Economic Journal - Thursday, 7/31/2014

(as of 7:10 AM PST)

There is a 'sell everything' mentality today.  All markets, including gold and oil are experiencing sharp declines.  We call this a 'risk off' scenario.  There are a number of reasons for the selloff.  Some profit reports and revenue warnings have investors very nervous about individual company prospects. There has also been some negative economic data in Europe, which is experiencing a sharp selloff, and in the US as well.  In the US the Chicago PMI plummeted well below analyst expectations.  Although still slightly in an expansion mode there was a significant drop in economic output growth in that region.  Consumer confidence readings are down also.  But I think the Fed is the primary negative driver today.  It is not that the Fed said or did anything bad, but the realization that economic stimulus has a very limited future, and that the Fed will start increasing interest rates in the not too distant future. The deep complacency of investors is very troubling.  The trading pattern on negative days has been that the markets recover as the day progresses.  It is important to know that it is not always the case and investors could be in for a shock if today's negative market accelerates downward.

Economic Journal - Wednesday, 7/30/2014

 (As of 7:20 am PST)

US stocks opened higher today as an optimistic GDP report caught investors by surprise.  The government reported early Wednesday that the economy grew 4% in the second quarter, much faster than expected and recovering from the first quarter’s upwardly revised decline of -2.1%.  The rebound in growth came as good news and supported the notion that Q1’s startling decline was just an outlier due to a harsh winter and the introduction of Obamacare.  Shares of Twitter stole the spotlight in earnings related news after the social media company posted a blowout second quarter after the bell yesterday.  The stock is surging in early action.  Later today investors will be keeping an eye on the Fed’s next policy move.  A policy statement, due out at 2 pm EST, is expected to show the Fed reducing their monthly bond purchases by another $10 billion to $25 billion per month.  Investors will be looking for clues on when the Fed will introduce its first interest-rate hike.  International tensions continue to keep gains at bay as the conflict in Gaza worsened overnight.  New sanctions on Russia are also adding to the economic uncertainty. 

Economic Journal - Tuesday, 7/29/2014

(as of 7:00 AM PST)

Stocks are up this morning.  Lots of profit reports over the last two days.  Much of the news is good and is making for a very solid opening for markets at today's start.  International tensions have dropped off the front page and investors seem complacent on all fronts.  It looks like a good day after yesterday's mixed bag.  Oil continues its downward spiral with a barrel approaching $100.  Gold is off fractionally. 

Economic Journal - Monday, 7/28/2014

(as of 7:15 AM PST) 

It looks like an ugly day is shaping up ahead of a raft of company earnings and economic data due out this week.  Friday's market reversal to the downside appears to be picking up steam despite some positive merger and acquisition news.  It's hard to target one event, but it seems that Amazon's big earnings disappointment was a turning point and now bears are pouncing.  News stories in the financial press indicate that larger investors are taking money out of the market fearing a correction might be looming.  The Nasdaq is down about half a percent, with other indexes down smaller amounts, but the worry is that the downward slide might accelerate.  Company earnings reports and the possibility of more positive economic data might stem the tide.  Gold is up slightly while oil is down close to 1 percent. The US dollar is close to unchanged while interest rates are stable.

Economic Journal - Friday, 7/25/2014

(As of 7:10 am PST)

Stocks opened firmly lower today as disappointing earnings results claimed the headlines.  Despite this morning’s decline, the major benchmarks are on pace for modest weekly gains.  Negative sentiment began yesterday in the after-market when Amazon announced quarterly results that missed expectations. The online retailer posted another huge sales quarter but failed to turn a profit with losses widening more than in the year ago period.  Investors beat down the stock with shares opening at $318, down 11% from the prior day close. Adding to the negative earnings day were results from Pandora and Starbucks, with shares down on a disappointing outlook. The bright spot of the day is a report on US durable goods orders.  Orders for durable goods rose 0.7% in June, well ahead of the consensus estimate.  Investors shrugged off the report to focus on earnings related news.  Next week is full of economic data with the Labor Department’s monthly jobs report rounding out a week that also includes the Federal Open Market Committee (FOMC) meeting.  International markets remain cautious as geopolitical tensions in Russia and Gaza persist. Expect this downward pressure to persist throughout the day.

Economic Journal - Thursday, 7/24/2014

(as of 7:20 AM PST)

Economic data out this morning paints a mixed picture and markets are hesitating after two days of solid upward movement.  Jobless claims were at a low not seen since 2007 and while it seems a great data point, thoughts of reduced economic stimulus as the end game for that great number is giving investors pause.  On the down side, housing starts fell off dramatically, so it is certainly a recovery with pockets of resistance.  Earning reports continue to be upbeat for the most part and that is stabilizing market indexes.  Gold has fallen off by nearly 1 percent and oil is down as well on excess supply concerns.  The dollar is stronger against most other currencies.  It seems the day will be one of consolidation and perhaps some profit taking after a good run up.

Economic Journal - Wednesday, 7/23/2014

(as of 7:00 AM PST)

Some high profile earnings announcements after yesterday's market close dominated news overnight and have spilled over to the morning action.  Both Microsoft and Apple came in with solid though unspectacular reports and both are higher in a mixed market.  Apple's rise is more due to anticipation of new product launches this fall than earnings results, while Microsoft is higher due to an analyst upgrade despite an unexciting quarter for profits.  Some big earnings reports are due in as the week progresses and the direction of the market will likely rest on those reports.  International tensions are still high but have taken a back seat to economic activity.  On the plus side, earnings reports have generally pleased investors thus far and last week's negative momentum seems very old news.  The Dow is lower this morning while the Nasdaq and S&P 500 are slightly to the positive.  Today will likely be a day of consolidation but there is little indication that investor emotions will turn to the negative.  Corporate profits look good so far and appear to have investors smiling.  Oil and gold are hovering around unchanged though up slightly as we publish this report.

Economic Journal - Tuesday, 7/22/2014

(As of 7:15 am PST)

 

It’s a busy day on Wall St. as investors sifted through earnings reports and economic data.  Momentum appears positive in early trade after several big names reported earnings.  Chipotle Mexican Grill surged 11% after reporting earnings after the bell yesterday.  Chipotle reported a 25% boost in profits and also lifted its sales outlook going forward. Shares of Comcast and Verizon are higher after upbeat earnings while reports from McDonalds and Coca-Cola disappointed.  Investors are eagerly awaiting Apple’s report later in the day as the iPhone maker joins Microsoft in reporting after the closing bell.  In economic news, consumer prices gained in June, but at a slower pace than the prior month easing some concerns that inflation was beginning to pick up.  A report on housing showed existing home sales grew 2.6% in June, better than expected.  Some slight improvements in eastern Ukraine may be adding to sentiment as pro-Russian rebels handed over black boxes from flight MH17 earlier today. Officials will be looking for clues to what happened to the downed aircraft in Thursday’s tragic event that killed 298 people.  International markets are higher on the day while gold and oil are lower.  It looks like a positive day is shaping up but expect gains to be short lived as unrest in the middle east remains the primary concern for global capital markets.