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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Financial Review

Tuesday, June 03, 2014 – Always Look on the Bright Side

Always Look on the Bright Side by Sinclair Noe   DOW – 21 = 16,722 SPX – 0.73 = 1924 NAS – 3 = 4234 10 YR YLD + .06 = 2.59% OIL + .37 = 102.84 GOLD + 1.40 = 1245.90 SILV + .05 = 18.91   Automakers reported strong sales of new cars in May, the strongest annual sales rate since before the 2008 financial crisis. Industry sales rose 11.3%. Chrysler and GM had their best month of May in 7 years. A record number of recalls at GM since the first of the year did not crimp demand for the automaker’s new vehicles. Average transaction price for a new vehicle in May was $32,307, according to research firm Kelley Blue Book, which said average new-car prices were up $653 from a year ago, but down slightly from April.   The city council of Seattle Washington has voted to raise the city’s minimum wage to $15 an hour, the highest level of any major US city. Wages would begin to rise next year, ultimately reaching $15 from Washington state’s minimum of $9.32 over three to seven years, depending on the business. Under the plan, firms with more than 500 employees nationally will be given at least three years to phase in the increase, those who provide health insurance subsidies would get four years and smaller businesses would be given seven years. US minimum wage is $7.25, although 38 states have set higher levels. The states of California, Connecticut …

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Financial Review

Monday, June 02, 2014 – Clean Power Plan

Clean Power Plan by Sinclair Noe DOW + 26 = 16,743 SPX + 1 = 1924 NAS – 5 = 4237 10 YR YLD + .07 = 2.53% OIL – .31 = 102.40 GOLD – 7.80 = 1244.50 SILV – .05 = 18.86   The ISM got it wrong this morning. The Institute for Supply Management reported its May manufacturing index came in at a weaker than expected 53.2, but there was a software problem that didn’t properly reflect season adjustments; the ISM issued a revision; the May index was 56.0; but for some reason, that wasn’t correct, so they issued another revision. The May manufacturing index was 55.4; that’s the number and they’re sticking with it. Embarrassing? Yes.   Meanwhile, stocks and bonds were all over the board. Stocks fell into negative territory early on, but bounced back as revisions were issued. Bonds are hyper sensitive to economic growth, and the yield on the 10 year note moved higher and stayed higher, despite the initial numbers and the revisions. And if you look past the revisions, and you should, because it appears to be nothing more than an honest mistake, caught quick and corrected; the bottom line is a pretty strong number for manufacturing, more or less in line with the idea of a second quarter bounce in the economy.   The bigger story this week will be the jobs report on Friday. It is widely expected the economy added about 200,000 to 215,000 jobs in May, which would …

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Financial Review

Tuesday, May 27, 2014 – Currently Trending Here

Currently Trending Here by Sinclair Noe DOW + 69 = 16,675 SPX + 11 = 1911 NAS + 51 = 4237 10 YR YLD – .02 = 2.52% OIL – .24 – 104.11 GOLD – 29.20 = 1264.30 SILV – .40 = 19.14   The S&P 500 Index closed at another record high. The Dow Industrial Average is just a little below the May 13 record of 16,715. The Russell 2000 index of small and mid-caps confirmed the uptrend. The Russell had been lagging and there was a concern that small caps might drag the blue chips lower. While the Russell is still down about 2% year to date, on Friday it moved above its 200 day moving average.   Any time the market is trending, it makes sense to look for divergences, or any indicator that might signal a change in trend, but the most important thing to watch is still the trend itself; in other words the market scorecard is measured in price. And right now the trend is up.   Let’s start with some economic news. The S&P/Case-Shiller Home Price Indices continued to show gains in prices for existing home sales; the 10-city composite was up 0.8% and the 20-city composite was up 0.9% month over month; and respective year over year gains of 12.6% and 12.4%. Nineteen of the 20 cities showed positive returns in March; New York was the only city to decline. As of March 2014, average home prices across the United States are …

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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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Thrusday, January 16, 2014 – The “It Could Be Worse” Victory Lap

The “It Could Be Worse” Victory Lap by Sinclair Noe DOW – 64 = 16,417SPX – 2 = 1845NAS + 3 = 421810 YR YLD – .04 = 2.84%OIL – .07 = 94.10GOLD + .70 = 1243.70SILV – .11 = 20.20 The number of Americans filing new claims for unemployment benefits fell for the second consecutive week last week; down 2,000 to 326,000. This might suggest that the December jobs report, which was a weak 74,000 jobs added, maybe that report was just a temporary slowdown. In a separate report, the Philadelphia Federal Reserve Bank said its business activity index rose to 9.4 points this month from 6.4 in December. Any reading above zero indicates manufacturing expansion in the region. In another report, the Labor Department said its Consumer Price Index increased 0.3% after being flat in November. In the 12 months to December, consumer prices accelerated 1.5%. A 3.1% increase in gasoline prices was mostly behind the spike in inflation last month. The increase in gasoline was the largest since June and followed a 1.6% fall in November. Food prices rose 0.1% for a third month. There is no wage inflation. Average hourly earnings adjusted for inflation fell 0.3% in December; and with the weakness in the labor market, there is very little chance of wage growth for quite some time. The Fed targets 2 percent inflation, although it tracks a gauge that tends to run a bit below CPI. And outgoing Fed Chairman Ben Bernanke says inflation is …

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Thursday, January 09, 2014 – A World Of Central Bankers

A World Of Central Bankers by Sinclair Noe DOW – 17 = 16,444SPX + 0.64 = 1838NAS – 9 = 415610 YR YLD – .03 = 2.96%OIL – .67 = 91.66GOLD + 1.80 = 1228.70SILV + .02 = 19.65 If it’s not one central bank, it’s another. Today the European Central Bank and the Bank of England met to determine monetary policy. Back in November, the ECB cut interest rates to 0.25%, so there were no expectations of further rate cuts in today’s meeting. In Britain, which is outside the euro zone, the Bank of England left its benchmark interest rate unchanged at a record low of 0.5 percent. As the US Federal Reserve has been creating new dollars at the rate of $85 billion a month under Quantitative Easing, the Fed’s balance sheet has been growing, even as the ECB’s balance sheet has been shrinking. And even though the Fed announced it would scale back those purchases by $10 billion a month, that just means the Fed balance sheet will continue growing, just not as fast. Or the bottom line; the Fed is creating money and the ECB is not. Today, Mario Draghi, the president of the ECB said he wanted to “strongly emphasize” his earlier promise to keep monetary policy easy for as long as necessary. And Draghi said the ECB was “ready to consider all available instruments” to address either further weakness in consumer prices or increases in short-term money market rates that could put stress on …

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Thursday, November 21, 2012 – Size and Composition

Size and Composition by Sinclair Noe DOW + 109 = 16,009SPX + 14 = 1795NAS + 47 = 396910 YR YLD – .01 = 2.78%OIL + 1.59 = 95.44GOLD – .40 = 1243.40SILV + .14 = 20.09 Intraday, the Dow industrials were higher last Friday and last Monday, but this was a record high close, and that is what we look at – the close. The reason we look at the close is largely arbitrary, and the reason we celebrate the Dow record high close as opposed to the S&P 500 record high close, is again arbitrary. The significance of a close above 16,000 is not a big deal; it’s just a number. Earlier in the week the market looked at the round number and could not close above; there was a pause; then today, a move above. Test, retracement, breakout; that’s bullish. We have discussed that there is a disconnect between the markets and the broader economy. We have discussed that the trickle down effect or the wealth effect has been less than satisfying for. Still, some of that money will filter into the broader economy; and the bottom line is that it’s better than a poke in the eye with a sharp stick. At some point the Fed will taper; the easy money party will end; until then, well, enjoy the milk and cookies. Initial claims for state unemployment benefits fell 21,000 to a seasonally adjusted 323,000. Meanwhile, prices at the wholesale level dropped 0.2%. The PPI core …

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Thursday, November 07, 2013 – The Road Not Taken

The Road Not Taken by Sinclair Noe DOW – 152 = 15,593SPX – 23 = 1747NAS – 74 = 385710 YR YLD – .03 = 2.61%OIL – .51 = 94.29GOLD – 10.00 = 1308.60SILV – .14 = 21.77 Big story on Wall Street today was the Twitter IPO. I will now tell you everything you need to know about it in 140 characters or less. TWTR IPO 2day. Priced @ $26. Pop 2 $50. Close @ 44.90 up 72%. Market cap = $24 bil, earnings = < zero. Smooth not Facebook. #bubblicious Economic growth accelerated in the third quarter. Gross domestic product grew at a 2.8 percent annual rate, the quickest pace in a year, after expanding at a 2.5 percent clip in the second quarter. Inventories, however, accounted for a 0.8 percentage point of the advance made in the third quarter, as businesses restocked shelves, but the slowest expansion in consumer spending in two years suggested an underlying loss of momentum. Consumer spending expanded at a 1.5 percent rate, the slowest pace since the second quarter of 2011. It grew at a 1.8 percent rate in the April-June period. So, unless there is a surge in 4thquarter demand, we might see future production reduced to clear out inventories. The economy grew at a 1.8 percent rate in the first half of 2013, expect growth of around 1.5% for the fourth quarter. The private sector decelerated over the summer, providing less of a cushion for the government shutdown in October. …

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Thursday, April 04, 2013 – Experimental Therapies

The Wealth Protection Conference kicks off tomorrow afternoon in Tempe, Arizona. I will be the keynote speaker, starting at 4PM. This year’s roster of speakers includes Mark Liebovit, Nathan Liles, David Smith, Roger Weigand, Arch Crawford, Ian McAvity, and Bill Tatro. These are some of the best technical analysts in the markets and top researchers and economic minds, and me. The conference is Friday and Saturday. For more information: www.buysilvernow.com. To make a reservation, please call 480-820-5877. I hope to see you there. Experimental Therapies by Sinclair Noe DOW + 66 = 14,606SPX + 6 = 1559NAS + 6 = 322410 YR YLD – .05 = 1.76%OIL – 1.07 = 93.38GOLD – 4.30 = 1554.60 SILV- .08 = 27.00 A big day for central bankers. The European Central Bank left its benchmark interest rate unchanged at 0.75%, while the Bank of England held its key rate steady at 0.5%. With both central banks’ rates already at record lows, there might be little room to use interest rates as a stimulus. But the euro zone economies, like that of Britain, are stagnant and in need of help wherever they can find it. What to do when interest rates are already near zero? The Fed playbook calls for Quantitative Easing, and today the Bank of Japan took that playbook and put it on steroids. First in Europe, ECB President Mario Draghi says the ECB was looking for new ways to stimulate lending in the weak euro zone economy, and could move quickly, …

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