Financial Review

Double Irish With a Side of Knowledge Box

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-14-2014.mp3Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 5 = 16,315 SPX + 2 = 1877 NAS + 13 = 4227 10 YR YLD – .08 = 2.20% OIL – 3.76 = 81.98 GOLD – 4.90 = 1233.20 SILV – .11 = 17.49 The Dow was down slightly, while the S&P and Nasdaq snapped a 3 day slide, but this was almost a quiet day; call it neutral. A follow-up on yesterday’s discussion of the 200 day moving average. The S&P 500 dropped down to the 200 day moving average on Friday (right around 1905), and then fell right through the trend line yesterday. We talked about the possibility of a bounce; and I don’t think today’s minor move qualifies as a bounce, even though it was a positive move. So, we are still waiting for a possible bounce. The 200 day moving average is a lagging indicator, and so for now, the trend line is still moving higher; which increases the prospects for a bounce. When the price drops below a declining 200 day moving average, it is considered extremely bearish and the probability of a bounce is very low. So, we wait for confirmation. It is earnings reporting season, and today’s reports feature the banks. We start with JPMorgan Chase, the nation’s largest bank by assets, reporting third quarter net income of $5.6 billion, or $1.36 per share, a big improvement from the same period last …

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Financial Review

Forget Complacency

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-13-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 223 = 16,321 SPX – 31 = 1874 NAS – 62 = 4213 10 YR YLD closed 2.28% OIL – .69 = 85.05 GOLD + 14.10 = 1238.10 SILV + .10 = 17.60 The major indices were up and then down; small moves earlier in the session; then, in the final hour stocks slipped and kept falling. The S&P 500 has fallen 6.8 percent from its Sept. 18 record, making this the worst pullback in two-and-a-half years. The Russell 2000 sank 4.7 percent last week. The small-cap index entered a correction after sliding more than 10 percent from an all-time high in March. The Dow Jones Industrial Average has dropped 5.5 percent from its record last month, while the Nasdaq Composite Index has slumped 8.3 percent from a 14-year high reached in September. The Volatility Index, or VIX, rose 13 percent today to 24, the highest level since June 2012. Forget complacency. The final hour collapse coincided with a report that an Emirates Airline plane in Boston was surrounded by medical crews and they removed five passengers over concerns about Ebola. But there is more to today’s trading than an Ebola scare. Oil prices continued to slide. Saudi Arabia is saying they are comfortable with oil prices in the sub-$90 range. The Saudis don’t necessarily want prices to slide further, but they are unwilling to shoulder production cuts unilaterally and …

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Financial Review

King Dollar and the Eurozone

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-10-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 115 = 16,544 SPX – 22 = 1906 NAS – 102 = 4276 10 YR YLD – .02 = 2.30% OIL – .25 = 85.52 GOLD – .60 = 1224.00 SILV + .05 = 17.50 The 10 year German bund has a yield that is 141 basis points lower than the US 10 year Treasury note. The yield on German debt will get you 0.89%. Standard & Poor’s lowered France’s credit outlook today, and you can still get a 10 year French note with a yield of 1.25%. A 10 year note from Spain will only get you 2.06%. Is this because the US debt is riskier than the Spanish debt? No, just the opposite. The problem in the Eurozone is deflation, and it threatens to bring the economy to a grinding halt, and send the EU into a triple dip recession. The president of the European Central Bank, Mario Draghi, gave no indication of any further monetary stimulus beyond what was announced this summer, suggesting in a speech in Washington that governments needed to do more on the fiscal side. Draghi said in effect that Eurozone countries that have enough money should spend it, a clear reference to Germany. His comments echoed remarks this week from Christine Lagarde, the head of the International Monetary Fund. Today, German Chancellor Angela Merkel said her government was examining how to encourage investment, …

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Financial Review

The Only Winner is Gravity

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-09-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 334 = 16,659 SPX– 40 = 1928 NAS – 90 =4378 10 YR YLD un 2.33% OIL – 2.96 = 84.35 GOLD + 2.10 = 1224.60 SILV – .03 = 17.45 Triple-digit swings in the stock market have become common in recent days. Just this week, the Dow jumped 274 points Wednesday, reversing a 272-point decline on Tuesday. We’ll talk about volatility in just a moment. In economic news: Germany’s exports sank 5.8 percent in August, the biggest monthly drop in five years. The figure raised concerns that Europe’s largest economy may fall into recession. European Central Bank President Mario Draghi says Europe’s problems are structural, not cyclical and there can be no recovery without reforms. Draghi was speaking in New York; he said the Euro banking sector is still going through deleveraging; they are not lending; and there are limits to what the ECB can do to produce growth. And deflation is highly contagious. The number of people who applied for U.S. unemployment benefits in the first week of October edged down by 1,000 to a seasonally adjusted 287,000, holding below 300,000 for the fourth straight week. Jobless claims are now 21% lower compared to one year ago. What we are starting to see is that so many businesses fired workers during the downturn and they have been very slow to rehire or hire new workers, which means not …

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Financial Review

Send Thank You Notes to Janet

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-08-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 274 = 16,994 SPX + 33 = 1968 NAS + 83 = 4468 10 YR YLD – .02 = 2.33% OIL – 1.23 = 87.62 GOLD + 13.20 = 1222.50 SILV + .19 = 17.48 Volatility has kicked into high gear. Yesterday the VIX, the Volatility Index was up 11%, and today it dropped 12%. The Dow has had moves of 200 points or more five times in the last 10 days. There have only been 10 other days this year when the index has made moves of that magnitude. Yesterday was an ugly decline and today, stocks started drifting lower, and then suddenly, dramatically, jumped higher; by the closing bell it was the best day of the year. Send your thank you notes to Janet Yellen. Pause for just a moment and think about what has been driving the markets for the past 5 years. Certainly, there are many factors but a big factor would have to be Federal Reserve monetary policy. Yesterday stocks looked like they were going to hell in a hand basket, and today the Fed’s FOMC minutes were released and the markets were revived as if they’d been given a big old hypodermic full of adrenaline straight to the heart. We all know the Fed is ending its bond buying crusade this month, and the open question has been when they will raise interest rates. …

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Financial Review

Thanks Hank

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-07-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 272 = 16,719 SPX – 29 = 1935 NAS – 69 = 4385 10 YR YLD – .07 = 2.35% OIL – 1.91 = 88.43 GOLD + 1.50 = 1209.30 SILV – .16 = 17.29 The S&P 500 dropped below its 50-day moving average last week and has yet to move back above that level. Coincidentally, the S&P 500 has been sliding for a few weeks, going back to September 19, which was the day of the Alibaba IPO, just coincidentally. The Dow is also trading below its 50 day moving average. Welcome to the start of earnings season. In the past 3 months the US dollar has jumped by 8% against the euro. That makes American goods more expensive relative to European goods. And it wasn’t just the dollar against the Euro, but against a basket of foreign currencies. It is estimated that a 5% rise in the dollar versus the euro results in a drop of about $1 for full-year Standard & Poor’s 500 Index per-share earnings; current estimates for the S&P are running around $118. Partly because of the dollar and the related decline in oil prices, earnings estimates have seen one of the largest downward revisions over the last few years aside from the weather-beaten first quarter of this year. Earnings-per-share are projected to have grown 4.9% in the third quarter, that’s down from 7.8% earnings …

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Financial Review

Paulson, Bernanke, and Geithner Walk Into a Courtroom

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-06-2014.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 17 = 16991 SPX – 3 = 1964 NAS – 20 = 4454 10 YR YLD – .02 = 2.42% OIL + .05 = 90.39 GOLD + 16.10 = 1207.80 SILV + .49 = 17.45 Stocks erased early gains. The Russell 2000 Index of small cap stocks took a hit of nearly 1%. Earnings season is right around the corner. Alcoa kicks off the unofficial start of earning season on Wednesday, and we’ll get 8 companies from the S&P500 reporting this week. The average estimate for the S&P500 calls for right at 5% earnings growth; however there are concerns about the impact of a strong dollar on overseas revenue. Not much in the way of economic data today. The economy added at least 200,000 new jobs in seven of the past eight months and all signs point to similarly strong hiring through the end of the year. The latest evidence? A ninth straight increase in the employment trends index produced by the Conference Board, a nonprofit economic-research firm. The index is now 6.1% higher than a year ago. Slightly less optimistic is the new, broader, all-purpose employment index from the Federal Reserve, it’s called labor market conditions index; it was up 2.5 points last month after an increase of 2.0 in August. This is a new index the Fed has built that draws on 19 separate jobs-related measures to give …

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Financial Review

September Jobs Report

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-03-2014.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 208 = 17,009 SPX + 21 = 1967 NAS + 45 = 4475 10 YR YLD + .01 = 2.44% OIL – 1.31 = 89.70 GOLD – 23.60 = 1191.70 SILV – .24 = 16.96 There is an old saying in the markets, “Sell Rosh Hashana, Buy Yom Kippur”, and when Yom Kippur falls on the first Friday of the month and coincides with a strong monthly jobs report, there is wisdom in the adage. Each month we focus on the jobs report and try to tell you everything you need to know; let’s go. The economy added 248,000 net new jobs in September. The unemployment rate dropped from 6.1% to 5.9%, falling below the 6% level for the first time since July 2008. Most estimates had called for job gains in the range of 210,000 to 220,000. In August the jobs report was far less than expected, coming in at just 142,000 jobs, however, today the August report was revised up to 180,000. And the July number was revised higher from 212,000 to 243,000. So, the two month revisions added a combined 69,000 more jobs than previously reported. The gain in payrolls over the last six months was the strongest for any six-month period since before the 2007-09 recession. Employment is now up 2.63 million year-over-year. The economy has added 2,040,00 jobs year to date. At the current pace, …

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Financial Review

Strange Days Indeed

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-02-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 3 = 16,801 SPX + 0.01 = 1946 NAS + 8 = 4430 10 YR YLD + .03 = 2.43% OIL + .59 = 91.32 GOLD + 1.30 = 1215.30 SILV – .08 = 17.20 The Dow Industrial dropped about 130 points in early trading, but then recovered, mainly In economic news: The number of Americans filing new claims for unemployment benefits fell last week by 8,000 to a seasonally adjusted 287,000. Separate data showed small businesses hiring workers at the fastest pace in 8 months. The National Federation of Independent Business said its monthly survey of its members found they added an average of 0.24 workers per firm last month, on a seasonally adjusted basis. Tomorrow the government will report on non-farm payrolls for September; we’re looking for about 220,000 net new jobs and the unemployment rate to hold near 6.1%. A report from the Commerce Department showed new orders for factory goods posted their biggest decline on record in August. Factory orders dropped 10.1%, following a 10.5% increase in July; the wild swings are attributed to orders for airplanes. Stripping out transportation orders, new orders were down a more modest 0.1%. Since June, the European Central Bank has lowered the interest rate on bank deposits parked at the ECB to negative territory, a first for this central bank, and added new lending and private-asset purchase programs. Today, the …

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Financial Review

Fluctuations

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-01-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 238 = 16,804 SPX – 26 = 1946 NAS – 71 = 4422 10 YR YLD – .10 = 2.40% OIL – .43 = 90.73 GOLD + 4.30 = 1214.00 SILV + .20 = 17.28 Yesterday, we talked about third quarter results. Most of the stock indices were down in September but still slightly positive for the third quarter. Today wiped out the third quarter gains. Why? Well, that’s always fun; the headlines offer a plethora of reasons, including “global worries” or maybe it’s a “market top” or “geopolitical hotspots” or “commodity crash” or maybe it’s just the start of a “rocky October”. I don’t claim to know why the markets dropped today, or any given day. I can read a chart, and I can identify patterns, but there are no guarantees. We follow macroeconomics and we analyze company P&Ls, but there are no guarantees. We do not get stuck in cheerleader mode like the talking heads on TV business shows, nor do we follow the perma-bears. Markets fluctuate; to paraphrase a line from J.P. Morgan, or maybe John Rockefeller. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.” That’s a quote from Warrant Buffet. We don’t yet know whether this is folly or a trend. We’ll just have to listen to the markets. The Institute for Supply Management’s index …

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