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).

Trading Deck Image2

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.

Aug 25

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

Aug 22

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 www.ggfs.com for details.

Aug 21

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 www.ggfs.com for details.

Aug 19

Strong rally as geopolitical tensions

Market Recap:

Stocks kicked off the week with a strong rally as geopolitical tensions between Russia and Ukraine eased and word spread that Kurdish soldiers had secured a large portion of land surrounding Iraq’s largest dam, effectively pushing back ISIS and greatly reducing the risk of the terrorist group blowing up the dam and flooding several major cities located along the Tigris river. More significantly, from a fundamental perspective, economic news was positive with home builder confidence rising more than forecast, and corporate earnings continued to impress. While investors remain nervous of a looming correction, we believe that any such event is likely to be short-lived. Watch our Monday afternoon discussion on Fox Business here:

Fox Business


Looking Ahead:

Equity futures are pointing to a higher open on Tuesday morning after European and Asian bourses followed through on Monday’s rally in the U.S. In addition to economic data, market participants are preparing to dissect speeches from major Central Bankers later this week, as they meet for the annual meeting at Jackson Hole. In our view, investors should temper their expectations as it is unlikely that any new news will be revealed from the conference.

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 www.ggfs.com for details.

Aug 18

Markets could experience additional volatility this week

Market Recap:

Stocks were volatile but generally higher last week, as investors concerns over geopolitical events were pitted against relatively strong economic data and better than forecast earnings reports. For the week, the S&P climbed just under 1%, with most sectors in positive territory.


Looking Ahead:

With earnings season coming to a close, and with the seasonally light trading volume, markets could experience additional volatility this week. None-the-less, while geopolitical events and the upcoming Central Banker’s meeting at Jackson Hole will provide for some good headlines, market fundamentals should support a further rise in stock prices. Don’t miss our President, Oliver Pursche, when he joins Liz Claman this afternoon at 4:00 PM on Fox Business Network to provide our full market outlook and economic analysis. And make sure to tune into Money Matters with Gary Goldberg this Saturday at 2 PM and Sunday at 11 AM on WOR 710 AM Radio to hear our complete economic and market analysis. Visit www.ggfs.com for details.


This Week’s Market Moving Events:

Monday: U.S. Housing Market Index

Tuesday: Housing Starts, Consumer Price Index, Goldman Same Store Sales, 2 day FOMC meeting begins

Wednesday: MBA Mortgage Applications, FOMC Minutes

Thursday: European inflation data and consumer sentiment figures, U.S PMI Manufacturing, Jobless Claims, Philly Fed Survey, Existing Home Sales and Leading Indicators

Friday: No major economic reports

Aug 15

Stocks climb out of the gate

Market Recap:

Stocks climbed out of the gate on Thursday and after a choppy first hour of trading settled to close up about 1/3%. Biotech stocks continued their rebound and led markets higher, as most sectors of the S&P gained ground. Energy shares fell, as did oil and gasoline prices after Russian President Vladimir Putin made reconciliatory statements towards Ukraine and the recent U.S. military strikes in northern Iraq slowed and in some instance reversed the progress the terrorist group ISIS was making in the region.

We also wanted to share a nice note from Art Cashin, Director of Floor Operations on the NYSE for UBS:

On this day in the year 1900, American and European forces broke through Chinese lines around the Imperial City of Peking (now Beijing).  They freed hundreds of terrified non-Chinese hostages and thus broke the back of the “Boxer Rebellion”.

History books will tell you that the original anti-foreign rebellion in China was sanctioned by the Dowager Empress and driven by the secret “Society of the Harmonious Fists” (Boxers – get it!).  While those facts are true, the real facts are more ironic.

What is not widely known is that The Boxer Rebellion may have started somewhat by accident in America.  According to some reports, about a year or more earlier, a bunch of hard drinking reporters were sitting around exchanging their frustrations that the “event du jour” had failed to appear.  How could they meet their deadlines?  Being good journalists, who needed the meager paycheck, they agreed to do the obvious thing – - make up a story.

But it had to be a good story.  And it also had to be a lulu. But these guys were pros.  So they invented a story that wealthy Americans and Europeans were planning to buy, dismantle and transport the Great Wall of China.  What the hay — it was fun — it met the deadline — it sold papers.  But somehow the story, short-lived in America, reached China.

There, Nationals were inflamed.  Word of mouth spread the story that foreigners wish to rape our heritage and national treasures. Hostility turned to aggression and then became the Boxer Rebellion.

To celebrate stop by the “Front Page” and have a few extras.  And try to keep a straight face when one of the regulars tells you that reporters only report the news they don’t shape it.


Looking Ahead:

Earnings keep rolling in and most widely held stocks have reported second quarter earnings – generally pleasing investors as bottom lines grew just over 10% year-over-year, ahead of expectations.  As such, market participants will be more focused on geopolitical events and economic data – which will likely translate into increased volatility over the last 2 (unofficial) weeks of summer. In spite of the increasing volatility, we continue to see the market as remaining in a relatively tight trading range, and it is expected to rise further once we pass the Labor Day holiday weekend. On the geopolitical front, while the crisis in Ukraine appears to be waning a bit, the situation in Iraq and now parts of Pakistan (they are not neighbors and the frictions are unrelated) are escalating and require additional vigilance.

Tune into Money Matters with Gary Goldberg this Saturday at 2 PM and Sunday at 11 AM on WOR 710 AM Radio to hear our complete economic and market analysis. Visit www.ggfs.com for details.

 

Aug 14

Volatility back to the forefront

Market Recap:

Investors shrugged off a slightly disappointing July retail sales report, instead focusing on positive earnings and the improving economic environment. Stocks climbed out of the gate on Wednesday, ending the day near their highs – up over ½%, with the NASDAQ climbing just over 1%. All sectors of the S&P were higher with Technology and Health Care shares gaining most, and Telecom and Utilities underperforming. Treasuries were mostly flat, while commodities were mixed.


Looking Ahead:

International data as well as a plethora of earnings reports could bring volatility back to the forefront on Thursday as investors will be forced to focus their attention on Europe as Eurozone GDP and German GDP data are released before the open. One potentially offsetting factor to expected weak data from Europe will be the US Jobless Claims figures set to be released at 8:30 AM. With some 200 small-cap stocks reporting tomorrow, including long-beleaguered J.C. Penney, expect increased volatility in the Russell 2000. That said, our general view is that markets are behaving very rationally at this time. Given the onslaught of geopolitical strains over the past few weeks, the recent sell-off is logical. More significantly, markets have not reacted to any of this news and investors remain focused on economic data and corporate earnings data – which we view as positive and encouraging regarding our bullish outlook for the rest of the year.

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 Radio to hear our complete economic analysis as well as our ongoing market commentary. Visit www.ggfs.com for details.

Aug 13

Stocks vacillated near flat

Market Recap:

Stocks vacillated near flat for most of the day, as a lack of news ahead of Wednesday’s deluge of data and earnings kept many market participants on the sidelines. Sectors of the S&P were mostly lower as Financials and Telecom shares were the only sectors in positive territory. Commodities were mostly lower as well, while bonds rallied slightly. Trading volume was light across all asset classes.


Looking Ahead:

Market participants will digest economic data from Japan, which gets released later Tuesday evening, as well as Chinese Industrial Production and German GDP data all before Wednesday’s market open. U.S. retail sales and business inventories are the key U.S. reports being released, while several widely-held companies, including Cisco, Deere, and Macy’s report earnings.

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 for a special discussion regarding the importance of removing emotions from your investment decision process. Visit www.ggfs.com for more details.

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