Financial Review

Wednesday, June 25, 2014 – Use Your Library Card at a Copy Shop for a Horseback Ride to the Moon

Use Your Library Card at a Copy Shop for a Horseback Ride to the Moon by Sinclair Noe   DOW + 49 = 16,867 SPX + 9 = 1959 NAS + 29 = 4379 10 YR YLD – .02 = 2.56% OIL + .74 = 106.77 GOLD – .60 = 1319.40 SILV + .09 = 21.12 One of the jobs of the Commerce Department is to calculate the gross domestic product of the country; clearly it is a difficult task to figure out the value of all the goods and services produced, and so they tend to revise the numbers as they gather information. In April the Commerce Department figured the economy grew, just barely, 0.1% in the first quarter; last month they revised their GDP numbers to negative1.0%; today they revised GDP even lower. The economy shrank by 2.9%.   To understand the big move, you first have to realize that the GDP number is supposed to measure everything; construction and demolition, marriages and divorces, broccoli sales and cigarette sales, yoga classes and cancer treatments. One of the big reasons for the negative number is that the cost of healthcare dropped significantly.   The US spent $6.4 billion less on health care in the first quarter than in the last quarter of 2013. Government statisticians initially forecast a 9.9% increase in health-care spending, and what we got was a 1.4% decline. Considering all the millions of previously uninsured people who are gaining access to health insurance under the Affordable …

READ MORE →
Uncategorized

Wednesday, March 26, 2014 – Render to Caesar

Render to Caesar by Sinclair Noe DOW – 98 = 16,268SPX – 13 = 1852NAS – 60 = 417310 YR YLD – .03 = 2.70%OIL + 1.03 = 100.22GOLD – 5.90 = 1306.80SILV – .27 = 19.84 Durable goods orders increased 2.2% in February, ending 2 straight months of declines. Durable goods are items like refrigerators, cars, and airplanes that are built to last for several years. But we need to dig into this report just a little; orders for non-defense goods, excluding aircraft, were actually down 1.3%. This might also indicate that first quarter business investment is weak. The US Census Bureau began releasing data from its 2012 Economic Census, a survey of American businesses taken every 5 years. The enormous boom in domestic oil and gas production helped make the mining, quarrying and oil and gas extraction industry one of the fastest growing sectors of the US economy. The number of businesses rose 26% from 2007 to 2012, employment in the sector rose 24% and revenue surged 34%. Meanwhile, from 2007 to 2012 manufacturing lost 2.1 million jobs, now down to just 11.3 million people employed in manufacturing. The finance and insurance sector shed 390,000 jobs between 2007 and 2012 and industry revenue fell by $137 billion, nearly 4%. But revenues in 2012 were still up 61% from 15 years earlier. There were one million retail stores operating in 2012. But the retail trade sector shed 65,000 establishments and nearly 778,000 jobs from five years earlier. Internet-based selling …

READ MORE →
Uncategorized

Wednesday, February 05, 2014 – Another Perfect Day

Another Perfect Day by Sinclair Noe DOW – 5 = 15,440SPX – 3 = 1751NAS – 19 = 401110 YR YLD + .04 = 2.67%OIL + .11 = 97.30GOLD + 3.20 = 1258.60SILV + .39 = 20.00 Yesterday on the Review we talked about the Congressional Budget office report. For a while this morning, the Internet was hopping with job-killing hype, when in fact the truth was vastly different. Obamacare’s impact, the CBO concluded, would lessen the supply of labor by encouraging certain folks not to work: “The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked. . . .” That’s different than what most of the media was saying today. And then a funny thing happened; some reporters actually read the report, and the headlines changed just a little:  Wall Street Journal earlier: Health-Care Law Expected to Take Greater Toll on Workforce Wall Street Journal now: Health Law Seen Leading to Some Loss of Labor Talk Radio News Service earlier: Obamacare Will Cost 2.5 Million Jobs: Report Talk Radio News Service now: 2.5 Million Will Exit Work Force Because Of Obamacare National Review earlier: The CBO Just Nuked Obamacare National Review now: The CBO Just Nuked Obamacare The CBO never, ever reported that Obamacare would somehow or other kill more than …

READ MORE →
Uncategorized

Tuesday, February 04, 2014 – Adjust Accordingly

Adjust Accordingly by Sinclair Noe DOW + 72 = 15,445SPX + 13 = 1755NAS + 34 = 403110 YR YLD + .04 = 2.62%OIL + 1.16 = 97.59 GOLD – 2.70 = 1255.40SILV + .17 = 19.61 Here come the bears; they tend to come out of the woods when the Dow has a day like yesterday, and they tend to growl. The latest noise is in the form of a couple of projections and predictions that the market will drop 40%. Perhaps we’re just going through a period of pricing discovery as the markets digest information. Maybe this will pass or maybe not. The typical bear market lasts 2 to 4 years and the average drop is about 40%, so it isn’t unreasonable to guess. And bear markets come around with regularity. The median duration for a bull market is 50 months and the average duration for a bull market is 67 months. The current bull market dates back to March 2009, which is right at 58 months. The idea of a bear coming along right about now should not shock anybody. We’re not there yet; a bear market would be a 20% correction; so we’re not there yet. Of course you might not want to just sit around and wait to get mauled by a bear. So, let’s consider where we are right now. Here’s the rundown: China’s GDP is slowing and their manufacturing sector is contracting and their shadow banking system may be harboring a few entities …

READ MORE →
Uncategorized

Thursday, January 02, 2014 – Back in the Groove

Back in the Groove by Sinclair Noe DOW – 135 = 16,441SPX – 16 = 1831NAS – 33 = 414310 YR YLD – .04 = 2.99%OIL – 2.93 = 95.49GOLD + 17.50 = 1224.00SILV + .57 = 20.11 I’m back. We’ll try to settle into the groove here, starting with a look at the daily economic news. Financial data firm Markit said its final US Manufacturing Purchasing Managers Index rose to 55.0 last month, beating November’s 54.7 reading. So, manufacturing ended the year on a high note, growing in December at the fastest pace in 11 months. Signs of strength in both the manufacturing and services sector as well as stronger job growth across the economy contributed to the Federal Reserve’s decision in December to begin tapering, slowing its monthly bond purchases. I had expected the Fed would wait to begin the taper. I was wrong. It wasn’t really a shocking development because we knew they would eventually taper, it was just a matter of timing. The taper hasn’t actually started yet, it’s only been announced. One area where we’re starting to see some impact is in mortgage rates, now at the highest levels since September. The average rate for a 30-year fixed mortgage was 4.53% this week, up from 4.48%. And Freddie Mac also reports the average 15-year fixed rate climbed to 3.55% from 3.52%. While a jump in mortgage rates has slowed demand, buyers continued to push prices higher. According to the most recent S&P/Case-Shiller home price index, …

READ MORE →
Uncategorized

Wednesday, November 13, 2013 – Cues for Yellen from Abe

Cues for Yellen from Abe by Sinclair Noe DOW + 70 = 15821SPX + 14 = 1782NAS + 45 = 396510 YR YLD – .07 = 2.70%OIL + .84 = 93.88GOLD + 16.10 = 1283.30SILV – .09 = 20.71 Record high close for the Dow Jones Industrial Average. Record high close for the S&P 500 Index. Janet Yellen starts her confirmation process tomorrow. Yesterday, a couple of Fed presidents, Dennis Lockhart of the Atlanta Fed, and and Minneapolis Fed President Narayana Kocherlakota both suggested that the current state of the economy still warrants aggressive monetary policy action. Yellen is well known for her meticulous preparation, but it will be interesting to see how she handles questions from politicians looking for cheap shots and easy points. Political theatrics aside, Yellen is highly qualified with a very solid academic foundation, extensive policy experience, sound judgment over many years and the most effective researcher at the Fed. Her policy moves will likely be incremental and well communicated. Markets can look to a continuation of the Fed’s current policy stance for now. When the time for taper comes, as it inevitably will, the central bank would partially compensate through more aggressive forward policy guidance. None of that means much of a change and no guarantee the Fed can do much more than it is doing to help the economy break out of the doldrums of the past few years. Of course the Fed could do much more; adding $4 trillion to their balance sheet …

READ MORE →
Uncategorized

Wednesday, October 02, 2013 – Genie Out of the Bottle

Genie Out of the Bottle by Sinclair Noe DOW – 58 = 15,133SPX – 1 = 1693NAS – 2 = 381510 YR YLD – .02 = 2.63%OIL + 1.76 = 103.80GOLD + 28.80 = 1317.30SILV + .57 = 21.83 So, the heads of the biggest banks, including Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JPMorgan and Brian Moynihan of Bank of America, and a list of others (apparently Dick Fuld from Lehman Brothers couldn’t afford the bus fare); so all these big banksters went to the White House today to discuss the shutdown. Heaven help us all. The President is getting advice on the economy from the very people who crashed the economy a few years ago. And then later in the afternoon the president met with lawmakers, not to negotiate but just to meet with the people that created the shutdown. Can everybody, please, just step away from the crack pipe? Maybe the politicians should try meeting with people that didn’t cause the problems. The meeting with the banksters, set up by the Financial Services Forum, a Washington-based trade group representing CEOs of the largest Wall Street banks, was part of an effort by the administration to leverage the business community’s clout in breaking the stalemate. Administration officials said pressure from the business community was effective in past fiscal fights. In other words, the financial industry threatened to take away the campaign contributions if the politicians persist in driving the economy off a cliff. The impending debt …

READ MORE →
Uncategorized

Tuesday, October 01, 2013 – The Universe is Unfolding As It Should

The Universe is Unfolding As It Should by Sinclair Noe DOW + 62 = 15,191SPX + 13 = 1695NAS + 46 = 381710 YR YLD + .03 = 2.64%OIL – .70 = 101.63GOLD – 40.40 = 1288.50SILV – .54 = 21.27 Thank you for joining us today. We will now arbitrarily shutdown for no apparent reason. We regret that this might cause inconvenience for listeners, advertisers, employees, or anyone else. Can you imagine if you tried that with your business? But the business of politics is not like your business; politics has become more like theater of the absurd. Let’s review how this is supposed to work. Voters elect representatives. The representatives write legislation, vote on it, the House of Representatives votes, the Senate votes, the bill goes to the President, the bill becomes a law. There are a series of checks and balances, including the possibility of a veto. The courts may weigh in to opine on whether the law is constitutional. And then every couple of years, the voters get a chance to weigh in and vote the bums out or not, which might open the door for a new crop of politicians to write new legislation. Now, I’ve been wondering what I might say that’s new and different about the shutdown; probably not much, except perhaps that it is more of a showdown that a shutdown, and there will be a political price to pay eventually. That thought is based upon the last shutdown in 1996; just …

READ MORE →
Uncategorized

Monday, September 30, 2013 – Politically Dysfunctional Insanity

Politically Dysfunctional Insanityby Sinclair Noe DOW – 128 = 15,129SPX – 10 = 1681NAS – 10 = 377110 YR YLD – .04 = 2.61%OIL – .56 = 102.31GOLD – 8.30 = 1328.90SILV – .07 = 21.81 We’ll get to the shutdown and all that fun politically dysfunctional insanity in just a moment, but first we need to wrap up the third quarter. The Dow Industrials are up about 260 points for the third quarter, and the S&P500 is up 80 points. Year to date the Dow has gained about 2000 points and the S&P has gained about 260. Since the start of the year, the yield on the 10 year Treasury note has climbed from around 1.75% to 2.51% at the end of the second quarter (briefly touching 3%). Oil prices dropped from around $110 in just about a week’s worth of trading, but prices are up about $10 dollars since the start of the year, and down about $1 for 3Q. If you’re wondering how the Sell in May idea has worked out, well the Dow is down about 130 points from the May sell signal and the S&P is down 35 points. So, Sell in May is looking good and could look a whole lot better if the government shuts down in a little less than 5 hours. Tomorrow, the fourth quarter begins. A potential federal government shutdown looms at midnight.So, the question is whether underperforming Wall Street traders will push prices higher in the face of government …

READ MORE →
Uncategorized

Tuesday, September 24, 2013 – Give Me Energy

Give Me Energy by Sinclair Noe DOW – 66 = 15,334SPX – 4 = 1697NAS + 2 = 376810 YR YLD – .05 = 2.65%OIL – .30 = 103.29GOLD + .80 = 1324.10SILV + .10 = 21.84 The big unknown this week is the possibility of a government shutdown Sunday night. A few moments on that and then I’ll get to my main topic here, which deals with energy. The shutdown could happen; with Congress, anything could happen. I’ve been trying to figure out the likelihood, and I don’t think it is likely, although it could still happen. Of course the battle is over defunding Obamacare. And I remember the old rules for how a bill becomes law, and the checks and balances of our democratic republic. The Affordable Care Act was duly enacted by a majority of both houses of Congress, signed into law by the President, and even upheld by the Supreme Court. The Constitution of the United States does not allow a majority of the House of Representatives to repeal the law of the land by defunding it. If that were the case, no law is safe. A majority of the House could get rid of unemployment insurance, federal aid to education, Social Security, Medicare, or any other law they didn’t like merely by deciding not to fund them. If that were the case, then you could control everything in government with a simple majority in the House of Representatives; it would render every other branch of …

READ MORE →