Economic Journal - Tuesday, 3/10/2015

(As of 7:25 am PST)

Yesterday's rally was short lived, as stock market indexes erased most of yesterday's gains at the open with the Dow shedding nearly 200 points while the S&P500 and Nasdaq down 1% as well. Fears of an imminent Fed rate hike were driving the selling early with yesterday's brief "relief rally" already a distant memory. A surging dollar is causing commodity prices to weaken across the board, with money flowing out of stocks and precious metals and into treasuries sending yields down to 2.13% on the 10 yr. Overseas, stocks are selling off with Asian indexes closing in the red, while European equities are being pressured a day after the start of the European Central Bank's QE program. The stimulus package, much similar to the QE program just completed in the US, has sent European sovereign debt yields lower as well. Fears of a Fed rate hike and the complications of diverging economic and monetary conditions around the globe remain the main story line for investors in 2015. Expect volatility to stick around as these important macro events unfold.

Economic Journal - Monday, 3/9/2015

(As of 7:15 am PST)

Stocks are slightly higher to start Monday's session as investors were cautious following Friday's pummeling which saw the S&P500 suffer it's steepest loss in two months. It's a quiet day for economic data as investors look ahead to tomorrow's JOLTS (Job Opening and Labor Turnover Survey) report for more data on the health of the labor recovery. The big story remains the timing of the Federal Reserve's short term rate hike. With Friday's surprisingly strong payrolls report, speculation is that the rate hike will come sooner than later. Expect volatility to continue as markets try to outguess the Fed and uncertainty remains. In overseas developments, market action is mixed. Oil is lower while gold is up slightly and interest rates are down.

Economic Journal - Friday, 3/6/2015

(as of 7:00 AM PST)

 

A stellar jobs report has set off a wave of activity.  The economy added a whopping 295,000 jobs last month in spite of bad weather across most of the country.  The unemployment rate has fallen to 5.5% from 5.7% the prior month.  The dollar is soaring against all other global currencies because the US economic recovery is surging while other countries are fighting growth deflation and attempting to emerge from recession.  The markets initial reaction to the positive news was negative because it certainly appears that arguments for delaying interest rate increase are melting away.  It looks more likely that a June interest rate hike is in the cards.  Commodities are getting clobbered by the strong dollar with gold off 2% and oil down as well.  Almost lost in the news is the impending bond purchase program of the European Bank soon to kick off.  The new financial stimulus program is likely to juice markets in the short term.  Fears of the effects of an interest rate increase are like overblown and, as cooler heads prevail, expect markets to surge.

Economic Journal - Thursday, 3/5/2015

(as of 7:10 AM PST)

Markets are on edge.  More and more bearish articles are popping up over the financial media and they are clearly making investors nervous.  Stocks are slightly to the positive but negative momentum is building.  Analysts are all but ignoring the massive Eurobank bond buying program which is to start tomorrow.  The bond buying program is a major stimulus effort on the part of the Eurobank to jumpstart the European economies, which are just now emerging from a long term recession.  This European financial stimulus is actually bigger than what the Federal Reserve Bank was providing at its peak and would normally have investors salivating over the easy money to come.  But as more and more financial experts switch from bullish to bearish prospects and 'bubble' talk accelerates the momentum continues to downshift.  On the economic data front, jobless claims jumped to their highest level since May, while US productivity declined for the second straight quarter.  Corporations are hiring more workers resulting in upward wage pressure, likely to impact corporate profits for the next couple of quarters.  Gold and oil are both flat to start the day while interest rates are stable.  Expect the ECB bond buying program to provide a temporary lift to markets for the next couple of days recovering losses from the prior two sessions.

Economic Journal - Wednesday, 3/4/2015

(as of 7:00 AM PST)

 

Stocks are continuing to slide adding to losses from yesterday's trade.  Economic data is not the culprit.  Most reports, both domestic and international, are showing mildly to the positive side, but not enough to get investors excited.  It seems the sharp gains of February have brought markets up too far, too fast...and a period of consolidation is in order.  Profit growth forecasts this quarter are far from stellar and that reduction in growth might translate to a lower price to earnings ratio for the market in general which could mean lower markets going forward.  Oil is steady, but inventory growth suggests a continuation of a downward trend.  Gold is up slightly. 

Economic Journal - Tuesday, 3/3/2015

(As of 7:10 am PST)

Stocks are retreating this morning after a monumental day yesterday, which saw the Nasdaq composite index close above 5,000 points for the first time in 15 years. Nothing significant seems to be causing the selling pressure this morning, just likely some profit taking off February’s rally and yesterday’s surge. Economic data is light with a report on auto sales due out later this morning. Investors are also preparing for a speech after the bell today from Federal Reserve Chairwoman Janet Yellen. Asian markets finished the day mixed, with Chinese stocks selling off on news that the China Securities Regulatory Commission just approved the IPO plans for 24 Chinese companies causing investors in the Shanghai Stock Exchange to fret over liquidity. The Shanghai index was down 2.20% in today’s action. European benchmarks are mostly lower as investors also took profits from a recent surge in European stocks. Oil and gold are flat as are interest rates while the US dollar is drifting lower.    

Economic Journal - Monday, 3/2/2015

(As of 7:15 am PST)

Stocks are higher to start on Monday as all three major US benchmarks opened in the green to start the month of March. It is a relatively quiet day with investors taking in economic data reports at the open of the session. A report on construction spending showed January spending falling 1.1%, more than the 0.2% growth expected while a report on manufacturing, the ISM index, showed manufacturing activity growing at a slightly slower pace than anticipated for February. Reports on personal incomes and spending for January, showed incomes rising slightly while consumer spending fell 0.2% last month, due mostly to cheaper energy prices. In overseas action, Asian markets finished the day higher, while European indexes are mostly down heading into the final hours of trade. Gold and oil are flat while interest rates ticked up as investors sold treasuries. It’s a quiet day with markets taking a surprise turn to the upside in the early going.