8/02 Jobs data big in week ahead, but no slam dunk for rate hike

Administrator - Sunday, 2 August 2015 06:23

Bored now! Earnings surprises just aren’t what they used to be
For publicly traded companies, beating earnings expectations just isn’t what it used to be.

Companies that have beat both earnings and revenue estimate this earnings season have seen their stocks jump just 1.5 percent on average, according to RBC’s market strategy team. That compares to an average rise of 1.9 percent.


Jobs data big in week ahead, but no slam dunk for rate hike
The July employment report in the coming week might in some ways be like a jump ball in the final minutes of a tied basketball game.

That’s because there’s an atmosphere of August madness around the final few pieces of data the Fed has left to consider, before it holds its rates meeting in September. Those would be first and foremost the July jobs report on Friday and the August employment report Sept. 4. Secondary to those would be retail sales and consumer price inflation data.

“I think we’ve moved into this environment where we’re super, super data dependent. The markets can’t figure out whether the Fed wants to go in September,” said Jens Nordvig, head of G10 currency strategy at Nomura. “We have to figure it out soon because we’re running out of data. There’s payrolls, and then retail sales, and I think after those two, the markets will come to a conclusion one way or the other.”

Economists expect 225,000 nonfarm payrolls, an unchanged unemployment rate of 5.3 percent and an increase in average hourly wages of 0.2 percent, according to Thomson Reuters.

Besides jobs, there are a few other important economic reports in the coming week, including auto sales, personal income and spending, and ISM manufacturing data, all on Monday. There are also dozens of earnings from such sectors as health care, insurance, media and consumer staples.

Stocks were higher in the past week, but relatively subdued when compared to the wild action in currencies, fixed income and commodities markets, where some of the drama was clearly tied to shifting rate hike expectations.

For instance, when Friday’s second-quarter employment cost index came in surprisingly weak, the dollar index plunged more than a percent before recovering. It also sent short-end rates lower, reversing the gains made by the two-year Treasury yield on a slightly hotter inflation print the day before. The two-year was yielding 0.66 percent late Friday, and had been as high as 0.75.

“If there’s a decent size surprise (in jobs), I think we could have something that easily surpasses (the dollar move) we saw today. This is really about whether the Fed is going to be able to go in September, or are they able to go later. It could lead to a big sentiment shift,” said Nordvig. “They almost have a window to go through. If they miss the window, there might not be any tightening at all.”

The odds of a September rate hike fell with the weak wage report, which showed the smallest gains going back to 1982. The Fed earlier in the week had assured markets it still wanted to boost rates this year, but that it was still watching the data in making its decision. The central bank also gave a nod to improving employment but it still has not seen the inflation it wants, though the Fed noted that it was “reasonably confident” inflation would move toward its 2 percent target.

“It looks like the week ahead is likely to give us this respite from thinking rates have to rise in the here and now … but by the time we get to next Friday, and we see another strong jobs report, that respite is likely to come to a close,” said Julian Emanuel, equity and derivatives strategist at UBS.

Economists in a CNBC survey were expecting a rate hike in September, by a slim majority, prior to the Fed’s meeting in the past week. “I think the probability of a September move is lower, but it ultimately hinges on the next two jobs numbers. If payrolls grow more than 200,000 and closer to 250,000, I think all else being equal, they will move in September,” said Mark Zandi, chief economist at Moody’s Analytics.

He said the Fed would want to see average hourly wages rise, but some economists say it’s not a condition of a rate increase.

7/23 Gold is in its worst slump since 1996

Administrator - Thursday, 23 July 2015 06:59

Gold is in its worst slump since 1996

So much for predictions that gold would spike to $2,000 an ounce. The yellow metal is in a deep slump. It’s down more than 40% from its 2011 peak and crashing back toward $1,000.


The slide just keeps getting worse. Gold has declined for 10 straight days. That’s the longest losing streak for gold since September 1996.

To put that into perspective, back then oil prices were fetching just $19 a barrel, New York Yankees rookie shortstop Derek Jeter was nearing his first World Series title and rap fans were mourning the death of Tupac Shakur.

So why is gold getting creamed? It comes down to three key factors: a strong U.S. dollar, China slowing down its gold purchases and little worry about inflation anymore.


7/20 Biggest OTC % Gainers/OTC % Losers /Top OTC Volume Movers:

Administrator - Monday, 20 July 2015 04:10

Biggest OTC % Gainers/OTC % Losers /Top OTC Volume Movers 7/20 close:

7/19 Doubling down on a summer correction

Administrator - Sunday, 19 July 2015 06:28

Doubling down on a summer correction
“Markets are constantly in a state of uncertainty and flux, and money is made by discounting the obvious and betting on the unexpected.” – George Soros

We just saw one of the most incredible rallies in recent history over the last few days, as the VIX index had its worst five-day percentage decline in history. Greece’s can has been kicked yet again, and we are back in the very familiar “vicious V” formation which has only benefited buy-and-hold investors as opposed to tactical asset allocators and risk managers — a pattern that has persisted since the small-sample period of 2013 began.

I maintain that the odds favor a summer correction and that the declines are far from over. Notice I say the “odds” here — I am not making a call on stocks, as a call assumes with 100% certainty that something is going to happen. Investing/trading is and forever will be a game of probabilities.

So let us for a moment take an objective look at the odds that favor a period of heightened volatility and stock-market declines ahead in the S&P 500 through the lens of the three award winning papers I co-authored on volatility, risk management, and conditions that favor a stock market breakdown.


Netflix and Google are streaming into overdrive
YouTube viewing hours, Netflix subscribers growing faster


What to watch for in IBM’s earnings
IBM expected to report adjusted EPS of $3.79, total revenue of $20.9 billion and software sales of $5.88 billion


Apple iPhone sales expected to key tech-sector earnings growth


The huge stock-market run-ups posted by technology companies reporting earnings in the past week have ratcheted up the pressure on the tech firms set to report quarterly results in the week to come, including Apple Inc.

Stocks finished higher on the week, with the tech-heavy Nasdaq Composite Index COMP, +0.91% screaming to a new closing high on the back of the massive earnings-related weekly gains by Google Inc. GOOGL, +16.26% GOOG, +16.05% and Netflix Inc. NFLX, -0.90% . The Nasdaq closed at 5,210.14 Friday after a 4.3% gain on the week.

The Dow Jones Industrial Average DJIA, -0.19% rose 1.8% for the week, as the S&P 500 Index SPX, +0.11% gained 3.3%.

More than one-third of the Dow 30 reports this week, along with more than 100 members of the S&P 500.

Apple AAPL, +0.86% , set to report results after the bell Tuesday, has become an earnings bellwether, especially in the tech sector.

Excluding Apple, the sector would be expected to see a 6% profit decline, rather than the 0.2% gain that’s being forecast, according to John Butters, senior earnings analyst at FactSet. That pronounced effect on tech-sector earnings appears firmly linked to a breakout in iPhone sales growth in 2014.


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.

Weekly Watch List

NASDAQ5115.38  chart-12.90  chart -0.25%

S&P 5002098.04  chart-5.80  chart -0.28%

SPY209.79  chart-0.71  chart -0.34%

GLD104.10  chart-0.83  chart -0.79%

ETSY20.50  chart-0.34  chart -1.63%

PPCH0.047  chart+0.003  chart +6.82%

GOOG631.21  chart+5.60  chart +0.90%

AMZN535.03  chart-1.12  chart -0.21%

AAPL118.44  chart-2.86  chart -2.36%

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