Economic Journal - Thursday, 3/19/2015

(as of 7:10 AM PST)

 

Yesterday's Federal Reserve meeting set markets afire in the afternoon resulting in yet another triple digit change in the Dow, this time to the upside.  The dollar crashed as markets advanced while Fed Chair Janet Yellen spoke.  The Fed removed the word 'patient' from its policy statement and continued to lean to the June timeframe for a possible rate increase.  The positive reaction of the markets came from the fact that the Fed lowered expectations of any significant rate hike well into the future.  This morning's action saw a return to normalcy.  In economic data, the Leading Economic Indicators gauge ticked up slightly while the Philadelphia Fed index, a measure of current economic activity was up slightly, but below analysts' estimates. The dollar gained back most of yesterday afternoon losses and markets are mostly down giving back a part of the surprise post-Fed rally.  Oil continues to fall heavily while gold is up about 1%.  We may well see another triple digit Dow, this time to the downside.  International markets are mixed.

Economic Journal - Wednesday, 3/18/2015

(as of 7:15 AM PST)

 

Stocks are off moderately in quiet trading.  The volatility of the last two weeks seems to be dampening in what has been a roller coaster ride.  Oil continues to fall with excess supply concerns and reports that US storage capacity for crude is nearing maximum capacity.  The US dollar is steady ahead of the important Federal Reserve Bank meeting, an event which could be a market mover.  Profit reports for some large international players are trending towards weakening earnings due to the strength of the US dollar.  Asian markets were higher overnight while Europe was mixed with the UK leading the way and the European Union struggling with how to handle the Greece financial crisis. 

Economic Journal - Tuesday, 3/17/2015

(As of 7:25 am PST)

After surging in yesterday’s session, US stocks are on the mend ahead of today’s kick-off of the Federal Reserve’s two-day policy setting meeting. Investors appear jittery ahead of the Fed’s meeting which will culminate tomorrow afternoon with a policy statement that will be under much scrutiny. One word is all investors are worried about…patience. Will the Fed remain patient on their timing of a rate hike, or will they remove ‘patient’ from their policy statement tomorrow, indicating they are ready to act? I suppose we’ll find out tomorrow. In the meantime, there’s a lot of other stuff happening around the world. European markets are in profit-taking mode today after a big run recently while Asian markets finished mostly higher. Economic data at home is light but mostly disappointing adding to the negative sentiment. Gold is flat today while oil continues to tumble, approaching $43 per barrel. The US dollar is down today while interest rates are lower as money flowed from stocks to bonds.

Economic Journal - Monday, 3/16/2015

(As of 7:15 am PST)

US stocks are higher to start the trading week as positive news abroad is helping to lift investor sentiment after a disappointing week last week.  The Dow is up 175 points early, while the S&P500 and Nasdaq are also up nearly 1%. Wall Street is following international markets higher as central bank stimulus programs took center stage. The ECB enters the second week of its QE program with abundant liquidity propelling markets higher on Monday. China also pledged over the weekend to step up efforts to stimulate and sustain economic growth in the region if certain targets aren't met. The announcement sent Chinese stocks soaring. On the domestic front economic data is mixed. The main story for US markets will continue to be the timing and pace in which the Federal Reserve moves to raise short term interest rates. On Wednesday, the Federal Open Market Committee (FOMC) will release a statement from its two-day policy setting meeting. Investors will be on the lookout for if the Fed drops the word "patient" from its statement, a key reference to the timing of the Fed's rate hike. Expect markets to remain erratic in the short term as investors grapple with the implications of a Fed rate hike. As has been argued by strategists and economists, the more important issue may not be when the Fed hikes rates (already priced in?), but by how much. Stay tuned as we follow this story closely. 

Economic Journal - Friday, 3/13/2015

(As of 7:30 am PST)

Stocks opened Friday's session lower in a turbulent week that looks set to finish with weekly losses for the major US benchmarks. A weaker-than-expected report on producer prices caught investors by surprise putting pressure on stocks from the start. A report out of the University of Michigan on consumer sentiment also fell below consensus, with sentiment falling from 95.4 in February to 91.2 in March, the worst reading since November. Falling oil prices are also adding to the negative sentiment early. The price of crude oil was off 2.5% to $45.80 per barrel at this writing. According to a report from the International Energy Agency, monthly oil production in the US increased by 115,000 barrels coupled with a ballooning inventory which may cause oil prices to drift lower. International markets are mixed to wrap up this volatile week. Interest rates are flat while the US dollar continues its historic climb. Expect volatility to continue throughout today's session and in to next week as the market seeks to find price equilibrium in light of the current economic conditions.

Economic Journal - Thursday, 3/12/2015

(As of 7:20 am PST)

US stocks are rallying this morning after two straight days of selling, with the DJIA up 189 points in the early going. Investors are digging through a deluge of economic data this morning including a report on jobless claims which showed claims fell last week from a 10-month high of 325,000 in the prior week to 289,000 in the week ending March 1-7. Average monthly claims (a more stable data point) fell by 3,750 to 302,250, a good sign for the labor market. Other data showed US retail sales declined in February, marking the third straight month of declines. Bad winter weather and falling gas prices were the main causes for the drop in retail sales, with sharply lower sales at gas stations leading the sector lower. In company specific news, Intel is making headlines this morning after the chip-maker cast a downbeat forecast for its first quarter sales citing weaker demand for business desktop PC’s. In overseas action, European markets are mixed after rallying yesterday. The ECB in its first 3 days of its QE program, has purchased $10.3 billion in European bonds, sending the Euro lower and yields on European debt to record lows. In Asia, markets finished the day mostly higher.

Economic Journal - Wednesday, 3/11/2015

(As of 7:00 am PST)

US stocks recovered slightly after yesterday's pummeling which saw the DJIA shed 332 points on its way to its worst day in over 5 months. Fears of a US interest rate hike as early as this summer, sent investors into sell mode yesterday, with all three major US benchmarks down from the start of the session. 2015 gains for the DJIA and S&P500 were all but erased yesterday, leaving both indexes flat for the year. Europe is providing some relief today, as stocks moved 1% higher as the third day of the European Central Bank's bond-buying program got under way. Asian markets finished the day mixed. Despite a brief recovery this morning, expect continued volatility thought the remainder of the week as investors come to grips with the inevitable Fed rate hike and what that means for markets. With earnings season wrapped up, these big macro stories will be the driving force for the coming weeks, making 'headline risk' perhaps the biggest risk to markets at this point.