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Tuesday, March 25, 2014 – Want to Buy a Cookie?

Want to Buy a Cookie? by Sinclair Noe DOW + 91 = 16,367SPX + 8 = 1865NAS + 7 = 423410 YR YLD un 2.73%OIL – .39 = 99.21GOLD + 2.10 = 1312.70SILV + .07 = 20.10 According to the S&P/Case-Shiller home price report, the home price index covering 10 major US cities increased 13.5% in the year ended in January. The 20-city price index advanced 13.2% for the year. Month to month, the 20-city index dropped 0.1%; the drop is not just weather related; from December to January, prices fell in 12 of the 20 cities Case-Shiller tracks. Taking a look at a few cities: LA was down 0.3% for the month but up 18.9% for the past year, San Diego was up 0.6% for the month and 19.4% for the year, Phoenix was down 0.3% for the month but up 13.8% for the year, San Francisco was up 0.5% for January and 23.1% for the year, the hot spot was Las Vegas up 1.1% for the month and 24.9% for the year, to lead the nation. The Commerce Department reports new home sales dropped 3.3% from January to February to a seasonally adjusted rate of 440,000. Sales fell in all regions except the Midwest, where they jumped 36.7%. Sales dropped 15.9% month to month in the West. The national median price for a new home was $261,800 last month, up from $260,800 in January. Compared with February 2013, the median price fell 1.2%. At the current sales pace …

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Tuesday, February 25, 2014 – Dumb Luck

Dumb Luck By Sinclair Noe DOW – 27 = 16,179SPX – 2 = 1845NAS – 5 = 428710 YR YLD  – .05 = 2.70%OIL – .76 = 102.06GOLD + 5.00 = 1342.60SILV – .07 = 21.99 Just a couple of economic reports to start. The S&P/Case-Shilller home Price Indices for December were posted today. Nationally home prices closed the year of 2013 up 11.3%, while posting a fourth quarter decline of 0.3%. After 26 months of consecutive gains, Phoenix posted -0.3% for the month of December, its largest decline since March 2011. Phoenix once led the recovery from the bottom in 2012, but Las Vegas, Los Angeles and San Francisco were the top three performing cities of 2013 with gains of over 20%. Another sign that the housing market slowed down during the fourth quarter: Fannie Mae, the nation’s largest mortgage guarantor, saw demand for foreclosed properties dip at the end of the year. Fannie reported last week an $84 billion annual profit for 2013 on the backs of large home-price gains and a series of one-time legal and accounting benefits. The report also showed that its inventory of foreclosed homes increased for the second straight quarter as it begins to take back more properties in Florida and other states where foreclosures have been tied up in courts. The report showed that the prices Fannie received on those properties, as a share of the underlying mortgage balances, declined slightly from the prior quarter for the first time in 2½ years. …

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Wednesday, May 29, 2013 – Behind the Curtain

Behind the Curtain by Sinclair Noe DOW – 106 = 15,302SPX – 11 = 1648NAS – 21 = 346710 YR YLD – .01 = 2.12%OIL – 2.12 = 92.89GOLD + 11.30 = 1393.70SILV + .19 = 22.56 Earlier today, I listened to one of the talking heads on CNBC trying to explain why the markets were up yesterday and down today. It was very entertaining. When mortgage interest rates fall, the probability that an individual will re-finance a mortgage increases. When mortgage interest rates increase, the likelihood of a re-financing of the mortgage goes down. Therefore, in a rising rate environment, the average life of a pool of mortgages increases. For example, if a bond fund held Mortgage Backed Securities (MBS) with an assumed 10-year average life, and interest rates rose, the average life of the MBS portfolio would be extended for a few years. The last thing that a bond manager wants in a rising rate environment is to have the average maturity of the portfolio extended, as this adds to the losses. As a result, MBS players hedge their portfolios against “duration risk” by shorting Treasuries. The higher rates go, and the speed that rates are increasing, forces more and more selling. Is there a level of support that we can watch? There is, and it’s probably 2.2% to 2.5% on the 10-year bond that will bring out an avalanche of selling. The 2.2% tipping point is very close to where the T-bond sits today. Others say we …

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Tuesday, May 28, 2013 – The Central Banks Grand Experiment, Continued

The Central Banks Grand Experiment, Continued by Sinclair Noe DOW + 106 = 15,409SPX + 10 = 1660NAS + 29 = 348810 YR YLD + .12 = 2.13%OIL + .88 = 95.03GOLD – 4.90 = 1382.40SILV – .12 = 22.37 New record highs for the Dow, not for the S&P 500. Last week there was considerable hand wringing and flop sweat about the idea that the Federal Reserve might pull back from QE. And you may recall that I told you that I didn’t think so; we might see the Fed change the composition of the accommodative monetary policy in order to avoid particular asset bubbles, but they would not abandon a loose money policy; they might even try out some new tools. The economic stagnation of the major developed nations has driven central banks in the United States, Japan, Britain and the European Union to take increasingly aggressive action. Because governments are not taking steps to revive economies, like increasing spending or cutting taxes, the traditional concern of central bankers that economic growth will cause too much inflation has been supplanted by the fear that growth is not fast enough to prevent deflation, or falling prices. The European Central Bank faces legal and political restraints that make it harder for the bank to imitate the other major central banks. It cannot finance governments, which limits its ability to buy any country’s bonds. Still, there has been a shift in sentiment from the ECB, including lower rates and a change …

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Tuesday, March 26, 2013 – Miles to Go

Miles to Go by Sinclair Noe DOW + 111 = 14,559SPX + 12 = 1563NAS + 17 = 3252 10 YR YLD – .01 = 1.91OIL + 1.40 = 96.21GOLD – 5.90 = 1600.50SILV – .09 = 28.86 The Dow Industrial hit a record hit close today, taking out the March 14 closing high. The S&P 500 came within a couple of points of the high close; it is having a hard time breaking through the ceiling; you just have to content yourself with the idea that the index has more than doubled from the lows of March 2009. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines, fell 7.1 percent to 12.77. The gauge has tumbled 29 percent for the year. It is a reflection of complacency. We have many things to cover today. Home prices were up in January and the year over year improvement in prices was the fastest in 6 years. The S&P Case Shiller Index of existing home sales was up 0.1% in January, and the year over year gains were 8.1%. On a year-over-year basis, all 20 cities measured by the Case-Shiller index improved, led by a 23.2% surge in Phoenix, with New York bringing up the rear with a 0.6% advance. Sales of new U.S. homes fell 4.6% in February to mark the biggest drop in two years, though poor weather likely played a big role. Sales slowed to an annual rate of 411,000, …

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Tuesday, January 29, 2013 – Stimulus Truths and Tweaks

Stimulus Truths and Tweaks by Sinclair Noe DOW + 72 = 13,954SPX + 7 = 1507NAS – 0.6 = 315310 YR YLD +.03 = 2.00%OIL + .88 = 97.32GOLD + 9.40 = 1664.90SILV + .54 = 31.48 We have a gaggle of economic reports this week and we’ll try to keep up. The Conference Board reported that its gauge of consumer confidence dropped to 58.6 in January, the lowest level since November 2011. Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The hike in the payroll tax is taking the brunt of the blame for the less-than-rosy outlook. Disposable income is actually declining. It’s hard to be happy when your purse shrinks. The sales price on existing homes dropped in November according to the S&P/Case-Shiller home-price index, down a non-seasonally adjusted 0.1% decrease in November following a 0.2% decline in October. After seasonal adjustments, the 20-city home-price index rose 0.6% in November. Despite the recent decline, prices were 5.5% higher than during the same period in the prior year, for the strongest year-over-year growth since August 2006. Tomorrow, we’ll get a glimpse of 4thQuarter GDP. The economy likely grew at a 1% pace, which is very weak. Also tomorrow, The Federal Reserve wraps up its first FOMC meeting for the new year. They will likely continue with a fairly aggressive approach to stimulate the economy. In December, the Fed committed to adding $45 billion of monthly Treasury purchases to the existing QE3 program to …

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A Raft of Reports by Sinclair Noe DOW + 136 = 13,232SPX + 15 = 1427NAS + 42 = 302010 YR YLD +.03 = 1.71%OIL +.65 = 88.48GOLD – 5.20 = 1716.00SILV un = 32.26 We have a drove of economic data to cover today; a mass of intelligence; a flock of facts; a legion of lowdowns; a swarm of information; and we’ll sort through the stories and try to make sense of it all. Of course, tomorrow we’ll get the big report on the monthly jobs picture for October. Friday’s jobs report is expected to show non-farm employers added just 125,000 jobs last month – not enough to prevent the jobless rate from rising a tenth of a point to 7.9 percent. The unemployment rate fell to a near four-year low in September at 7.8%. Today, we heard some hints about tomorrow’s non-farm labor report. Automatic Data Processing, the payroll processor, always releases their report prior to the government’s report. The ADP report is not a particularly good indicator of the BLS report. ADP shows private employers added 158,000 workers last month. There is some evidence of labor market improvement. It is not totally convincing yet but overall the message is positive. Weekly initial unemployment claims declined to 363,000 for the week ending October 27, down 9,000 from the previous week. Unemployment claims topped out over 650,000 back in the first quarter of 2009 and have been moving mostly sideways this year, but are near the cycle bottom. Don’t …

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