Sep 18

Fed takes 5 years to normalize balance sheet

Market Recap:

The much anticipated FOMC report ended up being little changed from previous reports and forward guidance by the Fed remains constant. Generally speaking the Federal Reserve Open Market Committee acknowledged that the US economy continues to make progress and that growth is strengthening. However they also acknowledged that the unemployment picture continues to be disappointing and that global pressures could impact US manufacturers and multi-nationals. Stocks spiked after the release of the FOMC minutes and Chairwoman Yellen’s press conference, running into record territory. In our view, the most critical statement in today’s release was when Dr. Yellen stated that it would likely take the Fed until the end of the decade (i.e. another 5 years) to normalize its balance sheet. In other words, while QE may be coming to an end by December (the remaining $15 billion in purchases will be tapered in $5 billion increments over the next three months), the unwinding of stimulus will take many more years.

Utilities and energy shares fell on commodity weakness, while the traditionally defensive consumer staple sector declined as a result of the continued dovish stance by the Fed. The US Dollar index remained relatively flat to slightly higher.

Looking Ahead:

With the Fed announcement behind us, market participants will focus their attention on the upcoming Alibaba IPO – the largest in history – as well Thursday’s Jobless Claims, Housing Starts, and Philly Fed Survey. Investors should expect markets to remain in a tight trading range, likely making new highs by small increments. This trading pattern is likely to last until the third quarter earnings season kicks off in three weeks.

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 a great interview with Carly Fiorina former CEO of HP and potential presidential candidate. Visit www.ggfs.com for details.

Sep 17

Near the flat line teetering

Market Recap:

Stocks started the day in a similar manner as they did on Monday and Tuesday, near the flat line teetering into the negative before an announcement of a liquidity injection by the People’s Bank of China helped lift stocks by about ¾%. The S&P traded above 2,000 before closing just below the benchmark number, as all ten of the indexes sectors rose. Utilities and energy shares climbed the most as oil and other commodities rallied as the dollar index weakened.

Looking Ahead:

The Federal Reserve Open Market Committee is concluding its two day meeting this afternoon and will release its highly anticipated meeting minutes around 2 o’clock followed by Chairwoman Yellen’s press conference. Market participants are listening for clues of a shift in timing of the first interest rate hike since 2006. As we discussed yesterday afternoon on CNBC’s Closing Bell, we expect the overall tone of the FOMC to remain dovish and do not expect any material changes in policy until mid-2015.

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 a great interview with Carly Fiorina, former Hewlett Packard CEO and potential candidate for the U.S. Presidency. Visit www.ggfs.com for details.

Sep 16

It’s all about the Fed

Market Recap:

Stocks started and stayed in the Red for most of Monday as market participants worried about the implications of the Scottish Nationalist vote (voting to secede from the UK) and the upcoming FOMC meeting which kicks off on Tuesday morning. Market internals were a bit better than indexes indicated as 7 of the 10 sectors in the S&P ended in, albeit mild, positive territory. Technology, Healthcare and Consumer Discretionary shares were the big laggards, mostly on profit taking as these sectors have performed well this year. Commodities were mixed and the dollar strengthened slightly.

Looking Ahead:

It’s all about the Fed and what statements Chairwoman Yellen will make during Wednesday’s Press Conference. As the FOMC kicks off its two day meeting, the big question for astute investors is: How much weight will the committee members place on the strength of the global economy as a whole when considering US monetary policy? Should the Fed ignore or downplay the global impact of a change in policy by the US, investors can expect some modification in the interest rate guidance tomorrow. However, if the Fed believes that it must take into account the state of the global economy, the weakness in the Eurozone could temper action and keep their stance dovish. Today’s news from Germany and the UK along with the US Redbook report and Producer Price Index data are likely to be scrutinized for last minute economic hints. One thing is certain, tomorrow’s testimony by Janet Yellen and the arguments she will put forth will resemble those of the Indian Goddess Kali, who has 10 arms to be able to weigh arguments from all perspectives – hence the term on one hand, ….

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 and a great interview with Coach Schnellenberger (NFL and Collegial coach at Baltimore, Miami, Louisville). And don’t miss our Co-Portfolio Manager, Oliver Pursche, on CNBC this afternoon at 3:45 PM live from the floor of the New York Stock Exchange when he discussed our latest market outlook. Visit our website www.ggfs.com for details.

Sep 12

Data is Coming Into Focus

Market Recap:

It must be Ground Hog Day…. Stocks repeated Wednesday’s trading pattern on Thursday, starting the day lower before rebounding towards the end of the trading day to essentially close near flat. Sectors of the S&P were mostly higher, with Utility and Telecom shares outperforming, while healthcare stock underperformed. Commodities continued to weaken as oil hit a multi-month low and the stronger US Dollar pressured metals.


Looking Ahead:

Data is coming into focus on Friday and next week – Friday’s market moving data will include Eurozone Industrial Production, US Retail Sales, Business Inventories and Consumer Sentiment. Market participants will likely attempt to read the tea leaves to decipher how the Fed may interpret the recent mixed data and if Chairwoman Yellen will turn a bit more Hawkish at next week’s press conference. Specifically, investors are wondering if the Fed will remove the “for an extended period of time” phrase from their interest rate guidance. In our view, this question misses the point, as the more critical question is whether the US economy will continue to grow at its current pace and thereby help drive corporate earnings higher. If it does, then stocks should continue to rise – read our latest story in Forbes here: http://www.forbes.com/sites/investor/2014/09/11/ready-set-buy-why-the-sp-500-will-reach-2150-sooner-than-you-think/


Next Week’s Market Moving Events:

  • Monday: 8:30 AM Empire State Manufacturing Index, followed by the 9:15 release of Industrial Production data
  • Tuesday: The FOMC meeting kicks off, Producer Price Index is released, along with the Redbook report
  • Wednesday: The FOMF meeting concludes with the release of Fed minutes and Chairwoman’s conference at 2:00 PM. Consumer Price Index, Housing, and Mortgage Application data are reported.
  • Thursday: Housing Starts, Jobless Claims and the Philly Fed Survey are released
  • Friday: German Producer Price Index and the Atlanta Fed Business Inflation Expectations are released before the open, followed by Leading Indicators.

Make sure to tune in to Money Matters with Gary Goldberg this Saturday at 2:00 PM and Sunday at 11:00 AM on WOR 710 AM Radio to hear a great interview with PIMCO CEO Doug Hodge and our latest economic analysis and market commentary. Visit  www.ggfs.com for details. And don’t miss our President, Oliver Pursche, when he joins the CNBC team next Tuesday afternoon to provide our latest commentary and outlook.

Sep 11

Commodities Continued Their Pull-back

Market Recap:

Stocks started Wednesday on a down tick and stayed in negative territory for most of the day before rebounding and closing up about ¼%. A rally in Apple shares appears to have been the leader in the change in sentiment on Wall Street, although we suspect the “Buy on (any) dip” attitude is more likely the chief reason. Economic news was sparse, with the only meaningful report showing Mortgage Applications falling to a multi-month low. Commodities continued their pull-back as oil oversupply fears and a stronger dollar pressured metals and energy, while a mild fall season forecast including a benign Hurricane season expectation pressured agricultural commodities. Sectors of the S&P were mixed, with Technology shares performing best.


Looking Ahead:

European and Asian bourses are generally lower overnight, and U.S. equity futures are pointing to a lower open this morning. The 8:30 AM Jobless report and 9:45 AM Consumer Confidence reports are likely to impact early trading, however we believe that stocks will likely remain in a tight trading range as investors mull the current geopolitical risks while waiting for more impactful economic data next week – including the FOMC meeting and press conference by Chairwoman Yellen.

 

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 a great discussion with PIMCO CEO Doug Hodge and our latest economic and market analysis. Visit www.ggfs.com for details.

Sep 10

Continued Geopolitical Tensions

Market Recap:

In spite of a better than forecast JOLTS report markets sold off on Tuesday. Continued geopolitical tensions between Russia and Ukraine as well as ongoing violence in Iraq were the chief culprits. However, talk and misunderstanding of the consequences of a potential vote for independence by Scotland, whose voters are threatening to exit the United Kingdom (England, Wales and Scotland) dominated headlines, along with the new iPhone and iWatch releases by Apple.

While a potential breakup of the UK makes for great headlines and would prove somewhat troublesome for the UK, the economic ramifications are likely to be regional and have the most significant impact on Scotland and the British Pound. On a much more consequential note, the ongoing strength in the US dollar as well as the (temporary) oversupply of Oil are certainly weighing on markets. Moreover, hawkish statements by Fed Governor Evans, which drove Treasury Yields higher and a relatively weak three-year note auction, also pressured markets. All sectors of the S&P were lower, with Utilities and Telecom shares fairing worst and Consumer Staple and Healthcare shares outperforming.   


Looking Ahead:

As we mentioned in our weekly MarketWatch Column this Monday (read it here: http://www.marketwatch.com/story/the-market-in-a-minute-lack-of-data-could-boost-volatility-2014-09-08?link=MW_TD ) the absence of data releases this week would likely cause investors to over-focus on geopolitical events and thereby increase market volatility. With little in terms of economic data releases until Wednesday evening when Chinese data will be dispersed, expect a possible follow through on today’s market weakness.

 

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 and market commentary, along with a great interview with PIMCO CEO David Hodge. Visit www.ggfs.com for details.

Sep 09

Short-term Pull-back is Likely

Market Recap:

Stocks started the week off slowly and to the downside as six of the ten sectors of the S&P ended the day lower. Energy shares fell about 1 ½% as Oil and Gasoline futures fell. Commodities in general were lower, with Gold and Silver as well as agricultural commodities dropping nearly 1% on subdued inflation concerns and expectations of a mild fall weather season. The rising U.S. dollar also put pressure on metals.


Looking Ahead:

 

Tuesday’s Small Business Optimism Index and JOLTS (Job Openings and Labor Turnover Statistics) reports could be market movers, as there is little other material economic news being released this week. Based on the ongoing geopolitical tensions, we believe that a short-term pull-back is increasingly likely. However, we expect a relatively robust third-quarter earnings season and a strong fourth quarter, as such we will continue to favor historically defensive high-quality dividend paying stocks, while remaining nearly fully invested.

 

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 a great interview with PIMCO CEO David Hodge, as well as our complete market and economic analysis. Visit www.ggfs.com for details.

Sep 08

Investors Shunned Geopolitical News

Market Recap:

Volume may have been light and the advance / decline ratio wasn’t overly bullish, but none-the-less, the S&P 500 closed at a new record high on Friday as investors shunned geopolitical news and a mixed jobs report to drive stock prices higher. Most sectors of the S&P were higher, as were commodities, while Treasuries fell slightly and the dollar strengthened.


Looking Ahead: 

Market participants are focusing on slightly weaker than forecast Chinese data and rising geopolitical tensions to start the week, putting pressure on international markets and US equity futures. The economic data reporting schedule is relatively light this week, potentially causing increased volatility as investors become more focused on geopolitical events. While a mild pull-back is to be expected, we continue to be bullish and expect the upcoming third quarter earnings season to be constructive for stocks.


This week’s Market Moving Events:

·         Monday: U.S. Consumer Credit at 3:30 PM

·         Tuesday: Small Business Optimism Index at 7:30 AM, Redbook report at 8:55 AM and the U.S. JOLTS (Job Openings and Labor Turnover Statistics) Report at 10:00 AM

·         Wednesday: Mortgage Applications at 7:00 AM, Wholesale trade report at 10:00 AM, Chinese Consumer Prices and Producer Prices at 9:30 PM

·         Thursday: Jobless Claims at 8:30 AM, U.S. Quarterly Services Survey at 10:00 AM

·         Friday: US Retail Sales at 8:30 AM, Import Export Prices at 8:30 AM, Consumer Sentiment at 9:55 AM, and Business Inventories at 10:00 AM

·         Sunday 9/14: Chinese Industrial Production and Retail Sales

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 and market commentary as well as interviews with some of today’s most respected business leaders. Visit www.ggfs.com for details.

Aug 28

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 Co-Portfolio Manager, 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 www.ggfs.com for details.

Aug 26

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 Co-Portfolio Manager, 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 www.ggfs.com for details.

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