Economic Journal - Monday, 6/30/2014

(as of 7:00 AM PST)

It is expected to be a very quiet week with many traders on vacation through the July 4^th holiday.  It will be a short week with reduced hours on Thursday and the market closed on Friday.  There is not much economic data except for Thursday when several important reports will be revealed.  Today’s key report, the Chicago PMI, a measure of industrial activity in the Midwest came in at a healthy reading of 62, slightly below analyst expectations but strong enough to allow markets to recover from a mildly negative opening.  Don’t expect much in the way of momentum shifts or dramatic trading days since many key traders are out of the office.  Oil and gold are also down a small amount.

Economic Journal - Friday, 6/27/2014

(As of 7:15 am PST)

Stocks are edging lower at the open with the major indexes on pace to finish with modest weekly losses.  The economic data calendar is light today.  A report out of the University of Michigan and Thomson Reuters showed consumer sentiment rising to a final reading of 82.5 in June from 81.9 in May.  Consumer sentiment was higher than expected but not enough to nudge markets into the green.  In earnings related news, shares of Nike rose after the Beaverton, OR apparel and shoe maker announced stronger than expected earnings after the bell yesterday.  Across other markets, Asian equities finished mostly lower, while Europe was mixed.  Gold and oil are slightly higher and interest rates are down with the 10 yr. treasury yield trading at 2.51%.  It was a lackluster week for markets as investor nerves over international tensions and Fed policy speculation led them to take profits.  We’re keeping our eye on the volatility index (also known as the fear gauge) as we head into the doldrums of summer.

Economic Journal - Thursday, 6/26/2014

(As of 7:15 am PST)

US stocks opened lower as investors sifted through mostly in-line data to start the session.  Jobless claims fell slightly last week to 312,000, in line with expectations.  Personal income inched up as did overall personal spending.  An important report on inflation, known as the PCE index, rose in May to its highest 12 month rate since October 2012.  The PCE index (personal consumption expenditure) is closely watched by the Federal Reserve as an inflation indicator.  The acceleration over the past several months indicates inflationary pressure is building.  Stock prices were pressured at the open and are further deteriorating after remarks from St. Louis Fed President Bullard suggesting that he anticipates the first rate hike to come at the end of Q1 2015.  Markets sold off on the comments as most analysts are pegging the Fed to raise rates in mid-2015.  In any case, with rising inflation pressure and easy money policies winding down, a Fed rate hike is imminent.  European markets are following Wall St. lower while Asian markets finished the session in the green.  Gold and oil are down as are interest rates.  It looks like another disappointing day for markets is shaping up.

Economic Journal - Wednesday, 6/25/2014

(as of 7:30 AM PST)

Positive economic data yesterday did not help as markets suffered a moderate decline.  This morning’s data has been pretty ugly, but investors are ignoring it and pushing stocks higher.  First quarter GDP was revised downward to a minus 2.9%, the largest quarterly decline in years.  Most analysts see this as a one-time anomaly and markets have already shrugged off the number.  Durable goods orders came in on the negative as well, down 1%.  Much of it was due to reduced defense spending and some internal positive numbers gave investors an optimistic bent on the overall reading.  Expect markets to continue to struggle.  With stocks near record levels there is a sense that investors are weary and that any negative news might spur a bout of profit taking.  Oil and gold are down a small amount and interest rates stable.

Economic Journal - Tuesday, 6/24/2014

(As of 7:15 am PST)

 

Mixed housing data has stocks opening near the unchanged line for the second straight day.  According to the closely followed S&P/Case-Shiller index, home prices rose in April but the pace of growth was the slowest in more than a year.  Expanding inventories and dropping affordability are putting the brakes on price appreciation, which may in turn encourage more buyers to enter the market.  Another housing report showed sales of new homes rose in May at the fastest rate in six years.  A huge surge in the Northeast region of the US led the increase.  Just hitting the wires at 7 am PST was a report on consumer confidence which showed confidence rising in May to the highest level since January 2008.  Stocks saw a brief bounce from the consumer confidence report but are mostly etching slight gains in the first hour of the session.  Gold and oil are flat while interest rates are down slightly. International tensions are keeping a lid on gains and providing investors a good excuse to take some profits. 

Economic Journal - Monday, 6/23/2014

(as of 7:30 AM PST)

Data is good this morning but sparse.  Flash PMI, a quick measure of industrial activity was good in both China and the US, but fell short in Europe.  Housing sales were up from a weak reading last month but the number was uninspiring.  There is some merger and acquisition activity but not enough to move markets upward.  Stocks are struggling in early trade with small losses.  Gold and oil started the day slightly to the downside after last week’s nice rally.  International tensions continue on a high plateau, but investors are ignoring worrisome newsfeeds.  Expect a quiet day with some profit taking after June’s strong rally.

Economic Journal - Friday, 6/20/2014

(as of 7:15 AM PST)

Stocks are up slightly in what has started as a calm day but may well become more volatile as trading continues.  Today is a quadruple witching day, when a series of equity options and futures all expire on the same day.  It can be volatile because large volumes of certain issues may be in play to settle existing options contracts.  International tensions are high but not affecting markets today.  There was some profit taking early for gold and oil after yesterday’s gains, but both are now slightly positive at last glance.  Economic data is light today.

Economic Journal - Thursday, 6/19/2014

(As of 7:15 am PST)

 

US stocks opened near the unchanged line after an impressive late day rally yesterday which saw the S&P500 reach its 20^th record close of the year.  Stocks soared late in the session yesterday after comments from Fed Chairwoman Janet Yellen indicated the Fed is in no hurry to raise short term interest rates.  In a press conference which concluded a two day FOMC policy meeting, the Fed Chair signaled the central bank was confident it could hold rates low for a considerable length of time after the wind down of its asset purchase program.  The market soared on the comments as many analysts had been calling for the Fed to consider a rate hike as near term as this fall.  Despite the Fed trimming another $10 billion per month in bond purchases, and lowering its 2014 growth forecast for the US, investors applauded the upbeat comments on rates and sent stocks soaring at the close.  Markets are taking a breather at today’s open.  A report on jobless claims showed claims dropping by 6,000 last week, as expected.  The Philly Fed manufacturing index climbed in June to its highest level since last September.  Gold is trading up nearly 1.5% while oil is trading back below $106 per barrel.  International markets are decidedly higher as well. 

Economic Journal - Wednesday, 6/18/2014

(As of 7:20 am PST)

US stocks have stalled out after three straight days of modest gains as investors await this afternoon’s press briefing from Fed chairwoman, Janet Yellen.  The Federal Open Markets Committee (FOMC) began its second day of meetings today and is expected to release a statement at 2 pm EST this afternoon.  Most investors are in agreement that the Fed will announce a further reduction of its monthly bond buying program, likely to the tune of $10 billion per month.  What investors will be looking for, however, are any comments from Yellen that would indicate the Fed’s move to raise interest rates in the near term.  Recent data, such as lower unemployment and steadily rising inflation, support the rate hike coming sooner than later.  In corporate news, Amazon chief Jeff Bezos is expected to showcase the company’s much anticipated smartphone at an event in Seattle today.  International markets are mixed with Asia mostly lower and Europe etching higher.  Gold is lower and oil is on the rise as the conflict in Iraq threatens supplies. 

Economic Journal - Tuesday, 6/17/2014

(As of 7:30 am PST)

Stocks opened lower Tuesday as investors reacted to disappointing economic data.  Two separate reports on housing, building permits and housing starts, surprised investors.  Both reports came in lower than expected - a sign that the housing recovery may be losing steam.  Also, a report on inflation showed the consumer price index rose a seasonally adjusted 0.4% in May, its highest since 2012.  Investors immediately reacted to the data by pushing stocks lower, but since the open stocks have come back to trade slightly in the green.  Today kicks off the Federal Reserve’s two-day policy setting meeting which will conclude tomorrow afternoon.  Investors will be looking for communication around the Fed’s plan for a future rate hike and with today’s inflation data, there’s thought that the Fed may move sooner than expected.  In international markets, Asia finished mixed while European markets are following Wall St. higher at the close.  Gold and oil are taking a breather after rallying the past week on worries over the Iraqi conflict.  Tensions in the Middle East remain the chief concern for capital markets around the world and will likely dominate headlines for the next several weeks.