Financial Review

Financial Review Market Scorecard 08-06-2014

DOW + 13 = 16,443 SPX +.03 = 1920 NAS + 2 = 4355 10 YR YLD – .01 = 2.47% OIL – .54 = 96.84 GOLD + 17.30 = 1306.30 SILV + .27 = 20.11

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Financial Review

Where Water Flows

  Let’s start with the economic news of the day: The Commerce Department says the trade gap for June shrank 7% to $41.5 billion, the lowest reading since January. That was smaller than the roughly $44.8 billion shortfall the government had assumed in its first snapshot of second-quarter gross domestic product published last week; so that would indicate the 2Q GDP number could be revised higher by 0.3%.   Exports edged up 0.1% to a record high of $195.9 billion in June, supported by a surge in automobiles, parts and engines, which rose to an all-time high. Consumer goods exports also hit a record high. There was also a jump in crude oil exports. Imports fell 1.2% in June, the largest drop in a year; petroleum imports declined to $27.4 billion, the lowest level since November 2010, from $28.3 billion in May.   Elsewhere, the Gaza-Israel ceasefire is holding for a second day. The Iraqi government carried out an airstrike on ISIS, killing 60 in the city of Mosul. Russia is massing troops near the Ukrainian border. Renewed fighting in eastern Ukraine has forced the suspension of a search for the remains of the victims of crashed flight MH17. Russian President Putin has banned agricultural imports from countries imposing sanctions on Russia. So, it might be difficult to buy California avocados in Moscow, although the Kremlin hasn’t yet created a list of food and ag products that will be banned.   Of course it might be difficult to buy California …

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Financial Review

Financial Review Market Scorecard 08-05-2014

DOW – 139 = 16,429 SPX – 18 = 1920 NAS – 31 = 4352 10 YR YLD – .01 = 2.48% OIL – .86 = 97.43 GOLD + .40 = 1289.60 SILV – .39 = 19.84

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Financial Review

Go Figure

  We start with a couple of economic reports: The Institute for Supply Management’s services index rose to 58.7 last month, the highest level since December 2005, from 56.0 in June. A reading above 50 indicates expansion. Orders jumped to a 9 year high. A sub-index gauging services industry employment also rose as did order backlogs, but export order growth moderated.   In a separate report, the Commerce Department said orders for manufactured goods increased 1.1% in June, more than reversing May’s 0.6% decline. Orders for non-defense capital goods excluding aircraft hit a record high; this might indicate a renewal in business confidence and equipment spending plans. Factory orders rose across all categories, with bookings for electrical equipment, appliances and components recording their largest gain since November 2010. In another sign of strength, unfilled orders saw their largest rise in seven months.   So, a couple of good reports on the economy, and the stock market tumbles. Go figure.   The situation in Ukraine appears headed to a tipping point. Ukrainian forces have been pushing back against Russian backed separatists in eastern Ukraine. Meanwhile, Russia is massing troops on the border. Some 20,000 troops are now stationed about 50 kilometers from the border, closer than they had been stationed previously. In April, Russian President Vladimir Putin had briefly deployed about 40,000 troops at the border. The latest troops include Russian Elite forces, armored brigades, artillery and anti-aircraft units. Poland’s foreign minister thinks Russia is preparing to invade Ukraine; he didn’t …

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Financial Review

Financial Review Market Scorecard 08-04-2014

DOW + 75 = 16,569 SPX + 13 = 1938 NAS + 31 = 4383 10 YR YLD – .01 = 2.49% OIL + .09 = 98.38 GOLD – 6.00 = 1289.20 SILV – .17 = 20.23

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Financial Review

Giving Up the Ghost

08042014 Script Giving Up the Ghost by Sinclair Noe   DOW + 75 = 16,569 SPX + 13 = 1938 NAS + 31 = 4383 10 YR YLD – .01 = 2.49% OIL + .09 = 98.38 GOLD – 6.00 = 1289.20 SILV – .17 = 20.23   Let’s start with economic data; on Friday we had the monthly jobs report: 209,000 jobs and the unemployment rate ticked up to 6.2%. It was a decent jobs report but came in a little under expectations. Still the economy has been adding jobs at a strong clip this year. Early in 2014, the Conference Board’s employment trends index pointed to stronger job creation even though the economy temporarily contracted, and that’s exactly what happened. Hiring accelerated, the economy snapped back in the second quarter, and over the past six months the economy has added jobs at the fastest clip since 2006.   The Employment Trends Index increased in July to a reading of 120.31, up from 119.91; this represents a 6.6% increase from a year ago. The 6 month growth rate in the index is the strongest in over 2 years, and suggests solid job growth is likely to continue in the coming months. Job openings keep hitting post-recession highs. There were 4.64 million job openings in May, near an all-time high; and layoffs are extremely low, even compared to the prerecession period.   While there are some signs of strength in the jobs market, wages have been stagnant. Worker pay was …

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Financial Review

Financial Review Market Scorecard 08-01-2014

DOW – 69 = 16,493 SPX – 5 = 1925 NAS – 17 = 4352 10 YR YLD – .05 = 2.50% OIL – .32 = 97.88 GOLD + 13.70 = 1295.20 SILV – .09 = 20.40

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Financial Review

Jobs, Mainly

  The first Friday of each month brings us what I consider one of the most important economic reports we can cover, the jobs report; and so we provide comprehensive (wonkish) coverage.   The economy added 209,000 net new jobs in July. The unemployment rate moved up to 6.2% from 6.1%. Even though the economy added jobs, more people joined the labor force, and that is why the unemployment rate moved higher. The 209,000 new jobs was below estimates of about 230,000. The report from June was revised from 288,000 to 298,000; the May report was revised from 224,000 to 229,000 for a net 15,000 in upward revisions.   Employment is up 2.57 million year over year. We have regained the jobs lost in the downturn, and total employment is 639,000 above the pre-recession peak. Total employment is up 9.35 million from the lows of the recession, and private employment is up almost 9.9 million from the lows; the difference reflects the job losses in government related jobs.   So far this year an average of 229,000 new jobs a month have been created. That’s a significantly higher pace than in 2010 when a mere 88,000 jobs a month on average were added. Since the start of the year the economy has added 1.6 million jobs.  At the current pace, the economy could add 2.75 million jobs this year, which would be the best year for total and private job growth since 1999.   This was the sixth month in …

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Financial Review

Financial Review Market Scorecard 07-31-2014

DOW – 317 = 16,563 SPX – 39 = 1930 NAS – 93 = 4369 10 YR YLD un = 2.55% OIL – 2.12 = 98.15 GOLD – 14.00 = 1281.50 SILV – .23 = 20.48

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Financial Review

Ugly Day, Ugly Logic

  Well, this was just ugly. The worst day for the Dow Industrial Average in about 4 months. Back on April 10th, the Dow dropped 267 points; that same day, the S&P 500 was down 30 points. Today wiped out the gains from July, with July marking the first negative month for the Dow and the S&P since January.   The S&P is still up about 5% for the year to date, but the Dow started the year at 16,576. All those record highs for 2014 have just been washed away. That’s how it goes; the markets scratch and claw, higher and higher, inch by inch it’s a cinch, until the cinch breaks. A couple of weeks ago, we talked about shorting, and the advantage of shorting is that the moves can be quick and severe. Sure enough. And while this might just be one bad day, long overdue, the Dow dropped below its 50 day moving average, which is one of the major measurements of a trend.   So, the question is why did the stock market nosedive today? One recurring theme I’ve been hearing is that traders are afraid the Fed will pull away the punchbowl. Yesterday’s GDP report showing better than expected 4% growth in the second quarter combined with today’s employment cost index, which rose 0.7% in the second quarter, made people nervous about the prospect of an improving economy and the possibility of wages pushing inflation higher.   Now wait just a minute; that doesn’t …

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