Sep 30 2014

Early morning trading showing equity futures higher

Market Recap:

Investors were unnerved by pro-democracy protests in Hong Kong, sending the Dow Jones Industrial Average down by as much as 175 points before rebounding into near positive territory to close down a mild ¼%. Commodities rallied across the board on a partial rebound from recent weakness as well as a lower than expected crop report that sent agricultural futures up almost 2%. The U.S. dollar strengthened slightly further as concerns over the upcoming ECB meeting put pressure on the Euro.

Looking Ahead:

Early morning trading is showing equity futures higher on Tuesday, as investors are coming to grips with the impact (or lack thereof) of the protests in HK and relatively positive economic news from Europe. In addition to the heavy international data releases, market participants will get the latest Case Shiller Housing Prices report, the U.S. Redbook report as well as Consumer and Investor Confidence data and the Chicago PMI report this morning. Moreover, investors will start to look towards next Tuesday when third-quarter earnings season ceremoniously kicks off with ALCOA reporting. Analyst consensus shows earnings growing by almost 7% in Q3, making a solid case for a continued bull-run.

Make sure to tune into Money Matters with Gary Goldberg this Saturday at 2:00 PM and Sunday at 11:00 AM to hear our latest 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.

Sep 29 2014

Agricultural prices are likely to rise over the coming days

Market Recap:

Stocks were volatile in the last full week of September, logging about a 1% loss of the week and the month. Concerns over timing of the Fed’s first interest rate hike coupled with more saber rattling from Russia, who threated to commandeer some European assets in retaliation for sanctions, caused nervousness. The final revision of second quarter GDP showed the U.S. economy growing at a robust 4.6%, renewing inflation concerns. On Friday all sectors of the S&P were higher, as was the dollar index.

Looking Ahead:

Agricultural prices are likely to rise over the coming days as early crop reports, which started being released early Monday morning, show a smaller harvest than expected. In additional to raising concerns over inflationary pressures, market participants will likely try to discern how this may impact the timing of the first Federal Reserve Interest Rate hike. As we wrote last week and then subsequently published in Forbes (read the article here: http://www.forbes.com/sites/investor/2014/09/26/market-worry-checklist-inconsequential-versus-real-and-what-to-do-about-it/ ) – the timing of the rate hike is not nearly as important as the size and scope of the first and subsequent hikes.

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 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.

Sep 26 2014

Next Week’s Market Moving Events

Market Recap:

Stocks sold off sharply on Thursday, reversing Wednesday’s gains and putting all major indexes into negative territory for the month of September. Technology shares fell the most, declining 2.28% as a sector, as all sectors of the S&P declined. Commodities were generally weaker, while the U.S. dollar index strengthened. Investors were worried about the strength of the global economy, as well as new geopolitical concerns relating to Russia and Ukraine, and comments from Fed officials that an interest rate hike may come sooner than previously estimated.

Looking Ahead:

Friday’s 8:30 AM second quarter GDP report will be critical to market action on Friday and might set the stage for next week as well. The last revision of GDP showed the U.S. economy growing at 4.2% and consensus estimates now show that economists expect an upward revision to 4.6% for tomorrow’s final reading. Should data show that the U.S. economy is growing at an increasingly faster pace, the Federal Reserve may well consider raising interest rates sooner than previously thought – and markets will likely view this in a bearish manner. However, in our view, the timing of the first rate hike is fairly inconsequential – the importance of when the first rate hike occurs is far outweighed by the size and frequency of future rate hikes. In other words, whether the Fed raises rates by ¼% in December, March or June doesn’t matter nearly as much as whether the Fed raises by ¼% or ½% and when subsequent rate hikes occur. As we have previously detailed, our research clearly shows that in virtually all previous deliberate interest rate hike campaigns (multiple rate hikes over several months) markets have performed reasonably well when the hikes were modest and tempered. In addition to GDP data, investors will be watching the Five-year and Ten-year Treasury yields for cues from the bond market. Separately, investors should recognize that these worries are likely to be temporary and that corporate earnings will prove much more impactful on market direction than the timing of the first rate hike. Currently, S&P Capital IQ reports that consensus analyst estimates show corporate earnings growing by 6.8% year-over-year in Q3. Given that generally over 65% of companies beat earnings by more than 3%, it is reasonable to deduce that Q3 earnings will rise approximately 10%, about as much as they did in Q2. As a result valuation will prove to be more attractive than many estimate, and as investors look forward to the rest of the year and into early 2015, there is plenty of encouraging news to help drive markets higher.

Next Week’s Market Moving Events:

  • Monday: German CPI, followed by US Personal Income, Pending Home Sales, Dallas Fed Manufacturing Survey and Farm Prices. After the close: Japanese Industrial Production and Chinese Manufacturing PMI.
  • Tuesday: Eurozone retail sales and consumer data, followed by the US Redbook report, Case Shiller Home Prices report, Consumer Confidence, Chicago PMI, Investor Confidence and Chinese Manufacturing data.
  • Wednesday: US Motor Vehicle sales, Eurozone PMI Manufacturing data, Mortgage Applications, ASP Unemployment, Job Creation, Construction Spending.
  • Thursday: Challenger Job Cut Report, Jobless Claims, Factory Orders
  • Friday: Eurozone PMI data, US Employment Data, PMI Services data, ISM Non-Manufacturing Index, Global Composite PMI and Services PMI data.

Make sure to tune into Money Matters with Gary Goldberg this Saturday at 7:00 AM and Sunday at 11:00 AM on WOR 710 AM Radio to hear our latest economic analysis, interviews with some of the most respected business leaders in the world, as well as our ongoing market commentary. Visit our website www.ggfs.com for details.

Sep 25 2014

Investors put their “Buying Hats” on

Market Recap:

Stocks started the day off in a steady fashion on Wednesday before investors decided to put their “Buying Hats” back on and drive major indexes to climb about ¾%. Utilities were the sole sector in negative territory as Healthcare and Consumer Discretionary shares rose more than 1%. Commodities were generally stronger as well, while the US dollar index and Treasuries remained relatively flat.

Looking Ahead:

In early morning pre-market trading equity futures are showing little volatility. This could change with Nike (NKE) earnings being released later today and two Fed officials speaking in the mid-morning and early afternoon. We expect markets to remain range-bound ahead of the third-quarter earnings reporting season which kicks off on Tuesday October 8th, a short two weeks from now.

Make sure to tune into Money Matters with Gary Goldberg for a special ½ hour show this Saturday morning at 7:00 AM on WOR 710 AM Radio as well as this Sunday at our regular time 11:00 AM. Visit our website www.ggfs.com for details.

Sep 22 2014

This Week’s Market Moving Events

Market Recap:

Stocks ended the week mixed as ambiguity over the Fed Statement and overall unease about the strength of the global economy made investors jittery. Financial and Technology shares fell the most on Friday, while Utilities and Telecom shares rallied on a bit of a safe haven play. Commodities were slightly lower, while the Dollar index weakened ever so slightly.

Looking Ahead:

Last week’s FOMC meeting brought a mixed reaction from market participants – mainly as bond buyers viewed the statements as a bit more hawkish, while stock buyers saw a continued dovish stance. Six different Fed Governors are set to speak this week, so expect further mixed messages and the likelihood of increased volatility. While European and Asian bourses started their day lower, they have rebounded allowing US equity futures to point to a higher open this morning.

This Week’s Market Moving Events:

  • Monday: Chicago Fed National Activity Index, Existing Home Sales, Chinese Flash PMI (after the close). AutoZone reports earnings
  • Tuesday: Eurozone Data, US Redbook report, House Prices, PMI Manufacturing Data, Richmond Fed Manufacturing Index, State Street Investors Confidence, Japanese PMI (after the close). Bed Bath & Beyond reports earnings
  • Wednesday: Mortgage Applications and New Home Sales are released.
  • Thursday: Durable Goods Orders, Jobless Claims, PMI Services, Kansas City Manufacturing Index, Japanese CPI (after the close). Nike reports
  • Friday: Q2 GDP final revision, Corporate Profits outlook, Consumer Sentiment.

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