Financial Review

Friday, May 30, 2014 – Record Highs, Bonds, Coal Mines

Record Highs, Bonds, Coal Mines by Sinclair Noe   DOW + 18 = 16,717 SPX + 3 = 1923 (another record) NAS – 5 = 4242 (not a record) 10 YR YLD + .01 = 2.45% OIL – .71 =  102.87 GOLD – 4.60 = 1252.30 SILV – .23 = 18.91   For the week, the Dow rose 0.7%, the S&P 500 gained 1.2% and the Nasdaq added 1.4%. For the month of May, the Dow gained 0.8%, the S&P 500 rose 2.1% and the Nasdaq climbed 3.1%. Meanwhile, if you are looking for action, the bond market is the place; the yield on the 10 year note has dropped from 2.65% to 2.45% this month.   Nearly everyone is looking for an explanation as to why longer-term interest rates continue to fall in the face of reduced Fed support and what is being hyped as better economic data. This wasn’t supposed to happen. The Federal Reserve has been propping up Treasury bond prices, and suppressing yields, for the past several years by buying large quantities of bonds each month in an effort to increase investment and consumption, and force investors into riskier assets. To some extent, the Fed’s QE purchases have worked; ultra-low interest rates have supported housing price increases and have led to skyrocketing stock prices.  Household net worth has increased by $25 trillion from the financial-crisis lows in the first quarter of 2009.  However, these gains in net worth have overwhelmingly accrued to the well-to-do while low- …

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Financial Review

Friday, April 25, 2014 – Don’t Hold Your Breath

Don’t Hold your Breathby Sinclair Noe DOW – 140 = 16,361SPX – 15 = 1863NAS – 72 = 407510 YR YLD – .02 = 2.66%OIL – 1.25 = 100.69GOLD + 9.90 = 1304.80SILV + .07 = 19.83 Consumer sentiment rose in April to a nine-month high as views on current and near-term conditions surged. The Thomson Reuters/University of Michigan’s final April reading on the overall index of consumer sentiment came in at 84.1, up from 80 the month before. Meanwhile, a new Gallup poll shows more Americans are optimistic about the job market this month than at any time since the 2008 financial crisis, with 30% saying now is a good time to find a quality job. That marks a significant improvement from the 8% who said they were optimistic about the job market in 2010, but it’s still a drop from the pre-2008 highs of almost 50%. And even though almost a third of Americans are optimistic, two-thirds still say the job market is lackluster; 66% of Americans say it’s not a good time to hunt for employment. Next week’s economic calendar includes a two day Federal Reserve FOMC meeting. Next Friday, we’ll have a monthly jobs report; the current estimates call for 215,000 net new jobs in April and the unemployment rate dipping to 6.6% from 6.7%. Also, the Commerce Department will release its first guess of first quarter GDP; the consensus estimate on the initial estimate is that the economy grew about 1%. The situation in Ukraine …

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Friday, March 14, 2014 – The Circle of Life

The Circle of Life by Sinclair Noe DOW – 43 = 16,065SPX – 5 = 1841NAS – 15 = 424510 YR YLD – .01 = 2.64%OIL + .81 = 99.01 GOLD + 10.90 = 1383.00SILV + .29 = 21.56 In economic news, the early-March consumer sentiment index fell to 79.9. That’s down from a final February reading of 81.6 but the latest number is within the range of numbers posted since November. A separate report from the Labor Department shows the producer price index dropped o.1% last month. The PPI measures inflation at the wholesale level. Final demand for goods rose 0.4% in February. Final demand for services dropped 0.3%. Producer prices excluding volatile food and energy costs fell 0.2%. In the 12 months through February, producer prices increased 0.9%, the smallest one-year gain since May 2013. Inflation is not a concern. The economy is still too sluggish to generate inflation. There are two big news stories of the day: Flight 370 and Ukraine. We don’t know anything about either. A total absence of actual information about the missing Malaysian flight is not in any way hindering 24 hour news coverage of the story. Facts have given way to fantastic fantasizing about everything from terrorism to hidden island airstrips to alien abductions. The news networks have been gathering tons of erroneous and conflicting reports which they immediately pass to their viewers. They must think we’re all morons. Secretary of State John Kerry and his Russian counterpart Sergei Lavrov wrapped up …

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Friday, October 25, 2013 – New Records on Bad News

New Records on Bad News by Sinclair Noe DOW + 61 = 15,570SPX + 7 = 1759NAS + 14 = 394310 YR YLD – .02 = 2.51%OIL + .79 = 97.90GOLD + 5.60 = 1353.90SILV – .13 = 22.70 The S&P 500 closed at a record high. The Nasdaq Composite closed at a 13 year high. The Russell 2000 hit a record high intraday, but closed slightly down on the day. The Dow Industrial Average did not hit a high; maybe next week, but not today, and so no milk and cookies. For the week, the Dow was up 1.1%, the S&P up 0.9%, the Nasdaq up 0.7%. Based on results so far and estimates for companies still to report, S&P 500 earnings are expected to have risen just 3.4 percent in the third quarter, with 69 percent of companies reporting earnings above analysts’ expectations. Revenue growth is seen at 2.2 percent for the quarter, with just 54.2 percent beating sales estimates, below the long-term average of 61 percent. Consumer sentiment dropped in October to its lowest level since the end of last year. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 73.2 in October from 77.5 in September and was the lowest final reading since December 2012. This report covered the time when the government shutdown. Consumer confidence is often linked to consumer spending expectations, and so there is some concern this report might foretell a weak holiday spending season. Meanwhile …

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Friday, October 11, 2013 – We Have Met the Enemy

We Have Met the Enemy by Sinclair Noe DOW + 111 = 15,237SPX + 10 = 1703NAS + 31 = 379110 YR YLD un = 2.68%OIL – 1.22 = 101.79GOLD – 13.20 = 1274.20SILV – .34 = 21.44 The Nobel Peace Prize was awarded to the OPCW, the Organization for the Prohibition of Chemical Weapons, the international chemical weapons watchdog helping to eliminate the Syrian army’s stockpiles of poison gas. Its inspectors have just begun working in the active war zone, and the Norwegian Nobel Committee said it hopes the award offers “strong support” to them as they face arduous and life-threatening tasks. Overall consumer confidence decreased from 77.5 in September to 75.2 in October, according to the Index of Consumer Sentiment published by Thomson Reuters and the University of Michigan. The economic expectations index in the survey also fell from 67.8 in September to 63.9 for October, reaching the lowest level so far this year as consumers reported less optimism about the course of the economy for the next 12 months. In what has become an almost daily occurrence, Thursday night brought another poll, this one from NBC and the Murdoch Street Journal, showing that Americans really don’t like the politicians. A recap: Only 24% of Americans had a favorable view of Republicans, the lowest figure in the poll’s multi-year history and four percentage points lower than last month. Another low: only 21% had a favorable view of the tea party. Obama’s standing was relatively stable, moving from 45% …

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Friday, August 16, 2013 – Who Knows?

Who Knows? by Sinclair Noe DOW – 30 = 15,081SPX – 5 = 1655NAS – 3 = 360210 YR YLD + .07 = 2.83%OIL + .62 = 107.95GOLD + 11.10 = 1378.20SILV + .25 = 23.36 The Dow fell 2.2 percent for the week, its biggest decline since June 2012, while the S&P 500 dropped 2.1% for the week and the Nasdaq dropped 1.6%; their biggest weekly losses since June, 2013. It was a second week of losses for the major indexes. The yield on the 10 year note climbed to the highest level in 2 years. Gold settled at its highest price in almost two months. The productivity of US workers rose more than projected in the second quarter. The measure of employee output per hour increased at a 0.9% annualized rate, after a 1.7% decline in the prior three months. Even with the second-quarter pickup, productivity was unchanged in the 12 months ended in June, below the average 2.4% annual gain in the 2000-2011 period. Businesses are reaching the limit of how much efficiency they can squeeze from their existing staff. So, we’re at a point where any increase in demand could prompt more hiring, but we’re not seeing an increase in demand. The Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment slipped to 80.0 from 85.1 in July. We’re all consumers aren’t we; that’s how we are measured; that is our value to corporate America. Earlier this week I repeated the old …

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Friday, July 26, 2013 – Notes from the Favela

Notes from the Favela by Sinclair Noe DOW + 3 = 15,558SPX + 1 = 1691NAS + 7 = 3613 10 YR YLD – .01 = 2.56%OIL – .82 = 104.67GOLD – .30 = 1334.80SILV – .26 = 20.09 Earlier in the week, the Dow and S&P hit record highs but the markets slipped; earlier today the Dow was down 150 points. For the week, the Dow rose 0.1 percent, the S&P 500 was flat (even as it hit a record) and the Nasdaq rose 0.7 percent. It’s Friday, and I have a bunch of notes and scraps that have been piling up, so we’ll clean the desk, in no particular order. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment climbed to 85.1 from 84.1 in June, topping expectations for 84. It was the highest level since July 2007 and was also an improvement from July’s initial reading of 83.9. Of course, if you paid a premium subscription, you could have had that information before the rest of the market. Yesterday, I mentioned former Fed Chairman Paul Volker’s remark that the only real financial innovation in the past 20 years was the ATM, which is actually about 30 years old now. And Volker wasn’t quite right; the banks haven’t done any real innovation but the hackers have. For nearly a decade, a band of cybercriminals rampaged through the servers of a global business who’s who: Among the victims were 7-Eleven, Dow Jones, Nasdaq, JetBlue …

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Friday, May 31, 2013 – Economic Wallbanger

Economic Wallbanger by Sinclair Noe DOW – 208 = 15,115SPX – 23 = 1630NAS – 35 = 345510 YR YLD + .04 = 2.16%OIL – 1.98 = 91.63 GOLD – 25.40 = 1389.30SILV – .51 = 22.37 We finish the month of May with the Dow Industrials up 1.9% on the month; the S&P 500 posted a monthly gain of 2.1%, and the Nasdaq Composite added 3.8% for the month. With this week’s declines, the MACD indicator for the Sell in May strategy, finally turned negative, just in case you had been waiting. The S&P 500 marked seventh monthly advance, its longest monthly winning streak since one ending in September 2009. The Dow industrials recorded their sixth straight monthly gain. Treasury prices dropped again today to finish their worst monthly performance since December 2010; the yield on the 10-year note climbed 46 basis points on the month. At one point during today’s trading, the yield topped 2.20%. Next week, we’ll see how the labor market is behaving. Today we found out that the unemployment rate for the 17 nation Eurozone has increased to 12.2%, the highest level since data has been compiled starting in 1995. Consumer price inflation was far below the ECB’s target of just below 2%, coming in at 1.4% in May, slightly above April’s 1.2% rate. Price increases may quiet concerns about deflation, but the deepening unemployment crisis is a threat to the social fabric of the eurozone, with almost two-thirds of young Greeks unable to find …

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Friday, December 7, 2012 – A Date Which Will Live in Infamy, Plus the Jobs Report

A Date Which Will Live in Infamy, Plus the Jobs Report by Sinclair Noe DOW + 81 = 13,155SPX + 4 = 1418 NAS – 11 = 297810 YR YLD +.05 = 1.63%OIL – .27 = 85.99 GOLD + 4.50 = 1704.50SILV + .08 = 33.11 Today marks the 71st anniversary of the attack on Pearl Harbor. There were of course, memorials in Hawaii and around the country. I’ve seen a few of the pictures. Each year the number of Pearl Harbor survivors that attend these memorials, their number grows smaller and their ranks thin. If you know a veteran of World War II, be sure to take time to recognize their stories, be sure to say thanks. Today’s major economic data was the monthly jobs report; widely expected to be weak due to the effects of Hurricane Sandy. Instead, it came in relatively strong. The headline numbers: the economy added 146,000 jobs in November, and the unemployment rate dropped to 7.7%, a four year low. The Labor Department claimed that the effect of Sandy on the report was minimal, saying in a statement, “Our analysis suggests that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November.” In other words, we should not look at this report as surprisingly good given the effect of the hurricane. Rather, the Labor Department claims that the jobs numbers should be analyzed without taking the storm into account at all. And by that standard, not only were the job …

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Thursday, November 29,2012 – Place Your Bets

Place Your Bets by Sinclair Noe Let’s start with the important numbers today: 5, 16, 22, 23, 29, and the Powerball 6. And I did not win. Somebody in Missouri and somebody in Phoenix are holding the winning tickets. Not me. All I’m holding is a $10 piece of paper which is my donation to the tax fund for the mathematically challenged. DOW + 36 = 13,021SPX + 6 = 1415 NAS + 20 = 301210 YR YLD un = 1.62%OIL + 1.23 = 87.72GOLD + 6.00 = 1726.80SILV + .50 = 34.27 The U.S. economy grew at a 2.7 percent annual rate from July through September, much faster than first thought. The Commerce Department said growth in the third quarter was significantly better than the 2 percent rate estimated a month ago. And it was more than twice the 1.3 percent rate reported for the April-June quarter. The main reason for the upward revision to the gross domestic product was businesses restocked at a faster pace than previously estimated. That offset weaker consumer spending growth. The fourth quarter GDP is expected to drop back down below 2 percent because of Hurricane Sandy, which put the brakes on all sorts of business activity along the East Coast. And then the other reason cited for the possible fourth quarter slowdown is the fiscal cliff. (Sorry, we just can’t get through the day without talking about it.) So, here is the annotated version of today’s fiscal cliff report: a little partisan sniping, …

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