Aug 28 2014

Stocks climb to yet another record on Wednesday

Market Recap:

Stocks climbed to yet another record on Wednesday, marking the 31st new all-time high reached by the S&P 500 this calendar year. Gains were muted as investors weighed positive economic news against rising geopolitical tensions between Ukraine and Russia. Moreover, volume slowed to a trickle as many market participants are away on holiday. Six of the ten sectors of the S&P showed gains, with utilities gaining most (0.96%) and financials underperforming (-0.1%). Commodities were mostly higher and Treasuries sold off slightly.


Looking Ahead:

It doesn’t appear that markets will be setting another high today, as news report of another Russian incursion into Ukraine surface. European and Asian bourses lost about 1% overnight, and U.S. equity futures are pointing to a lower open by about ½%. We expect continued light trading volume of the next two weeks, as market participants enjoy the last weeks of summer (unofficially of course). Our base line continues to be ongoing geopolitical turmoil, and moderate economic growth worldwide, coupled with a more rapidly improving labor market and overall economic conditions in the United States. Based on this, we expect that U.S. stocks should continue to shine over the next 12 to 18 months. From a technical perspective, the recent market rallies setting new highs are encouraging and a healthy sign. While some investors may worry that stock prices are overdue for a more meaningful correction, the current sentiment and technical patterns are supportive of a continued rally.

Make sure to tune into CNBC on Friday at 3:45 PM when our President, Oliver Pursche, joins Kelly Evans on the floor of the New York Stock Exchange to discuss our latest market and economic outlook. And don’t miss a great Money Matters with Gary Goldberg this week, when Gary highlights interviews with Nobel Laureate Dr. Robert Merton, former Labor Secretary Elaine Chow, and basketball legend John Calipari. Money Matters with Gary Goldberg airs every Saturday at 2:00 PM and Sunday at 11:00 AM on WOR 710 AM radio – visit our website www.ggfs.com for details.

Aug 26 2014

All 10 sectors of S&P were high

Market Recap:

The S&P 500 crossed 2,000 for the first time in its history on Monday, before closing slightly off the record level (read our interview in The Financial Times here). Abating geopolitical fears were the principal factors causing investors to push major indexes to new highs, as M&A activity continues and overall economic data was in line with expectations. All 10 sectors of the S&P were higher, with Financials outperforming and Consumer Discretionary shares lagging slightly. Commodities were mixed and bond fell slightly on the easing of concerns.


Looking Ahead:

Home Prices, Consumer Confidence, Durable Goods orders and Manufacturing data are among the key economic reports being released Tuesday morning. However, they could all be trumped by a scheduled meeting between Russian President V. Putin and his Ukrainian counterpart P. Poroshenko – as the world watches and hopes for an easing of tensions between the two neighbors (for more market moving events, read our weekly column in WSJ MarketWatch).

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A little further South-West, tensions in Iraq and Syria couldn’t be higher as the United States mulls more military action, including within Syria, to counter the rising Islamic State (formerly known as ISIS). While we generally feel that these types of geopolitical events tend to be transitory and only impact market sentiment for a short-while, we view the current situation as a bit more critical and encourage investors to remain disciplined in their investment approach. Large-cap high-quality dividend paying stocks continue to be our favored investment strategy. Although these (High-Quality Dividend Paying Stocks) are likely to lag in the event of a sharp rally, we take comfort in their steadiness and relatively lower volatility in the event of a correction.

Make sure to tune into CNBC this Friday at 3:45 PM when our President, Oliver Pursche, joins the CNBC team on the floor of the New York Stock Exchange to provide our latest outlook and market commentary. And don’t miss Money Matters with Gary Goldberg this Saturday at 2 PM and Sunday at 11 AM on WOR 710 AM radio for our complete economic analysis and full market commentary. Visit our website www.ggfs.com for details.

Aug 25 2014

Equity futures point to a higher open

Market Recap:

In spite of Friday’s minimal losses for equity indexes, markets had their best week since early July, with sectors of the S&P gaining nearly 1% for the week. Better than forecast economic data, strong earnings and an overall improving outlook all helped overcome geopolitical fears. In spite of the gains, investors are advised to exercise caution and stick with their investment disciplines. With the Ten-Year Treasury Yield falling well below 2.4%, overall sentiment is hardly convincingly bullish. While we maintain our expectation of a strong fourth quarter for stocks, we continue to favor more defensive sectors – in particular high-quality dividend paying stocks.


Looking Ahead:

Equity futures are pointing to a higher open on Monday morning, as market participants look forward to a slew of economic reports, including a second look at Q2 GDP data. Moreover, investors seem calmed by a planned meeting between Russian President Putin and Ukrainian President Petro Poroshenko set for Tuesday afternoon local time (roughly 8 AM EST). Rising M&A activity is also helping sentiment, as Burger King and Tim Horton disclose merger talks, and Roche agrees to buy InterMune.

Tune into CNBC this Friday at 3:45 when our President Oliver Pursche joins the team on the floor of the New York Stock Exchange to provide our latest outlook and commentary. And don’t miss Money Matters with Gary Goldberg this Saturday at 2 PM and Sunday at 11 on WOR 710 AM Radio to hear interviews with some of today’s most respected business leaders and our complete market and economic analysis. Visit our website www.ggfs.com for details.

Aug 22 2014

Next Week’s Market Moving Events

Market Recap:

Stocks inched higher on Thursday as investors mulled better than forecast economic data ahead of the annual Jackson Hole meeting by Central Bankers and highly anticipated speeches by U.S. Fed Chair Janet Yellen and ECB President Mario Draghi. Major indexes gained around ¼% with 7 out of ten sectors of the S&P rising and commodities being generally firmer as well.


Looking Ahead:

While much is being made out of the Jackson Hole meeting and Janet Yellen’s speech, we do not believe there will be any new revelations in the press conference. U.S. equity futures are pointing to a slightly lower open, as buyer exhaustion may be setting in with the Dow Jones Industrial Level sitting above 17,000 and the S&P within 10 points of 2,000. In our view, while these milestones may be fun to talk about, there are just that and nothing more. With regards to the next “leg” higher for equities, that will be dependent on continued economic strength and earnings growth.

Next Week’s Market Moving Events:

  • Monday: Chicago Fed National Activity Index, PMI Services report, New Home Sales and Dallas Fed Manufacturing Survey
  • Tuesday: This will be the busiest reporting day of the week, making it potentially explosive – Goldman Same Store Sales, Durable Goods Orders, House Price Index, Case-Shiller Home Price report, US Consumer Confidence, Richmond Fed Manufacturing Index, State Street Investor Confidence
  • Wednesday: MBA Mortgage Applications
  • Thursday: Second Quarter GDP, Jobless Claims, Corporate Profit data, Pending Home Sales, Kansas City Fed Manufacturing Index and US Farm Prices
  • Friday: Chicago PMI, Consumer Sentiment

Make sure to tune into Money Matters with Gary Goldberg on Saturday at 2:00 PM and Sunday at 11:00 AM on WOR 710 AM Radio to hear our complete economic analysis, interviews with some of today’s most respected business leaders, as well as our ongoing market commentary. Visit our website www.ggfs.com for details.

Aug 21 2014

S&P continues its march towards 2,000

Market Recap:

Stocks continued their climb on Wednesday, rising for a third day in a row as economic news remained positive and the FOMC minutes indicated a further dovish stance by the voting members. However, dissent regarding the timing of the first interest rate hike continues to grow, with more FOMC members and Fed Governors indicating that an earlier than previously thought rate hike may be in order. Given that all members of the Federal Reserve, including the more hawkish ones, have clearly stated that such moves and changes in policy will be dictated by the underlying strength in the U.S. economy as opposed to some arbitrary time period, we do not view this development as a concern.  All sectors of the S&P were higher, while Treasuries sold off slightly and commodities were mixed.


Looking Ahead:

As the S&P continues its march towards 2,000, investors will likely hear more and more discussions about a looming correction and that stocks are overvalued. While we agree that a correction is possible, we believe that given the overall strength in consumer spending, improving labor market, continued rise in manufacturing, and strong corporate earnings, that stocks will likely move higher over the next 6 to 12 months. We do caution investors to be selective in their investment choices and review balance sheets carefully to ensure that the companies have a reliable and predictable earnings stream. Moreover, historically late August and early September tend to be more volatile times for equities, as such while there might be good opportunities to deploy capital in the near term, patience will likely prove the more beneficial virtue.

Make sure to tune into Money Matters with Gary Goldberg this Saturday at 2:00 PM and Sunday at 11:00 AM on WOR 710 AM Radio to hear our latest economic and market analysis as well as interviews with some of today’s most respected business leaders. Visit our website www.ggfs.com for details.

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