Financial Review

Tuesday, July 01, 2014 – The Good, the Bad, and the Depressing

The Good, the Bad, and the Depressing by Sinclair Noe   DOW + 129 = 16,956 SPX + 13 = 1973 NAS + 50 = 4458 10 YR YLD + .05 = 2.56% OIL – .13 = 105.24 GOLD – .80 = 1327.10 SILV + .02 = 21.08   Record high closes for the Dow and the S&P.   The record setting bull market run refuses to stumble. The S&P 500 has not seen a correction, a drop of 10%, for 1,002 days, and counting. This marks the fifth longest stretch without a correction since 1928. The average time between corrections is about 18 months; we’ve now gone 33 months without a 10% pullback.   The Institute for Supply Management said its manufacturing index registered 55.3% in June, down slightly from May’s reading of 55.4%. Any number above 50% signals expansion. Separately, the research firm Markit said its final reading of US manufacturing conditions in June totaled 57.3, compared with a preliminary reading of 57.5; still the highest reading since May 2010. So the manufacturing sector has expanded for 13 consecutive months, but it wasn’t a month over month increase, and we have to remember that manufacturing was expanding in the first quarter as the broader economy was contracting by 2.9%. Today’s reports were decent news for manufacturing, but hardly great.   The Commerce Department reports construction spending increased 0.1% in May, following a 0.8% increase in April. Construction activity totaled $958 billion at a seasonally adjusted annual rate in …

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Financial Review

Wednesday, April 23, 2014 – A Brilliant Future From Cool Ideas

A Brilliant Future From Cool Ideas by Sinclair Noe DOW – 12 = 16,501SPX – 4 = 1875NAS – 34 = 412610 YR YLD – .05 = 2.68%OIL – .2- = 101.55GOLD un 1284.70SILV + .06 = 19.55 It’s earnings season, and this is a chance to compare and contrast. This morning, Facebook posted earnings of $642 million in net income, or 25 cents a share, in the first quarter, versus $219 million, or 9 cents a share in the year ago period. Overall revenue grew 72% year-on-year to $2.5 billion in the first quarter, topping estimates. Facebook now has 1.28 billion active users, and more than 1 billion do their Facebook stuff on a mobile device. Then Facebook announced their Financial Director was resigning. Shares were up about 3%. Nobody puts on a better presentation than Apple, that’s how they grew to be the most valuable company in the world. Steve Jobs would walk out and announce Apple had created a new mp3 player, and also a new way to connect to the internet, and also a new camera. Wow, three new products, nope…, he would hold up the iPhone – just one very cool thing from Apple; tech geeks heads would explode. Today, Apple posted earnings of $10.2 billion or $11.62 a share, on revenue of $45.6 billion. Analysts expected the company to report earnings excluding items of $10.18 a share; Apple reported a 4.6% rise in March-quarter revenue to $45.6 billion; Apple sold 43.7 million iPhones in …

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Thursday, August 15, 2013 – Who’s in Control?

Who’s in Control? by Sinclair Noe DOW – 225 = 15,112SPX – 24 = 1661NAS – 63 = 360610 YR YLD +.04 = 2.75%OIL + .41 = 107.26GOLD + 29.60SILV + 1.14 = 23.11 Let’s start with the economic data: The Labor Department said its producer price index (PPI) remained flat in July, surprising economists who were expecting a rise of 0.3%. Meanwhile, core prices, which exclude food and energy costs, edged 0.1% higher — less than the 0.2% climb projected by economists. By comparison, June saw gains of 0.8% and 0.2%, respectively. Meanwhile, the consumer price index (CPI) showed retail prices rose a seasonally adjusted 0.2% on gains for gasoline, housing, clothing and food, among other goods. Excluding energy and food, the core consumer-price index also rose 0.2%. The core CPI increased 1.7% in July from the same period in the prior year, slightly up from June’s annual growth. Overall consumer prices have increased 2% over the past 12 months. That year-over-year growth in the overall CPI has trended higher in recent months. Just the other day, James Bullard,  the St. Louis Fed president said he is concerned about low inflation levels, which he said will be a factor in whether the Fed will scale back its bond-buying program. Bullard said: “There has not been much indication, so far, that it has been ticking back up toward target.” Also, the number of people who applied for new regular state unemployment-insurance benefits fell 15,000 to 320,000 in the week that …

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Tuesday, February 19, 2013 – Never more

Nevermore  by Sinclair Noe DOW + 53 = 14,035SPX + 11 = 1530NAS + 21 = 321310 YR YLD +.02 = 2.03%OIL + .70 = 97.11GOLD – 5.20 = 1605.60SILV – .54 = 29.54 So, stocks have been moving higher, up for 7 weeks; the S&P 500 index is at a five year high. Every story I read talks about optimism in the markets. What that really means is that we’re almost back to where we were in October 2007. Five years of risk and heartburn and having money tied up, and we’re back where we were. WooHooo! There’s merger fever in the air. Last week we heard the announcements on USAirways and American Airlines, plus Berkshire Hathaway and 3 Brazilians buying an enormous quantity of ketchup. This week, the rumor du jour is Office Depot merging with Office Max. And when the M&A fever subsides, there is the stock buyback fever, the anti-dilution thrill that comes from watching corporate management buy high. Of the 391 companies in the S&P 500 that have reported fourth quarter earnings results, 70.1 percent have exceeded analysts’ expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters. Fourth-quarter earnings for S&P 500 companies have risen 5.6 percent. Of course, there is an ominous feel to this market rally, like a nasty black raven over the gate screeching out “Nevermore.” And this coincides with the impending sequester, which Congress will deal with, using all their energy and diligence, …

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Monday, December 17, 2012 – Unconnected Dots

Unconnected Dots by Sinclair Noe DOW + 100 = 13,235SPX + 16 = 1430NAS + 39 = 301010 YR YLD +.05 = 1.76%OIL +.71 = 87.44GOLD + 1.90 = 1699.10SILV -.03 = 32.38 President Obama and House Speaker Boehner met at the White House today. Aides from both parties said they were optimistic that a deal could be reached in the coming days to avert the “fiscal cliff,” as lawmakers set the stage for action before a year-end deadline. A senior Republican aide said: “There’s been too much progress at this point and neither guy wants to go over the cliff.” Although both sides still had major differences, investors were cheered by signs of progress. Major market indices moved higher in the afternoon, and some of that was the feel good part of the news cycle; we certainly need some good news. Now, we sit back and see whether it was yet another rumor. Boehner, the speaker of the Republican-controlled House of Representatives, has edged closer to Obama’s demand to raise taxes on the wealthiest Americans. In return, Obama is considering a measure that would slow the rate of growth of Social Security retirement benefits by changing the way they are measured against inflation. Boehner has put forward a tax increase for those earning over $1 million annually, while Obama wants that threshold set at $250,000. Republicans could probably stomach a tax hike on incomes above $500,000. Boehner could float the broad outlines of a deal with rank-and-file members on …

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Monday, August 13, 2012 – The World Slows Down but Refuses to Admit or Deny Slowing

The World Slows Down but Refuses to Admit or Deny Slowing– by Sinclair Noe DOW – 38 = 13,169SPX – 1 = 1404NAS + 1 = 302210 YR YLD +.01 = 1.65%OIL +.01 = 92.74GOLD – 10.60 = 1610.90SILV – .30 = 27.93PLAT – 13.00 = 1391.00 The S&P 500 closed slightly negative, but the interesting part was the volume, or the lack thereof on the New York Stock Exchange. It was the lowest non-holiday-trading day volume in over a decade; only 380 million shares changed hands. You’ve got to wonder if the problems with Knight Capital last week have exposed a problem. Clearly something broke with Knight’s algorithm software glitch. Could it be that the volume on the exchange has been artificially inflated? Yep. And what did we get for having a company like Knight Capital scalping with High Frequency trades? We all lost a little.  The S&P 500 and Dow have risen every week for the past five weeks. The S&P 500 last wrapped up a five-week climb in mid-March. The Dow hasn’t done so since last October. The Dow has fallen for 10 out of the past 11 Mondays, and the S&P 500 has finished down five of the last six. Japan’s economy grew in the second quarter at a 1.4 percent annual rate, slower than expected. Last week, China released dismal figures on retail sales and exports in July. There was some speculation Beijing would roll out stimulus measures over the weekend. That did not happen. …

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Wednesday, May 16, 2012 – Admit Nothing – by Sinclair Noe

DOW – 6.66 = 12,496 SPX + 2 = 1318NAS + 11 = 285010 YR YLD -.07 = 1.72OIL +.62 = 90.51GOLD – 6.00 = 1563.30SILV -.36 = 27.94PLAT – 20.00 = 1430.00 A listener writes: Maybe they should have renamed the company “Two Facedbook” at the IPO for all of the double dealing and back door insider information. One face for Joe public and the other face for Joe privileged… My .02 worth. We are learning details, and we will learn many more details as the Facebook Fiasco works its way through the courts. Zuckerberg made a boatload of money but he will spend a large part of his life dealing with lawyers and the legal system. At first blush it appears the bankers were behaving badly. Go figure. The latest revelation is that Facebook officials told the analysts for the banks that were underwriting the IPO to reduce revenue and earnings forecasts. Facebook backed off and said, “hey, get your models down.” Facebook’s advisory came around May 9, the day it published an amended prospectus that included a cautionary note about lower advertising revenue. It isn’t known which analysts from the 33 IPO underwriters were contacted by Facebook with the revised guidance. It also isn’t clear exactly who from Facebook gave the guidance. The analysts cut their estimates because a Facebook executive told them to. The information about the estimate cut was then verbally conveyed to sophisticated institutional investors who were considering buying Facebook stock, but not to smaller investors. The …

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Tuesday, May 22, 2012 – Bank Scum – by Sinclair Noe

DOW – 1 = 12,502 SPX +0.64 = 1316NAS – 8 = 283910 YR YLD +.06 = 1.79%OIL – .92 = 91.65GOLD – 24.10 = 1569.30SILV – .27 = 28.30PLAT – 23.00 = 1451.00 Morgan Stanley, JPMorgan and Goldman Sachs are just pure scum. No wait, I shouldn’t say that; it’s much too kind; they are lying, stinking, thieving, dangerous scum. Maybe you heard about a little company called Facebook; it went public last Friday. Today, Reuters is reporting Morgan Stanley, JPMorgan and Goldman Sachs all cut their earning forecasts for Facebook in the middle of the IPO roadshow. You didn’t hear about that? No, you did not hear about that because the big banksters didn’t tell you. Why didn’t they tell you? Because they thought it would be much better to screw the public and try to make a quick buck on insider information, which they are required by law to report. Instead, the banksters passed the information only to a handful of big investor clients. This is a problem because earnings forecasts are material information, especially when they are prepared by analysts who have special access to company information and company management. Everybody who invested in Facebook would consider this material information when making an informed decision. The handful of big investors that did receive the information about reduced revenue forecasts were reportedly shocked. The change in Morgan Stanley’s estimates came on the heels of Facebook’s filing of an amended prospectus with the U.S. Securities and Exchange Commission (SEC), in …

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Friday, May 18, 2012 – Europe, Before the Flood – by Sinclair Noe

DOW – 73 = 12,369SPX – 9 = 1295NAS – 34 = 277810 YR YLD un = 1.70%OIL – .57 = 93.41GOLD + 17.80 = 1593.10SILV +.67 = 28.82 PLAT + 2.00 = 1461.00 “He hath indeed better bettered expectation than you must expect of me to tell you how.” The Facebook Frenzy turned out to be a fairly orderly IPO. Share prices fluctuated but did not collapse nor did they soar; which means the price and quantity were about right; the underwriter was competent and reasonably accurate. The NASDAQ had some trouble executing trades but that was a relatively minor problem. Now, the new Facebook millionaires and billionaires have some heavy lifting to prove their value. Time will tell, and good luck to them in their efforts. FB +.23 = 38.23 I know its the biggest internet IPO ever, but in reality it’s much ado about nothing. The European economic crisis is expected to top the agenda at the G8 meeting tomorrow at Camp David. In Greece, voters will soon head to the polls for another round of elections which will be viewed by many as a referendum on the euro. The European Commission and the European Central Bank have been working on contingency plans in the event of a Greece exit from the 17-nation euro zone. Concern about whether Greece’s troubles would spread to other European nations hit the market last fall. It’s hard to imagine between what went on last fall and now, that a lot of …

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Tuesday, May 15, 2012 – JPMorgan is Scary, the California Budget is Easy – by Sinclair Noe

05152012 Script DOW – 63 = 12,632SPX – 7 = 1330NAS – 8 = 289310 YR YLD =.01 = 1.78% OIL – .57 = 93.41GOLD – 12.20 = 1545.30SILV -.46 = 27.82PLAT – 5.00 = 1437.00 So, JPMorgan shareholders held their annual meeting. They decided to pay Jamie Dimon $23 million. They can still afford it; despite a $2 billion dollar loss, JPMorgan is still the largest publicly traded company, the largest bank in the US, and the largest derivatives dealer in the world. JPMorgan invented credit default swaps, they wrote the legislation to reform the derivatives markets, and when JPMorgan went insolvent in the 1980s and in 2007, they were bailed out by taxpayers.A $2 billion dollar loss is not the end of the world, JPMorgan is not in imminent danger, but I don’t think this will end well. The really scary part isn’t the loss, but that it only represents one-tenth of the annualized profit. What are they doing to make that kind of money? And if these are supposed to be the best and brightest bankers, what does it say about the others? The FBI has opened an investigation into the trading losses. We don’t know what the FBI is looking at and I won’t hold my breath waiting. The SEC has opened an inquiry into JPMorgan’s disclosures and accounting practices. JP Morgan maintains that the purpose of the trades that resulted in the $2 billion loss was to hedge exposure elsewhere, as opposed to being proprietary …

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