6/14 Fed meeting should leave a Final Four of dates for rate hike

Administrator - Sunday, 14 June 2015 08:06

Fed meeting should leave a Final Four of dates for rate hike
WASHINGTON (MarketWatch) — Federal Reserve Chairwoman Janet Yellen and most of her colleagues are insistent that they plan to raise interest rates this year. So markets will be focused on this week’s U.S. central bank’s policy meeting for clues about when the Fed will move.

Strong jobs and spending data since the beginning of June are not expected to be enough to bring about a rate hike at the meeting on Tuesday and Wednesday, economists said. That leaves only four policy meetings remaining after this week’s meeting for a move: July, September, October and December.

Fifteen out of 17 Fed officials penciled in a rate hike this year when they were last polled in March. A new survey will be released this week, and that overwhelming support for a move is likely to remain in place, said Kevin Logan, chief U.S. economist at HSBC.

Economists said they would be looking for any nudges or winks from the U.S. central bank that could confirm or alter their expectations of the timing of a rate hike.There will certainly be opportunities for the Fed to tip its hand.

On Wednesday, following two days of talks, the Fed will release updated economic forecasts, a “dot plot” of the projected path of rates, and a policy statement at 2 p.m., all capped off by a press conference by Yellen at 2:30 p.m..

Josh Shapiro, chief economist at MFR Inc, said he plans to ignore the chatter and focus on the dots, which represent the best guess of each of the five Fed governors and the 12 district bank presidents, of where interest rates should go based on their individual forecasts.

“The dots, there it is in black and white. That represents information,” he said.

Ellen Zentner, chief U.S. economist at Morgan Stanley, agreed, saying: “The so-called dot plot is extremely useful in providing short-term communication regarding the timing of liftoff.”

Zentner says the dot plot released following the June meeting will show the path of rate hikes “starts later and shifts lower” than the March chart.

6/11 GM been on some nice Vaca…

Administrator - Thursday, 11 June 2015 09:06

Retail sales surge in May, point to revived U.S. growth

WASHINGTON (MarketWatch) — Sales at U.S. retailers rose sharply in May and increased for the third straight month, suggesting that warmer weather induced consumers to spending more in the spring after a winter lull.

Retail sales climbed a seasonally adjusted 1.2% last month, the Commerce Department said Thursday. Auto dealers and gasoline stations posted the strongest sales, but most major retail segments saw healthy gains.

What’s more, sales in April and March were stronger than initially reported.

ScreenHunter_537 Jun. 11 09.05

The pickup in retail sales, which accounts for as much as one-third of all consumer spending, offers more proof the economy has regained momentum after contracting in the first quarter. Yet sales may have also been boosted by an early Memorial Day holiday that gave people an extended weekend in which to shop.

Consumers splurged on big-ticket items in May, when sales of new cars and trucks hit a postrecession high. Sales at auto dealers rose 2%.

The auto sector generates about one-fifth of all retail spending.

Sales also shot up 3.7% at gasoline stations — not a good thing for consumers — as the price of fuel crept higher. Still, prices at the pump are much lower compared to one year ago.

Even if autos and gasoline are excluded, retail sales rose a healthy 0.7%.

Sales at home centers such as Lowe’s LOW, +0.93%  and Home Depot HD, +0.20%   advanced 2.1%. Apparel stores got a 1.5% boost. And Internet retailers posted a 1.4% gain.

The only segment to report a decline was health and personal-care stores. Sales were also surprisingly soft at restaurants, where business has been quite brisk lately.

Over the past year, retail sales have risen at a mediocre 2.7% pace. Sales were a more robust 5.2% excluding gasoline during the same span, however.

5/31 June gloom looms for the stock market

Administrator - Sunday, 31 May 2015 07:28

June gloom looms for the stock market
Analyst sees any early-summer weakness as a buying opportunity


As bulls and bears continue to fight for control of the stock market, the winner could be decided by something as simple as a flip of the calendar: June has been the worst month of the year for stocks over the past decade.

But while bears could win the battle over the short term, bulls could still win the war, as history suggests the market could snap back sharply in July, according to data provided by MKM Partners market technician Jonathan Krinsky.

The market has been stuck in one of the narrowest trading ranges to start a year in its history, leading market watchers to believe it is getting ready to bust out, in either direction, sooner rather than later. Since the S&P 500 SPX, -0.63%  has averaged a 1.32% decline over the last 10 months of June, according to Krinsky, led by weakness in the financial sector, a selloff could be imminent.

The SPDR Financial Select Sector exchange-traded fund XLF, -0.89%  has lost more than 3%, on average, over the last 10 Junes, making it the by far the worst monthly performer of the key sector-tracking ETFs.


U.S. auto sales speed toward 17 Million
Hot sales in May could put the U.S. auto industry well on its way to delivering 17 million new vehicles this year–a level unseen since 2001.

On Tuesday, auto makers are expected to report May sales, and analysts are forecasting 1.59 million vehicles for the month. While that would be down about 1% from the same month last year, the result would still put the auto sales on pace for a seasonally adjusted annual rate of 17.3 million vehicles, based on the first five months of the year, according to market researcher Kelley Blue Book. An improving economy and Memorial Day deals are helping offset the recent uptick in gasoline prices, say auto analysts.

Most major manufacturers are expected to post slight declines in volume due to one less selling day for the month this year. Fiat Chrysler Automobiles NV could be the outlier here, as surging Jeep demand is expected to pull the auto maker’s year-over-year increase in sales to a streak of 62 months, according to Kelley Blue Book.

Whether sales will be able to keep up the pace for another seven months is a matter of debate among analysts, who are toggling between forecasts for the full year.

Some are predicting car sales to finish the year at 16.9 million, just shy of the 17 million bragging right. Others, such LMC Automotive’s Jeff Schuster and Kelley Blue Book’s Alec Gutierrez, say strong consumer enthusiasm leading into the second-half of the year could help the industry “reach the elusive 17 million-unit mark.”


Steady jobs growth best thing going for up-and-down U.S. economy


WASHINGTON (MarketWatch) — The one thing the U.S. economy unabashedly has in its favor is a boom in hiring.

So long as companies continue to hire at a steady clip — the U.S. has gained an average of 243,000 new jobs a month since 2014 — the economy is likely sidestep the occasional potholes that keep cropping up in its path.

Take the first quarter. The economy contracted by 0.7% in the first three months of the year, bludgeoned by harsh weather, falling exports, lower business investment and a dockworker’s strike.

Yet even though hiring also slowed, the U.S. has still added an average of 194,000 jobs so far in 2015. Economists say that’s more than enough to outstrip the increase in the working-age population and nudge the unemployment rate lower over time.

The week’s employment report for May is expected to produce another solid gain in jobs: economists surveyed by MarketWatch predict a 218,000 increase. The unemployment rate is likely to remain at 5.4%.

The employment report is the best single bellwether of how well the economy is doing. The official report on gross domestic product appears to have significant flaws and it’s generally viewed as more backward looking. Other indicators are too narrow in scope.

When companies increase hiring, however, they are making a firm bet that demand for their goods and services will continue to increase, or even accelerate. That appears to be the case in the second quarter. U.S. growth has rebounded in the spring and the economy is forecast to grow around 3%, the MarketWatch forecast shows.

Yet with the unemployment rate closing in on 5%, a growing number of analysts predict the pace of job creation will soon taper off, perhaps by the end of the year.

“You do need to expect employment growth to slow substantially over the next few years,” said Jeremy Lawson, chief economist of asset manager Standard Life Investments. “You can’t continue to get 200,000 to 250,000 jobs a month in an economy growing just 2% to 2.5% a year.”

The only way to sustain those kind of employment gains is through higher consumer spending that lifts annual U.S. growth much closer to its historic 3.3% average. But that in turn would require either businesses to boost wages, giving Americans the cushion to spend more, or households dipping into savings to go out to eat more and get that big HDTV they’ve been ogling.

More bullish economists pin their hopes on bigger increases in the size of paychecks after years of sluggish wage growth. They see hourly wages rising 3% or higher from the post-recession rate of 2%, as the tightening labor market forces companies to pay more to attract or hold onto talented workers.

5/26 S&P 500, Dow suffer biggest drop in 3 weeks

Administrator - Tuesday, 26 May 2015 07:10

S&P 500, Dow suffer biggest drop in 3 weeks
U.S. stocks sold off on Tuesday with the S&P 500 and Dow suffering their biggest one-day declines in three weeks. A sharp increase in the dollar spurred global investors to dump riskier assets such as equities and commodities, while driving them into havens such as Treasurys.

The S&P 500 SPX, -1.03% closed off 21.86 points, or 1%, lower at 2,104.20, with all 10 main sectors declining. The Dow Jones Industrial Average DJIA, -1.04%  dropped 190.48 points, or 1%, to 18,041.54, while the Nasdaq Composite Index COMP, -1.11%  ended the session 56.61 points lower, or down 1.1%, at 5,032.75.

U.S. markets were closed for Memorial Day on Monday.

The dollar  DXY, +0.00%  rallied on the back of the inflation data on Friday and hawkish comments from Federal Reserve Chairwoman Janet Yellen, warning that a rate hike is still in the cards for 2015.

Oil and gold prices tumbled on the dollar’s move, while Treasurys rose, sending the yield on the 10-year note down 7 basis points to 2.14%. A spike in the CBOE Volatility index VIX, +15.91% which measures implied volatility on the S&P 500, suggests investors are increasingly nervous about a possible pullback.


Gold futures settle at a more than two-week low
Gold futures finished lower on Tuesday, with upbeat U.S. data on new-home sales and consumer confidence helping to further strengthen the dollar and push prices for the metal to their lowest settlement in just over two weeks.

ScreenHunter_526 May. 26 19.09

Gold for June delivery GCM5, +0.01%  dropped $17.10, or 1.4%, to settle at $1,186.90 an ounce on Comex. The most-active contract hasn’t settled at a level this low since May 11.

July silver SIN5, -0.10%  lost 30.5 cents, or 1.8%, to end at $16.746 an ounce.

“The consumer confidence and U.S. home sales data were a real slap in the face if you are trading gold and hoping for the upside,” said Naeem Aslam, chief market analyst at AvaTrade.

Sales of new homes in the U.S. climbed 6.8% in April to an annual rate of 517,000, while consumer confidence in May rose to 95.4 from 94.3 in April. Orders for durable U.S. goods fell, but the core capital-goods number, which can be viewed as a proxy for business investment, climbed 1% in April.

The day’s mostly upbeat economic data provided support for the dollar DXY, +0.00% which helped to dull investment demand for gold. Commodities priced in dollars often trade inversely with the dollar, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies.

“Make no mistake—it is the strength in the dollar, which is the main denominator and this is impacting the price for both gold and oil,” said Aslam.

Meanwhile, Federal Reserve Chairwoman Janet Yellen’s comments have “really inflated the sentiment among dollar bulls, who are feeling very confident with their long position that the rate hike will finally take place this year,” he said.

Still, “technicals for gold are pointing for oversold signal, which could just may provide a little pause in this sell off or give us a mean reversion trade,” Aslam said.

In other metals trading, July platinum PLN5, +0.13%  fell $24.50, or 2.1%, to $1,124.10 an ounce, while June palladium PAM5, +0.03%  slipped $3.60, or 0.5%, to $780.40 an ounce.

5/17 Peter Schiff, more bullish than ever, sees gold headed to $5,000 an oz

Administrator - Sunday, 17 May 2015 02:47

Big retailers cap earnings season against backdrop of weak sales
Wal-Mart, Home Depot, Target report results


As some of the biggest U.S. retailers report earnings this week, investors will be comparing their results against recent lackluster retail sales figures during a light week of economic data ahead of the Memorial Day holiday weekend.

Stocks finished the week higher with the S&P 500 Index SPX, +0.08%  reaching a record high of 2,122.73 on Friday. Overturning a string of slight losses earlier in the week, the index finished up 0.3%. The Dow Jones Industrial Average DJIA, +0.11%  finished the week up 0.5%, and the Nasdaq Composite Index COMP, -0.05%  advanced 0.9%.

This week the last two components of the Dow 30 report quarterly earnings on Tuesday: Wal-Mart Stores Inc. WMT, +0.66%  and Home Depot Inc. HD, +1.26%

“Retailer numbers are going to be important,” said Paul Nolte, portfolio manager at Kingsview Asset Management. “Nationally they weren’t great so a lot of people are going to try to reconcile that with the companies reporting.”

While consumer spending in April won’t be reflected in earnings reports this week, growth in retail sales has been steadily dropping since the beginning of the year.

One of the management concerns most often cited this earnings season is that falling oil prices have done little to boost consumer spending, according to a recent Goldman Sachs note.

Of the 24 S&P 500 companies reporting earnings this week, half of them are retailers, including Target Corp. TGT, +1.64% Lowe’s Cos. LOW, +1.15% Gap Inc. GPS, +1.91% and Best Buy Co. BBY, -0.66%

The week will also see the release of minutes from April’s Federal Open Market Committee meeting, along with housing data and April’s Consumer Price Index.


U.S. economy more tortoise than hare

WASHINGTON (MarketWatch) — Maybe the U.S. economy will bounce back in a big way in the spring, but the early evidence is sorely lacking.

Let’s see. Retail sales were disappointingly flat in April. Consumer sentiment fell to a seven-month low. And industrial production fell for the fifth straight month.

Other than that, everything is hunky-dory.

ScreenHunter_518 May. 17 14.49

Don’t expect a batch of secondary reports this week to alter the picture. New home construction and sales of previously owned homes probably got a touch stronger in April as the industry heads into the prime spring-buying season. And layoffs around the country are likely to remain at a 15-year low, a sign that businesses do expect the economy to improve after nearly grinding to a halt early in the year.

Yet 3% annual growth appears as elusive as ever after a dismal 0.2% reading in the first quarter that will likely to revised to show contraction. The last time the U.S. grew 3% or more — the historical average is 3.3% — was 10 years ago, in 2005.

What’s going on?

The problems are easy to see. A stronger dollar has battered U.S. exporters, for one thing. Cheaper gasoline prices that are great for consumers have hit the fast-growing energy industry hard. Drillers have shed thousands of jobs and put off planned investments. And consumers and companies have generally been tightwads.

“Households and businesses have shown more restraint in their spending than we expected,” the New York Fed noted last week after slashing its growth forecast for 2015 and 2016.

As a result, the economy is on track to grow less than 1% in the second quarter, according to the most recent update of the Atlanta Federal Reserve’s gross domestic product tracker. The New York Fed, for its part, slashed its growth forecast for 2015 to 1.9% from a 3.5% estimate a year earlier.

Not everyone is convinced the economy is worse off, though.

Some experts, for instance, believe GDP suffers from inherent flaws that make it make ita less reliable indicator of growth. Joseph Bernstein, chief economist of AllianceBernstein, points out that it’s rare for the U.S. to experience contraction when the number of hours that U.S. employees work increases as it did in the first quarter.

“Something seems off,” he said.


Peter Schiff, more bullish than ever, sees gold headed to $5,000 an oz.

ScreenHunter_517 May. 17 14.44

Despite a ho-hum performance year to date for gold, Peter Schiff, chief executive officer at Euro Pacific Capital, is still betting on gold’s eventual climb to $5,000 an ounce.

Schiff’s persistent call is more than 300% higher than Thursday’s settlement at $1,225.20 an ounce on Comex, which marked the highest close for the yellow metal since mid-February.

Gold is roughly 3% higher year to date, but the precious metal seems light year’s away from the all-time highs near $1,900 reached in 2011.

Still, gold’s performance hasn’t been particularly exciting in recent months. Prices GCM5, -0.18%  tallied declines for the last three months in a row. They logged declines last year and the year prior.

Gold’s sluggishness makes Schiff’s dogged call on gold all the more notable.

Over the years, he’s reiterated his long-running gold-price forecast, which has yet to come to fruition. Lately, however, he’s sounding even more bullish.

“There really is no limit to how high gold prices can rise,” he told MarketWatch in a phone interview recently.

Hemming in gold and supporting the dollar DXY, -0.17%  is the “false perception” that the Federal Reserve will raise interest rates, claims Schiff, who is known for his criticism of the U.S. central bank.

U.S. economic data has been “awful” and despite that, the Fed hasn’t changed its stance, he said. “We got a lot of weak economic data in the first quarter” and it’s going to be a “very weak” second quarter.

The nation’s economic growth slowed to a crawl in the first quarter, with gross domestic product expanding by a meager 0.2% annual pace.

The Fed is still “posturing” as if it’ll soon raise interest rates, but it won’t, Schiff predicts.

“We’ll always have to do [quantitative easing] to offset the damage from the previous QE,” said Schiff, who argued that the Fed has made “mistakes” and has done a “horrible job” with monetary policy.

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