Financial Review

Financial Review for Tuesday, May 06, 2014 – Quickly Aging Here

Quickly Aging Hereby Sinclair Noe DOW – 129 = 16,401SPX – 16 = 1867NAS – 57 = 408010 YR YLD  – .02 = 2.59%OIL + .38 = 99.86GOLD – 1.80 = 1308.90SILV – .04 = 19.65 There was a pretty broad selloff on Wall Street today. AIG posted lousy earnings late yesterday, and today they dragged down most of the financials. Twitter proved a drag on the tech stocks. Twitter reached the 6 month expiration of a lock-up period that had restricted sale of about 82% of its outstanding stock. Share prices dropped about 18% today, but home prices in Silicon Valley are likely to move a bit higher in the next month. After the close, Disney posted better than expected earnings. Let’s start with economic data; the trade deficit narrowed in March, down 3.6% to $40.4 billion. March exports came in at about $193 billion and imports were around $234 billion, resulting in a $40 billion shortfall. Exports are 17% above the pre-recession peak, while imports are about 1% above the pre-recession peak. Exports of capital goods, industrial supplies and materials, and automobiles increased in March. Exports of services hit a record high, while those of non-petroleum goods were also the highest on record. Exports to Canada, South Korea and Germany all touched all-time highs in March. Imports of food and non-petroleum products hit record highs in March. Last week we saw the estimate for first quarter gross domestic product showing 0.1% growth; that estimate worked with an assumption …

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Financial Review

Financial Review for Monday, May 05, 2014 – Riggers’ Propaganda

Riggers’ Propaganda by Sinclair Noe DOW + 17 = 16,530SPX + 3 = 1884NAS + 14 = 413810 YR YLD + .02 = 2.61%OIL – .38 = 99.38GOLD + 9.10 = 1310.70SILV + .13 = 19.69 Last week we told you about prosecutors and regulators preparing to criminally prosecute Credit Suisse and maybe BNP Paribas, and the slap on the wrist enforcement efforts of the past decade, and especially under the mis-guidance of Attorney General Eric Holder’s “Too Big to Jail” policy. The Swiss finance minister met Holder on Friday to discuss a US probe into Swiss banks that allegedly helped Americans evade US taxes, which includes Credit Suisse. Today, Holder posted a video on the Justice Department website saying that the DOJ is pursuing criminal investigations of financial institutions that could result in action in the coming weeks and months, and adding that no company was “too big to jail.” A criminal conviction of an entity regulated in the United States could lead authorities to potentially revoke a charter, essentially a death sentence for a bank. In his video, Holder said prosecutors are working closely with regulators to address the issues before taking action, “Rather than wall off banks from prosecution, the potential for such severe consequences simply means that federal prosecutors conducting these investigations must go the extra mile to coordinate closely with the regulators that oversee these institutions’ day-to-day operations.” It’s starting to sound like Holder is going after criminal charges without the consequences of criminal charges; …

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Financial Review

Financial Review for Friday, May 02, 2014 – April Jobs Report

April Jobs Report by Sinclair Noe DOW – 45 = 16,512SPX – 2 = 1881NAS – 3 = 412310 YR YLD – .01 = 2.59%OIL + .57 = 99.99GOLD + 15.70 = 1301.60SILV + .44 = 19.56 Today is another Jobs Report Friday. We will go into quite a bit of detail here because really, most everything we talk about in regard to economics begins with work and jobs. It is my hope that you will join us here on the first Friday of each month to get your comprehensive, fact based coverage of the jobs report. Last month the economy added 288,000 net new jobs, and the unemployment rate dropped to 6.3%. April marked the biggest monthly gain in jobs since January 2012, when the economy added 360,000 jobs. Employment gains for February and March were revised higher by a combined 36,000; that raised the monthly average to 214,000 jobs a month since the start of the year. Through the first 4 months of 2014, the economy has added 857,000 payroll jobs, slightly better than the first 4 months of 2013, despite the harsh winter this year. In the current 58 month expansion, employers have added more than 200,000 jobs per month in 38% of the months. Current job creation performance is stronger than it was in the business-cycle expansion that occurred during the recovery in the early 2000s, even when a real estate construction bubble fueled growth.  Today’s job creation pace lags well behind previous recent economic recoveries, …

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Financial Review

Financial Review for Thursday, May 01, 2014 – If the Cops Never Arrest the Killer, Nobody Really Died

If the Cops Never Arrest the Killer, Nobody Really Died by Sinclair Noe DOW – 21 = 16,558SPX – 0.27 = 1883NAS + 12 = 412710 YR YLD – .04 = 2.60%OIL – .39 = 99.35GOLD – 6.40 = 1285.90SILV – .13 = 19.12 No record high for the Dow today. The Industrial Average was up and down, up and down throughout the day, but couldn’t hold positive territory. Today’s economic reports showed consumer spending increased, as did manufacturing activity, and unemployment claims. Consumer spending increased 0.9 percent in March after rising by 0.5 percent in February, the largest gain in more than 4-1/2 years. The top 6 automakers backed up the spending report by reporting year over year gains in sales. The spending report supports the notion that cold weather just paused consumer activity and there is pent up demand that will lead to more economic activity in the second quarter. Income increased 0.5 percent in March, the biggest gain since last summer, but with spending outpacing income growth, the saving rate, which is the percentage of disposable income households are socking away, hit a 14-month low. The Institute for Supply Management said its manufacturing index of national factory activity rose to 54.9 last month, up from 53.7 in March. A reading above 50 indicates expansion in the nation’s factories. Manufacturing activity has now accelerated for 3 consecutive months and last month’s gains were driven by a pickup in employment, export orders and inventories; although new orders were unchanged. …

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Financial Review

Financial Review for Wednesday, April 30, 2014 – Record Highs in First Gear

Record Highs in First Gear by Sinclair Noe DOW + 45 = 16580.84 (record close)SPX + 5 = 1883 NAS + 11 = 411410 YR YLD – .04 = 2.65%OIL – 1.59 = 99.69GOLD – 4.60 = 1292.30SILV – .29 = 19.25 Back on December 31st, we finished the old year with a record high close on the Dow Industrial Average at 16,576; since then the index has bobbed up  and down, briefly hitting an intraday high of  16,631 on April 4th, but on that day we finished in negative territory. Today, a record high close. The S&P 500 is closing in on the record high close of 1890, but not today. Now, when you hear the Dow is breaking records, you might think the economy is roaring, cruising along the highway in fifth gear. You would be wrong; the economy is stuck in first gear and the clutch is slipping. The Commerce Department reports the economy expanded at a mere 0.1% annual pace in the first three months of the year, one of the weakest rates of growth in the nearly 5-year-old recovery. A slowdown had been expected due to the harsh winter weather that froze business activity across a large swath of the country, but this report was worse than expected. The gross domestic product had been expanding at a 3.4% pace in the second half of last year. No worries, the weather has warmed and everything is returning to normal. Yeah, not exactly. There has been a …

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Financial Review

Financial Review for Tuesday, April 29, 2014 – Lowering the Bar

Lowering the Barby Sinclair Noe DOW + 86 = 16,535SPX + 8 = 1878NAS + 29 = 410310 YR YLD + .02 = 2.69%OIL – .12 = 100.72GOLD – .40 = 1296.90SILV – .13 = 19.54 The S&P/Case-Shiller home price index for February showed prices up 12.9% from February a year ago, that’s down from the 12-month advance of 13.2% reported in January. The index tracks existing home sales in 20 major metropolitan areas, and this economic report tends to lag, plus it is a 3-month moving average of prices; so maybe we could be seeing one of the last reports to reflect bad winter weather. Home prices fell in 13 of the 20 cities in February compared with the previous month, and it wasn’t just cold weather cities; prices in Las Vegas dipped 0.1% in February from the previous month, the city’s first monthly decline in nearly two years; home prices fell 1.6% in Cleveland and 0.7% in Tampa, Florida. Las Vegas still posted the biggest 12-month gain, with an increase of 23.1%. The Conference Board said its index of consumer attitudes dipped to 82.3 from an upwardly revised 83.9 in March; still, very near a 6-year high. A new report today from the National Employment Law Project finds that as the economy has inched toward recovery, low-wage jobs have returned far more quickly than middle- or high-income work. The report’s finding shows how the housing sector in particular is a key middle-income employer that has failed to rebound. …

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Financial Review

Monday, April 28, 2014 – But Our Bankers Aren’t Oligarchs

But Our Bankers Aren’t Oligarchsby Sinclair Noe DOW + 87 = 16448SPX + 6 = 1869NAS – 1 = 407410 YR YLD + .01 = 2.67%OIL – .03 = 100.57GOLD – 7.50 = 1297.30SILV – .16 = 19.67 This should be an interesting week. On Wednesday, the Federal Reserve’s Federal Open Market Committee, the FOMC, will meet to determine monetary policy; a statement will be issued Wednesday. On Friday, we’ll have the monthly jobs report. The market is jittery. The Dow fell 140 points on Friday, rose 139 on Monday morning, and gave it all back Monday afternoon, then recovered at little at the close. Investors are worried about the Ukraine crisis, the Fed’s tapering, peak earnings, high PEs, low GDP, inflation, deflation, and of course, their own shadows. So far, the stock market has merely been sluggish to start the year; no big crash, no big gains. Last week, the big 3 indices were down a little, while the indices are in negative territory year to date, that could change with one good week of trading. After doubling or tripling since 2009, stocks aren’t cheap any more. Companies, meanwhile, are finding it harder to keep raising earnings in a period of soft economic growth. This makes investors more cautious, but because speculative excess still hasn’t reached the extremes of past bubbles, and because the Federal Reserve is determined to sustain the recovery, there is less fear of a big decline. The Fed has started slowly rolling back its quantitative …

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Financial Review

Friday, April 25, 2014 – Don’t Hold Your Breath

Don’t Hold your Breathby Sinclair Noe DOW – 140 = 16,361SPX – 15 = 1863NAS – 72 = 407510 YR YLD – .02 = 2.66%OIL – 1.25 = 100.69GOLD + 9.90 = 1304.80SILV + .07 = 19.83 Consumer sentiment rose in April to a nine-month high as views on current and near-term conditions surged. The Thomson Reuters/University of Michigan’s final April reading on the overall index of consumer sentiment came in at 84.1, up from 80 the month before. Meanwhile, a new Gallup poll shows more Americans are optimistic about the job market this month than at any time since the 2008 financial crisis, with 30% saying now is a good time to find a quality job. That marks a significant improvement from the 8% who said they were optimistic about the job market in 2010, but it’s still a drop from the pre-2008 highs of almost 50%. And even though almost a third of Americans are optimistic, two-thirds still say the job market is lackluster; 66% of Americans say it’s not a good time to hunt for employment. Next week’s economic calendar includes a two day Federal Reserve FOMC meeting. Next Friday, we’ll have a monthly jobs report; the current estimates call for 215,000 net new jobs in April and the unemployment rate dipping to 6.6% from 6.7%. Also, the Commerce Department will release its first guess of first quarter GDP; the consensus estimate on the initial estimate is that the economy grew about 1%. The situation in Ukraine …

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Financial Review

Thursday, April 24, 2014 – The Bridge From Bubbles to Prosperity

The Bridge From Bubbles to Prosperity by Sinclair Noe DOW unchanged 16,501SPX + 3 = 1878NAS + 21 = 414810 YR YLD unchanged 2.69%OIL + .46 = 101.90GOLD + 10.20 = 1294.90SILV + .20 = 19.75 The Dow closed unchanged. That is just one of those freaky things that happens every few years. I remember it happened in 2008, and 1998 and 1996. I’m fairly sure there were other days where the Dow closed unchanged. I don’t know if there is any particular significance. Orders to factories for durable goods rose 2.6%, adding to the 2.1% rise in February. The back-to-back gains followed two big declines in December and January, which had raised concerns about possible weakness in manufacturing. The earlier declines, however, were likely tied to bad winter weather. On the jobs front, the number of people seeking unemployment benefits jumped 24,000 to a seasonally adjusted 329,000 last week. The four-week average of weekly unemployment claims decreased to 316,750, which puts us back to 2007 levels. The big earnings report today was Microsoft, which posted income of $5.6 billion, or 68 cents per share, compared with $6 billion, or 72 cents, in the year-ago quarter. They beat estimates of 63 cents per share, but take it with a grain of salt; the estimates started the quarter around 80 cents per share. Yesterday we talked about a tech bubble, and whether we were in one or not, and we looked at comments from Greenlight Capital manager David Einhorn; he says …

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Financial Review

Wednesday, April 23, 2014 – A Brilliant Future From Cool Ideas

A Brilliant Future From Cool Ideas by Sinclair Noe DOW – 12 = 16,501SPX – 4 = 1875NAS – 34 = 412610 YR YLD – .05 = 2.68%OIL – .2- = 101.55GOLD un 1284.70SILV + .06 = 19.55 It’s earnings season, and this is a chance to compare and contrast. This morning, Facebook posted earnings of $642 million in net income, or 25 cents a share, in the first quarter, versus $219 million, or 9 cents a share in the year ago period. Overall revenue grew 72% year-on-year to $2.5 billion in the first quarter, topping estimates. Facebook now has 1.28 billion active users, and more than 1 billion do their Facebook stuff on a mobile device. Then Facebook announced their Financial Director was resigning. Shares were up about 3%. Nobody puts on a better presentation than Apple, that’s how they grew to be the most valuable company in the world. Steve Jobs would walk out and announce Apple had created a new mp3 player, and also a new way to connect to the internet, and also a new camera. Wow, three new products, nope…, he would hold up the iPhone – just one very cool thing from Apple; tech geeks heads would explode. Today, Apple posted earnings of $10.2 billion or $11.62 a share, on revenue of $45.6 billion. Analysts expected the company to report earnings excluding items of $10.18 a share; Apple reported a 4.6% rise in March-quarter revenue to $45.6 billion; Apple sold 43.7 million iPhones in …

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