Financial Review

One Foot on the Gas, One Foot on the Brake

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Financial Review by Sinclair Noe DOW – 251 = 17,164 SPX – 26 = 1994 NAS – 48 = 4635 10 YR YLD – .08 = 1.67% OIL + 3.25 = 47.78 GOLD + 25.00 = 1284.10 SILV + .31 = 17.33 GDP growth slows. The Commerce Department reports fourth quarter gross domestic product grew by 2.6%, down from a very strong 5% growth rate in the third quarter. The results were below consensus estimates of 3% growth. For all of 2014, the economy grew 2.4% compared to 2.2% in 2013. Consumer spending advanced at a 4.3% pace in the fourth quarter – the fastest since the first quarter of 2006 and an acceleration from the third quarter’s 3.2% pace. The final read on the University of Michigan’s consumer sentiment index was 98.1, down a tick from the 98.2 in the preliminary estimate. That’s still above the 93.6 mark in December and the best reading in 11 years. Just as consumers were stepping on the gas, businesses were tapping the brakes. Business spending on equipment fell at a 1.9% rate. It was the largest contraction since the second quarter of 2009. The fourth-quarter weakness could reflect cuts or delays to investment projects in the oil industry. But it could also be payback after two back-to-back quarters of robust gains. A wider trade deficit, as slower global growth curbed exports and solid domestic demand sucked in imports, subtracted 1.02 percentage …

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Financial Review

Good Luck With That

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Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB) Financial Review by Sinclair Noe DOW + 225 = 17,416 SPX + 19 = 2021 NAS + 45 = 4683 10 YR YLD + .02 = 1.75% OIL + .09 = 44.54 GOLD – 25.20 = 1259.10 SILV – 1.04 = 17.02 Yesterday, the Federal Reserve said it would remain “patient” on raising rates, but indicated it saw the U.S. economy getting stronger. The Fed also said it has seen inflation decline, and it may decline further, but that low oil prices are probably temporary. The FOMC statement said that economic activity has expanded “at a solid pace” and that labor market conditions have improved. That was certainly the case last week. The fewest Americans in almost 15 years filed applications for unemployment benefits during a holiday-shortened week that typically makes the data more volatile. Jobless claims dropped by 43,000 to 265,000 in the week ended Jan. 24, the lowest since April 2000. No state reported an increase of more than 1,000 in claims for the week ended Jan. 17. The National Association of Realtors reports its index of pending home sales fell 3.7% in December, though the year-on-year gain was 11.7%, the highest since June 2013. Pending sales measures contracts signed but not yet closed. The Census Bureau reports the number of owner-occupied households fell by 354,000 from a year earlier as the homeownership rate dropped to its lowest level since 1994. The ownership rate for people under …

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Financial Review

Fed Patiently Makes Hawkish Sounds

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Financial Review by Sinclair Noe DOW – 195 = 17,191 SPX – 27 = 2002 NAS – 43 = 4637 10 YR YLD – .10 = 1.72% OIL – 1.19 = 44.26 GOLD – 8.80 = 1284.30 SILV – .07 = 18.06 Microsoft’s stock logged its biggest one-day dollar decline in nearly 15 years on Tuesday, after the company posted disappointing earnings Monday afternoon. Shares of Microsoft closed down 9.2%, or $4.35, to $42.66 on Tuesday, wiping out $34.7 billion in stock-market value. The Dow Industrials dropped 291 points Tuesday. Then after the close of trade yesterday, Apple posted the largest quarterly net income of any public company in history; $18 billion. That provided an early boost to the markets today; at least until the FOMC statement. The Dow Industrials are down from record highs, but not too bad. Since hitting an intraday high of 18,103 on December 28th, the Dow has been choppy through January; on three occasions dropping down to the 17,200 range but not dropping under (17,262 on January 6th, 17,243 on January 16th, and 17,288 yesterday). These three lows formed a floor, or a level of support for the Dow. Today, the Dow closed at 17,191; we broke support. And the next level of support is 17,067 from mid-December and the big round number of 17,000. If we break the 17,000 support, the next level is 15,855 from mid-October. The Federal Reserve continues to try …

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Financial Review

Ugly With Snow Flurries

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Financial Review by Sinclair Noe DOW – 291 = 17,387 SPX – 27 = 2029 NAS – 90 = 4681 10 YR YLD un 1.82% OIL + .65 = 42.80 GOLD + 10.80 = 1293.10 SILV + .13 = 18.13 New York City was shut down overnight. That “blizzard of the century” was indeed a bad storm but not the predicted “snowpocalyspe”, even though authorities shut down schools, roads, subways, and rail; and more than 8,000 flights were cancelled. Turned out to be an overabundance of caution. New England was socked quite solidly, but not the Big Apple. Weather forecasters got it wrong; not the first time. And once again we were reminded that the news media is centered in New York. (The bad news is that Wall Street opened this morning.) Let’s start with a few economic reports. Home prices edge 0.2% lower in November. The S&P/Case-Shiller 20-city composite index dipped 0.2% in November and that lowered the year-on-year advance to 4.3%, down from a reading of 4.5% in October. Phoenix posted a 0.2% increase in home prices in November, but the year-on-year advance was only 1.9%. The Case-Shiller report looks at resales of existing homes. Also today, the Commerce Department reported a big increase in new home sales; up 11.6% last month to a seasonally adjusted annual rate of 481,000. The gains were not enough to offset essentially flat home-buying over the course of 2014. Just 435,000 …

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Financial Review

Flowers for Angela

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Podcast: Play in new window | Download (Duration: 13:19 — 6.1MB) Financial Review by Sinclair Noe DOW + 6 = 17, 678 SPX + 5 = 2057 NAS + 13 = 4771 10 YR YLD + .01 = 1.83% OIL – .49 = 45.10 GOLD – 12.80 = 1282.30 SILV – .39 = 18.01 It’s snowing in New York; this is a really, really big blizzard and it could dump up to 3 feet of snow across the northeast, with winds up to 60 miles per hour. The storm has already caused more than 1,800 flight cancellations, roads are closed in New York City except for emergency vehicles, rail traffic is also shut down, and schools are closed, and expect power outages across the Northeast. The Super Bowl will be this weekend in Glendale, and temperatures are expected to be mid-70’s. The folks at the Phoenix Chamber of Commerce are doing their happy dance. This week’s economic calendar is packed, plus we are in earnings reporting season and some big names will post results this week. Microsoft reported after the close today, and we’ll get to that in just a moment. Apple reports tomorrow. Shell, Europe’s largest oil company, reports results on Thursday; it could be an early indicator of the damage being done to company earnings by lower oil prices. Ford Motor, the nation’s second-largest automaker, reports fourth-quarter earnings on Thursday. On Wednesday, the Fed will end its two-day policy meeting with a statement but without the usual news …

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Financial Review

Friday Wrap

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Podcast: Play in new window | Download (Duration: 20:25 — 9.3MB) Financial Review by Sinclair Noe DOW – 141 = 17,672 SPX – 11 = 2051 NAS + 7 = 4757 10 YR YLD – .08 = 1.82% OIL – .95 = 45.36 GOLD – 8.00 = 1295.10 SILV – .02 = 18.40 For the week, the Dow rose 0.9 percent, the S&P gained 1.6 percent and the Nasdaq added 2.7 percent. The ECB announced plans yesterday to expand asset purchases by €60B per month until at least September 2016. ECB President Mario Draghi says the new stimulus plan “should strengthen demand, increase capacity utilization and support money and credit growth.” Well, it will make somebody rich, but the benefits to the broader Euro economy are still very much up in the air. Bonds in the region rallied, with the yields on 10-year notes of Germany, Italy, Spain and France falling to all-time lows. Stocks in the region on track for their best week since 2011 but the euro currency has dropped below $1.12. Greece’s leftist Syriza party leads the opinion polls heading into an election on Sunday. The ECB’s debt-purchasing program will not include Greece, at least not until July, and only then if a continuing review of the country’s bailout program is successfully completed. The basic bond buying plan wasn’t kind to Greece, even with the exclusion built in. The way, the ECB put together their QE scheme, rather than purchase government bonds from the most troubled economies, …

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Financial Review

ECB QE

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Financial Review by Sinclair Noe DOW + 259 = 17,813 SPX + 31 = 2063 NAS + 82 = 4750 10 YR YLD + .04 = 1.90% OIL – 1.24 = 46.54 GOLD + 9.20 = 1303.10 SILV + .20 = 18.41 The European Central Bank has launched a quantitative easing program, which together with existing programs, will pump €60 billion per month into the Eurozone economies through the purchase of public and private securities, mainly government bonds. The QE program will run through September 2016 with a total price tag of €1 trillion (or $1.3 trillion dollars). So, it’s a big money printing, QE party for the Eurozone, except for Greece. The central bank effectively shut Greece out of the bond buying until July, and only then if Greece passes a review of its current bailout program. That program is heavy on debt reduction and austerity. The country’s existing program of financial support expires at the end of February. The government will run out of money by June without further aid. Greece holds elections on Sunday. The Syriza party is expected to win the election. Syriza would like to default on existing debt and scrap the current bailout program; essentially challenging the status quo of fiscal austerity policy. What happens if Syriza wins the election on Sunday? Well, they will probably claim that fiscal austerity has contributed to the despair and poverty of Greece and created a humanitarian …

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Financial Review

Finally, Holograms

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Financial Review by Sinclair Noe DOW + 39 = 17,554 SPX + 9 = 2032 NAS + 12 = 4667 10 YR YLD + .05 = 1.85% OIL + .93 = 47.40 GOLD – 1.30 = 1293.90 SILV + .14 = 18.21 Gold moved above $1300 an ounce today. When was the last time you saw that? Last August. For the past 3 years, gold has been shellacked, but it is now testing an important level of resistance, and it coincides with the European Central Bank’s anticipated Quantitative Easing plan, which should be revealed on Thursday. Today we learned that an ECB executive board has called for bond purchases of roughly €50 billion per month over the next 12 months. The final number and details could change after the full board weighs in on the plan on Thursday. And the devil will be in details, and one of the most important is whether the ECB will let Greece play in their QE games. The Bank of Japan held off expanding its stimulus program today, even as they cut their core inflation forecast to 1% from 1.7%. Two Bank of England policy makers dropped calls for higher interest rates. Elsewhere, the battle against inflation intensified as the Bank of Canada unexpectedly cut interest rates for the first time since 2009, saying the oil price shock will drag down inflation. The Bank of Canada is lowering its target for the overnight …

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Financial Review

So Disappointing

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Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB) Financial Review by Sinclair Noe DOW + 3= 17,515 SPX + 3 = 2022 NAS + 20 = 4654 10 YR YLD un = 1.81% OIL – 2.30 = 46.39 GOLD + 13.90 = 1295.20 SILV + .19 = 18.08 Wall Street loves free money; they love free money from the Federal Reserve and for the past 5 years Wall Street has rallied on bailouts, QE, and ZIRP. The bailouts are over and the government promises they will never give away your money to the big banks again; QE, or quantitative easing is also finished and the Fed says they are out of the bond buying business for now; and ZIRP, or Zero Interest Rate Policy will patiently be replaced by slightly higher interest rates. Remember, Wall Street loves free money, so you might expect Wall Street might throw a tantrum at the prospect of no more QE and higher interest rates; we’ve seen taper tantrums in the not-so-distant past; and that might be what we’ve been experiencing to start the New Year. But the Federal Reserve is not the only central bank with a stimulus scheme. The Bank of Japan has its own QE program called Abenomics. And the European Central Bank is finally expected to launch its own QE program on Thursday. ECB President Mario Draghi has been saying he would do “whatever it takes” for the past 2 years. Now, the markets expect him to act. …

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Financial Review

Theories on Apples and Applesauce

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Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB) Financial Review by Sinclair Noe DOW + 190 = 17,511 SPX + 26 = 2019 NAS + 63 = 4634 10 YR YLD + .04 = 1.81% OIL + 2.32 = 48.57 GOLD + 17.70 = 1281.30 SILV + .83 = 17.88 Stocks bounced back after five sessions of losses. All 10 of the S&P 500 sectors were higher, though energy led the charge, rising 2.8%. U.S. crude oil futures settled up 5% after the International Energy Agency said there were signs that lower prices had begun to curb production in some areas. On the week, oil rose 0.7%, snapping a seven-week losing streak. The IEA report said that the market’s floor was still anybody’s guess, but “the sell-off is having an impact,” and “A price recovery – barring any major disruption – may not be imminent, but signs are mounting that the tide will turn. We love lower gas prices. A gauge of consumer sentiment jumped up to an 11 year high this month. The preliminary January reading on the University of Michigan’s consumer-sentiment index increased to 98.2, the highest level since January 2004, from a final December reading of 93.6. Also, more households were reporting increases in household incomes. Consumer inflation in December saw the biggest monthly drop in six years. Consumer prices, the CPI, fell 0.4% in December. You know the big driver for lower prices; energy prices plunged 4.7% in December, the biggest drop since …

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