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 …

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Financial Review

Friday, April 25, 2014 – Don’t Hold Your Breath

Don’t Hold your Breathby Sinclair Noe DOW – 140 = 16,361SPX – 15 = 1863NAS – 72 = 407510 YR YLD – .02 = 2.66%OIL – 1.25 = 100.69GOLD + 9.90 = 1304.80SILV + .07 = 19.83 Consumer sentiment rose in April to a nine-month high as views on current and near-term conditions surged. The Thomson Reuters/University of Michigan’s final April reading on the overall index of consumer sentiment came in at 84.1, up from 80 the month before. Meanwhile, a new Gallup poll shows more Americans are optimistic about the job market this month than at any time since the 2008 financial crisis, with 30% saying now is a good time to find a quality job. That marks a significant improvement from the 8% who said they were optimistic about the job market in 2010, but it’s still a drop from the pre-2008 highs of almost 50%. And even though almost a third of Americans are optimistic, two-thirds still say the job market is lackluster; 66% of Americans say it’s not a good time to hunt for employment. Next week’s economic calendar includes a two day Federal Reserve FOMC meeting. Next Friday, we’ll have a monthly jobs report; the current estimates call for 215,000 net new jobs in April and the unemployment rate dipping to 6.6% from 6.7%. Also, the Commerce Department will release its first guess of first quarter GDP; the consensus estimate on the initial estimate is that the economy grew about 1%. The situation in Ukraine …

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Friday, April 04, 2014 – The March Jobs Report

The March Jobs Reportby Sinclair Noe DOW – 159 = 16,412SPX – 23 = 1865NAS – 110 = 4127 (-2.6%)10 YR YLD – .06 = 2.73%OIL + .77 = 101.06GOLD + 15.50 = 1303.30SILV + .14 = 20.06 Today is a jobs report Friday. Let’s get geeky. The Labor Department reported nonfarm payrolls increased by 192,000 jobs last month after rising by 197,000 in February (that’s revised from 175,000). The prior 2 months were revised to show 37,000 more jobs than previously estimated; the revisions indicate that the bad winter weather was not a huge problem for the labor market; it did have an effect but not huge, and we certainly shouldn’t hear any more weather related excuses. The unemployment rate was unchanged at 6.7% as more people were looking for jobs. The consensus estimate was 200,000 jobs, so the figures were a little below expectations. Private employment rose to 116.09 million, finally moving beyond the previous high of 115.98 million recorded at the very start of the recession in January 2008.Total employment is just a little below the pre-financial crisis days; we still have about 437,000 fewer jobs than the peak in 2008, but private employment is now above the peak by 110,000 and at a new all-time high; the difference is that more than a half million government jobs have been cut during that time; also, the population and the labor force has grown over the past 6 years, so the unemployment rate remains fairly high. And the …

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Thursday, April 03, 2014 – Tomorrow, Tomorrow, It’s Only a Day Away

Tomorrow, Tomorrow, It’s Only a Day Away by Sinclair Noe DOW – 0.45 = 16,572SPX – 2 = 1888NAS – 38 = 423710 YR YLD – .01 = 2.79%OIL + .73 = 100.35GOLD – 3.10 = 1287.80SILV – .16 = 19.92 Forget about today; at least in terms of Wall Street trading. Tomorrow is more important. The first Friday of each month is always a big day because of the monthly jobs report; tomorrow, maybe more than most. The consensus estimates called for 200,000 net new jobs in March and the unemployment rate is expected to drop to 6.6% from 6.7%. Then there is the whisper number. Many people believe the harsh winter weather has held back hiring, like a balloon trapped under water by a thin sheet of ice, and when the ice melts, as it did in March, the balloon will jump out of the water like a salmon swimming upstream. Weather sensitive industries such as retail, construction and manufacturing might be especially strong performers. A March jobs report that shows a broad increase in hiring across most or all industries would show the economy is recovering and everything, including the Fed, is on track. A disappointing number, though, would bolster the case of the increasingly famished Wall Street bears that bad weather alone is not the source of weak economic growth so far in 2014. And if the number comes in right at expectations, we’ll have to go to the tiebreakers. We will look at the number …

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Friday, March 07, 2014 – Jobs Report Friday and Aiming Higher

Jobs Report Friday and Aiming Higher by Sinclair Noe DOW + 30 = 16,452SPX + 1 = 1878NAS – 15 = 433610 YR YLD + .05 = 2.79%OIL + 1.00 = 102.56GOLD – 9.50 = 1341.90SILV – .51 = 21.03 This is a jobs report Friday. Here’s what you need to know. The economy added 175,000 net new jobs in February; this topped estimates of 150,000. The unemployment rate moved higher to 6.7%, up from 6.6% in January. After two months of very bad jobs reports, we returned to just below average levels of 189,000 per month; not a great showing but not ugly. The December and January reports were revised higher by 25,000 jobs. So why did the unemployment rate go up? The labor pool got bigger; more people were looking for work. The ranks of the short-term unemployed declined by 61,000 to 2.3 million, while the ranks of the  long-term unemployed jumped by 200,000 to 3.85 million, and the labor participation rate held steady at 63%, just above the generational low of 62.8% in December. That seems to be a discrepancy, but the unemployment rate is based on a separate survey of households from the one that tracks hiring by employers, and the household survey showed an increase of 264,000 in the labor force. The participation rate is still well below the range of 66% to 67% where it had been for the past 20 years or so. The unemployment rate went up slightly because that 264,000 gain …

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Thursday, March 06, 2014 – Energy as Arsenal

Energy as Arsenal by Sinclair Noe DOW + 61 = 16,421SPX + 3 = 1877NAS – 5 = 435210 YR YLD + 4 = 2.74%OIL + .45 = 101.90GOLD + 13.60 = 1351.40SILV + .28 = 21.54 The Standard & Poor’s 500 index closed at another all-time high. The number of people who filed for unemployment benefits last week fell more than expected. That’s a sign fewer workers are being laid off. Tomorrow we have the monthly jobs report and we’ll see. Does a string of weak economic data in recent months represent a genuine slowdown in US economic growth, or is it just weather-related noise? The February jobs report might not provide much clarity because the reference week for the household survey coincided with a mid-February storm that dumped ice and snow (again) on much of the eastern US. Federal funding for extended unemployment benefits expired at the end of December, so we’ll be watching the jobs data to see what happens to people who have been out of work for more than six months. Of course, the jobs number is hugely important because it supposedly plays into Federal Reserve monetary policy. Fed officials have signaled they’re on track to trim the central bank’s bond-buying program in $10 billion increments this year. The jobs report probably would need to very ugly to change their minds. Of course, the past two months of jobs numbers have been ugly but that was dismissed as weather related. Maybe the February report will …

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Monday, February 10, 2014 – Set the Tone

Set the Tone by Sinclair Noe DOW + 7 = 15,801SPX + 2 = 1799NAS + 22 = 414810 YR YLD + .03 = 2.69%OIL + .12 = 100.00GOLD + 7.90 = 1276.00SILV + .07 = 20.18 A little bit of follow up to last Friday’s jobs report, which you recall came in at 113,000 jobs added in January and the unemployment rate dropping to 6.6%. There was a huge discrepancy between the household survey and the business establishment survey; the household survey showed 616,000 new jobs. The household survey can be a bit volatile and is considered less reliable. There is also a discrepancy between the establishment survey and a couple of earlier reports from ISM and ADP. The Institute for Supply Management services index came in at 56.4% in January, indicating a strong month for service jobs. The ADP, or Automatic Data Processing, employment report indicated 160,000 private sector service jobs were created in January, or about 100,000 more jobs than the government reported. It will be very interesting to watch revisions to the jobs report next month. The major stock indices just loved the lousy jobs report, and this is a head scratcher for many people. Why would bad news on jobs be good news for stocks? Well, a weak job market gives employers the upper hand because most workers will accept lower wages, which translates into higher profits for corporate America. I know that is short sighted because the workers are also customers, but in the …

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Friday, February 07, 2014 – Jobs Report Friday

Jobs Report Friday By Sinclair Noe DOW + 165 = 15,794SPX + 23 = 1797NAS + 68 = 412510 YR YLD – .03 = 2.67%OIL + 2.21 = 100.05GOLD + 9.30 = 1268.10 SILV + .07 = 20.12 The best 2 days in a row for stocks in almost 4 months. For the week the Dow was up 97 points, and the S&P 500 was up 15 points on the week. The VIX, the volatility index slipped back down to 15, indicating a general happy go lucky outlook for stocks, with just the slightest hint that the past couple of days were part of a short squeeze; especially considering the lousy nature of the unemployment report. This is Jobs Report Friday and I tend to get a bit wonkish with the numbers but I think it is important economic data, so here goes. The Labor Department reported the economy added 113,000 jobs in January while the unemployment rate dropped slightly to 6.6%. The number of jobs added fell short of expectations; analysts had projected job growth of around 185,000. While weather was believed to have weighed on hiring in December, it did not appear to be a major factor last month. There were strong gains in the weather-sensitive construction sector, and while a survey of households found 262,000 Americans were unable to work due to the weather, the department said that was in line with historical trends. This comes on the heels of an even weaker December jobs report. Today’s …

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Thursday, February 06, 2014 – Waiting on the Friday Jobs Report

Waiting on the Friday Jobs Report by Sinclair Noe DOW + 188 = 15,628SPX + 21 = 1773NAS + 45 = 405710 YR YLD + .04 = 2.70%OIL + .57 = 97.95GOLD + .20 = 1258.80SILV + .05 = 20.05 The number of Americans filing new claims for unemployment benefits fell more than expected last week. Initial claims for state unemployment benefits declined 20,000 last week to a seasonally adjusted 331,000. There have been some interesting reports this past week on jobs, including the controversial research from the CBO and the other from the New York Fed. Competition for jobs is still fierce. Although it varies with the company and the job, on average 250 resumes are received for each corporate job opening. In addition, out of every 1000 people who view an online job posting, 100 people will apply, 4 – 6 will be selected for an interview, 1 – 3 will be invited for a final interview, 1 will be offered the job, and 80% of those who get a job offer accept it. The Wall Street Journal shows how the very backbone of the labor market, men in their prime (for measurement purposes, 25 to 54), are out of work to an unprecedented degree. More than one in six men ages 25 to 54, prime working years, don’t have jobs—a total of 10.4 million. Some are looking for jobs; many aren’t. Some had jobs that went overseas or were lost to technology. Some refuse to uproot for …

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Friday, January 10, 2014 – Jobs Report Friday

Jobs Report Friday by Sinclair Noe DOW – 7 = 16,437SPX + 4 = 1842NAS + 18 = 417410 YR YLD – .10 = 2.86%OIL + 1.23 = 92.89GOLD + 20.90 = 1248.60SILV + .63 = 20.27 Jobs report Friday. The US economy created only 74,000 net new jobs in December. The number of jobs created was the lowest in 3 years and was well short of expectations for about 195,000 jobs. In the four months before December, the average number of jobs created in the US was 214,000 a month. The Labor Department said 38,000 more jobs in November were created than the 203,000 previously reported. And the unemployment rate dropped from 7% to 6.7%. If that doesn’t seem to add up, you are correct. The headline news that the unemployment rate dropped to 6.7% is not good. The problem is that a bunch of people fell out of the labor force, 347,000, to be exact. They stopped looking for work, which made them no longer “unemployed” in the eyes of the Bureau of Labor Statistics; they just become invisible. The Labor Force Participation Rate dropped from 63% in November to 62.8% in December. This is a measure of the working age population in the labor force. The participation rate is well below the 66% to 67% range that had been considered typical over the past 20 to 30 years. The participation rate has been dropping for the past 12 years. Part of the reason for the drop in …

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Monday, January 06, 2014 – A Cold Forecast

A Cold Forecast by Sinclair Noe DOW – 44 = 16,425SPX – 4 = 1826NAS – 18 = 411310 YR YLD – .03 = 2.96%OIL – .31 = 93.65GOLD – .20 = 1238.80SILV + .02 = 20.27 A few big things this week. Friday we’ll see the monthly jobs report. Today we had the confirmation of Janet Yellen, no surprise there; on Wednesday we’ll see the minutes of the most recent FOMC meeting which will give us the justification for the taper. The minutes will likely include strong differentiation between taper and tightening, and the Fed is likely to stress the importance of accommodative monetary policy and ultra-low interest rates for the next 18 months or so. Any bond gains have been curbed as we start the new year; a combination of the Fed slowing its bond purchases, plus corporate supply, plus there is still the safe haven aspect of bonds in the face of a few days of weakness in the equity markets. This Friday’s jobs report will prove important as a barometer for yields. More than 2.2 million jobs were probably created in 2013, the most since about 2.5 million eight years earlier. The estimates call for 195,000 net new jobs in December and the unemployment rate to hold at 7.0%. If the economy added more than 200,000 jobs we might expect a more aggressive taper; fewer than 200,000 jobs and the taper might be more sanguine. Healthcare spending in the US rose 3.7% in 2012 to $2.8 …

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Wednesday, December 04, 2013 – The Defining Challenge

The Defining Challenge by Sinclair Noe DOW – 24 = 15,889SPX – 2 = 1792NAS +0.80 = 403810 YR YLD + .05 = 2.83%OIL + 1.25 = 97.29GOLD + 19.00 = 1244.30SILV + .54 = 19.82 December can be a cold, cold month. At least that’s how the equity markets are starting the month; four losing sessions. Part of this might be the big institutional investors, the big hedge funds and money managers, looking around and realizing the market is up 30% or so, and that would be a good year, so why no lock in a few profits. No need to worry about the budget battle in Washington; no need to worry about the Federal Reserve surprising people with a premature taper; no need to worry about a strong jobs report on Friday. In this crazy market where good economic news gets traders worried about the Fed taking away the punch bowl, today we had some reasonably decent economic news and another drop in the markets. Let’s start with the economic reports. ADP, the payroll processing firm, has a monthly report on private jobs; they issue the report just before the monthly official government report on jobs, the BLS non-farm payroll report. The ADP report is not great at predicting the government report, but its one of the better guidelines we have. Today, ADP reported companies added to their payrolls by a net 215,000 in November, and they revised the October number higher to 184,000. Manufacturers, builders and other …

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Monday, December 02, 2012 – The Home Stretch

The Home Stretch By Sinclair Noe DOW – 77 = 16,008SPX – 4 = 1800NAS – 14 = 404510 YR YLD + .05 = 2.79%OIL + 1.19 = 93.91GOLD – 32.80 = 1220.30SILV – .73 = 19.31 Stocks were down today. There are many possible explanations, but the one that makes sense to me is that we just couldn’t have a record high celebration with milk and cookies; not after all the pie I ate over the holiday. There are other explanations as well. Anyway, we survived Black Friday, mainly by sitting it out. Black Friday comes with its own unofficial economic data point as the most important shopping day of the year. And we always hear the erroneous, or at least mildly misleading caveat that consumer spending accounts for nearly 70% of gross domestic product, making this large shopping day extra important. Thanksgiving and Black Friday combined brought in an estimated $12.3 billion in sales, according to shopping analytics firm ShopperTrak. Thanksgiving Day traffic grew 27% as nearly one-third of shoppers headed to stores on the holiday. About 97 million people planned to shop online or in stores on Friday, with about 140 million intending to do so Thanksgiving through Sunday. That’s down from 147 million last year. Overall spending was expected to reach $57.4 billion for the weekend, that’s down from $59.1 billion last year. Thanksgiving and Black Friday fell a week later in the season this year, leading stores to push pre-Black Friday deals and shifting consumer …

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Tuesday, October 2, 2013 – Jobs, Jobs, Jobs

Jobs, Jobs, Jobs by Sinclair Noe DOW + 75 = 15,467SPX + 10 = 1754NAS + 9 = 392910 YR YLD – .10 = 2.51%OIL – 1.57 = 98.11GOLD + 24.60 – 1342.20SILV + .47 = 22.81 The Labor Department reported the economy added 148,000 net new jobs in September. The change in total nonfarm payroll employment for July was revised from +104,000 to +89,000, and the change for August was revised from +169,000 to +193,000. With these revisions, employment gains in July and August combined were 9,000 more than previously reported. The unemployment rate declined in September to 7.2% from 7.3% in August. This is the lowest level for the unemployment rate since November 2008. The Labor Force Participation Rate was unchanged in September at 63.2%. This is the percentage of the working age population in the labor force. The participation rate looks at the people who are actually in the labor pool. As the Boomer generation retires, willingly or not, they get out of the labor pool, and this is why we’ve seen the unemployment rate decline, even though the economy isn’t really doing a great job of adding jobs. There are 4.146 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 4.290 million in August. This is generally trending down, but is still very high.  Long term unemployment remains one of the key labor problems in the US. Is the Affordable Care Act causing a surge in part-time employment? Apparently not. …

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Friday, October 04, 2013 – This Is Not A Game

This Is Not A Game by Sinclair Noe DOW + 76 = 15,072SPX +11 = 1690NAS + 33 = 380710 YR YLD + .04 = 2.65%OIL + .39 = 103.70GOLD – 5.50 = 1312.20SILV + .04 = 21.84 The government showdown continues. So, there isn’t much actually happening. We don’t have a jobs report to analyze. The next jobs report will be so screwed up by the shutdown that it won’t be possible to make heads or tails of it, whenever it is reported. We don’t need a functioning government to tell us that the job market is lousy. But we do need one to help make the job market better. It’s the first Friday of the month, usually the day we get a bunch of random numbers from the government telling us what we already knew: Good jobs are scarce. This month, the government is too busy being held hostage by House Republicans to give us those random numbers. But there’s plenty of evidence already that September was grimly similar to many of the months that came before it in this grinding recovery. With sagging consumer confidence and hiring surveys, September may even have been worse than August. Whenever Bureau of Labor Statistics workers stop being furloughed by a government shutdown, economists, on average, expect it to report 185,000 new jobs on nonfarm payrolls in September and an unemployment rate holding at 7.3 percent. And if we look at this week’s ADP report and the ISM hiring survey, we …

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Tuesday, September 03, 2013 – Welcome to September

Welcome to September by Sinclair Noe DOW + 23 = 14,833SPX + 6 = 1639NAS + 22 = 361210 YR YLD + .10 = 2.85%OIL + .89 = 108.54GOLD + 15.70 = 1413.20SILV + .75 = 24.38 Well, we still haven’t started the war, yet. Congressional leaders from both sides of the aisle lined up in support of military intervention. The Senate Foreign Relations Committee opened a hearing and grilled Secretaries Kerry and Hagel. Tomorrow, Kerry and Hagel are scheduled to appear before the House Foreign Affairs Committee. The debate is shifting away from “Did Assad use chemical weapons?” to “What should be done about it?” Clarity of objectives seems to be a work in progress. Maybe all the talk will eventually consider the possible consequences of a military attack on Syria. Is it really possible to bomb a country and avoid deeper involvement? So far, the politicians are trying to work it out in a logical progression; if A, then B. That’s not always how it happens in war. Logic gets thrown out the window. At this time of crisis, it is worth remembering another time, 30 years ago in October, 1983 when US warships bombarded Lebanon, the country located next to Syria. Within weeks, the US Marine barracks in Beirut was blown up by a massive truck bomb that killed 241 American servicemen: 220 Marines, 18 sailors and three soldiers. The truck driver/suicide bomber was an Iranian national whose truck contained explosives that were the equivalent of 21,000 …

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Friday, August 02, 2013 – Jobs and Side Bets

Jobs and Side Bets by Sinclair Noe DOW + 30 = 15,684SPX + 2 = 1709NAS + 13 = 368910 YR YLD – .11 = 2.60%OIL – .95 = 106.94GOLD + 4.60 = 1314.50SILV + .26 = 19.99 The stock market started lower, with tepid news on the jobs front, but managed to claw back into positive territory, confirming the perverse Wall Street logic that bad is good. The weakness in the jobs market was seen as proof positive the Fed will continue with QE to infinity and beyond, and talk of taper can be set aside for the next Fed Chairman, whoever he or she may be. The economy added 162,000 jobs last month; that was less than the estimates of 185,000 and less than the recent averages of about 192,000. Also, May and June payroll gains were revised down by 26,000. The unemployment rate dropped to 7.4% down from 7.6%. This is the lowest level for the unemployment rate since November 2008. Most of the decline in unemployment was due to more people getting jobs but part of it was due to a slight fall off in the labor force, a signal of not-too-strong labor demand, as 37,000 workers dropped out of the labor market. In July, the number of unemployed fell by 263,000 but the number of employed increased by only 227,000.  The participation rate ticked down one-tenth, to 63.4%, lower than it was a year ago at 63.7 %. The participation rate is at its lowest …

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Financial Review

Financial Review for Tuesday, July 30, 2013 – The Bus Doesn’t Go There

The Bus Doesn’t Go There by Sinclair Noe DOW – 1 = 15,520SPX +0.63= 1685NAS + 17 = 361610 YR YLD + .01 = 2.61%OIL + .22 = 103.30GOLD – .50 = 1327.70SILV – .12 = 19.83 This might turn out to be a very interesting week, even if the markets were absolutely somnambulant today. Tomorrow morning we’ll get a report on second quarter gross domestic product and it is widely anticipated that it will show the economy growing at 1%, which is down from 1.8% in the first quarter and is generally pathetic, but remember that this number will then be revised a couple of times until they get it right. Tomorrow afternoon the FOMC will wrap up it’s two day meeting; Ben Bernanke will come down from his ivory tower and announce that the economy is modestly moderate and the Fed is watching it with keen interest and they will do whatever they do, which is more of the same depending upon economic conditions as seen from the long range telescope high atop their ivory tower. Of course, there is always the possibility the Fed could surprise us; they might take away the punchbowl and the kids on Wall Street might throw a temper tantrum and break your 401k, so we’ll all tune in tomorrow. Then on Friday we have the jobs report, which is the first Friday of each month. If there is strong jobs growth the kids on Wall Street might throw a temper tantrum and …

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Monday, July 29, 2013 – Bees’ Revenge

Bees’ Revenge by Sinclair Noe DOW – 36 = 15,521SPX – 6 = 1685NAS – 14 = 359910 YR YLD + .04 = 2.60%OIL – .13 = 104.57GOLD – 6.60 = 1328.20SILV – .14 = 19.95 Two big economic stories planned for this week. The Federal Reserve FOMC is meeting and they will issue a statement on Wednesday. Then we have the monthly jobs report on Friday. September is the most likely time for the Fed to begin paring its $85 billion in monthly bond purchases. There are some concerns that big gains in jobs numbers could be enough of an economic pickup to prompt an early end to the Fed’s bond buying, a program which has helped stocks rally for much of this year. So, from a Wall Street perspective, good news on the jobs front is bad news from the Fed, but of course signs of a stronger economy are more important in the long run. The S&P 500 is up 18.2 percent for the year so far, however that is not a good indicator of the broader economy. The Fed may not cut back on bond buying. Remember the fact that Chairman Ben Bernanke has said that the decision to do so will be driven by the actual incoming data on the jobs and the economy rather than the Fed’s current expectations regarding that data. Despite the slow, steady job growth, unemployment has only moved about five-tenths of a percentage point down. This movement is barely enough …

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Tuesday, July 09, 2013 – What’s It All About?

What’s It All About? by Sinclair Noe DOW + 75 = 15,300SPX + 11 = 1652NAS + 19 = 3504 10 YR YLD -.01 = 2.63%OIL + 1.38 = 104.52GOLD + 13.40 = 1251.70SILV + .18 = 19.36 It’s earnings reporting season. The stock market is feeling happy for the moment. Second quarter earnings are expected to be soft, but expectations have been ratcheted down, so there is potential for upside surprises. That’s the game that’s played on Wall Street to siphon a little bit of trading profit. Anywhere else, they’d call it price fixing. But this game of diminished expectations may have some basis in reality. The top line numbers more than likely suck. Analysts expect the 30 companies in the Dow Industrial Average to see revenue growth of just 0.7%; that number could be ratcheted down into negative territory; that follows a 0.6% drop in revenue in the first quarter. What do you call it when there are two consecutive quarters of economic contraction? Recession. That’s a bit of a non sequitur, but the logical conclusion is not too far removed from the premise. After all, we’re talking about 30 of the biggest, most powerful companies in the world and they are struggling to grow sales. They’re still reporting profits, but that comes from cost cutting, which tends to fall on the labor force. There are limits to cost cutting as a business strategy for growing profits. No worries. The S&P 500 closed above 1650 and looks poised …

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