Financial Review

Little Steps

  (* I am taking a break from the daily markets for the holidays but I will try to offer a few thoughts from time to time, plus I will update a few of the audio interviews.) I suspect the major market driver in coming weeks will be more about oil prices than interest rates; not a guarantee, just a suspicion. The Fed raised rates, as expected, very little. The rate hike was largely priced in, although we will still see some accompanying volatility. The move from ZIRP should signal that the economy is on reasonably strong footing. The Fed’s accompanying forecast calls for the economy to grow at a 2.4% clip over the next year, with unemployment dropping to 4.7%, and inflation settling in around 2%; that sounds good on paper; time will tell. One thing the US markets have been slow to do is to price in the changes in energy markets. Not only has technology increased the amount of oil production, it has also increased the viability of renewable, sustainable energy. And if you are wondering about the future of energy, look to Paris. While the COP21 in Paris was not the big change many had hoped for, it was a step in the right direction; and it was definitely a step away from the fossil fuel based energy markets, but it was a tiny little step. Now let me pause for a moment and address the climate change deniers: Wake up and stop being stupid! Even …

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Financial Review

Don’t Bet the Farm

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-09-16-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe for 09-16-2015 DOW + 140 = 16,739 SPX + 17 = 1995 NAS + 28 = 4889 10 YR YLD + .02 = 2.30% OIL + 2.56 = 47.15 GOLD + 14.10 = 1120.20 SILV + .53 = 15.03   The cost of consumer goods fell in August for the first time since the beginning of the year, owing mostly to another sharp drop in gasoline prices as the summer driving season came to an end. The consumer price index, or the cost of living, fell by a seasonally adjusted 0.1% last month. That’s the first decline since January. Retail prices are up just 0.2% in the past year. Excluding food and energy, so-called core consumer prices rose 0.1% in August. Core prices have risen just 1.8% in the past 12 months, unchanged from in July.   Energy prices declined 2% in August. Most of the relief came in the form of lower prices at the pump. The cost of a regular gallon of gas fell about 8% last month. The price of fuel had risen three straight months before the decline in August. Still, energy prices are down 15% over the past year. Food prices rose again, however. They increased 0.2% in August, spurred by higher costs of eggs, fruits and vegetables. The cost of airline tickets dropped for the second straight month. The price of new cars and …

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Financial Review

Do Computers Dream of Algorithmic Capitulation?

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-08-28-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe for 08-28-2015 DOW – 11 = 16,643 SPX + 1 = 1988 NAS + 15 = 4828 10 YR YLD + .02 = 2.19% OIL + 2.71 = 45.27 GOLD + 8.30 = 1134.80 SILV + .08 = 14.70   The week roared in like a lion and left like a lamb. For the week, the Dow gained 1.1 percent, the S&P rose 0.9 percent and the Nasdaq added 2.6 percent. Go figure. Panicked selling on Monday and Tuesday gave way to a rush to buy on Wednesday and Thursday.  And for many investors, it was just too much. Equity funds saw $29.5 billion head for the exits, the largest weekly outflow on record. On Tuesday, investors pulled out $19 billion, the biggest single day for outflows in the past 8 years.  Some traders would call that “capitulation”, a sign of a bottom in the markets.   The chaos of this week’s markets appeared to hit smaller investors especially hard, leaving yet another dent in their stock market confidence. The Monday flash crash resulted in smaller investors being locked out of their online accounts. Strange glitches appeared. Exchanges spit out the wrong prices for widely held funds. For example, the SPDR S&P Dividend ETF dropped 33% in 15 minutes, then shot right back up 30 minutes later, while the stocks tracked by the ETF never fell that far. The QQQ, …

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Financial Review

May Day

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-05-01-2015.mp3Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 183 = 18,024 SPX + 22 = 2108 NAS + 63 = 5005 10 YR YLD + .07 = 2.11% OIL – .29 = 59.34   For the week, the Dow dropped 0.3%, the S&P 500 fell 0.4% and the Nasdaq was down 1.7%. May kicks off what has been the worst six months for stocks historically which has brought rise to the old saying “sell in May and go away.” Sometimes it works but no guarantees.   The Detroit 3 automakers reported solid April sales as new models and cheap loans lured even more buyers into what’s already a brisk-moving new-vehicle market. Fiat Chrysler reported sales jumped 6% in April, GM gained 5.9% and Ford rose 5%. Still, their stocks were mixed. Ford and GM were higher, Fiat Chrysler was down.   Merchants displeased with the high fees American Express charges them are permitted to steer customers toward less expensive cards without fearing retaliation from the credit card company. A Judge in Brooklyn federal court has ruled that American Express is not allowed to stop stores from offering discounts, rebates or other incentives for using lower-fee cards – an activity known as steering.    Construction spending fell in March to a six-month low as outlays on private residential construction spending declined sharply. Construction spending slipped 0.6 percent to an annual rate of $966 billion, the lowest level …

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Financial Review

So Disappointing

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-01-20-2015_2_.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 3= 17,515 SPX + 3 = 2022 NAS + 20 = 4654 10 YR YLD un = 1.81% OIL – 2.30 = 46.39 GOLD + 13.90 = 1295.20 SILV + .19 = 18.08 Wall Street loves free money; they love free money from the Federal Reserve and for the past 5 years Wall Street has rallied on bailouts, QE, and ZIRP. The bailouts are over and the government promises they will never give away your money to the big banks again; QE, or quantitative easing is also finished and the Fed says they are out of the bond buying business for now; and ZIRP, or Zero Interest Rate Policy will patiently be replaced by slightly higher interest rates. Remember, Wall Street loves free money, so you might expect Wall Street might throw a tantrum at the prospect of no more QE and higher interest rates; we’ve seen taper tantrums in the not-so-distant past; and that might be what we’ve been experiencing to start the New Year. But the Federal Reserve is not the only central bank with a stimulus scheme. The Bank of Japan has its own QE program called Abenomics. And the European Central Bank is finally expected to launch its own QE program on Thursday. ECB President Mario Draghi has been saying he would do “whatever it takes” for the past 2 years. Now, the …

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Financial Review

Face the Facts

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-09-08-2014.mp3Podcast: Play in new window | Download (Duration: 13:14 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSDOW – 25 = 17,111 SPX – 6 = 2001 NAS + 9 = 4592 10 YR YLD + .01 = 2.47% OIL – .63 = 92.66 GOLD – 12.90 = 1256.50 SILV – .17 = 19.12 The Federal Reserve reports consumers increased their debt by a seasonally adjusted $26.0 billion in July, up from an $18.8 billion gain in the prior month. Monthly debt rose at a 9.7% annual rate in July, compared with a 7.1% rate in the prior month. On a dollar amount, that’s a record gain, and on a percentage basis, it’s the highest since July 2011. Crude oil for October delivery fell 63 cents, or 0.7 percent, to settle at $92.66 a barrel in New York, its lowest level since January. Oil prices have fallen for three days straight as geopolitical worries in Ukraine and Iraq have eased. The ceasefire between Russia and the Ukraine is holding by a thread. The EU has approved a second round of sanctions against Russia, but today, they put the sanctions on hold, hoping for a favorable outcome. In an initial set of economic sanctions imposed in late July, the EU barred five state-owned Russian banks from selling shares or bonds in Europe; restricted the export of equipment to modernize the oil industry; prohibited new contracts to sell arms to Russia; and banned the export of machinery, electronics and other civilian products with …

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Financial Review

You Can’t Get There From Here

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-09-02-2014.mp3Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review DOW – 30 = 17,067 SPX – 1 = 2002 NAS + 17 = 4598 10 YR YLD + .08 = 2.42% OIL – 3.08 = 92.88 GOLD – 21.70 = 1266.50 SILV – .31 = 19.25 The S&P 500 hit an intraday record just over 2,006 shortly after the opening bell, but then turned negative. Morgan Stanley strategists said that the bull market could run for another five years and carry the S&P close to 3,000. They say the stock market is likely to keep “grinding higher,” helped by foreign investors for whom it’s “the only place to go.” But investors should remain aware of risks in the market, including the fact that zero interest-rate policies mean central bankers can’t lower rates to counter outside shocks. A strong dollar and continued concerns about demand pulled crude-oil futures to their lowest settlement since January. Brent futures ended at their lowest in nearly 18 months, and other energy commodities also notched multi-month lows. With Labor Day marking the end of the US driving season, refinery turnarounds are expected to start in earnest. Tensions rose in the conflict between Ukraine and Russia, with President Vladimir Putin reportedly telling a European Commission leader he saying he could take Kiev in two weeks. Russia did not deny the report, although officials there said the remarks had been taken out of context. Libya’s outgoing cabinet has acknowledged …

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Financial Review

Be Careful Out There

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1_2-08-22-2014.mp3Podcast: Play in new window | Download (Duration: 20:28 — 9.4MB)Subscribe: Apple Podcasts | Android | RSS08222014 LISTEN HERE DOW – 38 = 17,001 SPX – 3 = 1988 NAS + 6 = 4538 10 YR YLD un = 2.40% OIL – .46 = 93.50 GOLD + 4.30 = 1281.60 SILV un = 19.51 All three major indices posted gains for the week, with the Dow up 2%, the S&P up 1.7% and the Nasdaq up 1.6%. It was the strongest week of gains for both the Dow and the S&P since April, and the third straight week of gains for all three indices. There is a lot to cover before we can wrap up the week. First we go to Jackson Hole Wyoming, where the Fed has been having a friendly get together of economists. Janet Yellen kicked off the event with a speech this morning. She said what you might expect: “There is no simple recipe for appropriate policy,” and she called for a “pragmatic” approach that gives officials room to evaluate data as it arrives without committing to a preset policy path. And she backed up her comments with a new tool, the Labor Market Conditions Index, which measures 19 labor market indicators, and it isn’t new data, just combining it all together, but it showed she is monitoring the data. Yellen referenced the possibility that labor markets may be a bit tighter than they seem and that the Fed may consider having to raise interest rates …

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Financial Review

Wednesday, April 09, 2014 – Feeding Time at the ZIRP Trough

Feeding Time at the ZIRP Troughby Sinclair Noe DOW + 181 = 16,437SPX + 20 = 1872NAS + 70 = 418310 YR YLD un = 2.68%OIL + 1.04 = 103.60GOLD + 4.30 = 1313.30SILV  – .22 = 19.95 In an otherwise light week for economic news, the big report is today’s release of the FOMC minutes from last month’s meeting. No surprises. You may recall that after the last meeting, Chairwoman Janet Yellen talked about the possibility of raising the fed funds target rate after a “considerable time”; when pressed she indicated a “considerable time” was about six months after the Fed ends it asset purchases under Quantitative Easing. That would mean late spring or summer of 2015. Fed policymakers were unanimous in wanting to ditch the thresholds they had been using to telegraph a policy tightening; no hard and fast target of 6.5% unemployment or 2% inflation. The minutes indicate the Fed would like to see more improvement in the economy; the emphasis on quality rather than quantity. In other words, the Fed remains dovish, and they will taper but they will also keep rates low for a long time. And also, those “dots” are over-rated. The dots are actually charts suggesting the fed funds rate would top 2% by the end of 2016. In the minutes published today, several policy-makers claim the charts overstated the shift in projections, which would suggest the Fed is not ready to tighten policy. A couple of the voting members wanted to commit …

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Uncategorized

Monday, November 11, 2013 – Fed Stuck As Other Central Banks Race to Bottom

Fed Stuck As Other Central Banks Race to Bottom by Sinclair Noe DOW + 21 = 15,783SPX + 1 = 1771NAS + 0.56 = 3919OIL + .54 = 95.14GOLD – 7.60 = 1282.90SILV – .16 = 21.45 A fairly boring day on Wall Street ended with the major averages in positive territory and that was good enough for record highs on the Dow Industrial. The bond market was closed because of the Veterans Day holiday. Volume on the S&P 500 was down by about 23%. Of the 447 S&P 500 companies that have released third-quarter profits so far, 75% have beaten analysts’ forecasts. Earnings per share for the companies that have reported, increased 4.7% in the third quarter. All fairly good news. This will be a relatively light news week. Key economic reports include Thursday’s Sep trade deficit (expected to widen to -$39.0 from -$38.8 in Aug) and Friday’s Oct industrial production report (expected -0.1%). The Treasury this week will conduct its $70 billion quarterly refunding operation. There are speaking engagements by Minneapolis Fed President Kocherlakota and Atlanta Fed President Lockhart on Tuesday and by Philadelphia Fed President Plosser on Thursday. Fed Chairman Bernanke will hold a town hall meeting with educators on Wednesday in Washington D.C. One quick point that I didn’t get to last week, last Thursday, during a speech, New York Fed president William Dudley said that some of America’s largest financial institutions appear to lack respect for the law. Dudley suggested that regulators may be stymied by …

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Wednesday, August 1, 2012 – The Fed’s Gone Fishing – The Machines Take Control – The Check is in the Mail

The Fed’s Gone Fishing -The Machines Take Control – The Check is in the Mail-by Sinclair NoeDOW – 37 = 12,971SPX – 4 = 1375NAS – 19 = 292010 YR YLD +.05 = 1.54%OIL + .71 = 90.38GOLD – 14.80 = 1601.10SILV -.56 = 27.54PLAT – 20.00 = 1403.00The economy has slowed down over the past few months; I know it; you know it; the Federal Reserve knows it; anybody who can fog a mirror knows it. And so, it was widely anticipated the Federal Reserve would acknowledge the slowdown today as they wrapped up a two-day FOMC meeting. They did. They issued a statement saying:  “economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated.” And then they did absolutely nothing. The did not extend their Zero Interest Rate Policy into the next millennium and beyond; they did not cut the interest they pay member banks for not making loans; and they did not announce another round of quantitative easing. Nobody seriously expected QE3 but it was expected the Fed would make some small, incremental concession. Nope. They did nothing. Squat, zilch, zip, nada. They couldn’t even throw a dog a bone. Generally they expect inflation to be under control and employment to slowly improve just a smidge, and apparently Bernanke is going trout fishing in Wyoming. They promised to keep an eye on things; if it goes to hell in a handbasket, they’ll …

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