Financial Review

Something is Rotten

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-12-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 315 = 17,280 SPX – 33 = 2002 NAS – 54 = 4653 10 YR YLD – .08 = 2.10% OIL – 2.52 = 57.43 GOLD – 5.60 = 1222.80 SILV – .06 = 17.14 The fall in oil prices has been dramatic, now down almost 47% since June. Nobody was expecting it would fall that far that fast. Goldman was forecasting $85 oil for 2015 as recently as October 29. Crude-oil futures fell to their lowest since May 2009 on Friday, briefly dropping below $57 a barrel, after the International Energy Agency delivered the latest reduction in forecasts for global oil demand. On the week, oil futures have lost slightly more than 12%. So, oil is a bit oversold right here but it is never a good idea to try to catch a falling knife. And the whole drop just tells us that something is rotten in the markets. The fundamentals of oil have not changed in concert with the price. We don’t have double the oil we had in June. So why is the price cut in half? I know that’s overly simplistic, but either the market is too negative on energy, or it is not diligent enough in thinking about broader implications. Low prices lead to oil being left in the ground. Low oil prices lead to debt defaults. Low oil prices can lead …

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Financial Review

Before the Flood

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-11-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 63 = 17,596 SPX + 9 = 2035 NAS + 24 = 4708 10 YR YLD + .01 = 2.18% OIL – 1.22 = 59.72 GOLD + 1.30 = 1228.40 SILV + .04 = 17.20 We have a lot to cover. Let’s start with the economic news. The government reported early this morning that retail sales in November expanded at the fastest pace in eight months, rising 0.7%. A wide variety of retailers reported healthy sales last month. Retail sales growth hit 1.7% for autos, the most since August; and 1.2% for clothing, the most since April. Sales at building material and garden equipment stores jumped 1.4%, the most since April; while online or non-store retailers saw a 1% sales gain. The Commerce Department reports business inventories rose 0.2% in October, as building material and clothing stores both built stocks heading into the holiday season. That represents a 4.8% gain from October 2013. The number of people who applied for unemployment benefits hit the lowest level in three weeks, as employers continued to lay off very few workers. Initial claims for regular state unemployment-insurance benefits inched down by 3,000 to 294,000 in the week that ended Dec. 6. The prices paid for imported goods fell 1.5% in November, the largest drop since June 2012, dragged down by lower fuel prices. Excluding fuel, import prices declined by 0.2% …

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Financial Review

Strange Bedfellows

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-10-2014.mp3Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 268 = 17,533 SPX – 33 = 2026 NAS – 82 = 4684 10 YR YLD – .05 = 2.17% OIL – 2.64 = 61.18 GOLD – 6.30 = 1227.10 SILV – -.05 = 17.16 Well, that was ugly. This is why we enjoy milk and cookies while we can. We’ve seen a lot of record highs in the major indices this year, but they remain rare birds. When we fall from record highs the drop can be fast, as it was today. The worst day since the start of October; wiping out gains from the past month. The month of December has brought positive returns to the Dow every single year for the last five consecutive years. As you might imagine, there’s a lot of pressure to make it six. And it might still happen, despite the past couple of days. Still it’s a good reminder to stay awake through the holidays, keep your stop loss in place, however you employ your stop loss; and if you don’t have a stop loss it is time to wake up and smell the coffee. Beyond that, it was just an ugly day, with decliners beating advancing issues 4 to 1. All 10 S&P industry sectors were down, with the energy sector down 3.3% as oil prices continue their slide. Brent crude dropped to $63.56, a 5 year low; …

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Financial Review

Divergence

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-09-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 51 = 17,801 SPX – 0.49 = 2059 NAS + 25 = 4766 10 YR YLD – .04 = 2.22% OIL + .80 = 63.85 GOLD + 27.80 = 1233.00 SILV + .73 = 17.21 We’ll start with economic news. The Labor Department reports there were 4.83 million job openings in October, up from 4.69 million job openings in September. The number of available jobs means workers are more likely to leave their current jobs in search of a better deal. The quit rate, the share of total employees opting to quit their jobs was 1.9% in October, roughly the same level it was just before 2007. With 9 million unemployed people in October, there were about 1.9 potential job seekers per opening. In October 2013, there were 11.14 million unemployed people or about 2.8 potential seekers per opening. The Commerce Department reports wholesale inventories increased 0.4%, despite an energy price-related decline in the value of petroleum stocks. September’s wholesale stocks were revised up to show a 0.4% gain. This might indicate that third quarter GDP could be revised slightly higher. The National Federation of Independent Business says small-business sentiment reached a seven-year high in November. The index rose 2 points to 98.1, the highest level since Feb. 2007, as expectations for business conditions in six months surged and expectations for real sales volumes also gained. While …

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Financial Review

Fed Should Avoid Knee Jerk Hikes

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-08-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 106 = 17,852 SPX – 15 = 2060 NAS – 40 = 4740 10 YR YLD – .05 = 2.26% OIL – 2.80 = 63.04 GOLD + 11.10 = 1205.20 SILV + .09 = 16.48 No records today. Energy stocks pulled the market lower; 42 of the 43 energy stocks in the S&P 500 posted losses today. Falling oil prices have also hit exchange rates of energy producers, especially in emerging markets. Russia’s ruble continues to slide, and an index tracking 20 key exchange rates has fallen to levels last seen more than a decade ago, down 10.2 percent this year and headed for the biggest annual slide since 2008. While some developing nations may welcome a weaker currency because it makes their exports more competitive, for others the pace of decline is destabilizing their economies by fueling inflation and eroding investor confidence. While the International Monetary Fund expects developing economies to pick up next year, it still sees them falling short of their longer-term growth. The IMF predicts expansion of 4.95 percent across emerging markets in 2015, up from a forecast of 4.43 percent this year and compared with average growth of 6.44 percent over the past decade. Let’s start with a quick recap of Friday’s jobs report. The economy added 321,000 jobs in November, well above estimates, the highest monthly gain since January 2010 and …

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Financial Review

November Jobs Report – Progress Not Perfection

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-05-2014.mp3Podcast: Play in new window | Download (Duration: 13:19 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 58 = 17,985 SPX + 3 = 2075 NAS + 11 = 4780 10 YR YLD + .05 = 2.31% OIL – 1.12 = 65.69 GOLD – 15.50 = 1192.00 SILV – .20 = 16.39 Record highs for the Dow and the S&P 500. For the past week I’ve been telling you we could see a wild number on the jobs report. We did. The economy added 321,000 net new jobs in November. The unemployment rate held steady at 5.8%. Job gains for September and October were revised higher. September was revised from 256,000 to 271,000, and the change for October was revised from 214,000 to 243,000. With these revisions, employment gains in September and October combined were 44,000 more than previously reported. And that pushes the 3 month average up to about 277,000 jobs per month. November marked the biggest monthly jobs gain since January 2012. So far in 2014 the economy has gained an average of 241,000 jobs a month. This was the tenth consecutive month of job gains greater than 200,000, and an all-time record 50th consecutive month of job gains. Total employment is now 1.7 million above the previous peak. Total employment is up 10.4 million from the employment recession low. So far this year, the United States has added some 2.65 million jobs, putting the country on track for its best year …

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Financial Review

Game On

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-04-2014.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 12 = 17,900 SPX – 2 = 2071 NAS – 5 = 4769 10 YR YLD – .03 = 2.26% OIL – .61 = 66.77 GOLD – 3.10 = 1207.50 SILV + .06 = 16.59 Seven of the 10 main industries in the S&P 500 declined. Energy companies slumped 0.8%, following three days of gains. Chevron slid 1.3%, the most in the Dow, and Exxon Mobil declined 0.6%. Crude fell 18% last month and moves of that magnitude cannot be attributed to normal markets following supply and demand. There is manipulation in the oil market, and the question is really whether it will end well. Initial jobless claims fell 17,000 in the week ended Nov. 29 to 294,000. In the prior week, new filings hit 314,000, the first reading above 300,000 since early September. Tomorrow is the monthly jobs report and the guestimates are calling for 230,000 new jobs added and the unemployment rate steady at 5.8%. The November jobs reports are subject to some revisions, so don’t be surprised if that guesstimate is wildly off base. When the jobs report surprises to the upside, the S&P trades up two-thirds of the time, with growth sectors like Industrials outperforming. When jobs miss, gold does well. We’ll dig into the report tomorrow, but some of the important bits of data we will track includes where wages are going. …

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Financial Review

More Jobs

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-03-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 33 = 17912 SPX + 7 =2074 NAS + 18 = 4774 10 YR YLD + .01 = 2.29% OIL + .49 = 67.37 GOLD + 11.60 = 1211.10 SILV – .04 = 16.52 Record high for the Dow Industrials and the S&P 500. About 2 weeks before the Federal Reserve FOMC meets to determine monetary policy they gather together reports from across the nation on how the economy is doing; the Fed then binds those reports in a Beige folder, or what we call the Beige Book. As the name would imply, the Beige Book is not always a page turner, but it can provide some useful information as well as an indicator of what the Fed policymakers are thinking, and then there is the occasional surprise nugget of information. The Beige Book was released today and it shows the US economy holding up well despite global slowing; economic activity continued to expand in October and November, with lower gasoline prices boosting consumer spending. Despite a sharp drop in crude oil prices, drilling activity in shale production districts remained steady; oil and gas exploration activity decreased in North Dakota and increased in Montana relative to a month earlier; production remained at record levels. Lower oil prices have some oil companies concerned and closely monitoring prices, which are close to many firms’ breakeven price. Employment gains were …

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Financial Review

Oil and Implications

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-02-2014.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 102 = 17,879 SPX + 13 = 2066 NAS + 28 = 4755 10 YR YLD + .07 = 2.29% OIL – 1.48 = 67.52 GOLD – 14.30 = 1199.50 SILV un = 16.57 Record highs on Wall Street. The day’s gains were broad, with nine of the 10 S&P 500 industry sectors higher. The only group to fall was telecoms. I think this is the 32nd record high for the Dow this year; pretty soon we’ll be counting them in dozens. Records for the bond market as well. US corporate bond sales for 2014 have topped $1.5 trillion, setting a new annual record, as borrowers lock in low rates. According to Lipper, investors have poured money into corporate investment-grade funds for 24 straight weeks, with inflows of $880 million for the week ending Nov. 26. Borrowers have offered $1.168 trillion of investment-grade notes in 2014 and $344 billion of junk bonds. Yields on corporate bonds in the U.S. fell to 3.57 percent in June and have since risen to 3.86 percent yesterday. So, record highs for equities, record issuance for corporate bonds; the story line is that this is a good place to be, and when you look abroad, it makes sense. Yesterday, Moody’s Investors Service cut Japan’s credit rating to A1. Japan is in a recession after a sales tax increase in April destroyed consumer …

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Financial Review

Too Much Pie

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-01-2014.mp3Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Reivew by Sinclair Noe DOW – 51 = 17,776 SPX – 14 = 2053 NAS -64 = 4727 10 YR YLD + .02 = 2.22% OIL + 3.22 = 69.37 GOLD + 44.30 = 1213.80 SILV + .88 = 16.56 Last week I said that you can never eat too much pie. I would like to amend that statement. That was a long weekend. While we were gone, the Dow hit another record hit on Friday, the 31st of the year. Dow stocks are still up about 7% for 2014; with all these record high closes, you might think it would be more, and you might think you could just throw a dart at any of the Dow 30 stocks and hit a winner. Unfortunately, not all Dow stocks were able to revel in the year’s rallies. In fact, nearly one-third of the market’s companies had negative returns this year. Big names that are down, including: Boeing – down about 7% despite fairly strong sales of airplanes, IBM – down 13% as they try to figure out what their business is, General Electric – is off about 6%, United Technologies – down about 3%, and Chevron – down about 6% for the year as oil prices have been sliding. The oil companies are about the only ones not happy with lower oil prices. On Thursday, as we were enjoying turkey and way too …

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