Financial Review

Thursday, April 17, 2014 – The Growth Industry for the Next 20 Years

The Growth Industry for the Next 20 Years by Sinclair Noe DOW – 16 = 16,408SPX + 2 = 1864NAS + 9 = 409510 YR YLD + .08 = 2.72%OIL + .83 = 104.59GOLD – 7.60 = 1295.60SILV + .02 = 19.75 Stocks ended a holiday-shortened week with mixed results. Stock markets will be closed tomorrow in observance of Good Friday. The S&P 500 had its best week since last July. For the week, the Dow rose 2.4%, the S&P 500 added 2.7% and the Nasdaq advanced 2.4%. With less than one-fifth of S&P 500 companies having reported results so far, about 63% have topped earnings expectations and 52% have topped revenue expectations. Of course that’s part of the dance between corporations and analysts, but it does move stock prices. For example, Goldman Sachs reported an 11% drop in quarterly profit and revenue fell 8%, but the results were better than estimates and share price was higher on the day.  Among the other earnings related movers today, Google, IBM, Mattel, and United Health were down on poor earnings news, while Morgan Stanley, GE and Pepsi moved higher. The number of Americans filing new claims for unemployment benefits rose less than expected in the latest week and came near pre-recession levels. The Labor Department also reports weekly earnings of the typical full-time worker rose 3% in the first quarter compared to a year earlier, the fastest pace since 2008. Median earnings came in at $796, that’s the point where half of …

READ MORE →
Financial Review

Wednesday, April 16, 2014 – What is Really Plausible

What is Really Plausible by Sinclair Noe DOW + 162 = 16,424SPX + 19 = 1862NAS + 52 = 408610 YR YLD + .01 = 2.63%OIL + .05 = 103.81GOLD – .20 = 1303.20SILV + .07 = 19.73 Let’s start with some earnings news and then we’ll move over to economic data. Google posted $3.4 billion in net income, or $5.04 per share, in the three months ended March 31, compared to $3.3 billion, or $4.97 per share, in the year-ago period. Revenue rose 19% to $15.4 billion, but analysts had estimated $15.5 billion, and the shares were getting clobbered in late trades. IBM reported its lowest quarterly revenue in five years; IBM reported revenue of $21.7 billion for the quarter, but that marks the eighth consecutive decline in quarterly revenue. The company has been restructuring its business by cutting jobs and selling its low-end server business. This is not what you would call a growth model. Also, from the faulty business model file: Bank of America posted a $276 million loss for the most recent quarter. The financial results included a pre-tax expense of $6 billion, or approximately 40 cents a share after tax, to cover litigation costs as the bank moved to resolve mortgage-related litigation fallout from the financial crisis that began in 2007 and other issues; far worse than the $3.7 billion investors had braced for. The bank today agreed to a $584 million settlement of litigation over nine residential mortgage-backed securitizations insured by the Financial Guaranty …

READ MORE →
Financial Review

Tuesday, April 15, 2014 – Yellen in the Lions’ Den

Yellen in the Lions’ Denby Sinclair Noe DOW + 89 = 16,262SPX + 12 = 1842NAS + 11 = 403410 YR YLD – .01 = 2.62%OIL – .22 = 103.83GOLD – 24.20 = 1303.40SILV – .41 = 19.66 Stocks were all over the place today. We started with triple digit gains for the Dow Industrials, dipped to triple digit losses, then back into positive territory for the close with the major indices closing just below their morning highs. This kind of volatility does not engender confidence; it does warrant caution. The utilities sector gained 1.3% and finished ahead of the other groups, extending its YTD gain to 11.8%; the biotech ETF added 1%, while the broader healthcare sector advanced 1.1%.Tech stocks have been beaten up quite a bit over the past couple of weeks. The Nasdaq 100 Tech Index (NDXT) is down 7% since April 1st. The Nasdaq Composite has exhibited weakness, but not to the point of meeting the definition of a correction; it would take a slide to 3,922 to mark a 10% fall from the March 5 closing high at 4,357; a 10% pullback from the March 6 intraday high of 4,371 would be achieved at 3,934. The Labor Department’s Consumer Price Index, or CPI, increased 0.2% in March after posting a 0.1% increase in February. Excluding volatile food and energy prices, core prices ticked up 0.2%.Prices rose 1.5% for the 12 months ending in March. That is up from February’s year-over-year reading of 1.1%. Core prices …

READ MORE →
Financial Review

Monday, April 14, 2014 – Blood Moon and More

Blood Moon and More by Sinclair Noe DOW + 146 = 16,173SPX + 14 = 1830NAS + 22 = 402210 YR YLD + .02 = 2.64%OIL – .11 = 103.63GOLD + 8.20 = 1327.60SILV un = 20.07 Here’s what you can expect; the Earth will eclipse the moon tonight about 10:58PM pacific time, adjust according to your time zone. The eclipse will take some time, a few hours. The moon will shift color from orange to blood red to brown, again depending on you locale and the weather. It should be interesting. The stock markets started the day in positive territory and as trading dragged on, the major indices moved lower on the very cusp of turning red, almost as if they were being eclipsed, and then positive again, right at 3:15 PM eastern time, everything just picked up. Now, you might think the markets are rigged. You might. A group of traders has sued CME Group Inc, accusing the operator of the world’s largest derivatives exchange of selling market data to high frequency traders, cheating other investors who lacked such access. The suit says the CME and its Chicago Board of Trade unit have been giving high-frequency traders early access to buy and sell orders.  They said this deprived other investors of the transparent, real-time data on futures and interest rate contracts that they thought they were getting, and were paying for. Volume was down from Friday; that’s a nasty trend, lighter volume on up days, heavier volume on …

READ MORE →
Financial Review

Friday, April 11, 2014 – Corrupt or Incompetent, Take Your Pick

Corrupt or Incompetent, Take Your Pick by Sinclair Noe DOW – 143 = 16,026SPX – 17 = 1815NAS – 54 = 399910 YR YLD – .01 = 2.62%OIL – .07 = 103.33GOLD + .30 = 1319.40SILV – .07 = 20.06 The S&P 500 closed at its lowest level in two months. The gauge slipped 2.7% this week, the biggest loss since 2012. The Dow Industrial are down 2.4% for the week. The Nasdaq Composite Index dropped 1.3% today, capping its biggest two-day retreat since 2011; and down 3.1% for the week; closing at its lowest level in 4 months. The major US indices are all back in the red year to date. Biotechs fell for the 7th week in a row; the worst run since 1998; and now down 21% from recent highs. About 7.4 billion shares changed hands on US exchanges, 5.8% higher than the three-month average. We are entering a period that has historically been very poor for stocks. The idea is called “Sell in May” or the worst six months. According to the Ned Davis (NDR) database, had you invested $10,000 in the S&P 500 every May 1st starting in 1950 and sold October 31 of the same year, your initial position would only be worth $10,026. Put another way, by investing only from May through October, a $10,000 stake invested in 1950 would have only made $26. The Labor Department reports the producer price index, gained 0.5% for March. Excluding the volatile categories of food and …

READ MORE →
Financial Review

Thursday, April 10, 2014 – Mr. Toad’s Wild Ride

Mr. Toad’s Wild Rideby Sinclair Noe DOW – 266 = 16,170SPX – 39 = 1833 (-2.1%)NAS – 129 = 4054 (- 3.1%)10 YR YLD – .06 = 2.62%OIL – .20 = 103.40GOLD + 5.80 = 1319.10SILV + .19 = 20.13 If you want to know why the stock market is up one day and down the next, and not just little moves but triple digit swings – I don’t know. If anybody says they know, they probably don’t. Maybe it’s the Fed, maybe it is earnings reporting season, maybe it’s a strong economy or a weak economy, or maybe the markets are just trying to imitate Mr. Toad’s Wild Ride. The one thing we know is that stock prices fluctuate, and over time a pattern or trend develops; right now things are wobbly. In economic news, the Labor Department said that the number of people applying for unemployment benefits dropped to 300,000, the lowest level in nearly seven years. The Treasury Department says the federal budget deficit for the first half of the 2014 fiscal year totaled $413 billion, down $187 billion from where it stood at this point last year, as tax revenue surged and spending sank.  In March, the Treasury collected $216 billion in taxes, up 16% from a year ago, helping reduce the deficit for March to $37 billion from $107 billion last year.  Meanwhile, spending sank by 14%, or $40 billion; military spending has been cut, federal government jobs have been cut, and Fannie Mae and …

READ MORE →
Financial Review

Wednesday, April 09, 2014 – Feeding Time at the ZIRP Trough

Feeding Time at the ZIRP Troughby Sinclair Noe DOW + 181 = 16,437SPX + 20 = 1872NAS + 70 = 418310 YR YLD un = 2.68%OIL + 1.04 = 103.60GOLD + 4.30 = 1313.30SILV  – .22 = 19.95 In an otherwise light week for economic news, the big report is today’s release of the FOMC minutes from last month’s meeting. No surprises. You may recall that after the last meeting, Chairwoman Janet Yellen talked about the possibility of raising the fed funds target rate after a “considerable time”; when pressed she indicated a “considerable time” was about six months after the Fed ends it asset purchases under Quantitative Easing. That would mean late spring or summer of 2015. Fed policymakers were unanimous in wanting to ditch the thresholds they had been using to telegraph a policy tightening; no hard and fast target of 6.5% unemployment or 2% inflation. The minutes indicate the Fed would like to see more improvement in the economy; the emphasis on quality rather than quantity. In other words, the Fed remains dovish, and they will taper but they will also keep rates low for a long time. And also, those “dots” are over-rated. The dots are actually charts suggesting the fed funds rate would top 2% by the end of 2016. In the minutes published today, several policy-makers claim the charts overstated the shift in projections, which would suggest the Fed is not ready to tighten policy. A couple of the voting members wanted to commit …

READ MORE →
Financial Review

Tuesday, April 08, 2014 – When Stuff Aligns

When Stuff Aligns by Sinclair Noe DOW + 10 = 16,256 SPX + 6 = 1851NAS + 33 = 411210 YR YLD – .01 = 2.68%OIL – .28 = 102.28GOLD + 11.10 = 1309.00SILV + .20 = 20.16 Every now and then the planets align. Tonight is one of those times; Mars, the Sun, and Earth will be aligned in opposition. And Mars is closer than normal, although still about 92 million miles away. I have no idea what this means in the cosmic scheme of things, but when the sun sets in the West, Mars will rise in the East; and it will be overhead around midnight. You should be able to spot it easily as it will look light a bright star with a red or burnt orange color. If you can’t watch tonight, you can look to the skies for the next week.  On April 14, there will also be a total lunar eclipse causing the full Moon to turn as red as the Red Planet itself. Investor sentiment remains upbeat ahead of earnings and despite the smack-down in prices Friday and Monday. On Friday, the CBOE Volatility Index, or VIX, dropped down to a multi-month low of 12.6 and even after a few days of triple digit declines the VIX has only edged back into the mid-14 range. And although Alcoa is the official start of earnings season, a few companies have already reported, including Oracle, Nike, and Fed Ex; without inspiration. The floodgates on profit …

READ MORE →
Financial Review

Financial Review for Tuesday, July 30, 2013 – The Bus Doesn’t Go There

The Bus Doesn’t Go There by Sinclair Noe DOW – 1 = 15,520SPX +0.63= 1685NAS + 17 = 361610 YR YLD + .01 = 2.61%OIL + .22 = 103.30GOLD – .50 = 1327.70SILV – .12 = 19.83 This might turn out to be a very interesting week, even if the markets were absolutely somnambulant today. Tomorrow morning we’ll get a report on second quarter gross domestic product and it is widely anticipated that it will show the economy growing at 1%, which is down from 1.8% in the first quarter and is generally pathetic, but remember that this number will then be revised a couple of times until they get it right. Tomorrow afternoon the FOMC will wrap up it’s two day meeting; Ben Bernanke will come down from his ivory tower and announce that the economy is modestly moderate and the Fed is watching it with keen interest and they will do whatever they do, which is more of the same depending upon economic conditions as seen from the long range telescope high atop their ivory tower. Of course, there is always the possibility the Fed could surprise us; they might take away the punchbowl and the kids on Wall Street might throw a temper tantrum and break your 401k, so we’ll all tune in tomorrow. Then on Friday we have the jobs report, which is the first Friday of each month. If there is strong jobs growth the kids on Wall Street might throw a temper tantrum and …

READ MORE →
Financial Review

Financial Review for Friday, November 2, 2012

Jobs, Jobs, and More Jobs by Sinclair Noe DOW – 139 = 13,093SPX – 13 = 1414NAS – 37 = 298210 YR YLD +.01 = 1.73% OIL – 1.98 = 87.58GOLD – 38.10 = 1677.90SILV – 1.35 = 31.01 The big economic news of the day is the October jobs report. The Labor Department says the economy added 171,000 jobs last month, and they revised prior months to show even more job gains. The unemployment rate rose to 7.9%, as more people entered the labor pool. Some 578,000 people entered the labor force in September, according to the household survey, with 410,000 saying they found work. The discrepancy led to the slight uptick in the unemployment rate. The professional-services sector created 51,000 jobs, health care added 31,000, retail gained 36,000 and leisure and hospitality companies hired 28,000 workers, manufacturers added 13,000 jobs after shedding workers in the prior two months. Altogether, the private sector added 184,000 jobs, with government subtracting 13,000 from the final total. Any jump in jobs is good for housing. While overall construction added 17,000 jobs in September, residential-building construction employment fell by 2,000. Residential specialty contractor jobs increased by 6,700, which speaks to the real root of today’s housing recovery. All-cash investors are leading the gains; they buy distressed properties and then repair and remodel them to turn them into rentals. It’s no wonder remodelers are seeing greater gains than the home builders. Companies also hired more employees in September and August than previously estimated. The …

READ MORE →