Financial Review

Financial Review Market Scorecard 07-15-2014

DOW + 5 = 17,060 SPX – 3 = 1973 NAS – 24 = 4416 10 YR YLD + .01 = 2.54% OIL – .74 = 100.17 GOLD – 13.20 = 1294.60 SILV – .19 = 20.82

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Financial Review

The Path We’re On

  We’ll start with a couple of quick economic reports.   The Commerce Department reports retail sales increased 0.2% in June. The sales figures from May were revised from a 0.3% increase to a 0.5% increase. The increase in June was below consensus expectations of a 0.6% increase; however sales in April and May were revised higher, so it all levels out and was fairly strong report. Sales were up 4.3% year to year.   The Empire State Manufacturing Survey for July was up 6 points to 25.6, a four year high.   The state of California released its monthly cash report for June; the state’s General Fund ended the fiscal year with a positive cash balance for the first time since 2007, so the state won’t have to borrow to meet all of its payment obligations.   Federal Reserve chairwoman Janet Yellen delivered her semiannual Humphrey Hawkins testimony before the Senate Banking Committee today. Tomorrow, Yellen will repeat the process with the House. Yellen said progress has been made to restore the economy to health and strengthen the financial system, yet too many Americans remain unemployed and inflation remains below targets and there hasn’t been enough financial reform.   After prepared remarks, Yellen fielded questions from the senators, and this is where it gets a little interesting. Yellen said, “equity valuations of smaller firms as well as social media and biotechnology firms appear to be stretched.” Some folks felt this was an “irrational exuberance” moment for Yellen. Social media …

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Financial Review

Clearing Up Outstanding Issues

  The Dow Industrial Average hit an intraday high of 17,088, but couldn’t close above the old closing high of 17,074 from July 2. I woke up this morning and checked the Euro markets; the headline read: Global Stocks mostly higher as Portuguese debt concerns ease. Banco Espirito Santo’s parent company sold part of its stake in the bank to pay off short-term debt, so everything is cool. Portuguese bond prices popped. Nothing to see here. Move along, move along.   Just to refresh your memory, Banco Espirito Santo is 25% owned by Espirito Financial Group, which is in turn 49% owned by Espirito Santos Irmaoes, which in turn is wholly owned by Rioforte investments, which in turn is wholly owned by Espirito Santo international. What’s the point of owning a bank if you can’t make loans to yourself; and that’s what happened, until last week, when Espirito Santo International, the parent company failed to make a payment on short-term debt. The collective companies under the Espirito Santo umbrella have borrowed several billion from the bank, and then the bank made about 8 billion euros in loans to Angola, and that has a non-performance rate approaching 90%. And I know you’re wondering why you should be concerned about loans to Angola, and it’s because everything in finance is leveraged. No loan lives in isolation.   Panic ensued. The fear was that creditors and/or depositors might be on the hook in the event of a shortfall; no one could be certain …

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Financial Review

Financial Review Market Scorecard 07-14-2014

DOW + 111 = 17,055 SPX + 9 = 1977 NAS + 24 = 4440 10 YR YLD + .03 = 2.55% OIL + .22 = 101.05 GOLD – 32 = 1307.80 SILV – .54 = 21.00

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Financial Review

Financial Review Market Scorecard

DOW + 28 = 16,943 SPX + 2 = 1967 NAS + 19 = 4415 10 YR YLD – .01 = 2.52% OIL – 2.44 = 100.49 GOLD + 3.70 = 1340.00 SILV + .03 = 21.55

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Financial Review

TGI Friday

  We start with a quick review of the global hotspots.   Israel and Gaza are throwing missiles at each other. Israel has better offense and defense. Approximately 100 Palestinians have died in the bombing; one Israeli has died in the missile attacks. President Obama has offered to negotiate a ceasefire but there isn’t much interest. Palestinian militants say they will fire missiles at Tel Aviv’s main airport. Israelis won’t rule out a ground war and vow the aerial assault will continue until quiet is restored.   Ukrainian President Poroshenko vowed to “find and destroy” pro-Russian rebels who killed 23 servicemen and wounded nearly 100 in a missile attack today. Kiev blames Moscow for fanning the violence and allowing fighters and high-powered weaponry to cross the frontier from Russia to Ukraine.   Kurdish forces seized two oilfields in northern Iraq and took over operations from a state-run oil company. Kurdish politicians formally suspended their participation in Iraqi government in Baghdad. An oil ministry spokesman in Baghdad described the takeover as dangerous and irresponsible. The Shi’ite run government of Prime Minister Maliki has been trying to cobble together a coalition government with very little success and it now appears the country has literally been divided into three states. Meanwhile, when the extremist Sunni faction known as ISIS took over the city of Mosul, they reportedly captured some radioactive materials, 40 kilos of uranium. The International Atomic Energy Agency says it is low grade and doesn’t pose a risk. I’m just guessing …

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Financial Review

Financial Review Market Scorecard 07-10-2014

    DOW – 70 – 16,915 SPX – 8 = 1964 NAS – 22 = 4396 10 YR YLD – .01 = 2.53% OIL + .59 = 102.88 GOLD + 8.70 = 1336.30 SILV + .32 = 21.52

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Financial Review

If It’s Not One Thing…

We start today with the hottest stock in the world: CYNK Technology, ticker CYNK.  It is a one person company, which has something to do with a website, with headquarters in Belize, maybe. There is no indication of revenue, possibly about a million in losses. It had been trading for a couple of pennies, and then for no apparent reason it started trading higher. After closing at 6 cents on May 15 it began its surge with a 3,650% jump to $2.25 on June 17. The stock climbed as much as 49% to $21.95 earlier today in over-the-counter trading on volume of more than 380,000 shares before erasing its gain to close down 5.5% to $13.90, and a market cap of a little more than $4 billion. How and why did this happen? Nobody seems to have an answer, but I think it would be a very, very bad idea to do anything with this stock, just to be clear.   Se nao e uma coisa e outra coisa.   Which is Portuguese for “if it’s not one thing, it’s another thing.”   I’m sure somebody in Lisbon was fully aware of what was going on, and they were waving their arms and screaming about the bank that was ready to implode; and nobody paid any attention because there was so much else happening around the world. Iraq is fractured, bombs are flying in Israel, Germany is expelling a US spy, the Italian economy looks wobbly, Libya, Ukraine, Nigeria, Thailand, …

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Financial Review

Financial Review Market Scorecard 07-09-2014

DOW + 78 = 16,985 SPX + 9 = 1972 NAS + 27 = 4419 10 YR YLD – .02 = 2.54% OIL – 1.46 = 101.94 GOLD + 7.00 = 1327.60 SILV + .08 = 21.10

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Financial Review

Waiting For Liftoff

  The Federal Reserve released the minutes of the most recent FOMC policy meeting from June 17-18.   The Fed is going to take away the punchbowl. As of October, no more punchbowl. That’s it, QE is drying up. I think we all knew that was coming. And then after the Fed stops buying Treasuries and mortgage backed securities, they will get around to probably raising their target on interest rates, but rates would remain near zero for a “considerable time” (probably the spring of 2015) after the Fed halts its program of bond purchases.   According to the minutes, there continues to be division over when the Fed should stop reinvesting proceeds of the $4.2 trillion in assets it purchased to support financial markets. Ending reinvestment will put the central bank’s balance sheet on a declining path, and some members argue that should not take place until interest rates have been increased. Fed officials also agreed that the rate of interest on excess reserves would play a “central role” in moving rates higher when the time comes.   And this is a fluid timeline for all this; it is partly dependent on “liftoff”; that’s the new word from the Fed – liftoff. At some point, the economy will slip the surly bonds of earth and wheel, soar, and swing high in the sunlit silence, and do a hundred things we haven’t dreamed of for such a long, long time. Someday, we’ll have liftoff.   The market players looked at …

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