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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Financial Review

Time For Pie

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-26-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 12 = 17,827 SPX + 5 = 2072 NAS + 29 = 4787 10 YR YLD – .03 = 2.23% OIL – .35 = 73.75 GOLD – 3.20 = 1199.00 SILV – .13 = 16.64 Another record high close for the Dow Industrial Average and the S&P 500 index. That’s the 47th record high for the S&P this year. Volume was light, heading into the holiday. The markets will be open for a half day on Friday, but volume will be incredibly light. Yesterday we told you about the New York Fed report that consumers were taking on more debt; household debt increased $78 billion in the third quarter, and the NY Fed thought that meant the end of deleveraging. It was the end of an era. Good news for the economy as well. American households have been cleaning up their finances during the painful post-crisis era, with less debt and lower financing costs for the debts they still owe. They are now in a better position to spend in the years ahead, good for the economy and their own sense of well-being. I said “not so fast”, let’s wait and see if a trend develops. Today, the Commerce Department reports consumer spending increased 0.2 percent last month after being flat in September. Maybe Americans have cleaned up their debt problems, or not, but we aren’t yet …

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Financial Review

Faster and Faster but No Liftoff

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-25-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 2 = 17,814 SPX – 2 = 2067 NAS+ 3 = 4758 10 YR YLD – .05 = 2.26% OIL – 1.95 = 74.22 GOLD + 2.90 = 1202.20 SILV + .20 = 16.77 The major stock indices couldn’t close at records, but Apple reached a milestone today. Apple’s market capitalization hit a record $700 billion; that’s double from 3 years ago when Tim Cook became CEO. Apple is the first S&P 500 company to ever reach a $700 billion market cap. Yet, on an inflation-adjusted basis, it still has way to go to be the most valuable company of all time. Microsoft’s market cap peak of $613 billion in 1999 translates to nearly $874 billion in 2014 dollars. When Microsoft was at the top, it was trading at 72 times earnings. Apple’s price-to-earnings ratio is currently 18, in line with the overall S&P. It’s a little tough to imagine what Apple will do in the future to match the growth they’ve experienced in the past. The economy is better than you thought. The Commerce Department revised its estimate of third quarter gross domestic product from 3.5% up to 3.9%. There will be another revision before settling on a final number. Second quarter GDP came in at a 4.6% growth rate; combined second and third quarter GDP was the strongest back to back growth since 2003. Let’s …

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Financial Review

Test Results Are In

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-24-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 7 = 17,817 SPX + 5 = 2069 NAS + 41 = 4754 10 YR YLD – .01 = 2.31% OIL – .81 = 75.70 GOLD – 3.80 = 1199.30 SILV + .02 = 16.57 The S&P 500 has gained 11% since bottoming out in a slump that stretched from mid-September to mid-October. The rally has been driven by a belief that central bank actions in Europe, China and Japan will help invigorate global economic growth. On Friday, China’s central bank lowered a key interest rate and European Central Bank President Mario Draghi said he was willing to step up the bank’s efforts to stimulate the Eurozone, which has been struggling. Speaking of European investors that sell assets to the ECB moving into other, more risky, assets that would help accelerate the euro area’s growth, Draghi said that higher prices for European assets might encourage some foreign holders to switch away from the euro, with “investors rebalancing portfolios away from euro-denominated assets towards other jurisdictions and currencies providing higher yields.” Just to make sure that listeners got the message, he added there was evidence that the asset-purchase programs of the U.S. Federal Reserve and the Bank of Japan “led to a significant depreciation of their respective exchange rates, even in a situation in which long-term yields were already very low, as in Japan.” You have been warned; …

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Financial Review

Fans of Gridlock

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-21-2014.mp3Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 91 = 17,810 SPX + 10 = 2063 NAS + 11 = 4712 10 YR YLD – .02 = 2.32% OIL + .77 = 76.62 GOLD + 5.80 = 1201.30 SILV + .15 = 16.50 Record highs for the Dow and the S&P. China has cut interest rates for the first time in more than 2 years. The first thought is that China is trying to stimulate growth for a slowing economy. However, in making the announcement, the People’s Bank of China tried to emphasize that the economy is growing within a reasonable range, and the rate cut was not about spurring growth. Instead, they emphasized the need to reduce corporate financing costs to help struggling companies. So, you might think that lower rates would only encourage more borrowing in a country that already has too much debt. What the Chinese central bank appears to be doing is making it feasible to refinance the existing debt at lower rates, which would allow Chinese companies to lessen their debt burdens. So, in this way, lower rates is a way to deleverage. And this is not the first attempt at reducing borrowing costs. Since September the People’s Bank of China has provided more than $130 billion in medium term loans to banks on the condition they lower borrowing rates for small businesses; trying to channel to certain industries, including …

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Financial Review

Skim Just a Little

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-20-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 33 = 17,719 SPX + 4 = 2052 NAS + 26 = 4701 10 YR YLD – .02 = 2.33% OIL + 1.50 = 76.00 GOLD + 11.40 = 1195.50 SILV+ .12 = 16.35 Record high close for the Dow Industrials and the S&P 500 index. The Consumer Price Index, or CPI, measures inflation at the retail level; prices that you and I pay for stuff. Prices were unchanged in October at an annualized rate of 1.7%. Lower gasoline prices offset increases in housing (up 0.3%), medical care (up 0.2%) and airline fares (which increased 2.4% despite lower fuel costs). The price of gasoline fell 3% last month. The cost of food edged up 0.1% in October, but that was the smallest gain in four months. Fruits, vegetables, dairy and beef increased in cost, but pork, chicken, fish and eggs all declined. Food prices are up 3.1% from a year earlier. Excluding the up-and-down food and energy categories, core consumer prices rose 0.2%. Over the past 12 months the core rate of inflation has risen an unadjusted 1.8%. Initial jobless claims fell by 2,000 to a seasonally adjusted 291,000 in the week ended Nov. 15. The number of people who applied for new unemployment benefits totaled fewer than 300,000 for the 10th straight week. The National Association of Realtors reports sales of existing homes rose 1.5% in October to a …

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Financial Review

What? Me Worry?

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-19-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 2 = 17,685 SPX – 3 = 2048 NAS – 26 = 4675 10 YR YLD + .03 = 2.35% OIL – .51 = 74.61 GOLD – 14.40 = 1184.10 SILV – .06 = 16.23 The Federal Reserve’s most recent FOMC meeting was October 28th and 29th; after the meeting they issued a statement saying that QE3 was finished; they painted a fairly positive picture off the economy to confirm their decision. Fed Chair Janet Yellen and her central bank colleagues last month focused on improvements in the labor market when they announced an end to their stimulative bond purchases. They also said that the risk of inflation remaining persistently below their goal had ebbed. Today, they released the minutes of the FOMC meeting and we get some better understanding of their thoughts. No bombshells, not much that was not expected. Policy makers last month “pointed to a somewhat weaker economic outlook and increased downside risks in Europe, China, and Japan,” in addition to a stronger dollar. There were concerns “that if foreign economic or financial conditions deteriorated further, US economic growth over the medium term might be slower than currently expected.” There was some debate over whether to acknowledge the weakening global economy; the general feeling was that the effects weaker growth overseas would “likely be quite limited,” and that any mention of global weakness could send an unwarranted …

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Financial Review

Some Outcomes Are So Predictable

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-18-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 40 = 17,687 SPX + 10 = 2051 NAS + 31 = 4702 10 YR YLD – .02 = 2.32% OIL – 1.34 = 74.32 GOLD + 9.80 = 1198.00 SILV + .07 = 16.31 Record highs for the Dow Jones Industrial Average (26th of 2014) and the S&P 500 Index (43rd of the year). While there are plenty of reasons for concern, the major stock indices have been climbing a wall of worry. Today, health care stocks pulled the market higher. Wholesale prices in the US increased in October as higher costs for services and food outweighed a slump in energy. The Producer Price Index was up 0.2% compared to a 0.1% drop in September. Wholesale prices excluding food and energy rose 0.4 percent after no change a month earlier. Compared with 12 months earlier, producer prices rose 1.5% and the core index increased 1.8 percent in the year ended October. Prices for goods dropped 0.4 percent last month, the most since April 2013. Energy costs decreased 3 percent last month, the biggest decline since March 2013. Wholesale food costs climbed 1 percent as prices of vegetables, eggs and meats increased. The cost of services increased 0.5 percent in October, and this is a major reason why the overall index was higher. Now normally services don’t jump that much. What happened? The nationwide average price of a gallon of …

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Financial Review

Work Hard and Invest in the Future

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-17-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 13 = 17,647 SPX + 1 = 2041 NAS – 17 = 4671 10 YR YLD + .02 = 2.34% OIL – .37 = 75.45 GOLD – 2.00 = 1187.50 SILV – .18 = 16.24 Another day, another record on Wall Street. A record high close for the S&P 500. The Dow did not close above Thursday’s record close of 17,652. The Dow Transports were down today, but Transportation stocks are the best performing names on the market over the past month. Since the market bottomed out on October 13th, the Dow Jones Transportation Average has soared an incredible 18%. So if you thought the S&P’s furious 11% rally has been a sight to behold, you clearly weren’t paying attention to the soaring plane, train and trucks. Another Merger Monday; Halliburton agreed to buy Baker Hughes for about $34 billion. Actavis agreed to buy Allergan for $66 billion. The Halliburton acquisition of Baker Hughes will unite 2 major oilfield services companies. Halliburton and Baker Hughes began discussions in mid-October; an interesting time as oil prices were falling, raising questions about the viability of expanding oil and gas exploration and development. The acquisition was on again, off again, and briefly turned hostile last week. The deal could still face regulatory scrutiny, even though Schlumberger is still the largest oilfield services company, bigger than a combined Halliburton/Baker Hughes. Halliburton has agreed to …

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