Financial Review

Half True

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-08-10-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe for 08-10-2015 DOW + 241 = 17,615 SPX + 26 = 2104 NAS + 58 = 5101 10 YR YLD + .06 = 2.24% OIL + .95 = 44.82 GOLD + 10.30 = 1105.10 SILV + .41 = 15.33   Berkshire Hathaway is buying Precision Castparts for $235 per share in cash in a deal worth about $37 billion. On Friday, Precision Castparts closed at $193.94, meaning Berkshire is paying a 21% premium to own the company. Berkshire originally began investing in Precision Castparts in 2012 and had already acquired a 3% stake before today’s announcement. Berkshire Hathaway posted disappointing earnings on Friday. Revenue for the second quarter came in at $54 billion. Precision Castparts makes parts for the aerospace industry, and also the energy industry; their major customers are Boeing, General Electric, and Airbus. This is a company with a large moat; there is a big barrier for new competition; GE isn’t going to outsource parts inside a jet engine for a couple of dollars savings. And there is a good chance that PCP can make some decent sized acquisitions to consolidate its industry, or what Buffett calls “bolt-on’ acquisitions.   When you consider some of the recent acquisitions by Warren Buffett, it becomes clear that Berkshire Hathaway is no longer a pseudo-hedge fund or quasi-mutual fund. It is a diversified conglomerate with interests in heavy industry, transportation, …

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Financial Review

Monday, June 02, 2014 – Clean Power Plan

Clean Power Plan by Sinclair Noe DOW + 26 = 16,743 SPX + 1 = 1924 NAS – 5 = 4237 10 YR YLD + .07 = 2.53% OIL – .31 = 102.40 GOLD – 7.80 = 1244.50 SILV – .05 = 18.86   The ISM got it wrong this morning. The Institute for Supply Management reported its May manufacturing index came in at a weaker than expected 53.2, but there was a software problem that didn’t properly reflect season adjustments; the ISM issued a revision; the May index was 56.0; but for some reason, that wasn’t correct, so they issued another revision. The May manufacturing index was 55.4; that’s the number and they’re sticking with it. Embarrassing? Yes.   Meanwhile, stocks and bonds were all over the board. Stocks fell into negative territory early on, but bounced back as revisions were issued. Bonds are hyper sensitive to economic growth, and the yield on the 10 year note moved higher and stayed higher, despite the initial numbers and the revisions. And if you look past the revisions, and you should, because it appears to be nothing more than an honest mistake, caught quick and corrected; the bottom line is a pretty strong number for manufacturing, more or less in line with the idea of a second quarter bounce in the economy.   The bigger story this week will be the jobs report on Friday. It is widely expected the economy added about 200,000 to 215,000 jobs in May, which would …

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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

Tuesday, May 27, 2014 – Currently Trending Here

Currently Trending Here by Sinclair Noe DOW + 69 = 16,675 SPX + 11 = 1911 NAS + 51 = 4237 10 YR YLD – .02 = 2.52% OIL – .24 – 104.11 GOLD – 29.20 = 1264.30 SILV – .40 = 19.14   The S&P 500 Index closed at another record high. The Dow Industrial Average is just a little below the May 13 record of 16,715. The Russell 2000 index of small and mid-caps confirmed the uptrend. The Russell had been lagging and there was a concern that small caps might drag the blue chips lower. While the Russell is still down about 2% year to date, on Friday it moved above its 200 day moving average.   Any time the market is trending, it makes sense to look for divergences, or any indicator that might signal a change in trend, but the most important thing to watch is still the trend itself; in other words the market scorecard is measured in price. And right now the trend is up.   Let’s start with some economic news. The S&P/Case-Shiller Home Price Indices continued to show gains in prices for existing home sales; the 10-city composite was up 0.8% and the 20-city composite was up 0.9% month over month; and respective year over year gains of 12.6% and 12.4%. Nineteen of the 20 cities showed positive returns in March; New York was the only city to decline. As of March 2014, average home prices across the United States are …

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