Financial Review

Thursday, June 05, 2014 – The European Central Bank Has Done Something

The European Central Bank Has Done Something by Sinclair Noe   DOW + 98 = 16,836 SPX + 12 = 1940 NAS + 44 = 4296 10 YR YLD – .02 = 2.58% OIL – .18 = 102.46 GOLD + 9.60 = 1254.20 SILV + .24 = 19.04   The Dow and the S&P finished with record high closes.   We start in Europe. The European Central Bank has done something. No, I’m serious, they did something; not just talked about doing “whatever it takes”, they actually took some action; nothing terribly bold; probably not enough, but something. Specifically, the ECB cut its benchmark interest rate to 0.15% from 0.25%, and the deposit rate to minus 0.10% from zero. The rate cuts will take effect next week, on June 11. They are trying the  negative interest rate, which has never been tried on a large scale, in a bid to push down the value of the euro and encourage banks to invest excess cash rather than hoard it in central bank vaults.   The ECB will also begin offering four-year loans to banks at the benchmark interest rates, under conditions meant to ensure that lenders use the money to issue loans to businesses. The loans are designed so that they can’t just borrow the money from the ECB at 0.15% and toss it into government bonds.   Also, the ECB will start buying packages of loans, or asset-backed securities; another measure designed to push lending to small businesses; right now …

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Tuesday, April 23, 2913 – A Tweet Day

A Tweet Day by Sinclair Noe DOW + 152 = 14719SPX + 16 = 1578NAS + 35 = 326910 YR YLD un 1.70%OIL + .38 = 89.57GOLD – 12.70 = 1414.60SILV – .47 = 23.04 Some days you hear a bit of news and it’s bad, really bad. And then some days, hackers hack into the Associated Press Twitter account and tweet that there are bombs at the White House, and the stock market goes into a freefall, and it’s bad, but not really bad. Yes, a false tweet sent stocks plummeting. The 143-point fall in the Dow industrial average came after hackers sent a message from the Twitter feed of the Associated Press saying the White House had been hit by two explosions and that Barack Obama was injured. The fake tweet, which was immediately corrected by Associated Press employees, caused a sensation on Twitter and in the stock market. White House officials were unimpressed. An AP reporter apologized for the Twitter hacking at the start of the daily White House press briefing, saying the tweet had been deleted as soon as it was discovered. A stoney-faced Jay Carney, Obama’s personal spokesman, thanked the reporter but did not look amused. “The president is fine. I was just with him,” added Carney. The market recovered within a few minutes of the misunderstanding, but the incident raised many questions. We still have a problem with high frequency trading algorithms that scan the news and trade quickly, causing flash crashes. And then …

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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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Friday, October 19. 2012 – Sometimes I Forget What I’m Supposed To Remember

Sometimes I Forget What I’m Supposed To Remember by Sinclair Noe DOW – 205 = 13,343SPX – 24 = 1433NAS – 67 = 300510 YR YLD -.06 = 1.77% OIL – 1.96 = 90.14GOLD – 21.10 = 1721.50SILV – .75 = 32.17PLAT – 29.00 = 1625.00 Today is the 25th anniversary of Black Monday, and the markets paid homage with a 205 point drop, nothing close to the 508 point drop in 1987. On a percentage basis, 1987 was 16 times worse than today. The Crash of 1987 would be about a 3,100 point drop in today’s markets. That would get your attention. Still, the more things change the more they stay the same. Back in 1987, the Crash was blamed, at least in part, on program trading, based on portfolio insurance and a process called dynamic hedging. I remember computers back then that weren’t fast enough to play Pong, much less cause a crash. Maybe the Wall Street crowd had really fast floppies. Today we have high frequency trading or HFT, and they can whip out trades in milliseconds; and if you’re looking for a market crash in the future, don’t be surprised if it comes from HFT. The whole idea of HFT is legalized theft and it doesn’t add to market liquidity, stability or efficiency. They are not market-makers. They are market-manipulators. They have no obligation to make a market in any stock. The never have to post a market or ever honor the bids and offers they …

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