Uncategorized

Monday, April 29, 2013 – A Busy Week Heading in the Same Direction

A Busy Week Heading in the Same Direction by Sinclair Noe DOW + 106 = 14,818SPX + 11 = 1593NAS + 27 = 330710 YR YLD + .01 = 1.67%OIL + .58 = 93.58GOLD + 13.60 = 1477.50SILV + .55 = 24.69  The S&P 500 index ended at an all-time high. We have a celebration when the Dow Industrial Average closes at an all time high; no party for the S&P 500. I wish I could give you a valid reason for this but it defies logic. There is no law that says you can’t enjoy milk and cookies anyway. This week offers a packed economic calendar,with ISM manufacturing data Wednesday, and PMI manufacturing reports for the euro zone and China on Thursday. The week ends with Friday’s U.S. employment report, expected to show 150,000 new nonfarm payrolls in April; and the backdrop to all the information is last Friday’s initial report on first quarter GDP, which came in at 2.5%, short of the consensus forecast of 3%.  Also, we’ll compare and contrast this week’s news with last week’s reports out of Europe showing economic weakness in Germany as well really bad weakness in the peripheral countires where unemployment is rising from one awful record to another. In Spain, for example, the rate increased to 27.2%, with an even more stunning 57.2% rate among the young. In Greece, the unemployment rate tops 27% and the government is cutting thousands more jobs to qualify for more ECB bailout money. The European …

READ MORE →
Uncategorized

Friday, April 26, 2013 – The Fix is In

The Fix is In by Sinclair Noe DOW + 11= 14,712SPX – 2 = 1582NAS – 10 = 327910 YR YLD – .05 = 1.66%OIL – .86 = 92.78GOLD – 5.30 = 1463.90SILV – .36 = 24.14 The initial guesstimate of first quarter gross domestic product shows the economy growing at a 2.5% pace. Consumer spending increased by 3.2%, the strongest increase in consumer spending in 2 years. Defense spending fell at an annual rate of 11.5 percent in the first quarter, on the heels of a 22.1 percent decline in the last three months of 2012. This is the initial report on GDP and it is subject to revisions. The initial fourth quarter GDP number came in at a negative 0.1% and was revised up to 0.4%; the first quarter estimate of 2.5% is well below expectations, and it certainly isn’t showing enough strength to indicate a solid recovery. Personal disposable income, today’s report shows, actually fell by $140 billion in total from the fourth quarter. Reversion of the payroll tax to its normal rates at the beginning of 2013 will continue to drag on the disposable income of middle-class consumers throughout the year. Business investment in productive equipment and IT — a driver of productivity, innovation, and employment — slowed markedly to 3% growth in the first quarter, relative to nearly 12% in the prior quarter. Residential investment maintained strong growth, however, expanding 13% as housing markets in many areas of the country seem to be turning up. …

READ MORE →
Uncategorized

Thursday, April 25, 2013 – Austerians v. Keynesians

Austerians v. Keynesians by Sinclair Noe DOW + 24 = 14,700SPX + 6 = 1585NAS + 20 = 328910 YR YLD + .01 = 1.71%OIL + 1.79 = 93.22GOLD + 36.70 = 1469.20SILV + 1.24 = 24.50 Five years ago the banking system nearly imploded and almost resulted in a meltdown of the global financial system. Three years ago Congress passed the Dodd-Frank financial reforms, aimed at correcting some of the problems of 2008. Dodd-Frank may have included some good ideas, but you had to wade through 2,000 pages to find anything worthwhile. Much of the legislation has still not been implemented, and on the issue of averting another banking system implosion, it really didn’t do much; it basically called on regulators to do a better job of catching problems and nipping them in the bud. We all know that’s not going to happen. And so, the biggest banks have been getting bigger than before the financial crisis and it’s widely believed that if a big bank were to fail, they would be bailed out.., again. The government considers these banks to be Systemically Important Financial Institutions, which means they are Too Big to Fail. That implied backing has given firms a green light to engage in risky activities that pose a threat to the financial system. Yesterday, Senators David Vitter and Sherrod Brown introduced legislation that aims to end the implicit guarantee of a government bailout. Brown and Vitter are calling for big banks with more than $500 billion in …

READ MORE →
Uncategorized

Wednesday, April 24, 2013 – God Bless the Child

God Bless the Child by Sinclair Noe DOW – 43 – 14,676SPX +.01 = 1578NAS +0.32 = 326910 YR YLD un = 1.70%OIL + 2.43 = 91.61GOLD + 17.90 = 1432.50SILV + .22 = 23.26 Them that’s got shall get; them that’s not shall lose; so the Bible said, and it still is news. The Pew Research Center has analyzed the most recent date from the Census Bureau, and it turns out the rich got richer and the poor got poorer. During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%. From the end of the recession in 2009 through 2011 (the last year for which Census Bureau wealth data are available), the 8 million households in the US with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $0.6 trillion. Because of these differences, wealth inequality increased during the first two years of the recovery. The upper 7% of households saw their aggregate share of the nation’s overall household wealth pie rise to 63% in 2011, up from 56% in 2009. On an individual household basis, the mean wealth of households in this more affluent group was almost …

READ MORE →
Uncategorized

Tuesday, April 23, 2913 – A Tweet Day

A Tweet Day by Sinclair Noe DOW + 152 = 14719SPX + 16 = 1578NAS + 35 = 326910 YR YLD un 1.70%OIL + .38 = 89.57GOLD – 12.70 = 1414.60SILV – .47 = 23.04 Some days you hear a bit of news and it’s bad, really bad. And then some days, hackers hack into the Associated Press Twitter account and tweet that there are bombs at the White House, and the stock market goes into a freefall, and it’s bad, but not really bad. Yes, a false tweet sent stocks plummeting. The 143-point fall in the Dow industrial average came after hackers sent a message from the Twitter feed of the Associated Press saying the White House had been hit by two explosions and that Barack Obama was injured. The fake tweet, which was immediately corrected by Associated Press employees, caused a sensation on Twitter and in the stock market. White House officials were unimpressed. An AP reporter apologized for the Twitter hacking at the start of the daily White House press briefing, saying the tweet had been deleted as soon as it was discovered. A stoney-faced Jay Carney, Obama’s personal spokesman, thanked the reporter but did not look amused. “The president is fine. I was just with him,” added Carney. The market recovered within a few minutes of the misunderstanding, but the incident raised many questions. We still have a problem with high frequency trading algorithms that scan the news and trade quickly, causing flash crashes. And then …

READ MORE →

Monday, April 22, 2013 – Airplanes, Austerity, and Flying Bulls

Airplanes, Austerity, and Flying Bulls by Sinclair Noe DOW + 19 = 14,567SPX + 7= 1562NAS + 27 = 3233 10 YR YLD – .01 = 1.70%OIL + .80 = 88.81GOLD + 19.80 = 1427.30SILV + .12 = 23.51 It’s Monday but it’s a better Monday than last Monday. No bombings to report today, at least not in our country. Over the weekend, the cover story on Barron’s magazine featured a cartoon drawing of a bull on a pogo stick, leaping through the air. You may recall that 6 months ago, Barron’s poll of big money, institutional investors were bearish on the market; that was about 1,000 points ago. Now they’re bullish. This would be a contrary indicator. But not today. Today, the bulls were buying the dips. The market started negative but finished positive. It’s all about momentum. Many fundamentally-oriented investors have been licking their wounds. And the nature of momentum-driven investing is that it can work longer than more sober-minded souls would think possible. An open question is the odd continued rise of stock prices even as corporate earnings weaken. Why are investors paying more for companies whose earnings are declining in aggregate? In normal bull markets, you see a new leadership group emerge, and late in cycle, investors increasingly favor conservative stocks. This time the leaders are defensive plays, high quality companies that pay healthy dividends. While bulls say that this is predictable given ZIPR, we’ve had ZIPR for years now.When this disconnect ends is anyone’s guess. But markets like this …

READ MORE →
Uncategorized

Friday, April 19, 2013 – A Bizarre New Normal

A Bizarre New Normal by Sinclair Noe DOW + 10 = 14,547SPX + 13 = 1555NAS + 39 = 320610 YR YLD +.02 = 1.70%OIL =.27 = 88.00GOLD + 14.40 = 1407.50SILV + .01 = 23.39 You’ve probably heard the stories out of Boston today. Late yesterday police released a photo of two young men; it turns out to be two brothers, Tamerlan and Dzohkhar Tasarnaev; originally from Chechnya and living in Boston for the past 10 years. Last night the two brothers tried to flee; they robbed a convenience store. The two men then fatally shot an MIT campus police officer and carjacked a sport-utility vehicle at gunpoint, keeping the vehicle’s owner hostage for about a half-hour. The owner was released at a gas station in Cambridge. He wasn’t injured. As police pursued the vehicle, explosive devices were thrown from the car. There was an exchange of gunfire between police and the suspects. A Massachusetts Bay Transportation Authority officer was wounded during the exchange. Hundreds of police officers descended on the Cambridge and Watertown areas as the violence unfolded Thursday night. The older of the suspects was shot by police; the younger brother, still in a car, managed to drive away. At some point he abandoned the vehicle, and he is still at large, believed to be in the Boston neighborhood of Watertown. Police had locked down Boston. It is a voluntary lockdown. Millions of Bostonians are asked to stay in their homes. Streets are empty, trains are not …

READ MORE →
Uncategorized

Thursday, April 18, 2013 – Elvis and Other Ongoing Investigations

Elvis and Other Ongoing Investigations by Sinclair Noe DOW – 81 = 14,537SPX – 10 = 1541NAS – 38 = 3166 10 YR YLD – .02 = 1.69% OIL + 1.68 = 88.36GOLD + 14.60 = 1393.10SILV – .03 = 23.38 Emergency teams went house to house through mounds of debris in a devastated four-block area of West, Texas; that’s the name of the town – West; it’s near Waco. An explosion at a fertilizer plant leveled a big part of the town and there are 15 dead and perhaps 160 injured. Officials said there was no initial indication that the blast was anything but an industrial accident, but it is an ongoing investigation. Maybe someone will look into the wisdom behind building a fertilizer plant right next to a residential area and even a nursing home. Meanwhile, an interfaith service was held in Boston today to mourn the victims of the bombing. It was actually a very good service. Several dignitaries spoke, including President Obama, who promised that the perpetrators will face justice. But it is an ongoing investigation. The FBI has released pictures of a couple of guys carrying large backpacks; they think they might be suspects in the bombings. Meanwhile, the FBI has arrested a man in Mississippi for mailing letters laced with the poison ricin. The suspect is an Elvis impersonator. I can’t make this stuff up. We’re seeing economic growth cool off a little bit after a strong start to the year. The index of …

READ MORE →
Uncategorized

Wednesday, April 17, 2013 – Austerity Oops

Austerity Oops by Sinclair Noe DOW – 138 = 14, 618SPX – 22 = 1552NAS – 59 = 320410 YR YLD – .01 = 1.70%OIL – 2.35 = 86.37GOLD + 8.20 = 1378.50SILV – .03 = 23.41 The Federal Reserve released its Beige Book this morning. The Beige Book is just a survey of the 12 Fed Districts and the name is due to the fact that it has a beige cover. The survey covers the time from late February to early April. The info is more anecdotal than precise measurements. Of the Fed’s 12 districts, five reported “moderate” growth, five reported “modest” growth, and New York and Dallas reported slight accelerations. “Particular strength” was seen in residential construction and automobiles, which confirms the report on Monday dealing with industrial output. Consumer spending grew modestly, with higher gasoline prices, the expiration of the payroll tax cut and winter weather restraining growth. Lat week, the Commerce Department reported that retail sales were at a 9 month low. The sequester has rattled the defense industry with the automatic budget cuts; no surprise there. Overall, the Fed remains optimistic, but still concerned about fiscal policy. On the fiscal policy front, one of the main arguments for budget cuts and austerity comes from a 2010 study by two Harvard economists, Ken Rogoff and Carmen Reinhart. The study concluded that when a nation’s debt grows too big, it can slow growth. The idea is that when the debt to GDP ratio hits 90%, the result …

READ MORE →
Uncategorized

Tuesday, April 16, 2013 – Love That Dirty Water

Love That Dirty Water by Sinclair Noe DOW + 157 = 14,756SPX + 22 = 1574NAS + 48 = 326410 YR YLD + .02 = 1.72%OIL + .20 = 89.90GOLD + 16.70 = 1370.30SILV + .65 = 23.44 If home is where the heart is, then Boston is everybody’s hometown today. No significant developments to report. The death toll stands at 3, with 176 people reported as injured, some in very critical condition. Officials now say it was just two bombs; yesterday, there was speculation there were more. There is no indication that the bombing was part of a broader plot. We still don’t know if it was one evil lunatic or a group of evil lunatics. We don’t know if it was done by someone from this country or elsewhere. There have been no arrests, and it is a very intensive ongoing investigation. We should not speculate on some things. What we do know is that people responded by running toward the blast to help the victims. We do know that the medical personnel and others responded heroically. And we do know that the good, decent, and heroic people outnumber the evil lunatics; always have, always will. Total housing starts in March were up 46.7% from the March 2012 pace, although some of that increase was due to a surge in multi-family starts in March. Single family starts were up 28.7%. Even with this significant increase, housing starts are still very low. The consumer price index decreased 0.2% in March, led …

READ MORE →