Financial Review

Inflation or the Lack Thereof

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-22-2014.mp3Podcast: Play in new window | Download (Duration: 13:21 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review DOW – 153 = 16,461 SPX – 14 = 1927 NAS – 36 = 4382 10 YR YLD + .02 = 2.23% OIL – 2.06 = 80.43 GOLD – 8.40 = 1242.00 SILV – .34 = 17.27 The major stock indices were higher this morning, then they dropped about the time were heard reports of a shooting in Ottawa Canada, near the parliament building. The shooting in the Canadian capital left a soldier dead and the city on lockdown. The Labor Department said the Consumer Price Index edged up 0.1% last month. In the 12 months through September, the CPI rose 1.7%. The core CPI, which strips out food and energy prices, ticked up 0.1% last month, while the year-on-year change held steady at 1.7%. Energy prices fell for a third straight month in September, with gasoline costs slipping 1.0% after dropping 4.1% in August. Food prices gained 0.3% in September and were up 3.0% from a year ago, the largest gain in nearly 2-1/2 years. Shelter costs increased 0.3% in September after rising 0.2% in August. The medical care index increased 0.2%, with prices for nonprescription drugs posting a record increase. Airline fares declined for a third straight month, while prices for new motor vehicles and apparel were unchanged. Prices for used cars and trucks fell for the fifth straight month. Wages remain stagnant. Average hourly earnings adjusted for inflation fell 0.2% …

READ MORE →
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: iTunes | 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, particularly …

READ MORE →
Financial Review

Bring Your Umbrellas

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-09-29-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review DOW – 41 = 17,071 SPX – 5 = 1977 NAS – 6 = 4505 10 YR YLD – .04 = 2.49% OIL + .59 = 92.61 GOLD – 4.40 = 1216.00 SILV – .20 = 17.56 Starting with economic data: Consumer spending accelerated in August. Consumer spending rose 0.5% last month after being unchanged in July. Growth in personal income ticked up 0.3%, in line with forecasts. Some of the strength in spending came from a decrease in the saving rate, which eased back from a 1-1/2-year high in July. One area where spending dipped – housing. The National Association of Realtors issued its index of pending home sales for August. Pending sales dropped 1% from an 11 month high in July. Signaling that upcoming closings of existing homes are likely to slow down, the index of pending home sales hit a seasonally adjusted 104.7 in August, compared with 105.8 in July. The Fed’s preferred gauge of inflation was up 1.5% in August from a year earlier, down slightly from the reading in July. Excluding volatile food and energy prices, so-called core prices also advanced 1.5% year over year. Price increases measured by the PCE index slowed to a 1% annual pace late last year before accelerating during the spring and then plateauing this summer. A separate measure also shows inflation is largely in check. The Labor Department’s consumer-price index rose 1.7% …

READ MORE →
Financial Review

Incredibly Orwellian Record High

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-09-17-2014.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review DOW + 24 = 17,156 SPX + 2 = 2001 NAS + 9 = 4562 10 YR YLD + .01 = 2.60% OIL – .90 = 93.98 GOLD – 11.70 = 1224.20 SILV – .16 = 18.62 The Dow Jones Industrial Average closed at a record high of 17,156.85; the first record high for the Dow since July. The Dow set an all-time intraday high of 17,221.11. It was the sixteenth record close for the blue chip index in 2014. The stock market action today was focused on the Federal Reserve. I suppose we could say the same thing about the past 6 years. Today, the Federal Reserve wrapped up its FOMC meeting. The FOMC stands for Federal Open Market Committee, which sounds incredibly Orwellian. The meeting was a rousing success; we know this because the media coverage can’t quite figure out whether the Fed will raise interest rates sooner or later, or whether the economy is weaker or stronger. While the much analyzed phrase “considerable time” remained in the FOMC statement, the newly announced scheme for interest rate normalization shows that higher rates are in the cards. The FOMC also said labor market conditions improved but a significant amount of slack remains. The Fed said it would end the bond-buying program known as quantitative easing in October. The Fed will purchase $15 billion of mortgage and Treasury bonds in October and then …

READ MORE →
Financial Review

Tuesday, June 17, 2014 – What Could Go Wrong?

What Could Go Wrong? by Sinclair Noe   DOW + 27 = 16,808 SPX + 4 = 1941 NAS + 16 = 4337 10 YR YLD + .06 = 2.65% OIL – .30 = 106.60 GOLD un = 1272.70 SILV + .09 = 19.86 The FOMC, the Federal Open Market Committee started two days of meetings today; tomorrow they are expected to announce more of the same. The FOMC is largely expected to taper its asset purchase program by $10 billion to $35 billion. Effective July 1, the Fed is expected to lower its asset purchases to $15 billion in agency mortgage backed securities (MBS) and $20 billion in Treasuries. The Fed is also expected to maintain its current forward guidance language on federal funds rate support; in other words, they will keep telling us that rates might increase sometime next year.   The committee is likely to make some upgrades to its description of the economic outlook in its economic projections. The committee will probably need to reduce its 2014 real GDP growth forecast to take into account the Q1 disappointment, and we can probably expect the committee to reduce its unemployment rate forecast and lift its inflation forecast slightly.   The consumer-price index climbed a seasonally adjusted 0.4% in May from a month earlier. It marked the fastest increase since February 2013 and doubled the pace of economists’ forecasts. Excluding food and energy components, so-called core prices increased 0.3%, the fastest pace since August 2011. From a year …

READ MORE →
Financial Review

Friday, May 16, 2014 – Nervous About Recovering in the Recovery

Nervous About Recovering in the Recovery by Sinclair Noe DOW + 44 = 16491 SPX + 7 = 1877 NAS + 21 = 4090 10 YR YLD + .02 =  2.52% OIL + .68 = 102.18 GOLD – 4.10 = 1293.70 SILV – .11 = 19.45   Stocks were all over the place this week; we had record highs for the Dow Industrial Average and the S&P 5oo Index, topping 1900 for the first time, even as small caps slipped and internet stocks tumbled. For the week, the Dow slipped 0.6 % and the S&P 500 dipped 0.03 %, while the Nasdaq gained 0.5 %. Bonds enjoyed a very nice week indeed, with the yield on the 10 year Treasury note moving from a high for the week of 2.66% to a low of 2.47%. Isn’t it awesome when the Dow hits a record high but everything else flatlines or shrinks? Maybe we are in a recovery, but maybe we need to recover from the recovery. Recent economic data has been mixed, and reports released Friday added to concerns about the lackluster recovery. The preliminary Reuters / University of Michigan consumer sentiment index for May was at 81.8, down from 84.1 in April. Housing starts increased in April at a seasonally adjusted annual rate of 1,072,000. This is 13.2 % above the revised March estimate of 947,000 and is 26.4 % above the April 2013 rate of 848,000. Earlier in the week we got the PPI and CPI inflation numbers. …

READ MORE →
Financial Review

Tuesday, April 15, 2014 – Yellen in the Lions’ Den

Yellen in the Lions’ Denby Sinclair Noe DOW + 89 = 16,262SPX + 12 = 1842NAS + 11 = 403410 YR YLD – .01 = 2.62%OIL – .22 = 103.83GOLD – 24.20 = 1303.40SILV – .41 = 19.66 Stocks were all over the place today. We started with triple digit gains for the Dow Industrials, dipped to triple digit losses, then back into positive territory for the close with the major indices closing just below their morning highs. This kind of volatility does not engender confidence; it does warrant caution. The utilities sector gained 1.3% and finished ahead of the other groups, extending its YTD gain to 11.8%; the biotech ETF added 1%, while the broader healthcare sector advanced 1.1%.Tech stocks have been beaten up quite a bit over the past couple of weeks. The Nasdaq 100 Tech Index (NDXT) is down 7% since April 1st. The Nasdaq Composite has exhibited weakness, but not to the point of meeting the definition of a correction; it would take a slide to 3,922 to mark a 10% fall from the March 5 closing high at 4,357; a 10% pullback from the March 6 intraday high of 4,371 would be achieved at 3,934. The Labor Department’s Consumer Price Index, or CPI, increased 0.2% in March after posting a 0.1% increase in February. Excluding volatile food and energy prices, core prices ticked up 0.2%.Prices rose 1.5% for the 12 months ending in March. That is up from February’s year-over-year reading of 1.1%. Core prices …

READ MORE →
Uncategorized

Wednesday, March 19, 2014 – Behind the Curtain of the Mysterious Central Bankers

Behind the Curtain of the Mysterious Central Bankers by Sinclair Noe DOW – 114 = 16,222SPX – 11 = 1860NAS – 25 = 430710 YR YLD + .09 = 2.77%OIL + .67 = 100.37GOLD – 24.90 = 1331.60SILV – .20 = 20.71 Sometimes the stock market is a grand mystery, a riddle wrapped in a mystery inside an enigma. Sometimes the stock market is simple. Wall Street loves it when the Federal Reserve is throwing bags of money out of the helicopter that hovers over Wall Street. The traders get a little nervous when it looks like the free money might stop raining down on them. That doesn’t mean the Fed is stopping throwing money at Wall Street, just that traders are nervous. Today, the Fed FOMC wrapped up a two day meeting; they issued a statement; then Chairwoman Janet Yellen delivered a prepared statement; then she answered questions. The Fed statement indicated the Fed could and likely would continue with its low interest rate policy even after they reach their goals of full employment and 2% inflation. The central bank proceeded with its well-telegraphed reductions to its massive bond-buying stimulus, announcing it would cut its monthly purchases of Treasuries and mortgage-backed securities to $55 billion from $65 billion per month. I will now attempt to translate the Fed statement from Fedspeak to English. The statement said: the labor market is getting better but unemployment is still too high, household and business spending is decent but the housing market is …

READ MORE →
Uncategorized

Tuesday, March 18, 2014 – Food and Oil

Food and Oil by Sinclair Noe DOW + 88 = 16,336SPX + 13 = 1872NAS + 53 = 433310 YR YLD – .02 = 2.68%OIL + 1.62 = 99.70GOLD – 12.00 = 1356.50SILV – .38 = 20.92 Let’s start with some economic news. The National Association of Home Builders housing market index increased to 47 in March, up from 46 in February. A reading below 50 means more builders view conditions as poor rather than good. Fewer homes are being started in early 2014 than at the end of 2013. Housing starts came in just slightly below economists’ expectations of 910,000 at 907,000. Separately, a quarterly survey by the Business Roundtable found US chief executive officers somewhat more positive about the economy, including plans for hiring and capital spending over the next six months; they expect gross domestic product to advance 2.4% this year. The forecast is a slight upgrade from an expectation of 2.2% in the previous survey but still less than robust. The Consumer Price Index, or CPI, increased a seasonally adjusted 0.1% in February, matching the increase in January. According to the Labor Department report, the increase was mainly due to higher prices for food. Energy prices decreased 0.5%. Over the last 12 months, the CPI is up 1.1%. Costs for meats, poultry, fish, dairy and eggs drove the gains. Most notably, beef and veal prices surged. Prices for beef saw their biggest monthly change in February since November 2003; that was when fears of mad-cow disease …

READ MORE →
Uncategorized

Monday, March 17, 2014 – Empty Chambers and the Tools in the Toolbox

Empty Chambers and the Tools in the Toolbox by Sinclair Noe DOW + 181 = 16,247SPX + 17 = 1858NAS + 34 = 427910 YR YLD + .05 = 2.70%OIL- .90 = 97.99GOLD – 14.50 = 1368.50SILV – .27 = 21.29 Russia held a referendum vote on taking Crimea from Ukraine. Crimean voters approved the takeover with 98% voting in favor; the 2% of voters who opposed the take-over are probably on a slow train to Siberia. Global financial markets ignored the annexation, and they went up in what was described as a “relief rally”.  Stock markets in the US, Europe, and even Russia all moved higher. The United States and European Union countries imposed a new round of sanctions on 11 Russian and Ukrainian political figures, freezing assets and banning visas for Russians deemed responsible for interfering in Ukrainian sovereignty. The order means that any assets owned by the targeted Russians in the United States will be frozen and Americans will not be allowed to do business with them. Few Americans are truly concerned about Ukraine, nor should they be. The United States has no real national interests there, and whether Crimea becomes part of Russia is irrelevant to broader US national security issues. That doesn’t mean we shouldn’t pay attention; annexation of Crimea by Russia, and especially a further push by Moscow into Ukraine, would poison US-Russian relations for many, many years to come, and it will make cooperating with Russia on Syria, Iran and Afghanistan much more …

READ MORE →