negotiations between Congress and the White House to avoid the fiscal cliff had made steady progress in recent days.  Attention also turned to Ben Bernanke and the Federal Reserve as a two-day policy meeting kicks off today.  The Fed is expected to announce plans for a fresh round of monthly treasury buying of $45 billion at the first of the year.  The new asset purchase program would begin just after the expiration of Operation Twist, the Fed’s program of artificially lowering interest rates.  Investors mostly shrugged off economic reports that showed the US trade deficit widened in Oct. as imports and exports both dropped.  European markets were higher on optimism over the fiscal cliff progress and a surprise reading out of Germany that showed investor sentiment rising.  Asian markets also saw broad gains after US stocks rose Monday.  Oil is higher but gold prices lower today.  Interest rates saw a brief jump and volatility is lower.  Today is shaping up to be a positive day as the rumors on fiscal cliff progress is bringing a jolt of confidence to the market.

Economic Journal - Monday, 12/10/2012

(As of 7:10 am pacific)

 

Stocks are mixed this morning with similar trading patterns to last week.  Shares of Apple continue their downward slide, holding back the tech heavy Nasdaq.  There are no economic reports on tap today, and all eyes remain on the fiscal cliff.  President Obama and House speaker John Boehner reportedly met in the White House yesterday, but a lack of information from the meeting have kept investors complacent.  European stocks are taking a beating as Italian Prime Minister Mario Monti announced he would step down effectively after Italy’s 2013 budget is approved.  The resignation sent jitters throughout the European markets.  Asian stocks were higher after a weekend of positive data out of China.  Chinese industrial output climbed 10.1% and retail sales were up 14.9%.  Trade data today showed Chinese exports slowed considerably in November as its two major buyers, the US and Europe, continued to struggle.  Oil and gold are higher and the US dollar is mixed.  The focus for the week will be on the fiscal cliff and an important two-day Fed policy meeting that kicks off tomorrow.  Expect much of the same as last week until a fiscal cliff resolution begins to form.

Economic Journal - Friday, 12/7/2012

(As of 7:20 am pacific)

 

Stocks are trying to breakout a rally on strong jobs data, but consumer sentiment and worries over the fiscal cliff are holding markets back. The US Labor Department reported that the private sector added 146,000 jobs in November, much higher than analysts expected. The unemployment rate fell in November to 7.7% from 7.8%, mostly due to 350,000 people dropping out of the labor force.   October and September jobs numbers were downwardly revised.  A preliminary reading of US consumer sentiment fell in December, likely due to fears over the fiscal cliff and higher taxes at the beginning of the year.  In Europe, markets were lower to start as the German central bank cut its 2013 GDP forecast from 1.6% growth to 0.4%.  Stocks bounced back later in the day after the US jobs data came in.  The big story out of Asia was of the 7.3 magnitude earthquake that hit just off the Northeast coast of Japan.  It struck just after the markets closed, having little impact on stocks and at this point there are no reports of casualty or damage.  Commodities are higher today with oil and gold edging up, while the dollar is also up.  Interest rates are higher and 30 yr. mortgage rates are lower as a result of Fed buying.  Volatility is down today.  It looks like a push and pull day as investors weigh the jobs report against the fiscal cliff drama.  

Economic Journal - Thursday, 12/6/2012

(As of 7:15 am pacific)

 

The markets are lacking direction this morning as investors remain worried over the fiscal cliff.  Some sharp comments yesterday from House republicans and the administration showed both sides are far from an agreement that would avert the automatic tax increases and spending cuts set to occur on January 1^st.  Thus, the “wait-and-see” mindset prevails in the markets.  On a positive note, jobless claims fell 25,000 last week.  After rising by 90,000 after Hurricane Sandy put people out of work, we are back down to pre-storm levels.  In corporate news, shares of Apple continue to get pummeled, down .5% today after falling over 6% yesterday, the worst 1 day drop since 2008 for the world’s largest company.  Most European markets are higher after the European Central Bank left its key interest rates unchanged and at historic lows.  However, the central bank is not expected to implement any new policy changes before the end of the year.  Asian stocks were mixed with Japan leading the way as political reports show the opposition party favored to win the upcoming election.  The Liberal Democratic Party favors more accommodative money policies, which the markets have come to love.  Oil is down 1% today, while gold is slightly higher.  The dollar is mixed and interest rates are slightly lower.  Volatility is creeping up since the open and there’s a sense the market wants to give back yesterday’s gains.   

Economic Journal - Wednesday, 12/5/2012

(As of 7:30 am pacific)

 

Headlines are rampant today; Mergers, economic reports, massive layoffs at a big bank, international optimism.  The bottom line is a mixed market.  Apple is down over 3 percent, pulling down the NASDAQ, in what otherwise might be a strong rally.  The Dow is up slightly while the S&P 500 is mixed.  US economic reports were strong with the ISM services index in healthy expansion territory and US productivity up.  These reports are the latest in a series of positive US economic reports that show a recovering economy.  The ‘fiscal cliff’ is the major factor that is keeping markets from breaking strong to the upside.  Oil is down slightly, gold up slightly, while interest rates continue to fall.  Citigroup announced layoffs of over 10,000 employees in a major restructuring.  There was big news in commodities as Freeport McMoran announced the potential acquisition of two rivals.  Expect continuing caution from investors as political talks intensify through the month. 

Economic Journal - Tuesday, 12/4/2012

(As of 7:15 am pacific)

 

With a lack of economic reports and data to sift through investors are zeroing in on fiscal cliff discussions in early trading.  Yesterday, House republicans offered up a plan that included $800 billion in new revenue, nearly half of what the Obama administration is calling for.  The political back and forth seems to be causing a feeling of complacency in the markets.  Commodity prices are noticeably lower today with oil down 1% and gold down over 1.25% on possibly some short selling out of Asia.  Asian markets ended today slightly higher as the Reserve Bank of Australia announced a rate cut to its key interest rate.  European stocks are higher ahead of their close.  Interest rates are lower and volatility is down.  With no economic reports on tap for today, look for market moves to be determined by fiscal cliff rhetoric.

Economic Journal - Monday, 12/3/2012

(As of 7:10 am pacific)

 

December opened with positive news on the international front.  Strong economic data from Asia and positive news from Europe spurred an early morning rally.  Strong rhetoric from dueling political parties is being downplayed relating to fiscal cliff talks.  The likelihood of a solution prior to year end is becoming widely accepted.  Complacency abounds.  Oil and gold are up moderately as are most commodities.  The dollar is down across the board.  Upbeat economic data both in the US and Internationally over the last few weeks have created a very solid base of positive momentum.  It should be a good day for markets. 

Economic Journal - Friday, 11/30/2012

(As of 7:15 am pacific)

 

It is quiet in most markets today.  It is a bit of a surprise because political sniping is making the dive over the ‘fiscal cliff’ seem more likely.  It is possible that negative momentum may take hold today, unless there is progress in resolving this uncertainty.  Gold continues its downward plunge as it approaches $1700 p/Oz, while oil is slightly to the upside.  Interest rates are stable.  The trend of positive economic news is continuing as the Chicago PMI, a key measure of industrial activity points to a very slight economic expansion, though slightly below what analysts had predicted.  European news is good as the Greek rescue plan appears on course.

Economic Journal - Thursday, 11/29/2012

(As of 7:10 am pacific)

 

Exuberance was the best word to describe today’s market open.  An upwardly revised GDP figure of 2.7% growth from an initial 2% measure propelled the markets to an extension of yesterday’s rally.  The dollar is down and most commodities are up reflecting renewed optimism, not only for the US, but for the global economy.  Oil is up by over 2% while gold is moderately higher as well.  Interest rates are stable, as government buying seems to be overcoming what would normally be a spike in interest rates resulting from the good news.  Retail sales numbers from major retailers came in well below expectations and that dampened the initial enthusiasm, but Hurricane Sandy is being blamed for that ‘anomaly’, and markets are not reacting as negatively as would be expected with pessimism that should accompany such an economic report.  Positive vibes on ‘fiscal cliff’ talks are also adding a bit of positive momentum.  It looks like a good day for the bulls. 

Economic Journal - Wednesday, 11/28/2012

(As of 7:30 am pacific)

 

Yesterday’s surprise market drop, despite some very positive economic reports, raised red flags that all other news besides a resolution to the fiscal cliff is of little importance to investors.  Today we see a continuation and even acceleration to yesterday’s declines.  Oil and gold are down big as are most commodities and a disturbing ‘risk off’ scenario is taking hold.  The dollar is stronger as investors flock to safety.  Home sales news added fuel to the fire. Recently positive news was dampened by weakening home sales and price declines.  As we approach year end it is getting more apparent that a ‘lame-duck’ Congress may not have the time or the desire to solve the problem before year-end.  It could be a rocky road for the next few weeks.

Economic Journal - Tuesday, 11/27/2012

(As of 7:00 am pacific)

 

Markets opened tentatively this morning.  While the start has been slightly negative, all indications are that a very positive day is shaping up.  News is good out of China and there has been some resolution to the Euro/Greek budget and bailout impasse.  Retail numbers look outstanding, not only from Black Friday, but also Cyber Monday, which saw excellent growth from last year.  The ‘Fiscal Cliff’ is the key factor holding back what seems to be a very anxious anticipatory investor poised to get on the rally bandwagon.  Oil and gold are near unchanged while the Dollar index is mixed.  Durable goods orders appeared flat, but were somewhat positive after stripping out the volatile aircraft and auto sections. Housing prices were slightly higher, but close to unchanged. 

Economic Journal - Monday, 11/26/2012

(As of 7:20 am pacific)

 

Stocks are lower this morning as traders return to their desks and lawmakers return to Washington to tackle the fiscal cliff.  It was a record breaking weekend in terms of retail sales as nearly 247 million Americans shopped in some form over the weekend, whether by foot or online.  Retail sales are estimated at $59 billion, up 13% from the same period last year, in line with expectations.  It was not enough to lift investor confidence however as Greece debt woes and US fiscal issues dominated headlines.  European officials reconvene today in an attempt to release the next tranche of aid payment to Greece.  After failing to come to an agreement last week, pressure is on the group of finance ministers to come up with a plan to debt recovery and sustainability for Greece.  The immediate focus for the week is on the fiscal cliff as lawmakers have just a few short weeks to come up with a resolution to the $600 billion in automatic tax increases and spending cuts set to hit the US economy January 1, 2013.  Several republicans have broken away from a no-tax pledge in recent days, including a Georgia senator over the weekend, signaling a willingness to compromise.  As the weeks wind down in 2012, all eyes will be on Washington and whether or not these comments can be backed up with actions.

Economic Journal - Wednesday, 11/21/2012

(As of 7:25 am pacific)

 

It should be a quiet day with low volume today as many traders exit the market early for Thanksgiving travel.  News was negative out of Japan with a significant drop in exports, but the prospect of more economic stimulus as a result propped up markets.  The European Union is not yet settled on the continuing Greece rescue plan so things are unsettled there.  On the domestic front economic reports are mixed.  Reportedly lower jobless claims should be ignored until the effects of Hurricane Sandy are filtered out.  Leading economic indicators were up slightly at .2%, a meager gain.  The University of Michigan Consumer Sentiment Report was revised lower, but is still surprisingly high given the rhetoric surrounding the ‘fiscal cliff’ that is so widespread.  Oil is rebounding slightly based on continuing mid-East tensions while gold is flat along with most commodities.  The dollar is mixed.  Expect negative momentum to reemerge as hard negotiations on the fiscal cliff take place with each opposing party battling for political gain.  HAPPY THANKSGIVING!

Economic Journal - Tuesday, 11/20/2012

(As of 7:15 am pacific)

 

The market is reversing course after a bit of a relief rally yesterday.  Comments over the weekend by President Obama and congressional leaders were enough to give the market a brief boost, but investors are looking for substantive plans to resolve the issue.  Housing data released today showed that construction on new homes in October rose to the highest rate in more than 4 years.  Housing starts are up 42% from this time last year.  On the other hand, building permits (a sign of future demand), fell 2.7% in October.  Overall, the tone is that the housing market continues to slowly and steadily recover as consumers take better control of their balance sheets.  In company news, shares of Hewlett-Packard are getting crushed today as the company missed earnings and disclosed accounting errors made by a firm it acquired in 2011.  European stocks are mostly down as Moody’s downgraded the credit rating of France one notch late Monday.  Asian markets are slightly lower as well.  It appears yesterday’s rally was short-lived.

Economic Journal - Monday, 11/19/2012

(As of 7:05 am pacific)

 

Risk is on as hopes rise for a solution to the 'fiscal cliff' drama.  Most asset categories are up significantly, including oil and gold.  The stock market opened with gains of nearly 1%.  In company news, Intel announced that its CEO was retiring.  Asia and Europe markets reflect US optimism as well.  It looks like a turnaround for the markets today as positive momentum is picking up.

Economic Journal - Friday, 11/16/2012

(As of 7:15 am pacific)

 

All eyes are on the White House.  Economic reports and earnings announcements take a back seat to the all important meetings being held which include party leaders from the House and Senate, as well as business leaders.  It seems that global growth is contracting as the worries of the US fiscal cliff cross to other borders.  Europe has drifted back into a technical recession by a small margin. Key commodities are close to unchanged.  There is an overwhelming negative sentiment in the markets at this time, and barring a major breakthrough there it is likely to be another negative day on the markets. Tensions in the Middle East compound the economic turmoil.

Economic Journal - Thursday, 11/15/2012

(As of 7:05 am pacific)

 

It's shaping up to be another dismal day for markets. A short opening market bounce quickly faded as data that has been jumbled by hurricane Sandy poured in.  Retail is in the spotlight and it is not good, with Wal-Mart and Ross Stores falling on less than expected profit and growth.  Jobless claims were through the roof, but much of that was attributed to hurricane Sandy.  One can't help but feel however, that investors are getting jittery about the country's selection of President for the next four years, and whether we are in for more of the 'new normal'.  The dollar is mixed, gold is down, and oil is up, in reaction to Middle East tensions.  Europe news is depressing and Asia is abuzz as new leadership takes over in China.  It appears that it will take a solid, positive resolution to the fiscal cliff to turn this ship around.

Economic Journal - Wednesday, 11/14/2012

(As of 7:30 am pacific)

 

Stocks opened higher, propelled by a surprisingly positive report from tech giant Cisco after market close last night.  Cisco rose by 7%, pulling the Nasdaq up in early morning action.  Commodities are generally up, although oil is down slightly.  The US dollar index is down while interest rates have ticked up slightly this morning.  News from Europe is troubling, with strikes against austerity in several countries today.  Continuing uncertainty regarding the fiscal cliff will likely continue the negative momentum of the past few days.  GOP stringent calls against new taxes are wavering as politicians are starting to access the new political landscape.

Economic Journal - Tuesday, 11/13/2012

(As of 7:20 am pacific)

 

Markets are mixed this morning as volume picks up after traders return to their desks from Veteran’s Day holiday.  With no major economic reports due out today, the headlines are still being dominated by fiscal cliff fears.  Positive earnings from several retailers have helped buoy stocks this morning.  Dick’s Sporting Goods, TJ Maxx and Michael Kors all beat earnings and raised their full year guidance.  Home Depot reported positive earnings causing shares to rise 3.7% while Microsoft shares slid 4% after the company announced that the Windows chief is stepping down from the company immediately.  Euro-zone leaders, after approving the next round of aid for Greece last week, are now struggling to agree to the terms of release of the funding causing an unnecessary delay.  Euro-zone debt woes are now leaking in to countries like Germany and France and threatening another recession that could be devastating to the global economy.  Gold is down 0.5% and oil is down 0.6% slipping to $84.99/barrel as the IEA cut its demand outlook for the 4^th quarter.  The dollar is rising and interest rates continue to fall with the 10 yr. treasury back down to 1.58%.  Volatility has been cooling since the open.

Economic Journal - Monday, 11/12/2012

(As of 7:00 am pacific)

 

A 'risk on' scenario?  Not quite?  While most key investment categories are up this morning, it is a tentative bunch, with each hugging the near unchanged line.  News is diverse globally, with concern over Greece coming from Europe, a possible recession poised to grip Japan, and positive numbers out of China.  The US markets will be trying to recover from a drubbing last week.  A bipartisan conference called by President Obama, attended by Senate, House and Business leaders will test how much political flexibility exists to break the deadlock on the fiscal cliff.  Expect negative momentum to prevail until a positive outcome from this conference can break the hold that this fiscal uncertainty presents.

Economic Journal - Friday, 11/9/2012

(As of 7:20 am pacific)

 

The market is struggling to find direction this morning as investors weigh several economic reports with the growing anxiety surrounding the fiscal cliff.  A preliminary reading showed that consumer sentiment jumped to its highest level since July 2007, however the fiscal cliff continued to dominate headlines.  Concerns over the fiscal cliff were highlighted by the Congressional Budget Office yesterday who put out a report showing the impact of automatic tax hikes and spending cuts set to go in to effect on January 1, 2013.  Growth in the US economy would likely decline by 0.5% while unemployment would jump over 9% according to the CBO’s figures.  President Obama is set to address the topic of the fiscal cliff in a conference later this morning where he will likely respond to previous comments made by House speaker John Boehner, as well as provide guidance on Congress’ efforts moving forward on this issue.  European markets are down as growth concerns out of France and a possible delay in bailout funding for Greece sent stocks lower for the 3^rd straight day.  Some surprising reports out of China showed industrial output on the rise and retail sales soaring 14.5% in October.  The reports weren’t enough to lift stocks, however, as markets reflected the worries of Wall St. and what the fiscal cliff might mean for other global economies. 

 

***This issue will continue to dominate headlines for the remainder of the year, and as such, we’d like to direct you to the video we put out on the fiscal cliff back in September.  We did our best to unpack the issues at stake in way that is palatable to the everyday consumer.  Please click on the ‘Video’ tab of this blog and scroll down to our September video on the fiscal cliff.***

Economic Journal - Thursday, 11/8/2012

(As of 7:12 am pacific)

 

Yesterday’s large market losses were blamed on election results, but it was the emergence of the ‘fiscal cliff’ as a major economic obstacle that accelerated those losses as the day wore on.  Boeing announced facilities closures and a layoff of 30% of its executives in its defense segment.  That story brought emphasis to the coming large cuts in the defense budget on Jan 1, 2013.  Today it appears that we are in a recovery mode, but it may also be just a ‘dead cat’ bounce.  As the day wears on we will see if the negative momentum has been broken.  The US dollar is mixed today and most commodities are near the unchanged line including gold and oil.  News was good out of Europe, while Japan reported negative economic data.  US economic data has generally been good indicating a mild economic recovery but not good enough to weather the storm that will be created by falling off the fiscal cliff.

Economic Journal - Wednesday, 11/7/2012

(As of 7:20 am pacific)

 

It’s in the books.  Obama has won a second term.  Senate and House control have remained the same.  The status quo prevails today.  Investors and hedge fund managers have reacted with disappointment this morning, giving back yesterday’s gains.  Gold is up and oil is down, while the dollar rides higher against all other currencies.  Speaker of the House Boehner has thrown down the gauntlet again spouting ‘no new taxes’.  The ‘fiscal cliff’ is getting uncomfortably close and it’s not likely that a lame duck Congress will react with much vigor to change things.  Europe news is slanted to the negative this morning as well. But I believe that this morning’s market drop of triple digits is more related to the election than the fiscal cliff or European activity.  There are still several weeks for the market to absorb and react to the fiscal cliff, and today’s negative reaction to another 4 years for Obama will likely fade as the day wears on and investors replace disappointment with the optimism that comes when we say that it may not be as bad as we think.  There may be trouble ahead but it is not yet firmly in our headlights as we focus on peripheral events.

Economic Journal - Tuesday, 11/6/2012

(As of 7:22 am pacific)

 

Polls are shifting to the Obama side as most are now calling an Obama victory probable.  The clarity provided is boosting stocks even though analysts had suggested that an Obama victory would more likely boost the bond markets.  A Romney victory is more likely to rally stock markets according to analysts, but an Obama victory is likely to see a continuation of the ‘Helicopter Ben’ philosophy, the thought that economic malaise can be turned around by throwing massive amounts of stimulus dollars at the problem.  The dollar is down across the board while most commodities, including oil and gold are up moderately.  Interest rates are stable, while mortgage interest continues at be historically low.  Expect markets to give up gains today and finish close to unchanged.  

 

Economic Journal - Monday, 11/5/2012

(As of 7:00 am pacific)

 

All is quiet as Election Day approaches.  Uncertainty is creating a pause as investors anticipate the coming day’s changes.  Most markets are close to unchanged with the dollar up against most currencies.  It will be hard for the markets to mount much a rally here, so expect a day that reflects the negativity that uncertainty brings.  Expect a mildly down, but listless day that lacks direction.

Economic Journal - Friday, 11/2/2012

(As of 6:45 am pacific)

 

The news is mostly positive this morning and it looks like we will be adding to the gains of yesterday’s rally.  New jobs creation came in better than expected while the employment rate crept up from 7.8 to 7.9%.  This provides fodder for both Presidential candidates as the campaign winds down to next week’s election.  Besides the employment data, there were several positive earnings reports of note yesterday which should add to today’s positive momentum.  Gold is down nearly twenty dollars an ounce, oil is down slightly and interest rates are surging as the different markets react to better than expected news.  The dollar is generally stronger against other global currencies.  There is little investor concern at this point related to the coming election or the looming fiscal cliff.

Economic Journal - Thursday, 11/1/2012

(As of 7:23 am pacific)

 

Stocks are rising this morning on positive US economic data.  Consumer confidence is up and jobless claims are down.  Manufacturing numbers were slightly positive.  Earnings are mixed.  Gold and oil are close to unchanged while the dollar is falling moderately as traders seem ready to embrace more risk.  After one of the worst Octobers for the markets in the last few years, this has the feel of a relief rally in that economic reports are indicating that the economy is not struggling as much as previously thought. Positive economic stimulus from China and a lack of bad news out of Europe is further solidifying this positive momentum.  It looks like a good day for the markets.

Economic Journal - Wednesday, 10/31/2012

(As of 7:25 am pacific)

 

After a two-day trading hiatus due to Hurricane Sandy, and the pent up demand for trading that built during that period, the stock market opened ‘not with a bang, but a whimper’.   Several big companies posted numbers that beat expectations and news from Asia was good, while Europe was benign.  All in all, what had been a nervous anticipation transitioned into dull routine that left markets mixed.  Some notable stories are that GM beat expectations in spite of lower profits and Apple is experiencing continuing growing pains as a purge of senior executives seems to be taking place with Tim Cook firming his grip at the reins of the tech titan.  The tipping point for this market might be next week’s election and the urgent deadlines for action that rapidly follow.  Uncertainty is bad for markets and there is a lot of it baked into the next eight weeks.  Don’t be counting on a Santa Claus rally this year!

Economic Journal - Tuesday, 10/30/2012

(As of 7:25 am pacific)

 

The market is closed for the second consecutive day as Hurricane Sandy devastates lower Manhattan and much of the Eastern seaboard.  It is the first time since 1888 that the stock market has closed for two consecutive days due to weather related issues.  Some experts are estimating damages done by Sandy of over $20 billion.  It is certainly too early to tell, but expect at least some short term tumult in the market before returning to “normal.”  Several companies have postponed earnings this week and the Labor Dept. is expected to postpone their October jobs report, which was due out Friday, until next week.  Meanwhile, one report was released showing that US home prices rose 0.9% in August reaching the highest level since 2010.  European markets are higher this morning on positive earnings and Asian markets are mixed after the Bank of Japan added 11 trillion yen to its stimulus program.  Oil and gold are slightly higher as a result of Sandy.  The exchanges are expected to open tomorrow at least for a short session anyways.  It is the end of the month and the end of the fiscal year for many mutual fund managers, who will likely unload positions as a normal “window-dressing” process at the end of a year.  The return of traders and the uncertainty surrounding the economic impacts of Sandy will likely bring some short term volatility to the markets this week.

Economic Journal - Monday, 10/29/2012

(As of 7:00 am pacific)

 

Equity markets in New York are closed as Hurricane Sandy blasts the city.  Mild economic numbers and weakness in Europe had set the stage for what looked like a negative opening on Wall Street.  Most commodities are near unchanged and the dollar is up against most currencies.  The economic effects of Hurricane Sandy should be significant as insurers batten down the hatches for a tsunami of damage losses.  'The fiscal cliff' should be coming more into play as the election nears and attention is refocused on this serious looming problem.

Economic Journal - Friday, 10/26/2012

(As of 7:05 am pacific)

 

While markets appear to be quiet at the opening this morning, nothing could be further from the truth.  There has been a dramatic reversal overnight from negativity generated by big misses in both Apple and Amazon earnings after the market closed yesterday.  While it appeared that we would be looking at 1% plus losses this morning, a couple of things happened along the way.  The first is that US GDP came in slightly above expectations at 2% growth.  While this is nothing to write home about, it is more of a relief to investors that it was not worse.  The second is that investors chose to ignore the current earnings miss and look into the future of the two huge companies, Amazon and Apple, giving them a 'free pass' on this one occasion.  Bad news had already been priced into both stocks and future projections look pretty rosy.  One can't help but think that this is a continuation of a fairly weak earnings season and that we will see continued deterioration of stock prices as the day progresses with stocks finishing negative to end the week.

Economic Journal - Thursday, 10/25/2012

(As of 7:20 am pacific)

 

Positive news from Asia and Europe is propelling the market forward this morning after a five day streak of losses.  Jobless claims came in lower than expected, but still too high to have an impact on employment numbers.  Good numbers on earnings have temporarily tabled the gloom of earnings season.  Gold is up moderately as are most commodities.  Oil is recovering from a string of down days.  It is a mini 'risk on' scenario, but there remains caution and restraint as there is the feeling that the market might reverse itself and continue its downward trend.  Uncertainty is the rule as of late as the close Presidential election and the looming fiscal cliff have investors on edge.

Economic Journal - Wednesday, 10/24/2012

(As of 7:15 am pacific)

 

After the worst daily decline in months, the market has seen a slight bounce this morning.  Positive earnings from Boeing and Facebook have added some optimism, with Facebook shares up over 20%.   Healthcare giants Eli Lilly and Bristol Meyers Squibb both missed on top line revenues and AT&T reported quarterly earnings that were in line with expectations.  In economic news, new home sales rose in October by 5.7% adding to the recovery effort in the housing market.  The Fed will wrap up a policy meeting this afternoon with investors looking to language on the economy and some outlook for interest rate direction from the Fed.  There have been rumors this week of the Fed upping the size of its QE3 program but it appears those rumors are far too premature.  European markets had a positive day despite some negative economic reports.  A key report in Germany showed that business confidence fell to the lowest level since February 2010 and manufacturing throughout the euro-zone continues to slip.   China reported a similar report which showed their manufacturing activity actually increased in October, hitting a 3 month high and cooling concerns of a Chinese “hard landing.”  Oil is down and gold slightly higher as the US dollar is mixed.  Interest rates are slightly higher.  Volatility is down today after jumping 15% during yesterday’s sell off.  There seems to still be a negative tone on the street over company earnings and the slight bounce we are seeing this morning could just be traders “buying on the dip” of yesterday.  

Economic Journal - Tuesday, 10/23/2012

(As of 7:18 am pacific)

 

It's an ugly opening for the market as corporate earnings were a big disappointment and news from Spain has brought back into play European jitters.  It is a 'risk off' scenario as investors are dumping most investments and moving to a more conservative position.  The US Dollar index is up strongly, while oil, gold and most other commodities are down.  Interest rates are down slightly as investors seek safety in US Treasuries. The Presidential debate, which appeared to be a win for Obama, but not a knockout punch, seems to be having little effect, but uncertainty about the coming 'fiscal cliff' is looming larger.  While corporate earnings generally disappointed, there were some bright spots and I would expect the markets  to adjust from what seems an overreaction, and recover some of its losses.

Economic Journal - Monday, 10/22/2012

(As of 7:05 am pacific)

 

It is very quiet this morning as the market tries to stabilize after Friday's significant market drop.  There is not much in the way of economic data, so it seems that the market direction will go as earnings go today.  Europe is stable, with some evidence of dissention, but nothing of import.  Asian markets were up overnight.  Oil, gold and other commodities are close to unchanged as is the US dollar.  Caterpillar announced a weak projection for the rest of the year, adding negativity to the early going.  Political activity is having an impact as the third and final Presidential debate is on tap and investors contemplate the fiscal cliff that is fast approaching.  It appears that a very quiet day is on tap.

Economic Journal - Friday, 10/19/2012

(As of 7:25 am pacific)

 

A long list of earnings misses has knocked the market down this morning.  The Dow is down near triple digits after names such as Microsoft, Chipotle, E-Trade, GE and others disappointed investors.  News from Europe is mixed and a non-factor thus far, while Asia continues to shine.  Oil is up, while metals are down.  The dollar is generally up today.  Interest rates are slowly creeping up, as generally positive economic reports are adding upward pressure.  Existing home sales came in lower than expected and capped what had been a series of positive real estate reports adding further downward pressure.  It looks like a significantly down day is on tap as earnings and economic data pile on.

Economic Journal - Thursday, 10/18/2012

(As of 7:08 am pacific)

 

Chinese data buoyed Asian markets overnight and spilled over into US markets.  US markets are down slightly based on a jump in jobless claims, but the data from China has limited the losses.  Earnings are coming in better than expected especially in the financial arena, and we are not seeing the dismal 4th quarter projections which were expected to depress the markets during this earnings season.  Stability is the watchword thus far.  In today's market, gold is down along with oil.  The dollar is up slightly against most currencies.  Mortgage rates have risen slightly.  It feels like jobless claims will weigh on markets today and that losses will accelerate to a moderate decline for the day.

Economic Journal - Wednesday, 10/17/2012

(As of 7:15 am pacific)

 

Stocks are fighting for gains this morning after two straight days of 100 pt. gains on the Dow.  Earnings continue to depict market direction with economic data continuing to come in positive.  The tech sector is dragging on markets today as tech giants IBM and Intel reported disappointing earnings after the bell yesterday and Intel lowered its revenue outlook for next quarter.  Shares are down 3-4% this morning.   On a positive note, the housing recovery continues to show signs of strengthening as today the Commerce Dept. reported that new housing starts surged 15% in September while building permits for new construction rose to a 4 yr. high.  You get the sense the market wants to rally on the strong housing numbers, but earnings are holding markets back today.  In Europe, Moody’s held Spain’s credit rating one level above ‘junk’ bond status citing the ECB’s willingness to buy Spanish bonds making the credit supposedly less risky.  This much anticipated news helped lift stocks and confidence in Europe with the euro hitting a 1 month high.  The US dollar is down against most currencies while interest rates are slightly higher.  Gold and oil are both up and the volatility index is down.  It could be a back and forth day as investors weigh the positive housing data with not so positive earnings reports today.

 

Economic Journal - Tuesday, 10/16/2012

(As of 7:10 am pacific)

Positive earnings surprises continue to add to yesterday's market rally.  Banks continue to lead the way as Goldman beat estimates handily due to hefty investment gains.  In other banking news, the head of Citigroup resigned, in a move that surprised Wall Street. International news is quiet.  Gold is up slightly and oil is near unchanged.  The dollar is mostly down against other currencies, while interest rates hold near historic lows.  The Dow could be headed for its second consecutive triple digit gain as enthusiasm for positive earnings surprises build.

Economic Journal - Monday, 10/15/2012

(As of 7:00 am pacific)

 

It is a quiet start to the week.  Markets have eked out a small gain as retail sales came in better than expected and Citibank earnings beat estimates, which had been significantly reduced over the last quarter.  The Empire State Manufacturing Index continued to show contraction, although it was slightly better than last month.  China exports showed a recovery over the weekend, boosting Asia.  Oil is down as is gold, while the US dollar index is close to unchanged.  Mortgage interest rates are falling and are near historic lows.  Expect market action to be driven by earnings and, more importantly, earnings projections for the following quarter.  Expect the market to reverse itself and struggle to finish positive today as earnings outweigh mildly positive data. 

Economic Journal - Friday, 10/12/2012

(As of 7:00 am pacific)

 

News is quiet ahead of a wave of earnings reports.  There was marked relief when JP Morgan Bank announced and beat earnings estimates in spite of a huge trading loss incurred by a rogue trader.  The dollar was down as were most commodities.  Gold is down slightly and oil is up slightly.  Interest rates are stable.  News out of Asia was mixed and Europe had some positive data to report, although nothing has moved the markets much this morning.  It feels like the calm before the storm as an unnatural stillness persists.

Economic Journal - Thursday, 10/11/2012

(As of 7:00 am pacific)

 

Jobless claims dropped to the lowest level in 4 years surprising analysts, while the stock market has taken a ho-hum approach with only a small to moderate gain.  The dollar is down significantly against most currencies while oil and gold are up, along with most other commodities.  It looks like, but doesn’t feel like a ‘risk-on’ scenario.  There is a lot of skepticism among investors waiting for direction from earnings season.  Import prices were up last month.  Mortgage interest rates have ticked slightly high, but are still near historic lows.  PC shipments are down significantly this year as the explosion of Tablet Devices seems to have cut into market share.  From global reaction to US claims numbers, it would seem that the market will cast off its skepticism (at least for today) and move forward with a strong advance.

 

Economic Journal - Wednesday, 10/10/2012

(As of 7:30 am pacific)

 

Alcoa kicked off earnings season last night with a whimper.  In a report convoluted with one time charges, the bottom line on profit beat expectations, but projections, especially due to China growth worries, was anemic and set the stage for a weak opening of markets this morning.  Commodities were mixed with gold and oil trading close to unchanged and the dollar index up slightly.  Mortgage interest rates ticked up a small amount.  It is a quiet morning, with the beige book report likely to provide direction for the markets.  Momentum is negative as pessimism persists in the wake of a flood of earnings reports.

Economic Journal - Tuesday, 10/9/2012

(As of 7:04 am pacific)

 

Investors are jittery this morning over earning season, which kicks off today when Alcoa announces after market close.  European news trickling in also has investors on edge although little of substance is transpiring.  China introduced a new stimulus package which boosted its markets by 2% last night, but other Asian markets lagged, especially Japan.  The dollar index is up while gold is down, oil is higher and other commodities are slightly positive.  Interest rates are stable, although there was a minute rise in mortgage interest rates, the first in several weeks.  Markets started the day down slightly, but very quiet.  I expect improvement as the day wears on and investors become less pessimistic about reduced quarterly earnings.  Expect the next few weeks to be very much driven by corporate earnings and expect earnings to be better than current pessimistic projections.  Markets, on the other hand, will likely react more to 4^th quarter projections than the announced third quarter earnings.