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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, …

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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 …

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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 …

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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 …

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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 …

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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 …

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Friday, August 09, 2013 – May All Your Wishes Come True

May All Your Wishes Come True by Sinclair Noe DOW – 72 = 15,425SPX – 6 = 1691NAS – 9 = 3660 10 YR YLD – .01 = 2.57%OIL + 2.57 = 105.97GOLD + 2.30 = 1315.70SILV + .31 = 20.66 As we started the week, I warned that August can be fairly volatile in the stock market; it seems like the lazy days of summer and volume is usually lackluster, as it was today, but sometimes that just intensifies price swings. The markets were down again today, the fourth decline in the week, and the first weekly decline on the heels of six weeks of gains. The Dow was down 1.5% for the week. The S&P pushed back to 1700 a few times but couldn’t break through. This week’s declines don’t seem to tell us much; we could go either way next week. Yes, I know the rally is long in the tooth; going back to March 2009, the rally is 4.4 years old, longer than the average rally, but it really is too early to start catching falling knives. There wasn’t much in the way of economic reports this week; earnings reporting season is winding down, Congress is away on Summer recess. I guess it’s been about a week since we saw the guesstimates on second quarter GDP, and you’ll recall that the guesstimates included revisions that go back 83 years. The government is recalculating the numbers to try to get a more accurate picture. One of the …

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Thursday, June 28, 2012 – Adverse Selection, Asymmetric Information, Large Numbers, and Healthcare

Adverse Selection, Asymmetric Information, Large Numbers, and Healthcare – by Sinclair NoeDOW – 24 = 12,602SPX – 2 = 1329NAS – 25 = 284910 YR YLD – .04 = 1.58%OIL +.79 = 78.48GOLD – 22.20 = 1553.00SILV -.62 = 26.42PLAT – 19.00 = 1396.00If you had gone to Las Vegas and put down $5 dollars on Obamacare with John Roberts as the swing vote, your odds would have been about a million to one. According to Vegas bookmakers, nobody placed that bet; it was just too outrageous. This morning, a majority of the Supreme Court upheld the constitutionality of the Affordable Care Act, otherwise known as Obamacare. The big surprise, was the vote by the Chief Justice of the Court, John Roberts, to join with the Court’s four liberals.On the crucial issue in the case – whether the “individual mandate” requiring almost all Americans to purchase health insurance was a constitutionally-permissible extension of federal power under the Commerce Clause of the Constitution – Roberts agreed with his conservative brethren that it was not. If that was the end of the decision, it would have killed Obamacare, instead, it just tripped up the reporters at CNN and Fox who were so intent on trying to deliver “breaking news” that they forgot to read before speaking.  Roberts upheld the law because, he reasoned, the penalty to be collected by the government for non-compliance with the law is the equivalent of a tax – and the federal government has the power to tax. What’s …

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Wednesday, June 27, 2012 – To Your Health; Spanish Junk; Barclays Bad; Falcone Flunks; Bhopal Veggie Garden; Goodnight Stockton

To Your Health; Spanish Junk; Barclays Bad; Falcone Flunks; Bhopal Veggie Garden; Goodnight Stockton – by Sinclair NoeDOW + 92 = 12,627SPX + 11 = 1331NAS + 21 = 287510 YR YLD -.01 = 1.62%OIL +.27 = 80.48GOLD + 1.60 = 1575.20SILV – .17 = 27.04PLAT – 18.00 = 1415.00According to the Centers for  Medicare and Medicaid Services, health spending accounts for about 18% of the GDP of the United States. So, tomorrow’s ruling by the Supreme Court on President Obama’s health care plan is pretty important, but so far the economists can’t seem to figure out the implications. This is not to say I have any advance info on the Supreme Court decision. They might say the Act is fine as it is, they might say they will eliminate the mandate but leave the rest unchanged, they might throw out the whole thing.  If they vote against Obamacare it will be seen as a highly partisan act. What better way to show the Court’s impartiality than to affirm the constitutionality of legislation that may be unpopular? That might be a stretch; I think I’ll stick with the idea that we’ll have to wait till tomorrow.The only safe bet is that there will be unintended consequences. For example, what if the Supremes strike down the mandate portion but leave the rest intact? The Obama administration put a mandate in the Affordable Care Act because the law requires insurers to charge the same premium regardless of health status. Without a mandate, it would …

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Friday, June 1, 2012 – Someday the Violence Will End – by Sinclair Noe

DOW + 93 = 12,554SPX + 10 = 1325NAS +  27 = 285810 YR YLD -.02 = 1.64%OIL – .47 = 84.35GOLD + 6.20 = 1595.70SILV -.06 = 28.63PLAT – 10.00 = 1437.00 For the week, the Dow advanced 3.6 percent, the S&P 500 rose 3.7 percent and the Nasdaq jumped about 4 percent. It was the best percentage weekly gain for all three indexes since December. President Obama held a White House press conference this morning. The initial focus of the prepared remarks dealt with the European economic problem, not a Euro-debt crisis as the president noted. Obama went on to talk about the US economy and a few other issues. Obama tried to explain how the European economic problems could impact the American recovery and pushed Congress to pass parts of his “to-do” list aimed to stimulate economic growth. But during a question and answer session, the president said the private sector is “doing fine,” and he referenced the importance of jobs losses in the public sector. Mitt Romney criticized him for being “out of touch,” and so Obama backtracked and said the economy is not doing fine and he said: we’ve actually seen some good momentum in the private sector… record corporate profits…so that has not been the greatest drag on the economy.” He once again pressed Congress to provide aid to states to employ public sector workers including teachers and provide small businesses with tax breaks to help rejuvenate a sluggish recovery. Of course that isn’t …

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