Jul 31

Rate Hike Comes Sooner Than Expected?

Market Recap:

Market participants received some encouraging news early Wednesday as economic data showed the US economy growing by 4%, significantly above the 3.2% estimate, during the second quarter. However, given the sharp adjustments to GDP data in the past, many investors remained pessimistic that the final read will be this strong. Moreover, the strong data and a somewhat mixed message Fed policy statement by Chairwoman Yellen during her testimony at 2:00 PM caused some to speculate that a rate hike could come sooner than forecast. Lastly, market participants also contended with the possibility that Argentina would default on its bond payments, which could cause a broader sell off in its currency and emerging markets as a whole. Sectors of the S&P were mixed, with the interest rate sensitive Utilities sector falling most and Consumer Discretionary shares rising most on the better GDP data.


Looking Ahead:

Earnings continue to roll in and mostly impress investors, who are likely to be distracted by the overnight bond-default by Argentina. This marks the second default in 12 years for the South-American nation, as it failed to negotiate a repayment deal with a group of hedge-funds who purchased the bonds at a steep discount years ago. While these events will create some turmoil in currency markets and make for great headlines, they are unlikely to cause a broader impact on developed markets in North-America and Europe. Once this headline crisis passes, market participants will likely refocus their attention on fundamentals, which primarily revolve around economic strength and corporate earnings – both of which are solid at this stage.

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 complete market and economic analysis, as well as a great interview with Nobel Laureate and MIT Finance Professor Dr. Robert Merton. Visit our website www.ggfs.com for details.

Jul 30

Expect a Relatively Muted Session

Market Recap:

Slightly disappointing earnings and nervousness ahead of Wednesday’s GDP release caused markets to drift lower on Tuesday. Volume and volatility were muted ahead of a busy reporting day, with most sectors of the S&P declining – Telecom shares were the only gainers for the day. Commodities were mixed, while Treasuries remained flat as the Ten-Year Yield remained below 2.5%.


 

Looking Ahead:

Stocks are set to get a boost from much better than forecast second quarter GDP data, which showed the economy growing at 4% while observers expected a 3.2% gain. We expect a relatively muted session until mid-afternoon when the FOMC releases its meeting minutes at 2:00 PM and Chairwoman Yellen briefs reporters and market participants on the Fed’s view of the economy. While we do not expect any new language in the minutes, we do view a rising probability of increasing dissent amongst committee members regarding the appropriateness of the current policy and when the Fed should begin raising rates.

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 complete economic analysis, a great interview with MIT finance professor and Nobel Laureate Robert Merton, as well as our ongoing market commentary. Visit www.ggfs.com for details.

Jul 28

Investors Are Holding Their Breath

Market Recap:

It was a rough start of the week, as the Dow Jones Industrial Average dropped by nearly 100 points before rebounding and ending the day near flat for the day. M&A activity continued as its recent torrid pace, with online real-estate company Zillow announcing it would acquire rival Trulia for $3.5 billion and retailer Dollar General announced their intention to acquire Family Dollar Stores. Oil and Gold were flat for the day, as were Treasuries, with the Ten-Year yield remaining below 2 ½%. Sectors of the S&P were mixed, with Utilities having a very strong day, while economically sensitive shares, such as industrials, fared worst.


Looking Ahead:

Investors are holding their breath ahead of a slew of corporate earnings reports, the busiest week so far, as well as Wednesday’s release of second quarter GDP and Fed Chairwoman Yellen’s testimony after the 2 day FOMC meeting. So far, corporate earnings have been robust, rising 8.3% from Q1 – and up an astounding 10% excluding financials. Politics and geopolitics continue to weigh on investor sentiment, as the rising tensions in Ukraine as well as the Obama’s administration focus on “tax inversion” are raising concerns.

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, when we discuss the latest economic data releases, the impact of the Q2 GDP number being released on Wednesday, as well as having an in depth interview with MIT Finance Professor and author of “America’s Retirement Crisis” Dr. Robert Merton. Visit www.ggfs.com for details.

Jul 24

The Current Market Environment

Market Recap:

Strong earnings drove stocks to new highs as Facebook shares soared on much better than forecast earnings. Shares of International Paper (IP), Yahoo (YHOO), and IBM (IBM) were also among market leaders. In spite of the positive earnings momentum and encouraging economic news, which showed jobless claims falling to a 9 year low, markets reversed course in the afternoon to close with small losses. Word that the Obama administration, one of Wall Street’s favorite ever, was working on a plan to close a tax loop hole that allowed companies to move their headquarters overseas and pay lower taxes – so called Corporate Inversion – unnerved some already jittery investors. We talked about the current market environment with MarketWatch Radio’s Chief Correspondent Larry Kofsky this morning – listen to the interview here:

Sectors of the S&P were mixed, with industrials underperforming and consumer staples outperforming


Looking Ahead:

More earnings and economic news releases are on tap on Friday. Generally speaking, we continue to expect a relatively strong earnings season with continued positive economic news. However, as has been the case in the last few months, we expect markets to take a “two steps forward, one step back” trading pattern. The Durable Goods order report being released at 10:00 AM will be the most meaningful data point ahead of the weekend and next week deluge of economic releases.

Don’t forget to tune into Money Matters with Gary Goldberg this Saturday at 2 PM and Sunday at 11 AM to hear a great interview with S&P Capital IQ’s Sam Stovall, our latest economic analysis, and a discussion about why markets are trading at all-time highs, in spite of the current geopolitical turmoil in the world. Visit www.ggfs.com for details.

Jul 24

Exceeding Earnings Expectation

Market Recap:

Stocks were mixed on Wednesday, as market participants weighed strong earnings against a slightly disappointing Mortgage Origination report. Boeing and Apple both impressed, helping drive the S&P 500 to a new record high. The Dow Jones did lose a small fraction of a percent as Consumer and telecom shares fell. Sectors of the S&P were mixed, with the aforementioned industrial sectors falling, and healthcare shares climbing most. The dollar strengthened against major currencies, while commodities were generally higher.


Looking Ahead:

AT&T reported weaker than forecast earnings on Wednesday afternoon, while Facebook had an impressive quarter. So far, about ¾ of the companies that reported have exceeded earnings expectation – a trend that will hopefully continue on Thursday as both earnings reports and economic data will be plentiful. Expect market participants to pay particular attention to Home Sales data, which is being released at 10:00 AM.

Make sure to tune into Money Matters with Gary Goldberg at 2:00 PM on Saturday afternoon, and 11:00 AM on Sunday to hear our complete economic analysis and market commentary. Visit www.ggfs.com for details.

Jul 23

Stocks Rebound Tuesday

Market Recap:

Stocks rebounded on Tuesday, as strong earnings lifted investor’s spirits and fears of increasing violence between Israel and the Palestinian Territories as well as in the eastern region of Ukraine ebbed. The traditionally defensive Consumer Staples and Utilities sectors were the only losers for the day, with Technology, Energy and Health Care shares advancing most. Commodities were generally higher, while Treasuries sold off slightly on stronger than forecast economic data.


 

Looking Ahead:

Earnings continue to roll in on Wednesday, starting with PepsiCo which reported earnings ahead of expectations this morning. On the economic front, Mortgage applications rose more than expected, although mostly on refinancing activity as opposed to home purchases. As of 7:30 AM equity futures are pointing to a higher open, following international bourses which are generally higher.

Don’t forget to tune into Money Matters with Gary Goldberg on Saturday afternoon at 2, and Sunday morning at 11 to hear our complete economic analysis and market commentary, as well as a great interview with S&P Capital IQ’s Sam Stovall. Visit www.ggfs.com for details.

 

Jul 22

Economic Data & Earnings Heat Up

Market Recap:

Global bourses sold off on Monday as investors grew more and more anxious over the violence in Gaza and the rising geopolitical tensions between the world and Russia after the downing of Malaysian Airlines Flight MH 17. The Dow fell as much as 130 points before rebounding to close with relatively minimal losses. Sectors of the S&P declined, while commodities generally strengthened and Treasuries rallied with the benchmark Ten-Year yield falling below 2.5%. So far, earnings have impressed investors, keeping a floor underneath an otherwise shaky market.


Looking Ahead:

Economic data and earnings heat up on Tuesday, with Japanese all Industrial Index and U.S. Consumer Prices being released before the open, followed by the U.S. Redbook report, Home prices, Existing Home Sales, and the Richmond Fed Manufacturing Index. On the earnings front, Altria (MO), Apple (APPL), The Coca Cola Co (KO), Harley Davidson (HOG), Kimberly Clark (KMB), McDonalds (MCD), Microsoft (MSFT), Prologis (PLD), United Tech (UTX) report earnings on Tuesday.

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 complete analysis of how the events in Ukraine and between Israel and the Palestinian territories will impact global markets, as well as a discussion on this and other critical subjects with S&P Capital IQ’s Sam Stovall. Visit www.ggfs.com for details.

Jul 21

This Week’s Market Moving Events

Market Recap:

As we wrote and expected in the beginning of last week, market participants largely ignored geopolitical events and focused on earnings instead. However, the downing of Malaysian Airlines flight MH 17 by (apparently) Russian separatist in Ukraine may shift this dynamic over the coming days. More significantly from a market perspective, corporate earnings reports and earnings calls have been robust and positive so far, pushing stocks to new all-time highs.


Looking Ahead:

Earnings heat up for BJ’s, Mr. Softy, and HOG… while it will be a busy reporting week, there is also plenty of economic data to be digested. So far, markets have ignored geopolitical events, which I expect to continue over the coming week or two. However, I do expect market participants to tune into economic news more than they have in previous weeks. The “Be long or be wrong” moniker by market bulls may be running on thin air in the coming weeks. While a significant correction is unlikely, the air is getting thinner and prudent portfolio management rules indicate caution.


 

This Week’s Market Moving Events:

Monday: German PPI before the open, followed by the Chicago Fed National Activity Index. Halliburton (HAL) and Netflix (NTFX) report.

 

Tuesday: Japan all Industrial Index and U.S. Consumer Prices before the open, U.S. Redbook, Home prices, Existing Home Sales, and the Richmond Fed Manufacturing Index. Altria,, Apple (APPL), The Coca Cola Co (KO), Harley Davidson (HOG), Kimberly Clark (KMB), McDonalds (MCD), Microsoft (MSFT), Prologis (PLD), United Tech (UTX) report

 

Wednesday: Mortgage Applications, Eurozone Consumer Confidence, U.S. Petroleum Reserves, Chines Flash PMI Manufacturing and Japanese PMI (after 9:30 PM). ATT (T), Boeing (BA), Clear Channel home of our weekly radio show (CCO), Crown Castle International (CCI), Down Corning (DOW), Facebook (FB), Norfolk Southern (NFS) PepsiCo (PEP), and Tupperware (TUT) all

 

Thursday: Eurozone and German PMI, U.S. Jobless Claims and Consumer Comfort before the open, plus New Home Sales, Kansas City Fed Manufacturing Index, and Japanese CPI date are reported. 3M (MMM), Bristol Meyers Squibb (BMY) Caterpillar (CAT), Elli Lilly (ELY), Ford (F), General Motors (GM), Leggett & Platt (LEG), Raytheon (RTN) and Starbucks (SBUX) report earnings.

 

Friday:  TGIF (not the restaurant chain)…. U.S, Durable Goods at 8:30 AM and Tyco (TYC) report.

 

Make sure to tune into Money Matters with Gary Goldberg this Saturday and Sunday on WOR 710 AM Radio to hear our complete economic analysis and ongoing market commentary. Visit www.ggfs.com for details.

Jul 17

Earnings Continued to Impress Investors

Market Recap:

Earnings continued to impress investors after the close Tuesday and ahead of the open on Wednesday. Moreover, increased merger activity – or at the very least proposed merger activity – lifted investor’s moods, along with a relatively robust Beige Report, which showed the economy growing at a moderate pace. Energy and Technology shares led markets higher, while the Healthcare and Financial sectors declined. Bonds and commodities also rallied on Wednesday, as investors bet on a modestly improving economic environment that will still require very low interest rates and Central Bank intervention.


Looking Ahead:

Earnings, earnings, earnings… that’s what will drive the market. In our view, market participants have clearly shifted into the “bullish” camp, believing that the combination of better economic data and strong earnings will not change overall monetary policy – in other words, the market is likely to keep climbing until some form of bad news turns the tide; i.e. geopolitical news and headline risks are unlikely to derail the bull-market.

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 complete economic analysis and our ongoing market commentary. Visit www.ggfs.com for details.

Jul 16

Fed Chairwoman Begins Two Day Testimony

Market Recap:

Market activity was muted on Tuesday, as investors held off on making significant portfolio moves ahead of critical earnings reports from Intel (INTC), Goldman Sachs (GS), CSX Corp (CSX), and Johnson & Johnson. Sectors of the S&P were mostly higher, with financial shares leading the charge after a strong report by JP Morgan (JPM) before the market open. Consumer Staple shares underperformed as market participants appear to be betting that earnings growth will be more robust than initially thought. Generally, we agree with this thesis, as there has been very little negative pre-reporting and full-year guidance for earnings has been rising. Separately, Fed Chairwoman Janet Yellen began her two day testimony in front of the Senate Banking Committee, known as the Humphrey Hawkins testimony. Little new information was revealed during the discussions so far. However, Dr. Yellen did indicate that she was growing more concerned with asset bubbles and “stretched” valuations in various sectors of the market. In spite of the cautionary comments, stock trading remained benign and uneventful. Treasuries dropped slightly, and commodities were also mostly lower.


Looking Ahead:

Earnings reports were generally positive after the close of trading on Tuesday, setting the stage for a positive open on Wednesday. On the earnings front, Abbott Labs (ABT), Bank of America (BAC), Black Rock (BLK), EBay (EBAY), and Yum Brands (YUM) are among the widely followed companies reporting on Wednesday.

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, a great interview with the original producer of the Tonight Show, as well as our ongoing market commentary. Visit www.ggfs.com for details.

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