Financial Review

Sparks Turn into Flames

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW + 38 = 18,135 SPX + 2 = 2101 NAS + 15 = 4982 10 YR YLD – .01 = 2.11% OIL – .59 = 50.94 GOLD SILV   Productivity in the fourth quarter fell at a revised 2.2% annual pace. The Labor Department originally estimated that productivity fell 1.8% in the final three months of 2014.   The number of people who applied for new unemployment benefits climbed by 7,000 to 320,000 for the week ended February 28. New applications for unemployment benefits are 1.5% below year-ago levels.   Of course the big economic news is tomorrow morning when we get the monthly jobs report. A month ago, the report showed the economy added 257,000 net new jobs in January. The estimate for February is 235,000 new jobs. It would be a bit of a surprise if the number is stronger than expected. Earlier in the week the ISM report showed employment was still expanding, but at a slower pace; they cited the West Coast port slowdown. Meanwhile, the rest of the country has experienced bad weather in February. Overall, the labor market looks to be improving, slowly.   Last month, Walmart made headlines by announcing it would be hiking wages for a significant chunk of its hourly workforce, boosting its minimum hourly rate to $10 by next year. What was behind the move? Yesterday’s Beige Book may provide a clue. The report says employers …

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Financial Review

Sometimes Brazenly

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Podcast: Play in new window | Download (Duration: 13:14 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW – 106 = 18,096 SPX – 9 = 2098 NAS – 12 = 4967 10 YR YLD un = 2.12% OIL + 1.26 = 51.78 Private-sector employment gains continued in February but at a slower pace than in the prior month. Automatic Data Processing Inc. reported Wednesday that employers added 212,000 jobs last month. On Friday, we’ll get the non-farm payroll report for February; it is expected the economy added about 235,000 jobs last month.   The Congressional Budget Office estimates the Treasury Department will exhaust its capacity to borrow in October or November if the debt limit isn’t raised. The debt limit is suspended until March 15. After that date, so-called extraordinary measures available to the Treasury to keep borrowing include deferring new investments in federal retirement and disability funds.   The U.S. Supreme Court is considering the fate of Obamacare for the second time in three years, weighing an attack on tax credits designed to help millions of people afford insurance. The Court heard arguments today in the case of King v. Burwell, an appeal by four Virginia residents who would block the subsidies in at least 34 states. The fight centers on a four-word phrase that has become a linchpin of the law. The measure says people qualify for tax credits when they buy insurance on an online marketplace “established by the state.” The challengers say …

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Financial Review

The Lights Are On

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW – 85 = 18,203 SPX – 9 = 2107 NAS – 28 = 4979 10 YR YLD + .04 = 2.12% OIL + 1.00 = 50.59 GOLD – 2.40 = 1204.50 SILV – .13 = 16.33   Just a few economic reports today.   Corelogic reports home prices jumped 1.1% in January to take the year-over-year gain to 5.7%. CoreLogic said 27 states and the District of Columbia are at or within 10% of their peak.   The Thomson Reuters/PayNet Small Business Lending Index fell to 120.9 from an upwardly revised December reading of 133.5.  Small businesses cut back on borrowing. Cold weather may be part of the reason.   Car companies reported February sales figures. Ford Motor sales dropped 2%. Ford was projected to report a 5.8% increase in sales but deliveries of F-Series pickups, Escape sport-utility vehicles and Fusion family cars all declined last month. General Motors sales rose 4.2 percent but they still fell short of estimates as sales of light trucks rose and sedans fell. Toyota, Fiat Chrysler, Honda and Nissan all reported deliveries that increased less than analysts had estimated. Industry-wide, the annualized selling rate, adjusted for seasonal trends, rose to 16.2 million cars and light trucks, from a 15.4 million pace a year earlier.   Chief executives of large U.S. companies see the economy accelerating modestly in 2015. According the Business Roundtable’s first-quarter survey …

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Financial Review

Holy Grail

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW + 155 = 18,288 SPX + 12 = 2117 NAS + 44 = 5008 10 YR YLD + .08 = 2.08% OIL + .06 = 49.82 GOLD – 7.80 = 1206.90 SILV – .22 = 16.46   February was the best month for stocks since October 2011. The S&P 500 gained 5.5% in February. March is off to a fine start. The Dow Industrial Average closed at a record high. The S&P 500 closed at a record. The Nasdaq Composite hit 5000 for the first time in 15 years. And if you wonder why we celebrate when the indices hit records, it is because 15 years ago we didn’t know it would take 15 years to get back to these levels.   Earnings season is pretty much over and it wasn’t all that pretty. With 485 of 500 S&P 500 companies reporting, FactSet says the blended growth rate is only 3.7%. Without Apple that number shrinks to only 2% but then again if you take out energy, it balloons to nearly 7%. Estimates have been revised lower, which is typical; companies try to ratchet down expectations, but this is different. All sectors are showing expectation deterioration, not just energy.   Earnings growth has slowed, and valuations are a little on the pricey side, and expectations are down. So, why are stocks at record highs? Well, start with the idea that the …

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Financial Review

Live Long and Prosper

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW – 81 = 18,132 SPX – 6 = 2104 NAS – 24 = 4963 10 YR YLD – .01 = 2.00% OIL + 1.03 = 49.20 GOLD + 4.50 = 1214.70 SILV + .04 = 16.67   We are wrapping up the first 2 months of trading. January was a down month for stocks, but February turned positive, with record high closes posted for the Dow, the S&P 500 and the Russell 2000. The Nasdaq went almost entirely green for the month, closing in on 5000, and actually setting a new monthly closing high, taking out the March 2000 monthly close of 4572.   For the month, the Dow Industrial Average gained 5.6%, the S&P 500 gained 5.5% and the Nasdaq added 7.1%, and the Russell 2000 added 5.8%. Year to date, , Dow Jones Industrial Average +1.7% YTD, S&P 500 +2.2% YTD, Nasdaq Composite +4.8% YTD,  and the Russell 2000 +2.4% YTD,   Junk bonds are poised to deliver gains of 2.3% for February, the best monthly result since 2013, while investment-grade debt has registered losses. Investors are also returning to the equity markets, with the MSCI All-Country World Index touching a record Thursday after two losing months. Markets in Germany, the United Kingdom and Sweden hit all-time highs. Japan, the poster child of deflation, saw its stock index reach its highest point in 15 years. This should …

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Financial Review

Neutrality Matters

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW – 10 = 18,214 SPX – 3 = 2110 NAS + 20 = 4987 10 YR YLD + .05 = 2.01% OIL – 2.01 = 48.98 GOLD + 5.00 = 1210.20 SILV – .01 = 16.63   The Federal Communications Commission has voted to regulate broadband Internet service as a public utility. Tom Wheeler, the commission chairman, said the FCC was using “all the tools in our toolbox to protect innovators and consumers” and preserve the Internet’s role as a “core of free expression and democratic principles.”   The new rules, approved 3 to 2 along party lines, are intended to ensure that no content is blocked and that the Internet is not divided into pay-to-play fast lanes for Internet and media companies that can afford it and slow lanes for everyone else. Those prohibitions are hallmarks of the net neutrality concept.   Mobile data service for smartphones and tablets, in addition to wired lines, is being placed under the new rules. The order also includes provisions to protect consumer privacy and to ensure that Internet service is available for people with disabilities and in remote areas.   The FCC is taking this big regulatory step by reclassifying high-speed Internet service as a telecommunications service, instead of an information service, under Title II of the Telecommunications Act. The Title II classification comes from the phone company era, treating service as a public utility. …

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Financial Review

Milk and Cookies. Enjoy While You Can.

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW + 15 = 18,224 SPX – 1 = 2113 NAS – 0.98 = 4967 10 YR YLD – .02 = 1.97% OIL + 1.75 = 51.03 GOLD + 2.90 = 1205.20 SILV + .22 = 16.64   Another record high for the Dow Industrial Average. These are the days of milk and cookies.   Federal Reserve Chairwoman Janet Yellen continued her semi-annual Humphrey-Hawkins testimony today in front of the House Financial Services Committee. The prepared opening remarks were identical to the testimony yesterday in the Senate. The Q&A session became a bit testy today as Yellen was accused of political bias. Republicans questioned Yellen about an October speech on inequality, just before the midterm elections, as evidence she was leaning toward the Obama administration and Democrats. Methinks they doth protest too much. There were also calls for an audit of the Fed, historically a nonstarter with Federal Reserve Chairs. It made for generally poor political theater.   The important part of the testimony was fairly easy to find. Keep in mind the Fed has a dual mandate of maximum employment and price stability. So the key statement from Yellen was when she said: “Provided that labor market conditions continue to improve and further improvement is expected, the Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when, on the basis of incoming …

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Financial Review

Gulliver’s Travels

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW + 92 = 18,209 SPX + 5 = 2115 NAS + 7 = 4968 10 YR YLD – .07 = 1.99% OIL – .29 = 49.16 GOLD – .50 = 1202.30 SILV – .01 = 16.41   The Dow Industrials and the S&P 500 hit record high closes. The Nasdaq rose for the tenth straight session, its longest streak since July 2009. The Russell 2000 Index of small cap stocks closed at a record 1233.   Fed Chair Janet Yellen testified today before the Senate banking committee in her semi-annual report on monetary policy. Yellen said the Fed is preparing to consider interest rate hikes “on a meeting-by-meeting basis.” Yellen described how the Fed’s rate-setting policy committee will likely proceed in coming months: first by removing the word “patient” in describing its approach to rate hikes, then entering a phase in which rate hikes are possible at any meeting. That approach could open the door to an interest rate increase as early as June, but short-term rate futures contracts showed traders had shifted their expectations of an initial rate hike from September to October. And the yield on the ten year Treasury note slipped down below 2%. So, the markets players are placing their bets.   Yellen said she felt labor markets and other key economic indicators “have been increasing at a solid rate.” However, she said she still feels the job …

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Financial Review

The Dog Ate the Greek Proposal

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW – 23 = 18,116 SPX – 0.64 = 2109 NAS + 5 = 4960 10 YR YLD – .07 = 2.06% OIL – 1.36 = 49.45 GOLD – 2.10 = 1202.80 SILV + .05 = 16.42   The S&P 500 climbed 0.6 percent last week to finish at record highs, the third record high of the year. The Dow rose to its first record of the year and the Nasdaq Composite closed at its highest level since March 2000, closing in on 5000. The Russell 2000 Index advanced 0.7 percent, also ending at a record Friday. Much of the stock market action has followed news of a compromise with Greece. At last week’s meeting, Greece signed up to all the conditions of its current bailout package and to continued international oversight, provided the Greeks come up with a list of reforms. Easier said than done; any reforms have to be acceptable to the Troika (the IMF, the ECB, and the EU, and subject to approval by all EU members) and at the same time it will have to be acceptable to Greeks who voted against the austerity plans of the Troika. The plan was supposed to be presented today, but that didn’t happen. Now the Greeks say they will present the reforms tomorrow. Given that Monday night was treated as a hard deadline for getting the Greek proposals in, …

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Financial Review

Risk On

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Subscribe: iTunes | RSS Financial Review by Sinclair Noe DOW + 154 = 18,140 SPX + 12 = 2110 NAS + 31 = 4955 10 YR YLD + .02 = 2.13% OIL – .82 = 50.34   Eurozone finance ministers are meeting in Brussels today for the latest round of emergency talks aimed at breaking the deadlock with Greece. Yesterday, Germany rejected a request by Athens to extend a loan program, calling the Greek proposal a Trojan horse. Now it looks like there will be an extension of the bailout loan agreement, probably for four months; the current deal was scheduled to expire on February 28th.   Euro zone officials said the accord required Greece to submit by Monday a letter to the Eurogroup listing all the policy measures it planned to take during the remainder of the bailout period, to ensure they complied with conditions. So, they haven’t worked out all the details or even come close to resolving the problems; they didn’t have to; they just needed to avoid making a big, irreversible mess of everything. So, they have hit the pause button. It might be the smartest thing they could have done.   Greece has a new government, barely one month on the job. It is not reasonable to expect the new government to have fully formulated all the details of a bailout and recovery plan. They might not come up with a decent plan after 3 or 6 …

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