Financial Review

Monday, June 09, 2014 – Record Highs and a Few Crumbs

Record Highs and a Few Crumbs by Sinclair Noe DOW + 18 = 16,943 SPX + 1 = 1951 NAS + 14 = 4336 10 YR YLD + .02 = 2.61% OIL + 1.73 = 104.39 GOLD – .30 = 1253.00 SILV + .05 = 19.16   The major indices are now up for 4 consecutive sessions. The Dow Industrials hit a record high close for the 10th time this year. The S&P is now up 14 of the last 17 trading sessions. The last time the Dow experienced a 10% correction was back in October 2011; since then, the Dow has gained almost 60% over 32 months without a 10% correction. Typically, you can expect a correction about every 12 months on average. The longest period without at least a 10% pullback was an 82 month run from 1990-1997. The S&P 500 hit a record high close for the 19th time this year. The S&P bull market is now at 62 months and counting, the best run since 1994 to 2000.   The CBOE Volatility Index moved a little higher today to 11.34. On Friday, the VIX hit a low of 10.73, the lowest level since January 2007. The VIX can go low and stay low for an extended period of time. In 2007, after hitting a low, the VIX steadily rose for the remainder of the year but stock prices didn’t peak until the end of 2007. The VIX measures options trades, but does it really mean investors …

READ MORE →
Financial Review

Wednesday, May 21, 2014 – Congratulations Graduates, Yada, Yada, Yada

Congratulations Graduates, Yada, Yada, Yada by Sinclair Noe   DOW + 158 = 16,533 SPX + 15 = 1888 NAS + 34 = 4131 10 YR + .02 = 2.53% OIL – 33 = 103.74 GOLD – 2.40 = 1292.90 SIL  un = 19.49   Earnings season is winding down; about 96% of S&P 500 companies have reported results, with profit growth this quarter of 5.5% and revenue up 2.8%. While more companies have topped earnings expectations than usual, fewer have beat on the revenue side. This has been an ongoing theme for corporate profits; bottom line growth without corresponding sales. If this formula sounds unsustainable, it is, unless there is some other factor pumping up the markets.   Follow-up from yesterday: China has signed a 30-year deal to buy Russian natural gas worth about $400 billion. The gas deal gives Moscow an economic boost at a time when Washington and the European Union have imposed visa bans and asset freezes on dozens of Russian officials and several companies over Ukraine. It allows Russia to diversify its markets for gas, which now goes mostly to Europe; essentially opening the door to Asia’s gas market and potentially closing the door on the petro-dollar.   The Federal Reserve today released the minutes of the most recent FOMC meeting. Fed policymakers considered several approaches to tightening monetary policy, but decided to remain flexible; which is another way of saying QE is a big experiment and they are just hoping nothing explodes in their …

READ MORE →
Financial Review

Financial Review for Wednesday, April 30, 2014 – Record Highs in First Gear

Record Highs in First Gear by Sinclair Noe DOW + 45 = 16580.84 (record close)SPX + 5 = 1883 NAS + 11 = 411410 YR YLD – .04 = 2.65%OIL – 1.59 = 99.69GOLD – 4.60 = 1292.30SILV – .29 = 19.25 Back on December 31st, we finished the old year with a record high close on the Dow Industrial Average at 16,576; since then the index has bobbed up  and down, briefly hitting an intraday high of  16,631 on April 4th, but on that day we finished in negative territory. Today, a record high close. The S&P 500 is closing in on the record high close of 1890, but not today. Now, when you hear the Dow is breaking records, you might think the economy is roaring, cruising along the highway in fifth gear. You would be wrong; the economy is stuck in first gear and the clutch is slipping. The Commerce Department reports the economy expanded at a mere 0.1% annual pace in the first three months of the year, one of the weakest rates of growth in the nearly 5-year-old recovery. A slowdown had been expected due to the harsh winter weather that froze business activity across a large swath of the country, but this report was worse than expected. The gross domestic product had been expanding at a 3.4% pace in the second half of last year. No worries, the weather has warmed and everything is returning to normal. Yeah, not exactly. There has been a …

READ MORE →
Uncategorized

Friday, February 28, 2014 – Tantrums

Tantrums by Sinclair Noe DOW + 49 = 16,321SPX + 5 = 1859 NAS – 10 = 430810 YR YLD + .02 = 2.66%OIL + .05 = 102.45GOLD – 5.10 = 1327.70SILV – .06 = 21.30 Broadcasting from the Renaissance Esmerelda in Indian Wells for Financial Fest Palm Springs edition.   Remember last summer when various Fed officials floated the taper balloon? The hinted that the Fed might taper from $85 billion a month in QE asset purchases. The result: Wall Street had a taper tantrum; the yield on the 10 year note spiked up to 3%; mortgage rates shot up and made many question the strength of the housing recovery; stocks swooned as the froth escaped the market. The tantrum didn’t last long, even when the Fed announced the actual taper. Markets treated the announcement with a yawn. Stocks resumed their climb to record highs; Treasuries settled down; the housing market, well that’s always a local story, so it depends; and the economy continued to muddle. The markets seemed to accept the idea that the economy could handle a little less Fed stimulus, after all, they gave forward guidance that interest rates would remain low until the cows come home. In retrospect, last summer’s taper tantrum seems nothing more than a blip. Not so fast. A new paper released today before the Monetary Policy Forum in New York argues that the tantrum might portend a negative response as taper continues and as the Fed moves closer to someday raising …

READ MORE →
Uncategorized

Tuesday, November 26, 2013 – The Best Question

The Best Question by Sinclair Noe DOW + 0.26 = 16,072SPX + 0.27 = 1802NAS + 23 = 401710 YR YLD – .02 = 2.71%OIL – .60 = 93.49GOLD – 9.60 = 1243.00SILV – .39 = 19.92 Today we celebrate the Nasdaq. Yes, the Dow is at record highs, again, but the milk and cookies thing is getting old, kind of sickly sweet. Some might argue that you can never have too many cookies; that any day with milk and cookies is a good day. It’s hard to dispute this argument. Still, it bears notice that the Nasdaq has closed above 4,000 for the first time in 13 years. The Nasdaq is up about 33% year to date, and counting. So, today we celebrate with chips and salsa. If you’re thinking the Nasdaq has had quite a run and it’s starting to feel like 1999, you could be forgiven, but when you put it in perspective it’s not quite the same. P/E ratios are around 19, compared with 29 just before the millennium. Price to book is now 2.6 compared to 5.1 back then. Basically, back in 1999, the Nasdaq was extremely overvalued. You can argue that it’s overvalued today, but it isn’t nearly to the old extremes. Two economic reports on the housing market today. Permits for future home construction hit a near 5-½ year-high in October and prices for single-family homes showed big gains in September, suggesting a run-up in mortgage interest rates has not derailed the housing …

READ MORE →