Dec 19 2014

THANK YOU Mrs. Chairwoman

Market Recap:

THANK YOU Mrs. Chairwoman – stocks continued their Fed induced rally on Thursday as the Dow Jones Industrial Average soared more than 400 points, helping lift stocks by nearly 5% over 2 days. A commitment to keep interest rates low for an extended period of time, and reiterating that any policy changes will be data driven, gave a sharp boost to investor confidence. Technology shares rose the most, gaining over 2.8% on Thursday, while consumer discretionary shares lagged by gaining 1.4%. Most significantly, oil stocks gained as the energy sector rallied nearly 2% while Oil prices actually fell by more than 3%. The performance divergence is an indication that investors are recognizing the value in some of the over-sold energy stocks, and that the fall in oil prices – while not necessarily over – is likely temporary. As we discussed on Fox Business yesterday afternoon Oil prices have fallen too much in recent weeks and do not reflect the economic realities of the world.


Looking Ahead:

Friday’s trading is likely to be heavily influenced by the mid-morning release of the Atlanta Fed Business Inflation Expectation Index and the Kansas City Fed Manufacturing Index. Moreover, as we approach the Christmas holiday season, we think that volatility will remain at the forefront as portfolio managers and professional investors re-jig their portfolios and engage in the typical “window dressing” exercises.

Make sure to tune into Fox Business Friday evening at 6:00 PM when our President, Oliver Pursche, joins Charles Payne for the hour on Making Money with Charles Payne. And don’t miss a great Money Matters with Gary Goldberg this Saturday at 5:00 PM and Sunday at 11:00 AM on WOR 710 Radio to hear our latest economic analysis and market commentary.

Gary Goldberg, the host of Money Matters was just named 2014 Financial Broadcaster of the year by Talkers Magazine. Talkers is the premier insider magazine for the radio broadcast industry, and is viewed as “the bible” of who’s who and what’s what by radio producers and program directors. Below is a link to the award and the magazine’s site.

Dec 17 2014

What a ride it was on Tuesday

Market Recap:

What a ride it was on Tuesday – stocks started with 100 point plus decline in the Dow Jones Industrial Average before climbing sharply to an over 200 point gain for the blue-chip index to ultimately close about ½% lower for the day. Treasuries, Oil and currencies were all just as erratic, as a sharp intervention by the Russian Central Bank caused sharp swings in the Rubble, which in turn impacted other currencies and in turn commodity markets. Within the S&P 500, Energy, Industrial and Telecom shares all climbed while Consumer Discretionary and Technology shares fell nearly 1%. On the plus side, Housing data, which slowed a bit in November, supported the consensus view that the overall home-building and housing market continue to improve. As we stated in our note yesterday, the current environment may be gut-wrenching but is best classified as a psychologically driven market (correction) as opposed to a fundamentally driven correction. We reiterate our view that market and economic fundamentals continue to point to a generally bullish outlook for U.S. equities, and that the current volatility could very quickly abate.

Looking Ahead:

After a volatile session on Monday and Tuesday, markets may be able to find some calm in reassuring words by Fed Chairwoman Janet Yellen. The last FOMC meeting of the year concludes with the Chairwoman’s press conference around 2:10 PM tomorrow, during which Dr. Yellen will be providing the Fed’s latest assessment of our and the global economy. Market participants will be parsing the Fed minutes to gain further insights into the timing of any potential changes in monetary policy in 2015. The looming question is how much of an impact the Fed expects the fall in oil prices to have and whether or not global growth concerns will influence their decision of when or even if to raise rates next year.

Make sure to tune into Fox Business tomorrow afternoon at 3:55 PM when our President Oliver Pursche joins Liz Claman and David Asman to discuss the Fed report and how it impacts our market outlook for 2015. And don’t miss Money Matters with Gary Goldberg this Saturday at 2:00 PM and Sunday at 11:00 AM when Gary discusses the current tumultuous environment with Vanguard founder and investment legend John Boggle. Visit our website for details.

Dec 16 2014

Current market psychology is fragile but short lived

Market Recap:

In spite of a very strong start of the trading day, where the Dow Jones Industrial Average climbed triple digits by noon, stocks ended the day in negative territory as falling oil prices dragged equities down. In addition to falling energy prices, markets were apparently impacted by year-end window-dressing and portfolio clean-up activity as volume was irregular. Moreover, market technicians pointed to the approaching triple-witching option expiration date. The NASDAQ once again underperformed, as biotechnology names and small cap names continued their sell-off. Telecom shares were the sole sector to gain, albeit minimally, as Utilities, Energy and Financial shares all feel roughly ¾ %. The dollar gained strength, while Treasuries were mixed as long-bond yields fell while the rest of the maturities climbed slightly.

Looking Ahead:

After a disappointing Empire State Manufacturing report, Monday night’s release of Chinese PMI data and Tuesday’s Eurozone inflation data will likely be the key drivers of Tuesday’s market action as the two-day FOMC meeting kicks off. Pressure continues to build on stocks, as Saudi Arabia maintains its stance that it isn’t planning on cutting any of its output, and worries over deflation continue to mount.

Separately, the sharp fall in the Russian Ruble is increasing the risks of a broad recession in Russia, which would likely have some carryover effect on Europe. While the current sell-off is unpleasant, it should be put into the context of a “psychological” correction, as opposed to a fundamentally driven correction. The current market psychology is fragile and is over-reacting to potential risks and is viewing all data and information through a pessimistic lens. It is important to note that these types of corrections are a natural part of a maturing bull-market and tends to be relatively short lived. More importantly, psychological corrections are frequently followed by a strong rebound, meaning that based on the current fundamentals of our economy, corporate earnings and the overall market, we remain confident in our long-term bullish stance for U.S. equities.

Make sure to tune into Fox Business this Wednesday at 3:55 PM when our President Oliver Pursche joins Liz Claman and David Ansam to discuss our year-end and 2015 outlook. And don’t miss Money Matters with Gary Goldberg this Saturday at 2:00 PM and Sunday at 11:00 AM to hear a great interview with Vanguard Investment’s Founder John Boggle, our latest market analysis and economic outlook. Visit our website for details.

Dec 12 2014

The weakness in Thursday’s market close

Market Recap:

After a sharp sell-off on Wednesday, stocks started with a sharp reversal on Thursday as the DOW climbed more than 200 points by mid-day. Stronger than forecast November retail sales data and a sharper rise in consumer confidence helped lift investors’ spirits in early trading. By early afternoon however, falling oil prices started an erosion of gains across the board. Oil fell below $60 for the first time since July 2009, as continued fears of a supply glut and weakening global demand caused the continued sell-off. While lower oil prices certainly help consumers, it also signals several potential issues. First and perhaps most concerning to the broader economy, a rapid and steep fall in oil prices such as the one that has been occurring is likely to impact overall capital expenditures from energy companies. This is turn, could have a trickle down impact to the job market, ergo – negative impacting job creation as well as overall unemployment. Secondly, smaller energy companies have in some cases become relatively highly leveraged through the issuance of high-yield debt. The recent fall in oil prices will almost certainly impact profitability and may hinder some companies’ ability to repay their debts. Fears of potential default in the high-yield debt markets are already driving high-yield bond prices lower. Lastly, the plunge is also highlighting the overall strength, or lack thereof, of the global economy. By the end of the day, and after flirting with losses, major indexes did close higher as all ten sectors of the S&P gained ground.

Looking Ahead:

The weakness in Thursday’s market close is potentially signaling trouble for the open on Friday morning, placing greater emphasis on the early morning release of Chinese Retail Sales and Industrial Production as well as U.S. Consumer Sentiment and Producer Price Index data. As we wrote earlier this week, the current push and pull between market bulls and bears is likely to remain in place through the end of the year, meaning that further market volatility should be expected. Putting these short-term gyrations, we maintain a positive outlook for U.S. equities, and believe that 2015 will be a fruitful year for investors.

Make sure to tune into Money Matters with Gary Goldberg this Saturday at 2:15 PM (right after the football game), and Sunday at 11:00 AM to hear our complete economic analysis and market commentary. And tune into Fox Business again next Tuesday at 3:55 PM when Oliver Pursche joins Liz Claman and David Asman at the closing bell, to provide our year-end outlook.

Next Week’s Market Moving Events:

  • Monday: US Industrial Production, Housing Data, Empire State Manufacturing Data
  • Tuesday: The 2 day FOMC Meeting kicks off, Housing Stars, Redbook report
  • Wednesday: Mortgage Applications, Consumer Price data, FOMC Meeting concludes with the Fed Press Conference
  • Thursday: Bank of Japan announcement, Consumer Sentiment, Jobless Claims, Philly Fed Index, Leading Indicators
  • Friday: Kansas City Fed Manufacturing Index

Dec 10 2014

Markets show some signs of confliction

Market Recap:

It was a tough day on Wall Street, as markets started sharply lower in sympathy with the sell-off in Asian equities before declining further after the JOLTS report confirmed yesterday’s weaker than forecast Labor Market report. On the positive side, Small Business Optimism was shown to rise much more than expected in November, while the Whole-Sale Trade report came in at the upper end of estimates. Stocks fell as much as 1 ½% before rebounding to close with minimal losses. The NASDAQ was the only major index in positive territory, with Energy shares leading the way higher with a 0.85% gain, while Telecom stocks fell sharply as the sector declined by more than 3%. Commodity prices generally rose, and Treasury Yields fell as the Dollar was mixed.

Looking Ahead:

Chinese inflation data, which will be released late Tuesday evening, will likely set the tone for Wednesday’s trading activity, as will the closely watched Mortgage Applications report and Quarterly Services survey.

Markets are showing some signs of confliction as stronger than expected U.S. economic news and an overall improving environment for U.S. stocks are being pitted against increasing uncertainty in Europe and elsewhere in the world. News of rising protests in Greece and unease over the European Central Bank’s ability and willingness to act firmly are troubling. Moreover, the economic pressures being exerted onto Russia as a result of sanctions, falling oil prices, a falling Rubble, and rising inflation are making many wonder how Russian President Vladimir Putin may react. While doomsayers will point to Mr. Putin’s history of aggression and more recently his increasing nationalistic tone, we suspect that most of this is saber rattling and that there will be no conflagration. Based on the current environment, it is impossible to determine a trajectory for markets in the short-term (through Year-End), we continue to maintain a positive outlook for 2015 and see significant gains for U.S. equities over the next 12 to 18 months.

Make sure to tune into Fox Business Network Wednesday evening at 6 PM when our President Oliver Pursche joins Charles Payne for the hour to discuss our latest market and economic outlook. And don’t miss 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 complete economic analysis and market outlook. Visit our website for details.

Older posts «