Financial Review

Faster and Faster but No Liftoff

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-25-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 2 = 17,814 SPX – 2 = 2067 NAS+ 3 = 4758 10 YR YLD – .05 = 2.26% OIL – 1.95 = 74.22 GOLD + 2.90 = 1202.20 SILV + .20 = 16.77 The major stock indices couldn’t close at records, but Apple reached a milestone today. Apple’s market capitalization hit a record $700 billion; that’s double from 3 years ago when Tim Cook became CEO. Apple is the first S&P 500 company to ever reach a $700 billion market cap. Yet, on an inflation-adjusted basis, it still has way to go to be the most valuable company of all time. Microsoft’s market cap peak of $613 billion in 1999 translates to nearly $874 billion in 2014 dollars. When Microsoft was at the top, it was trading at 72 times earnings. Apple’s price-to-earnings ratio is currently 18, in line with the overall S&P. It’s a little tough to imagine what Apple will do in the future to match the growth they’ve experienced in the past. The economy is better than you thought. The Commerce Department revised its estimate of third quarter gross domestic product from 3.5% up to 3.9%. There will be another revision before settling on a final number. Second quarter GDP came in at a 4.6% growth rate; combined second and third quarter GDP was the strongest back to back growth since 2003. Let’s …

READ MORE →
Financial Review

Test Results Are In

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-24-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 7 = 17,817 SPX + 5 = 2069 NAS + 41 = 4754 10 YR YLD – .01 = 2.31% OIL – .81 = 75.70 GOLD – 3.80 = 1199.30 SILV + .02 = 16.57 The S&P 500 has gained 11% since bottoming out in a slump that stretched from mid-September to mid-October. The rally has been driven by a belief that central bank actions in Europe, China and Japan will help invigorate global economic growth. On Friday, China’s central bank lowered a key interest rate and European Central Bank President Mario Draghi said he was willing to step up the bank’s efforts to stimulate the Eurozone, which has been struggling. Speaking of European investors that sell assets to the ECB moving into other, more risky, assets that would help accelerate the euro area’s growth, Draghi said that higher prices for European assets might encourage some foreign holders to switch away from the euro, with “investors rebalancing portfolios away from euro-denominated assets towards other jurisdictions and currencies providing higher yields.” Just to make sure that listeners got the message, he added there was evidence that the asset-purchase programs of the U.S. Federal Reserve and the Bank of Japan “led to a significant depreciation of their respective exchange rates, even in a situation in which long-term yields were already very low, as in Japan.” You have been warned; …

READ MORE →
Financial Review

Fans of Gridlock

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-21-2014.mp3Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 91 = 17,810 SPX + 10 = 2063 NAS + 11 = 4712 10 YR YLD – .02 = 2.32% OIL + .77 = 76.62 GOLD + 5.80 = 1201.30 SILV + .15 = 16.50 Record highs for the Dow and the S&P. China has cut interest rates for the first time in more than 2 years. The first thought is that China is trying to stimulate growth for a slowing economy. However, in making the announcement, the People’s Bank of China tried to emphasize that the economy is growing within a reasonable range, and the rate cut was not about spurring growth. Instead, they emphasized the need to reduce corporate financing costs to help struggling companies. So, you might think that lower rates would only encourage more borrowing in a country that already has too much debt. What the Chinese central bank appears to be doing is making it feasible to refinance the existing debt at lower rates, which would allow Chinese companies to lessen their debt burdens. So, in this way, lower rates is a way to deleverage. And this is not the first attempt at reducing borrowing costs. Since September the People’s Bank of China has provided more than $130 billion in medium term loans to banks on the condition they lower borrowing rates for small businesses; trying to channel to certain industries, including …

READ MORE →
Financial Review

Skim Just a Little

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-20-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 33 = 17,719 SPX + 4 = 2052 NAS + 26 = 4701 10 YR YLD – .02 = 2.33% OIL + 1.50 = 76.00 GOLD + 11.40 = 1195.50 SILV+ .12 = 16.35 Record high close for the Dow Industrials and the S&P 500 index. The Consumer Price Index, or CPI, measures inflation at the retail level; prices that you and I pay for stuff. Prices were unchanged in October at an annualized rate of 1.7%. Lower gasoline prices offset increases in housing (up 0.3%), medical care (up 0.2%) and airline fares (which increased 2.4% despite lower fuel costs). The price of gasoline fell 3% last month. The cost of food edged up 0.1% in October, but that was the smallest gain in four months. Fruits, vegetables, dairy and beef increased in cost, but pork, chicken, fish and eggs all declined. Food prices are up 3.1% from a year earlier. Excluding the up-and-down food and energy categories, core consumer prices rose 0.2%. Over the past 12 months the core rate of inflation has risen an unadjusted 1.8%. Initial jobless claims fell by 2,000 to a seasonally adjusted 291,000 in the week ended Nov. 15. The number of people who applied for new unemployment benefits totaled fewer than 300,000 for the 10th straight week. The National Association of Realtors reports sales of existing homes rose 1.5% in October to a …

READ MORE →
Financial Review

What? Me Worry?

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-19-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 2 = 17,685 SPX – 3 = 2048 NAS – 26 = 4675 10 YR YLD + .03 = 2.35% OIL – .51 = 74.61 GOLD – 14.40 = 1184.10 SILV – .06 = 16.23 The Federal Reserve’s most recent FOMC meeting was October 28th and 29th; after the meeting they issued a statement saying that QE3 was finished; they painted a fairly positive picture off the economy to confirm their decision. Fed Chair Janet Yellen and her central bank colleagues last month focused on improvements in the labor market when they announced an end to their stimulative bond purchases. They also said that the risk of inflation remaining persistently below their goal had ebbed. Today, they released the minutes of the FOMC meeting and we get some better understanding of their thoughts. No bombshells, not much that was not expected. Policy makers last month “pointed to a somewhat weaker economic outlook and increased downside risks in Europe, China, and Japan,” in addition to a stronger dollar. There were concerns “that if foreign economic or financial conditions deteriorated further, US economic growth over the medium term might be slower than currently expected.” There was some debate over whether to acknowledge the weakening global economy; the general feeling was that the effects weaker growth overseas would “likely be quite limited,” and that any mention of global weakness could send an unwarranted …

READ MORE →
Financial Review

Some Outcomes Are So Predictable

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-18-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 40 = 17,687 SPX + 10 = 2051 NAS + 31 = 4702 10 YR YLD – .02 = 2.32% OIL – 1.34 = 74.32 GOLD + 9.80 = 1198.00 SILV + .07 = 16.31 Record highs for the Dow Jones Industrial Average (26th of 2014) and the S&P 500 Index (43rd of the year). While there are plenty of reasons for concern, the major stock indices have been climbing a wall of worry. Today, health care stocks pulled the market higher. Wholesale prices in the US increased in October as higher costs for services and food outweighed a slump in energy. The Producer Price Index was up 0.2% compared to a 0.1% drop in September. Wholesale prices excluding food and energy rose 0.4 percent after no change a month earlier. Compared with 12 months earlier, producer prices rose 1.5% and the core index increased 1.8 percent in the year ended October. Prices for goods dropped 0.4 percent last month, the most since April 2013. Energy costs decreased 3 percent last month, the biggest decline since March 2013. Wholesale food costs climbed 1 percent as prices of vegetables, eggs and meats increased. The cost of services increased 0.5 percent in October, and this is a major reason why the overall index was higher. Now normally services don’t jump that much. What happened? The nationwide average price of a gallon of …

READ MORE →
Financial Review

Work Hard and Invest in the Future

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-17-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 13 = 17,647 SPX + 1 = 2041 NAS – 17 = 4671 10 YR YLD + .02 = 2.34% OIL – .37 = 75.45 GOLD – 2.00 = 1187.50 SILV – .18 = 16.24 Another day, another record on Wall Street. A record high close for the S&P 500. The Dow did not close above Thursday’s record close of 17,652. The Dow Transports were down today, but Transportation stocks are the best performing names on the market over the past month. Since the market bottomed out on October 13th, the Dow Jones Transportation Average has soared an incredible 18%. So if you thought the S&P’s furious 11% rally has been a sight to behold, you clearly weren’t paying attention to the soaring plane, train and trucks. Another Merger Monday; Halliburton agreed to buy Baker Hughes for about $34 billion. Actavis agreed to buy Allergan for $66 billion. The Halliburton acquisition of Baker Hughes will unite 2 major oilfield services companies. Halliburton and Baker Hughes began discussions in mid-October; an interesting time as oil prices were falling, raising questions about the viability of expanding oil and gas exploration and development. The acquisition was on again, off again, and briefly turned hostile last week. The deal could still face regulatory scrutiny, even though Schlumberger is still the largest oilfield services company, bigger than a combined Halliburton/Baker Hughes. Halliburton has agreed to …

READ MORE →
Financial Review

Sprinting Up a Mountain

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-14-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 18 = 17634 SPX + 0.49 = 2039.82 NAS + 8 = 4688 10 YR YLD – .02 = 2.32% OIL + 1.74 = 75.95 GOLD + 26.40 = 1189.30 SILV + .64 = 16.41 The recent rally in the S&P 500 has been really, really strong. Today marked the 41st record high close for the S&P. In mid-September, the index dropped, and that continued until October 16th. On October 17th we told you about a bullish reversal pattern, and since then the S&P 500 has gained about 160 points. The S&P 500 has traded above its 5 day moving average for 21 consecutive sessions; this is unusual; it means the rally has been extremely strong and nearly non-stop; there were a couple of days where the index paused, but never really went down. The past 21 days resulted in a 12% gain; that’s like a runner sprinting up a mountain. The market is now extremely overbought. Typically, when the market is overbought, you might anticipate a pullback. We haven’t seen it yet, but we can anticipate and wait for the market to show us. There are plenty of reasons to think the stock market will continue higher. First reason is that it is in an uptrend right now; a trend in place is more likely to continue than it is to reverse. Another reason is that there is a …

READ MORE →
Financial Review

Dow Up, Oil Down, Quit Your Job

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-13-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW + 40 = 17,652 SPX + 1 = 2039 NAS + 5 = 4680 10 YR YLD – .02 = 2.34% OIL – 2.79 = 74.39 GOLD + .20 = 1162.90 SILV – .01 = 15.77 Record high close for the Dow Industrials. The Nasdaq Composite hasn’t seen record highs since the spring of 2000, when it closed at 5048, which is just 368 points, or about a 7% move from here. If you were unlucky enough to have bought the PowerShares QQQ exchange-traded fund, an ETF that tracks that top 100 non-financial stocks in the Nasdaq, on March 10, 2000, you’d still be in the red on that investment. Tech companies are once again in a leadership role. While Microsoft, Apple and several other tech leaders of today are trading at higher prices than 15 years ago, Intel and Cisco are still well below their 2000 peak prices. Of course the largest company in market cap is Apple at $660 billion. Apple shares have surged more than 40% so far this year, creating more than $160 billion in market value for shareholders, which coincidentally is about the same market cap as IBM, which was once considered the big player in tech. Today, Microsoft passed Exxon to become the second largest company in terms of market capitalization. Exxon has a market cap of $400 billion; Microsoft is worth $408 billion. Exxon’s …

READ MORE →
Financial Review

Catch a Falling Star

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-12-2014.mp3Podcast: Play in new window | Download (Duration: 13:20 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 2 = 17,612 SPX – 1 = 2038 NAS + 14 = 4675 10 YR YLD un = 2.36% OIL – 1.19 = 76.75 GOLD – 2.80 = 1161.10 SILV – .04 = 15.76 Stocks have been on a run lately, with the Dow Industrials and the S&P 500 hitting record highs yesterday, and the Dow Transports closing at a new high today. Yesterday, the S&P 500 marked its 40th new closing high of the year, versus 45 in 2013. The last five-day streak of record highs was in May 2013, and the next longest was eight days in June 1997. The Dow also hit a record yesterday, marking 6 consecutive record highs, its longest since June. The S&P 500 has closed above its 5 day moving average for the 19th consecutive session, a streak that has only occurred seven times in the past 20 years. And today did not reverse the trend. Typically, after a rally like this you might expect a pullback; not necessarily a correction, but a pullback; a pause to catch your breath. And so, now would not look like a good time to buy, but you also haven’t seen a signal to sell, at least not yet. Meanwhile, the advance has been so straight and fast that it hasn’t left any support levels in its wake. You might look at S&P 2000 as a round …

READ MORE →