Financial Review

Where Robots Fear to Tread

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-03-10-2016.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSECB Day and Draghi fires the bazooka. Also, the fifth anniversary of Fukushima.

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Financial Review

A Hot One

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-01-21-2016.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe for 01-21-2016 DOW + 115 = 15,882 SPX + 9 = 1868 NAS + 0.37 = 4472 10 Y + .04 = 2.02% OIL + 1.50 = 29.85 GOLD + .20 = 1102.40 The European Central Bank announced today that they will hold interest rates at record lows of 0.3%. Mario Draghi said the European Central Bank may need to provide more stimulus programs as soon as March to address concerns about the euro-area recovery. Draghi said, “Downside risks have increased again amid heightened uncertainties about emerging-market growth prospects. It would therefore be necessary to review and possibly reconsider our monetary-policy stance at our next meeting.” Now remember that the markets just love free money, and that was essentially what Draghi promised.   China’s central bank cranked up cash injections in its money-market operations for the third week in a row, trying to counter capital outflows. The PBOC added $60 billion to the financial system using reverse-repurchase agreements, the most in three years. The Shanghai composite dropped 3.2%.   Brazil’s central bank kept policy on hold. The Central Bank of Brazil held its benchmark rate at 14.25%, surprising the consensus, which was calling for a 50-basis-point hike to 14.75%. The bank has been under pressure from politicians and local businesses to raise rates in an effort to combat inflation that is running at a 12-year high, above 10%.   Oil prices …

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Financial Review

Stormy Weather

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-23-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe for 10-23-2015 DOW + 157 = 17,646 SPX + 22 = 2075 NAS + 111 = 5031 10 YR YLD + .05 = 2.08% OIL – .65 = 44.73 GOLD – 1.90 = 1165.00 SILV – .03 = 15.91   After Thursday’s closing bell Microsoft, Amazon, and Alphabet all reported very strong third quarter earnings, and these companies are big enough to lift the entire market; today they added $80 billion in market cap. Amazon and Alphabet hit all-time highs, and Microsoft moved to its highest levels since 2000. Toss in a little central bank easy money and you’ve got one of the best two day rallies in a long time. The S&P 500 gained 2.1% for the week; its fourth straight weekly gain; moving into positive territory year to date. For the week, the Dow rose 2.5 percent and the Nasdaq gained 3 percent. Oil capped its biggest weekly decline since August as expanding U.S. crude stockpiles exacerbated a global glut, and the dollar moved higher, especially against the euro.   China’s central bank cut interest rates today for the sixth time in less than a year (down 25 basis points to 4.35 percent) , and it again lowered the amount of cash that banks must hold as reserves. Monetary policy easing in the world’s second-largest economy is at its most aggressive since the 2008/09 financial crisis. The People’s …

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Financial Review

Buckle Up

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-03-17-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW – 128 = 17,849 SPX – 6 = 2074 NAS + 7 = 4937 10 YR YLD – .04 = 2.06% OIL – .42 = 43.46 GOLD – 5.70 = 1149.60 SILV – .10 = 15.63   The FOMC will wrap up its two-day meeting on interest rate policy tomorrow. The key question: will the Fed give a hint about raising interest rates? IMF Director Christine Lagarde says even if the Fed is able to manage expectations about an interest rate hike, “the likely volatility in financial markets could give rise to potential stability risks.”   ECB President Mario Draghi says, “Most indicators suggest a sustained (eurozone) recovery is taking hold.”  Draghi is urging governments to use the brighter outlook to advance reforms that would improve the region’s long-term growth prospects. Draghi claims, “Confidence among firms and consumers is rising. Growth forecasts have been revised upwards. And bank lending is improving on both the demand and supply sides.”   Draghi sounds a little overly optimistic. A couple of weeks of bond buying have not changed the overall economies of the Eurozone. Unemployment is still rampant in Spain and Italy and Greece and Portugal and several other countries. No doubt QE is increasing liquidity in the sovereign debt markets; the private banking system are surely pleased with cheap money policy, but it hasn’t changed the jobs picture, it hasn’t resolved …

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Financial Review

King Dollar and the Eurozone

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-10-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 115 = 16,544 SPX – 22 = 1906 NAS – 102 = 4276 10 YR YLD – .02 = 2.30% OIL – .25 = 85.52 GOLD – .60 = 1224.00 SILV + .05 = 17.50 The 10 year German bund has a yield that is 141 basis points lower than the US 10 year Treasury note. The yield on German debt will get you 0.89%. Standard & Poor’s lowered France’s credit outlook today, and you can still get a 10 year French note with a yield of 1.25%. A 10 year note from Spain will only get you 2.06%. Is this because the US debt is riskier than the Spanish debt? No, just the opposite. The problem in the Eurozone is deflation, and it threatens to bring the economy to a grinding halt, and send the EU into a triple dip recession. The president of the European Central Bank, Mario Draghi, gave no indication of any further monetary stimulus beyond what was announced this summer, suggesting in a speech in Washington that governments needed to do more on the fiscal side. Draghi said in effect that Eurozone countries that have enough money should spend it, a clear reference to Germany. His comments echoed remarks this week from Christine Lagarde, the head of the International Monetary Fund. Today, German Chancellor Angela Merkel said her government was examining how to encourage investment, …

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Thursday, September 6, 2012 – Free Money With Strings Attached

Free Money With Strings Attached -by Sinclair Noe DOW + 244 = 13,292SPX + 28 = 1432NAS + 66 = 313510 YR YLD +.08 = 1.67%OIL – .67 = 95.82GOLD + 7.90 = 1702.30SILV +.44 = 32.81PLAT + 10.00 = 1589.00 Pop Quiz. Q: What does Wall Street love? A: Free money. The Standard & Poor’s 500-stock index jumped 2 percent by the close to its highest level since January 2008. The Dow Jones industrial average added about 244 points, or 1.9 percent. And the Nasdaq composite index gained 2.2 percent for its highest close since 2000. In Europe, stock market indexes closed with gains of more than 2 percent, with Spanish and Italian stocks up more than 4 percent. The DAX in Frankfurt added 2.9 percent. The FTSE 100 in London gained 2.1 percent. Today, the European Central Bank announced they will launch a new and potentially unlimited bond buying program to lower borrowing costs for countries struggling with debt. The idea is to buy bonds with maturity of three years or less. ECB President Mario Draghi claims this is within the mandate of the ECB. Germany’s Bundesbank reiterated its opposition to the plan. Draghi said the ECB would only help countries that signed up to and implemented strict policy conditions, with the euro zone’s rescue fund also buying their bonds, and preferably with the IMF involved in designing and monitoring the conditions. At a news conference, Draghi said: “Under appropriate conditions, we will have a fully effective backstop …

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Wednesday, August 8, 2012 – Rogue Regulators, Central Bank Enablers, and a Jolt of Profit for Morgan Stanley

Rogue Regulators, Central Bank Enablers, and a Jolt of Profit for Morgan Stanley-by Sinclair Noe DOW + 7 = 13,175SPX + 0.87 = 1402NAS – 4 = 301110 YR YLD +.01 = 1.64%OIL +.07 = 93.42GOLD + .30 = 1613.60SILV – .06 = 28.14PLAT + 3.00 = 1414.00 The Dog Days Rally on Wall Street extended to day 4 but the dog is looking tired. The S&P 500 closed above 1400. The Nasdaq Composite closed above 3000 but finished slightly lower on the day. The volume was very light, so it’s hard to find strong conviction in the rally; still it is a rally, or it was. The main driver seems to be the idea that the ECB will, in fact, do whatever it takes to prop up the Euro-union. Today, the Bank of England gave little indication that it would rush to pour in further stimulus even as it cut its forecast for medium-term economic growth in Britain. France’s central bank forecast a contraction in growth going into the third quarter, citing weak demand from the periphery and Britain. The strange case of Standard Chartered Bank just keeps getting stranger. The British bank has been accused by a regulator from New York state of doing business with Iran in violation of sanctions. The regulator has threatened the bank’s charter in New York. The bank denies it did the dirty with the Iranians, or at least they deny they did as much as accused, maybe just a few million in …

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Tuesday, August 7, 2012 – Stay Dry My Friends!

Stay Dry My Friends!-by Sinclair Noe DOW + 51 = 13,168SPX + 7 = 1401NAS + 25 = 301510 YR YLD  +.07 = 1.63%OIL – .22 = 95.23GOLD + .70 = 1613.30SILV + .22 = 28.20PLAT + 6.00 = 1413.00 The head of the Federal Reserve Bank of Boston, Eric Rosengren, wants the Fed to undertake “an aggressive, open-ended bond buying program” that would stop only when the economy’s growth rate accelerates and unemployment begins dropping. Last week, following the FOMC meeting, the Fed said it would “closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability. So, that means the Fed will do something we just don’t know what or when, but things would have to get much much better, otherwise the Fed is somewhat obligated to do something. The Fed’s counterpart in Europe, the ECB is obligated to do “whatever it takes”. Mario Draghi, former Goldman man and now head of the European Central Bank, promised to do “whatever it takes” to save Euroland. Whatever it takes, Mario Draghi didn’t seem to have it. Or maybe he did. The situation in Europe is so complicated it’s hard to tell. So, investors have been fearful one day and cheerful the next. At the beginning of last week they thought all was lost. Then, by the end of the week, stocks were rallying again. Draghi …

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Thursday, August 02, 2012 – ECB Does Nothing – Jobs Tomorrow – Dust Bowl Today

ECB Does Nothing – Jobs Tomorrow – Dust Bowl Today– by Sinclair NoeDOW – 92 = 12,878SPX – 10 = 1365NAS – 10 = 290910 YR YLD -.06 = 1.48%OIL – 1.58 = 89.27GOLD – 11.80 = 1589.30SILV – .31 = 27.23PLAT – 12.00 = 1391.00So, last week, you might recall the stock market had a nice little two day rally based largely upon European Central Bank President Mario Draghi claiming within his mandate, he would do whatever it takes to preserve the euro; which turns out to be not so much. Draghi doesn’t have a bazooka, or even a pea shooter.  Yesterday, the Federal Reserve did nothing as they concluded their FOMC meeting. Today the ECB and the Bank of England did nothing. Perhaps Bernanke did not want to take center stage away from Draghi today. Could the Fed be playing it close to the vest, keeping their fingers crossed hoping for good employment numbers on Friday? For whatever reason, Bernanke is unwilling to try to kick start the economy with more stimulants. Why is he hesitating?  Maybe he’s more scared that additional Fed maneuvers won’t have any real effect than he is scared of a deflationary depression. Maybe he’s more scared that new twisting will have no economic effect. The last thing Bernanke wants is the point of recognition where the Fed is seen to no longer have any effective tools.If Bernanke actually unleashed QE3 and the market didn’t rally or worse, sold off, he would lose face.  Maybe …

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Wednesday, August 1, 2012 – The Fed’s Gone Fishing – The Machines Take Control – The Check is in the Mail

The Fed’s Gone Fishing -The Machines Take Control – The Check is in the Mail-by Sinclair NoeDOW – 37 = 12,971SPX – 4 = 1375NAS – 19 = 292010 YR YLD +.05 = 1.54%OIL + .71 = 90.38GOLD – 14.80 = 1601.10SILV -.56 = 27.54PLAT – 20.00 = 1403.00The economy has slowed down over the past few months; I know it; you know it; the Federal Reserve knows it; anybody who can fog a mirror knows it. And so, it was widely anticipated the Federal Reserve would acknowledge the slowdown today as they wrapped up a two-day FOMC meeting. They did. They issued a statement saying:  “economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated.” And then they did absolutely nothing. The did not extend their Zero Interest Rate Policy into the next millennium and beyond; they did not cut the interest they pay member banks for not making loans; and they did not announce another round of quantitative easing. Nobody seriously expected QE3 but it was expected the Fed would make some small, incremental concession. Nope. They did nothing. Squat, zilch, zip, nada. They couldn’t even throw a dog a bone. Generally they expect inflation to be under control and employment to slowly improve just a smidge, and apparently Bernanke is going trout fishing in Wyoming. They promised to keep an eye on things; if it goes to hell in a handbasket, they’ll …

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Tuesday, July 31, 2012 – Waiting on Godot, Draghi, Bernanke, DeMarco, the Flood, and For The Lights to Come Back On

Waiting on Godot, Draghi, Bernanke, DeMarco, the Flood, and For The Lights to Come Back On-by Sinclair NoeDOW – 64 = 13,008SPX – 5 = 1379NAS – 6 = 293910 YR YLD -.01 = 1.49 OIL – 1.78 – 89.89GOLD – 7.00 = 1615.90SILV – .18 = 28.10PLAT + 1.00 = 1421.00We wrap up the month of July. Let’s look at the scorecard; for the month, the Dow Industrial gained 128 points; the S&P 500 index gained 17 points; the yield on the 10 year treasury note dropped 9 basis points. S&P Case Shiller index of home prices rose  2.2% in May. All 20 cities in the index saw monthly gains. On a year-over-year basis, prices are down 0.7% nationally, the smallest fall in 18 months. Phoenix prices have climbed 11.5% – the strongest in the nation, while Atlanta’s have dropped 14.5%. Meanwhile, Corelogic reports there were about 60,000 completed foreclosures in June, down from about 80,000 in the same month last year. According to the report there were roughly 3.7 million homes lost to foreclosures since  2008. Ed DeMarco, the acting chief of the regulator for Fannie and Freddie, the Federal Housing Finance Agency, said in a letter to the top Republican and Democrat on the Senate Banking Committee that “after much study,” he has concluded that Fannie and Freddie’s participation in the Obama administration’s program to cut the amount owed by underwater borrowers would “not make a meaningful improvement in reducing foreclosures in a cost effective way for taxpayers.”Treasury Secretary Tim …

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Monday, July 30, 2012 – A Convergence of Central Bankers

A Convergence of Central Bankers-by Sinclair NoeDOW – 2 = 13,073SPX – 0.67 = 1385NAS – 12 = 294510 YR YLD -.05 = 1.50%OIL – .11 = 89.95GOLD – 1.70 = 1622.90SILV +.39 = 28.28PLAT + 5.00 = 1422.00This week features a convergence of central bankers: the ECB, the BOE, and the Fed; toss in a jobs report to finish the week and the fate of the global economy hangs in the balance. Maybe, maybe not;what we can say is that the game of kick the can down the road is running out of road. A quarter point rate cut from the ECB will not satisfy anybody. ECB President Mario Draghi has promised to do whatever it takes; now he is being put to the test. Germany will be required to step up; the ECB will be required to function as a global central bank and throw off its limitations. If Draghi and the ECB can’t control the downward spiral of the debt debacle in Spain and Italy, the entire global economy could start to crumble. Too dramatic? Consider China, India and Brazil are facing slower economic growth and a broken credit cycle; the US is facing the prospect of a fresh round of QE or some other tool to lift us out of a downturn – and let’s not even spend time today on the fiscal cliff. The International Monetary Fund issued this warning:  “the euro area crisis has reached a new and critical stage … raising questions about the …

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Thursday, April 26, 2012 – Everybody Loves Free Money

Everybody Loves Free Money– by Sinclair NoeDOW +211 = 12,887SPX + 22 = 1360NAS + 39 = 289310 YR YLD +.02 = 1.43%OIL +.02 = 89.41GOLD + 11.30 = 1617.10SILV + .20 = 27.64PLAT + 5.00 = 1411.00Pop Quiz: What do Wall Street bankers love? Free money. They swoon at the prospect of  money being redistributed from taxpayers to bankers. You might say they are socialists, in this regard; if redistribution of wealth is your definition of socialism. This morning European Central Bank President Mario Draghi declared “the ECB is ready to do whatever it takes to preserve the euro…and believe me, it will be enough.”We don’t know the details. Draghi wasn’t actually handing out euros to the bankers, but the idea is that there will be a European version of Quantitative Easing, possibly a direct bond purchase program.The euro rallied against the dollar. European stock exchanges jumped. Commodity prices jumped. The Yield on Spanish and Italian bonds dropped. Yields on German and US bonds rose as prices dropped. And US stocks moved higher. The ECB announcement was a put, a floor under the markets. For bankers and traders, the announcement flicked the switch to “risk on”, because even if they lose money, the ECB will just print more. Draghi opening the door to a Bernanke-style monetary policy in Europe is a big deal — at least for the financial markets. This sort of stimulative policy does a poor job of circulating money through the broader economy. Still, the market was …

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Wednesday, May 9, 2012 – Greek Government, Spanish Banks, Gold Prices – It’s All Messy

DOW – 97 = 12,835SPX – 9 = 1354NAS – 11 = 293410 YR YLD unch = 1.84% OIL – .56 = 96.45GOLD – 15.40 = 1590.40SILV – .20 = 29.37PLAT – 12.00 = 1505.00 The Greek tragedy continues; no success so far in negotiations to form a coalition government after weekend elections resulted in a deadlock. It looks like there might be another election in June. The Greeks accepted another $5 billion dollar bailout payment today, so they keep the government afloat for a few more weeks. Now, the chatter is shifting to the very real idea that Greece will exit the Euro, and trying to figure out the implications. The concern is that exiting the Eurozone is going to be impossible and possibly will trigger a cascade of bad economic consequences. Absolutely right, but only because it might be done in an uncontrolled manner. The Federal Reserve and the ECB and the IMF and all the others have been saying that the Euro-crisis is under control. If, or when Greece exits the Euro, nobody should be surprised; this train has been rolling down the track for a couple of years, and the Germans and ECB and IMF and Fed all had plenty of time to come up with solutions. And they didn’t. So, now the Greek voters have come up with a solution. They didn’t come up with a unanimous decision, not even a plurality. The whole thing was a crazy mish-mash of votes, ranging from communists to …

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Thursday, April 26, 2012 -Home Sales Up, Expectations Up; Beard on Beard Violence; Spain Sinks; Draghi’s Pretzel Logic; Big Banks Payday Tactics

DOW + 113 = 13,204SPX + 9 = 1399NAS + 20 = 305010 YR YLD -.02 = 1.96%OIL – .50 = 104.05GOLD + 12.80 = 1658.10SILV + .38 = 31.19PLAT + 16.00 = 1574.00 The number of people seeking U.S. unemployment benefits last week was 388,000; basically unchanged from a week earlier. The National Association of Realtors’ pending-home-sales index rose 4.1% to 101.4 in March. March pending home sales were up 12.8% from year-ago levels. A sale is listed as pending when the contract has been signed but the transaction has not closed. Sales of existing homes during the first quarter were the strongest in five years, and the NAR said the pending home sales data suggests the second quarter will be equally good. Pending sales are now at a 23 month high. We told you there would be a push to stimulate the economy by way of the housing market. It probably started with Operation Twist, and the Fed buying mortgage backed securities, and then continued with the push for HARP 2.0. We had a plethora of earnings reports today. Pulte Homes posted a smaller than expected loss. Citrix Software posted a better than expected profit. Amazon.com reported better than expected earnings even though profit dropped 35% from a year earlier. Of the 51% of the S&P 500 companies that have reported first-quarter results so far, 72.4% have reported earnings above expectations, 11.8% reported earnings in line with expectations and 15.7% reported earnings below estimates. It’s all about expectations. …

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