Financial Review

Thoughts on Oil

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-07-2015.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review with Sinclair Noe for 12-07-2015 DOW -117 = 17,730 SPX – 14 = 2077 NAS – 40 = 5101 10 YR YLD – .07 = 2.20% OIL – 2.37 = 37.60 GOLD – 15.10 = 1072.20   Crude prices fell again in the first trading session after OPEC said over the weekend that it would maintain production at the current levels and made no decision on a new target ceiling. An oil glut has cut prices by more than 60% since June 2014. Abandoning an official output ceiling effectively codifies what OPEC has already done for the past year: ignore its previous target of 30 million barrels a day. The cartel produced 31.4 million barrels per day in October. Indonesia also rejoined OPEC on Friday (after being inactive since 2008), boosting the group’s participants to 13 members. Oil prices today dropped to levels last seen in 2009.   There has been an ongoing battle between OPEC and US shale producers with each side pumping massive amounts of oil in the hopes the other would cut production once crude became too cheap. The world isn’t going quite the way Saudi Arabia expected when it led OPEC to declare a pricing war against US shale drillers last year by flooding the market with crude oil. Far from being a quick kill, shale drillers have stubbornly held on, and OPEC has suffered along with them. Cheap oil …

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Financial Review

A Far, Far Better Thing

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-12-03-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe for 12-03-2015 DOW – 252 = 17,477 SPX – 29 = 2049 NAS – 85 = 5037 10 YR YLD + .15 = 2.33% OIL + 1.33 = 41.27 GOLD + 8.40 = 1062.60 The S&P 500 suffered its biggest drop since late September.   The European Central Bank cut its deposit rate commercial banks must pay to store money overnight to minus 0.3% from minus 0.2%. The ECB left its key lending rate unchanged at 0.05% and the rate on its marginal lending facility at 0.3%. They also announced they will extend their bond buying program until March 2017. But the central bank did not increase the monthly spending on bonds beyond the current monthly level of 60 billion euros, or $63 billion. With inflation at just 0.1%, unemployment still over 10% and bank lending disappointing, many analysts were expecting more aggressive moves. Now, here’s where it got interesting; the dollar index dropped over 2%, at one point the euro was up about 3% but finished trade with modest gains. Early this morning the Financial Times tweeted and reported the ECB was leaving rates unchanged. Oops. But even after the correction, the euro held on to some of the gains.   Even as the ECB announced fresh stimulus, the Federal Reserve is considering tightening monetary policy. Actually, it is more than just a consideration – the Fed has now …

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Financial Review

A Busy Economic Calendar

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-30-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe for 11-30-2015 DOW – 78 = 17,719 SPX – 9 = 2080 NAS – 18 = 5108 10 YR YLD – .01 = 2.22% OIL + .02 = 41.73 GOLD + 7.90 = 1065.50 SILV – .01 = 14.16   For the month, the Dow was up 0.3%, S&P 500 gained 0.1% and the Nasdaq gained 1.1%. The yuan rallied after the IMF said it will be added to its basket of reserve currencies. The euro capped its worst month versus the dollar since March. The yield gap between German and American bonds widened to the most in nine years, while emerging-market stocks posted their biggest monthly slump since August. This week’s economic calendar is packed. Today the National Association of Realtors reported pending home sales rose 0.2% in October and its index of contract signings is up 3.9% compared to a year ago. NAR’s chief economist, Lawrence Yun, said supply isn’t keeping up with strong demand. You know the old supply-demand formula, and tight supply points to higher prices.   Data due tomorrow includes US auto sales, ISM Manufacturing, PMI manufacturing, and construction spending. Look for auto sales to come in at an annualized rate of 18.0 million units, with a particular emphasis on VW sales following the emissions cheating scandal. The Markit PMI is expected to drop slightly from 54.1 in October to about 52.5 in November. The ISM manufacturing survey …

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Financial Review

The Day of Futures Past

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-10-21-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe for 10-21-2015   DOW – 48 = 17,168 SPX – 11 = 2018 NAS – 40 = 4840 10 YR YLD – .04 = 2.03% OIL – 1.08 = 45.21 GOLD – 9.10 = 1167.70 SILV – .22 = 15.78   Oil futures settled at their lowest level in nearly three weeks. OPEC is holding a special meeting in Vienna with cartel members and non-members Russia and Mexico to discuss ways to prop up oil prices. Don’t hold your breath. Meanwhile, the U.S. Energy Information Administration reported a much bigger than expected increase of eight million barrels in crude supplies for the past week.   The European Commission has ruled that Starbucks and Fiat Chrysler’s tax deals with the Netherlands and Luxembourg are illegal state aid, ordering the respective governments to recover as much as $34 million from each. The ruling follows an EU investigation launched in June 2014. It looked into whether the two companies were given so-called sweetheart tax deals that effectively lowered their corporate taxes.  Who’s up next? European regulators are finishing up investigations into McDonald’s and Amazon’s tax affairs in Luxembourg and Apple’s arrangements in Ireland.   Outgoing House Speaker John Boehner said Republicans will meet on Oct. 28 to nominate a candidate to replace him. Last night, Rep. Paul Ryan of Wisconsin said he would run for the job if certain conditions were met. With a critical deadline …

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Financial Review

Confidently Waiting

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-09-14-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe for 09-14-2015   DOW – 62 = 16,370 SPX – 8 = 1953 NAS + 26 = 4822 10 YR YLD un = 2.18% OIL – .49 = 44.14 GOLD – .30 = 1109.40 SILV – .21 = 14.51   The story that will be leading markets throughout this week will be Thursday’s Federal Reserve interest rate decision. While market expectations of an increase in rates have fallen to 28 percent, down from over 50 percent a few weeks ago, economists insist the decision is still too close to call. The Fed has been saying they will hike interest rates; this may be one of the most telegraphed rate hikes in the Fed’s history, but circumstances keep changing. Since the last Fed meeting, oil prices have dropped by 15%, the dollar has strengthened, China has slowed, emerging markets have softened, and there is little to no sign of inflation despite a Fed target of 2%. By the way, we’ll get one more report on inflation Wednesday, with the release of the CPI, or consumer price index. So, there are many reasons why the Fed might not raise rates, but then if they do stand pat, they risk coming across as timid, or worried that the recovery is in trouble. If they hike rates they can give the impression they are confident, and confidence begets confidence. And so some clever folks think the …

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Financial Review

Dog Day Advance

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-08-17-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe for 08-17-2015 DOW + 67 = 17,545 SPX + 10 = 2102 NAS + 43 = 5091 10 YR YLD – .05 = 2.15% OIL – .62 = 41.88 GOLD + 3.70 = 1118.40 SILV + .07 = 15.42   A reading of New York-area manufacturing conditions fell in August. The Empire State general business conditions index nose-dived to a reading of negative 14.9, from positive 3.9 in July, marking the worst level since April 2009.   The National Association of Home Builders/Wells Fargo housing market index rose 1 point to 61, marking the highest level since Nov. 2005. Any reading above 50 indicates “good” conditions. NAHB says the report is consistent with their forecast for a gradual strengthening of the single-family housing sector in 2015.   Japan’s economy contracted in Q2 as overseas demand for Japanese goods slumped and households spent less, raising the possibility the government will act to support the country’s weak recovery. GDP shrank 1.6% on an annualized basis in the April-June quarter.   The yuan started the week on stable footing after the People’s Bank of China set the currency’s daily reference rate at 6.39 per dollar – in line with Friday’s close. The move signals Beijing is willing to cede more control to market forces, following last week’s record devaluation that saw the currency plunge 3.6%. Shanghai +0.7%. Shenzhen +1%.   Rounding up support for Greece’s fresh aid package, German Chancellor …

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Financial Review

Dead Cats and Shade Balls

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-08-11-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe for 08-11-2015 DOW – 212 = 17,402 SPX – 20 = 2084 NAS – 65 = 5036 10 YR YLD – .10 = 2.14% OIL – 1.71 = 43.25 GOLD + 4.60 = 1109.70 SILV + .13 = 15.46   Since mid-July the Dow Industrial Average has dropped from a high of 18,137, including a 5 session losing streak; in late July the Dow dropped below its 200 day moving average, indicating a downtrend; it bounced up to touch the 200-day moving average but could not break through; after that we started August with a 6 session losing streak. Yesterday, the Dow bounced 241 points; and that is looking like a dead cat bounce today.   China’s central bank devalued the yuan in an effort to help jump-start its stalling economy. The central bank cut its daily reference rate by 1.9 percent, triggering the yuan’s biggest one-day drop since China ended a dual-currency system. For background, the yuan’s peg to the dollar had been in place since 2006. The People’s Bank of China, their central bank, would buy or sell yuan to keep the currency near a certain value against the dollar. The dollar’s been strong since 2011. And so, the peg made the yuan strong too.   The People’s Bank of China called the change a one-time adjustment and said its fixing will become more aligned with supply and demand. Outside …

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Financial Review

Half True

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-08-10-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe for 08-10-2015 DOW + 241 = 17,615 SPX + 26 = 2104 NAS + 58 = 5101 10 YR YLD + .06 = 2.24% OIL + .95 = 44.82 GOLD + 10.30 = 1105.10 SILV + .41 = 15.33   Berkshire Hathaway is buying Precision Castparts for $235 per share in cash in a deal worth about $37 billion. On Friday, Precision Castparts closed at $193.94, meaning Berkshire is paying a 21% premium to own the company. Berkshire originally began investing in Precision Castparts in 2012 and had already acquired a 3% stake before today’s announcement. Berkshire Hathaway posted disappointing earnings on Friday. Revenue for the second quarter came in at $54 billion. Precision Castparts makes parts for the aerospace industry, and also the energy industry; their major customers are Boeing, General Electric, and Airbus. This is a company with a large moat; there is a big barrier for new competition; GE isn’t going to outsource parts inside a jet engine for a couple of dollars savings. And there is a good chance that PCP can make some decent sized acquisitions to consolidate its industry, or what Buffett calls “bolt-on’ acquisitions.   When you consider some of the recent acquisitions by Warren Buffett, it becomes clear that Berkshire Hathaway is no longer a pseudo-hedge fund or quasi-mutual fund. It is a diversified conglomerate with interests in heavy industry, transportation, consumer …

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Financial Review

No

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-07-06-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe DOW – 46 = 17,683 SPX – 8 = 2068 NAS – 17 = 4991 10 YR YLD – .11 = 2.29% OIL – 4.40 = 52.53 GOLD + 4.10 = 1170.80 SILV + .06 = 15.85   Perhaps you have heard about the big vote in Greece over the weekend. Greeks voted to pay off all of their debt; they put the money in a big wooden horse. They left the horse on the doorstep of the European Central Bank in Brussels. Problem solved. Actually, Greeks voted ‘No’ in a referendum asking them to accept an international creditor proposal that would have included more austerity reforms. The final tally showed 61% voted “no”; so it was a bit of a landslide. Both the Greek people and their government want to remain within the euro, and it isn’t clear that there is a legal mechanism to kick Greece out of the Eurozone, at least not any time soon.  Of course a Greek exit might not be so bad. If you are an unemployed Greek worker, it really doesn’t matter if you are not being paid in euros or drachmas. Actually, the idea of printing their own currency, even if it is greatly devalued, is probably easier to swallow than the boot to the throat that is austerity. The question is whether the Greeks must leave the euro to have their …

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Financial Review

Tomorrow

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-06-04-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: iTunes | Android | RSSFinancial Review by Sinclair Noe DOW – 170 = 17,905 SPX – 18 = 2095 NAS – 40 = 5059 10 YR YLD – .06 = 2.31% OIL – 1.66 = 57.98 GOLD – 8.60 = 1177.40 SILV – .40 = 16.18   The sun will come out tomorrow, beyond that we don’t have much certainty. Tomorrow could be a very interesting day in the markets. Greece is scheduled to make a debt payment to the IMF; that will not happen. OPEC meets tomorrow in Vienna; they are expected to leave the current production ceiling of 30 million barrels per day unchanged. And in the US, we have a Jobs Report Friday; the Labor Department is expected to report the economy added about 225,000 new jobs in May and the unemployment rate is forecast to remain unchanged at 5.4%. Any one of these three events could result in major market moves. So buckle your seat belts.   This morning the Labor Department reported the number of people seeking unemployment benefits at the end of May remained near a 15-year low. Some 276,000 Americans filed initial jobless claims in the period running from May 24 to May 30, a week that included the Memorial Day holiday. That was down 8,000 from the prior week.   In addition to the headline numbers in the Jobs Report, we will be looking to see if wages are actually increasing; …

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