GDP sags, BOJ surprise, Amazon pops, Ford gets pricey, and Goldman is still playing the ponies. Financial Review by Sinclair Noe for 04-28-2016   DOW – 210 = 17,830 SPX – 19 = 2075 NAS – 57 = 4805 10 Y -.02 = 1.84% OIL + .70 = 46.03 GOLD + 20.60 = 1267.40   The US economy grew 0.5% in the first quarter, the slowest pace in 2 years. Economists had forecast the economy expanding at a 0.7 percent rate in the January-March period after growing at a 1.4 percent pace in the fourth quarter. While consumers eased up slightly on spending, business investment fell sharply, stung by lower outlays on equipment and infrastructure like factories and drilling rigs. Almost all sectors of the economy weakened in the first quarter. Households have been frugal, cutting back on big purchases; saving their modest wage gains and paying down debt. Income at the disposal of households after accounting for taxes and inflation increased 2.9 percent in the first quarter after rising 2.3 percent in the prior period. Savings rose to $712 billion from $678 billion in the fourth quarter. Businesses continued to place fewer orders for goods in the first quarter, accumulating $60 billion worth of inventory, down from $78 billion in the fourth quarter. A sustained plunge in energy sector investment undermined business spending. The first-quarter results reinforced what has become something of an annual economic rite in recent years – a weak first quarter, followed by optimistic predictions that a ...

FOMC no change, June still on the table. It looks like the fix is in on oil. Remember Greece? Drug companies addicted to prices. Financial Review by Sinclair Noe for 04-27-2016 DOW + 51 = 18,041 SPX + 3 = 2095 NAS – 25 = 4863 10 Y – .07 = 1.86% OIL + 1.29 = 45.33 GOLD + 2.50 = 1246.80   Today is a Fed FOMC day. As expected, the Fed left its benchmark interest rate unchanged at 0.25% to 0.50%. No surprise. Markets were pricing in a 0% chance of a rate hike today. With no news conference from Fed Chair Janet Yellen and no economic projections, the focus was on the wording of the Federal Open Market Committee’s statement. The Fed said the labor market had improved but there were still signs of a broader economic slowdown. Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft. The Fed removed language about the risk from global markets.  Inflation is still expected to rise toward 2% over the medium term. The bottom line is that a rate hike is on the table for the June 15 FOMC meeting. The initial market response was dollar up, stocks and bonds down, but that faded. The dollar index slipped, bonds closed higher and stocks recovered.   There is one notable development since the FOMC’s last meeting: oil prices have started to recover again. This morning West Texas Intermediate futures traded ...

Time now for another edition of, “What you need to know about basic economics”. Today, we look at liquidity. Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it. Liquid assets are cash, cash equivalents and other assets that can be easily converted into cash (liquidated). In the case of a market, a stock or a commodity, the extent to which there are sufficient buyers and sellers to ensure that a few buy or sell orders would not move prices very much. Some markets are highly liquid (such as cash); some are relatively illiquid (such as a collection of rare, old books). With an illiquid instrument, trying to buy or sell may change the price, if it is even possible to transact. Stocks are generally considered liquid but we have seen instances when share prices drop instantly – and price is an important component of liquidity. You may not like the price in question, and so you need to gauge whether to trade at that price or not.  Also, sharp swings in share prices can result in trading halts. Liquidity risk is the risk that a company or bank or even individuals may be unable to meet short term financial demands. This usually occurs due to the inability to convert a security or hard asset to cash without a loss of capital and/or income in the process. For example, banks need to hold enough to cover expected demands from ...

Markets calm ahead of FOMC decision. Apple chopped. Financial Review by Sinclair Noe for 04-26-2016 DOW + 13 = 17,990 SPX + 3 = 2091 NAS – 7 = 4888 10 Y + .03 = 1.93% OIL + .45 = 44.49 GOLD + 5.40 = 1244.30 The Federal Open Market Committee started a two day meeting today. No change in policy is anticipated at the meeting. The credit markets are mixed, although the thirty year Treasury bond futures are down for seven days in a row. The U.S. dollar is lower and most other currencies are higher as traders believe the pace of Federal Reserve rate hikes is slowing. The lower dollar has provided a boost to oil prices, which have climbed in the face of bad news. The Federal Reserve will certainly be considering oil prices as a component of inflation. The Fed began pulling back on its efforts to stimulate growth back in May 2013, when then-Chairman Ben Bernanke said that the central bank would likely begin to reduce the bond-buying known as quantitative easing; clearly the thinking was that we were getting close to the Fed’s target of 2% inflation, but that didn’t happen. The Fed has missed its inflation target, badly. The Fed might be well advised to hold off on any rate increases until the target is hit or even surpassed.   The CME Group’s FedWatch Tool, indicates a 0% probability of a rate increase in April and a 23% probability of a rate increase in ...

Closing numbers and economic news, including: FOMC plus earnings on tap; Saudis try to end oil addiction; M&A news; free burritos and Area 120 startups. Financial Review by Sinclair Noe for 04-25-2016 DOW – 26 = 17,977 SPX – 3 = 2087 NAS – 10 = 4895 10 Y + .02 = 1.90% OIL + .26 = 42.90 GOLD + 5.70 = 1238.90   The Federal Reserve FOMC meets this week to determine monetary policy; they are not expected to raise interest rates this week, however they might set the stage for a rate hike in June. Earlier this month, Fed Chair Janet Yellen said the U.S. economy was on a solid course with some hints of inflation, so the Federal Reserve was on track for further interest rate hikes. First quarter GDP, to be released on Thursday, is expected to slump to a paltry 0.7% annual rate from a 1.4% rate in the last three months of 2015. It might be tough for the Fed to sound hawkish if it is followed by a weak GDP report.   Traders are also keeping an eye on the outcome of a Bank of Japan meeting on Thursday, with expectations that Japan could push deeper into negative interest rate territory.   Investors have been assessing first-quarter earnings, FactSet just released its latest update of earnings season stats for S&P 500 companies. And the numbers are pretty bad; 76% of companies have beaten analysts’ estimates, but the aggregate earnings decline is -8.9%. That’s actually worse ...

Sinclair Noe interview Duncan Clark, author of “Alibaba: The House That Jack Ma Built” For more info on the book, click the banner:

The closing numbers, economic news, and a look at the most important financial story of our time. Financial Review by Sinclair Noe for 04-22-2016   DOW + 21 = 18,003 SPX + 0.10 = 2091 NAS – 39 = 4906 10 Y + .02 = 1.89% OIL + .55 = 43.75 GOLD – 15.80 = 1233.20   Most of the session, stocks were in negative territory, and as expected, Alphabet and Microsoft kept the Nasdaq in the red. The stock market hit a wall today. After a rally that pushed the Dow above 18,000 and the S&P 500 above 2100 – close to record high, we have now hit resistance. And we are about to move into May. Remember the old wisdom: sell in May and go away. For the week, the Dow added 0.6 percent, the S&P 500 gained 0.5 percent and the Nasdaq lost 0.6 percent. Oil gained about 11% on the week.   Investors withdrew $7.3 billion from stocks in the week to April 20, the largest outflows in nine weeks, while continuing to shovel money into corporate and emerging market debt. The equity redemptions were led by $4.2 billion of outflows from U.S. stocks and $2.6 billion from Japan.   Caterpillar reported first-quarter earnings that were weaker than forecast, and lowered its expectations for the rest of the year. The company warned in March that its sales and earnings would drop amid low commodity prices, weak demand and the strong dollar.   McDonald’s reported first-quarter earnings of $1.23 per ...

ECB holds on to ultra-loose policy, earnings season, strange moves in commodities, VW will pay for un-clean diesel, nobody invests anymore. Financial Review by Sinclair Noe for 04-21-2016   DOW – 113 = 17,982 SPX – 10 = 2091 NAS – 2 = 4954 10 Y + .02 = 1.87% OIL – .71 = 43.47 GOLD + 3.70 = 1249.00 The European Central Bank held its key interest rate at 0% and its deposit rate at negative -0.40%. European Central Bank President Mario Draghi brushed off German criticism of his ultra-loose monetary policy and vowed to use all the tools at his disposal for “as long as needed”. He said the ECB’s policy was working, which helped boost the euro. Draghi also stepped up his calls on euro zone governments to help get the region’s economy on a more solid footing through fiscal policy and more ambitious reforms.   According to a poll of over 1,000 American adults, even with the Dow Jones industrial average near its record high, only slightly more than half of Americans (52%) say they currently have money in the stock market, matching the lowest ownership rate in Gallup’s 19-year trend. Although Americans in all income groups are less likely to have stock investments now than before the Great Recession, middle-class Americans have been the most likely to flee the market. Nearly three in four middle-class Americans, with annual household incomes ranging from $30,000 to $74,999, said they invested money in the stock market in 2007. Today, only ...

Home sales, earnings reports, bad car companies, and the latest from SCOTUS. Financial Review by Sinclair Noe for 04-20-2016 DOW + 42 = 18,096 SPX + 1 = 2102 NAS + 7 = 4948 10 Y + .07 = 1.85% OIL + 1.43 = 43.90 GOLD – 6.00 = 1245.30 The S&P 500 hit an intraday high of 2111.05 today, less than 2% away from the 2134 all-time high, last May.   Purchases of previously owned U.S. homes rose more than projected in March. The National Association of Realtors reports contract closings climbed 5.1 percent to a 5.33 million annualized rate from February’s 5.07 million. The median price of an existing home rose 5.7 percent from March 2015 to reach $222,700. The median time a home was on the market decreased to 47 days from 52 days a year earlier. Meanwhile RealtyTrac reports Americans who sold homes in March realized the highest price gains since December 2007. On average, homeowners sold for $30,500 more than their purchase price, an average 17% price gain.   China’s Shanghai Composite Index fell the most in almost two months, closing 2.3 percent lower, having fallen as much as 4.5 percent during the trading session, with no obvious news driving the decline. The MSCI Asia Pacific Index was little changed, with small gains in Japan where the Topix index closed 0.2 percent higher.   Japan had its biggest surplus in more than 5 years. Japan announced a trade surplus of 755 billion yen in March, the largest since October 2010. However, ...

Stocks climb, discounting weak earnings. Still waiting on the Fed, and more Panama Papers names. The heat builds. You deserve a break. Financial Review by Sinclair Noe for 04-19-2016 DOW + 49 = 18,053 SPX + 6 = 2100 NAS – 19 = 4940 10 Y + .01 = 1.78% OIL + 1.30 = 41.08 GOLD + 17.80 = 1251.30   The Dow Industrial Average closed above 18,000 yesterday for the first time since last July and the rally continued today, although the Dow lost about half its early gains. The S&P 500 topped the psychologically key 2,100 level this morning. We’re not far from the record highs of last May; a couple of strong days and we’re there. China looks stable, at least today. The Eurozone is preparing for more stimulus from the ECB in its battle against deflation. Oil prices are rising. Analysts are predicting earnings for the first quarter will decline anywhere from 8% to 10% and it appears that weak first quarter corporate earnings are almost fully discounted. Share prices are going up. This is when you should get nervous.   After the close Monday, IBM posted results that beat on both the top and bottom line. However, they did not raise full-year guidance. Netflix also disappointed with lower-than-expected subscriber growth for the second quarter. IBM was down 5% today, and Netflix lost almost 13%, which was a major drag on the Nasdaq.   Early morning reports include Goldman Sachs posting first-quarter earnings dropped 60 percent from a year ago, the ...