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Apr 26 2016

Further Volatility to cause Emotional Overreactions

Market Recap:

Stocks sold off and then rebounded to close the trading day near the flat line on Monday. While oil, which had been a key driver for stock market direction, was sharply down for the day, stocks in general fared better. The ‘new’ correlation seems to be with bonds, which sold off in the early part of the day before rebounding. Earnings season kicked into high gear as some 100 companies reported on Monday alone.

 

Looking Ahead:

Investors should expect further volatility as earnings and economic news releases are sure to cause emotional overreactions. Tomorrow’s FOMC announcement will likely contain language that indicates that the U.S. economy can sustain 2 or more interest rate hikes, however that the Fed has chosen to hold off due to international concerns. The Fed is in quite a bind, as it absolutely wants to raise rates, but is (rightfully) fearful that such a move will further strengthen the dollar, thereby weakening the Chinese Yuan, which could cause a significant banking crisis in the worlds’ second largest economy. Moreover, given the challenges that Europe and Japan are facing, the negative impact on these economies is also undesirable. As such, we continue to believe that commodity prices will remain somewhat depressed, that the U.S. dollar will remain in its current trading range, and that if the Fed doesn’t raise in June, no hike in 2016 is a significant possibility. From an investors perspective this will mean that interest rates will remain suppressed, making high-quality dividend paying stocks attractive alternatives for those seeking income in a low-yield environment. Don’t miss this week’s Money Matters with Gary Goldberg; for stations and air times, please click here. Visit our website at www.ggfs.com for more details, including for a free, no-obligation portfolio evaluation.

Apr 25 2016

This Week’s Market Moving Events

Market Recap:

While it may have been an uneventful week for markets, it was an important one. On the heels of a slew of (decent) earnings reports, major stock indexes stabilized and ended within arms-reach of their all-time highs. Speculation that the U.S. Federal Reserve would hold interest rates steady at this week’s meeting became almost unanimous. And while we agree that the Fed is unlikely to raise rates this go around, we believe that the risks are in what Chairwoman Yellen says, not what the committee does. So far, Dr. Yellen has been on the Dovish side, a trend that is sure to end at some point.

 

Looking Forward:

Index futures as well as major international bourses are down slightly on Monday morning, as investors digest recent political events relating to President Obama’s European tour, the failed Doha accord and threats by Saudi Arabia relating American’s ability to sue foreign governments for damages due to terrorist related damages. More significantly, there are a slew of earnings reports and economic data on tap for the week, not least of which is the long-awaited April Fed meetings scheduled for Tuesday and Wednesday of this week. Markets are likely to remain range bound until the Fed’s press conference on Wednesday afternoon or Thursday’s release of revised Q1 GDP data.

 

This Week’s Market Moving Events:

Monday: New Home Sales, Dallas Fed Manufacturing Index

Tuesday: Durable Goods Orders, Case Shiller Home Price Index, Richmond Fed Manufacturing Index

Wednesday: International Trade data, FOMC Meeting Minutes and Press Conference

Thursday: GDP, Jobless Claims, Kansas City Manufacturing Index

Friday: Employment Cost Index, Chicago PMI, Consumer Confidence

Apr 18 2016

Wall St falls after oil meeting fails to result in production freeze

Market Recap 4/15/16:

U.S. stocks fell on Friday, pressured by energy shares as investors bet that a meeting of major oil-producing nations would do little to clear up the commodity’s oversupply glut. Though the correlation has somewhat faded of late, Wall Street remains closely tied to crude oil prices. Investors are worried that persistently weak prices could presage a broader economic slowdown, or that financial companies could be vulnerable to energy companies defaulting on loans if prices do not pick back up. Also weight on the markets on Friday was Apple (AAPL), following reports the tech giant was continuing its reduced production of iPhones in response to light demand. Despite the decline on the day, major indexes were positive for the week.

Looking ahead:

U.S. stock index futures fell on Monday after a weekend meeting of major oil nation failed to result in a freeze to their production targets. The news means that energy prices could stay low for a while, until global demand picks up in a big way – a uncertain prospect given slowing growth in China and increased use of alternative energy sources. Investors were also cautious as they awaited the latest corporate earnings, with Morgan Stanley (MS) scheduled to report before the market opens and both IBM (IBM) and Netflix (NFLX) coming out after the close. While earnings are seen falling this quarter, expectations may be so low as to make it easier for names to come in ahead of expectations. Don’t miss this week’s Money Matters with Gary Goldberg; for stations and air times, please click here. Visit our website at www.ggfs.com for more details, including for a free, no-obligation portfolio evaluation.

Apr 15 2016

Wall St flat with Citigroup results on tap

Market Recap 4/14/16:
 
U.S. stocks closed flat on Thursday, with investors finding few reasons to keep pushing shares higher following two strong days of gains, especially with questions remaining over the upcoming earnings season. While there have been some positive results thus far in the season – most notably JPMorgan (JPM) – investors continue to expect a sharp drop in overall earnings. The low expectations could give companies an easier bar to top, allowing for upside surprises; nonetheless, this is expected to be the third straight month where earnings have dropped. So-called “earnings recessions,” defined as at least two consecutive drops in profits, are often seen as a presage to broader economic weakness. Despite the overall flatness on the day, financial shares rallied following results from Bank of America (BAC) and Wells Fargo (WFC).  
 
Looking ahead:
 
U.S. stock index futures were little changed on Friday, though market direction could turn decisively when Citigroup (C) reports its quarterly results. Financial stocks have performed well this week, boosted by some better-than-expected results, but skepticism remains over whether this earnings season will show corporate America holding up in an uncertain economic environment, or whether financials have deteriorated in the manner than many investors fear. Market participants are also looking ahead to data on consumer confidence and industrial production. Don’t miss this week’s Money Matters With Gary Goldberg, where the guest will be Ari Benmosche, author of the book Good For the Money, about how his father led AIG back to profitability and repay its TARP bailout money with interest. For stations and air times, please click here. Visit our website at www.ggfs.com for more details, including for a free, no-obligation portfolio evaluation.

Apr 14 2016

Wall St flat, investors await more earnings

Market Recap 4/13/16:
 
U.S. stocks rallied on Wednesday, with major indexes gaining more than 1 percent and the S&P 500 ending at a four-month high. The gains followed better-than-expected results from JPMorgan & Co (JPM). The bank was the first Dow component to report this season, as well as the first major financial, a sector that many have worried would struggle this season. Investors have been concerned that the sector’s loan growth has been negatively impacted by slowing growth in China, as well as a weak commodities market. JPMorgan’s results sparked a massive rally in the sector, and helped to offset a weak read on March retail sales. 
 
Looking ahead:
 
U.S. stock index futures were flat on Thursday, as investors awaited further earnings for confirmation of the market’s valuation. While JPMorgan topped expectations on Wednesday, Bank of America (BAC) and Citigroup (C) are scheduled to report this week, and the results could indicate whether JPMorgan’s results were uniquely strong, or if the overall banking industry performed better than anticipated in the quarter. With major indexes near record levels and the market coming off two strong days of gains, earnings will need to top expectations in order to validate current levels. Don’t miss this week’s Money Matters With Gary Goldberg, where the guest will be Ari Benmosche, author of the book Good For the Money, about how his father led AIG back to profitability and repay its TARP bailout money with interest. For stations and air times, please click here. Visit our website at www.ggfs.com for more details, including for a free, no-obligation portfolio evaluation.

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