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Wednesday, December 04, 2013 – The Defining Challenge

The Defining Challenge by Sinclair Noe DOW – 24 = 15,889SPX – 2 = 1792NAS +0.80 = 403810 YR YLD + .05 = 2.83%OIL + 1.25 = 97.29GOLD + 19.00 = 1244.30SILV + .54 = 19.82 December can be a cold, cold month. At least that’s how the equity markets are starting the month; four losing sessions. Part of this might be the big institutional investors, the big hedge funds and money managers, looking around and realizing the market is up 30% or so, and that would be a good year, so why no lock in a few profits. No need to worry about the budget battle in Washington; no need to worry about the Federal Reserve surprising people with a premature taper; no need to worry about a strong jobs report on Friday. In this crazy market where good economic news gets traders worried about the Fed taking away the punch bowl, today we had some reasonably decent economic news and another drop in the markets. Let’s start with the economic reports. ADP, the payroll processing firm, has a monthly report on private jobs; they issue the report just before the monthly official government report on jobs, the BLS non-farm payroll report. The ADP report is not great at predicting the government report, but its one of the better guidelines we have. Today, ADP reported companies added to their payrolls by a net 215,000 in November, and they revised the October number higher to 184,000. Manufacturers, builders and other …

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Wednesday, July 17, 2013 – Good Markets, Bad Economy

Good Markets, Bad Economy by Sinclair Noe DOW + 18 = 15,470SPX + 4 = 1680NAS + 11 = 361010 YR YLD – .04 = 2.49%OIL + .59 = 106.59GOLD – 16.90 = 1275.60SILV – .72 = 19.29 Let’s start today with a quick rundown of a few earnings reports. Intel reported second quarter net income of $2 billion, down from $2.8 billion a year ago. Revenue was $12.8 billion, and they expect third quarter revenue around $13.5 billion, both revenue numbers and guidance were below current estimates. IBM posted earnings of $4.3 billion on revenue of $24.9 billion. Earnings were up slightly from a year ago, while revenue was down slightly. Bank of America reports net income rose 63 percent, to $4 billion from $2.5 billion in the period a year earlier, while revenue increased to $22.7 billion from $22 billion. The bank benefited from higher revenue from equities sales and trading and a reduction in expenses, but its mortgage unit continued to struggle. This seems to be a recurring trend for the big banks; more profits from the Wall Street business side, less revenue from the old fashioned loan business, less money set aside for reserves. The concerns are that trading performance tends to be uneven over time, and cutting costs can only go so far, it doesn’t increase revenue. June housing starts fell 9.9% to an annualized rate of 836,000—the lowest level since August 2012. The drop in housing starts was led by a decline in multifamily …

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Wednesday, June 05, 2013 – Agree to Disagree

Agree to Disagree by Sinclair Noe DOW – 216 = 14,960SPX – 22 = 1608NAS  – 43 = 3401 10 YR YLD 0 .03 = 2.10%OIL + .38 = 93.69GOLD + 2.70 = 1403.70SILV unch = 22.65 The big economic news this week will be the Friday morning jobs report. ADP, the payroll processing company does its own jobs report, and today they estimated the economy added 119,000 new jobs in May. The ADP report is not a good indicator of Friday’s report, but taken on its own, today’s analysis shows a softening labor market, dragged down by the sequester. Then, this afternoon we read the Federal Reserve Beige Book; here’s how they described things: “Overall economic activity increased at a modest to moderate pace since the previous report across all Federal Reserve Districts except the Dallas District, which reported strong economic growth. The manufacturing sector expanded in most Districts since the previous Beige Book. Most Districts noted slight to moderate gains in consumer spending and a moderate increase in vehicle sales. Tourism showed signs of strength in several Districts. A wide variety of business services expanded, and transportation traffic increased for producer, consumer, and trade goods. Residential real estate and construction activity increased at a moderate to strong pace in all Districts. Commercial real estate and construction activity grew at a modest to moderate pace in most Districts.” And fade to beige, actually a modest to moderate shade of beige. After reading the Beige Book, I know what you’re probably thinking; yes, it is properly titled. …

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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 …

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Wednesday, January 16, 2013 – Fuzzy Justice

Fuzzy Justice by Sinclair Noe DOW – 23 = 13,511SPX +0.29 = 1472NAS + 6 = 311710 YR YLD – .01 = 1.82%OIL + .88 = 94.16GOLD + .10 = 1681.00SILV + .12 = 31.59 The National Association of Home Builders/Wells Fargo housing market index was flat at a seasonally adjusted level of 47 in January. This is a gauge of homebuilders’ confidence. Conditions in the housing market look much better now than at the beginning of 2012 and an increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year. The builder-confidence gauge is up 88% from the same period in the prior year, even though the number was essentially flat for the January reading. Industrial production increased 0.3% in December and now stands at the highest level since the summer of 2008. Production is up for 2 months, indicating a recovery from Hurricane Sandy. The House of Representatives finally passed a $51 billion aid package to provide emergency relief for Hurricane Sandy. It was a partisan vote, but 49 Republicans voted for the aid package, mainly representatives from the affected areas. The Consumer Price index was flat in December. The core rate of inflation, excluding food and energy, rose 0.1%. Gasoline prices dropped last month. For all of 2012 consumer prices climbed 1.7%, the third lowest rate in the past 10 years. That’s also down from a 3% increase in the prior year. Core CPI was up 1.9% …

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Wednesday, November 28, 2012 – If They Don’t Jump, I Might Push Them

If They Don’t Jump, I Might Push Them by Sinclair Noe DOW + 106 = 12,985SPX + 10 = 1409NAS + 23 = 299110 YR YLD – .03 = 1.62%OIL – .52 = 86.66GOLD – 22.00 = 1720.80SILV – .28 = 33.87 I am getting so sick and tired of this fiscal cliff malarkey* (* a politically acceptable euphemism, according to the debates), that I would like to throw some politicians off a fiscal cliff; maybe we could toss in a few media types as well. Today, I hear that stocks moved higher because John Boehner, the Speaker of the House, said he was optimistic about not going over the cliff. Really? That’s all it takes for stocks to post triple digit gains? Maybe tomorrow, Mr. Boehner can tell us he is both optimistic, and confident, and chipper, and slightly perky, and everything in his universe is copacetic; and the markets could celebrate with a monster rally. I don’t think this is the real motivation for market moves but it might be, but I don’t think so. On Friday, President Obama will hit the road to promote his version of fiscal cliff avoidance. Business executives and others who’ve met with President Barack Obama in recent days describe a president who’s supremely confident that he’ll come out on top of a fiscal cliff deal; with Republicans bending to his will on tax increases for the wealthy and Democrats sucking up deep spending cuts. You have to wonder about the austerity advice …

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Wednesday, October 10, 2012 – Great Fun and Very Entertaining

Great Fun and Very Entertaining -by Sinclair Noe DOW – 128 = 13,344SPX – 8 = 1432NAS – 13 = 305110 YR YLD – .03 = 1.69% OIL – 1.04 = 91.35 GOLD – 1.30 = 1763.60SILV +.08 = 34.08 PLAT – 13.00 = 1678.00(to listen to audio visit Financial Review at MoneyRadio.com) It’s earnings season. Chevron took a hit after announcing third quarter earnings would be substantially lower. Alcoa took a hit because law suits and remediation costs are part of their business model and not one time exclusions. FedEx announced it will fire workers and park planes to cut $1.7 in expenses. S&P cut Spain’s sovereign credit rating to BBB-minus, just a notch above junk status. Less than 4 weeks to the election. Tomorrow we can watch the vice-presidential debate. It’s all great fun and very entertaining. Last week, the first presidential debate produced a bump in the polls for Romney. The latestPew Research Center poll shows Mitt Romney ahead of President Barack Obama among likely voters, 49% to 45%. But the latest Gallup poll shows President Obama leading Romney among likely voters, 50% to 45%. If you’re wondering about the discrepancy, the reason is simple. The Pew poll covered the days immediately following last Wednesday’s presidential debate, but it didn’t include last weekend. The Gallup poll, included the weekend and that means it also included Friday’s September’s jobs report which showed unemployment down to 7.8 percent for the first time in more than three years.Romney got a bump …

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Wednesday, April 11, 2012

DOW + 89 = 12,805SPX + 10 = 1368NAS + 25 = 301610 YR YLD +.04 = 2.03%OIL – .13 = 102.57GOLD – .90 = 1660.70SILV -.23 = 31.71PLAT – 14.00 = 1591.00 What changed between yesterday and today? What pushed the markets higher today? What pushed the markets lower yesterday? I hope I’m smart enough to not fall into that trap. The markets fluctuate. They don’t go straight down and they don’t go straight up. At the start of the month, I said you might want to think about taking profits off the table; I still think that’s wise, but I’m not saying the market will crash; I don’t think the sky is falling, at least not today. There are twelve different regional banks in the Federal Reserve; each month the task of writing about the economy falls to a different bank; the results are published in a book format with a beige cover, hence the name “Beige Book”. It’s a misnomer. Some months the book should be called “the lime green electrifying economic report” and other months it might be called the “Kind’a Blue Forecast”. This month, the report was prepared by the Cleveland Fed and the “Beige Book” title fits. The Federal Reserve says the economy continued to grow at a “modest to moderate pace” over the last month. Manufacturers and retailers expressed some concern about rising oil prices, but the unusually warm weather helped retail sales. The report showed an economy chugging if not roaring along: …

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