Friends

Market participants waited breathlessly for the Fed Minutes
today (not really), as stocks just drifted aimlessly until the release. Not
much changed after the release as stocks tilted quietly to the upside until the
close of the session. Basically, the Fed minutes indicated that most of the Fed
officials don’t see a likelihood that rates would need to be raised for the
rest of the year, but they did not rule it out completely. On the other hand,
contrary to recent market belief, the Fed officials did not indicate that any
rate cuts were likely for 2019. Of course, the Fed remains data dependent.

As for stocks, by the close the Dow Jones Industrial Average
was up 6 points to finish the day at 26,157. The S&P 500 was up 10 points
to close at 2,888. Gold was up $4 to trade at $1,312 per ounce, while oil was
up $.50 to trade at $64.48 per barrel WTI.

As recently mentioned, a few big banks kick off earnings
season on Friday as JP Morgan Chase and Wells Fargo get things started. Then,
next week we get releases from the likes of Goldman Sachs, Citi, Bank of
America, United Health, Pepsico, Morgan Stanley, American Express,
Schlumberger, Honeywell, Travelers, and Union Pacific just to mention a few.
Earnings season is going to be very interesting and very important. Stay tuned.

Have a nice evening everyone.

Jim

Friends

The jobs number was a little better than expected with
196,000 new jobs created in March, but not so strong as to cause concern among
market participants that the Fed might be tempted to rethink their dovish stance.
The unemployment rate remained at 3.8%, while average hourly earnings creeped
slightly higher and sits at a 3.2% gain year over year. The data was strong
enough to calm recession/slowdown fears, yet not too strong to stir inflation
fears (and Fed hawkishness).

Stocks reacted in a positive fashion with the Dow Jones
Industrial Average up 40 points for the day to close at 26,425. The S&P 500
was up 13 points to finish the day at 2,892. Gold was up $1 to trade at $1,296
per ounce, while oil was up $1.21 to trade at $63.31 per barrel WTI.

The economy appears to be in decent shape, the Fed is in a
dovish mood, and stocks are closing in on all-time highs. Quite a setup as we
head into earnings season. Stay tuned.

Have a great weekend everyone.

Jim

Friends

It was quite a nice start to the second quarter for the bulls as stocks rallied at the open and added to those gains as the trading session wore on. The rally was broad based with financials and industrials joining the party along with technology shares. Staples and other interest rate sensitive shares took a breather today as longer term rates ticked up a bit. All in all, the bulls seem to firmly hold the high ground as we move into the second quarter. Of course, the upcoming earnings season will begin to separate the men from the boys. Though we are going into this earnings season with muted expectations, rising share prices would actually make stocks more vulnerable to inferior earnings releases.

For the day, the Dow Jones Industrial Average was up 329
points to finish the day at 26,258. The S&P 500 was up 32 points to close
at 2,867. Gold was down $5 to trade at $1,293 per ounce, while oil was up $1.50
to trade at $61.64 per barrel WTI.

It is a busy week for economic data including today’s retail
sales number that was not good. Surprisingly, though, January’s lousy number
was revised quite nicely higher. The ISM manufacturing number was actually
pretty good. We’ll see durable goods tomorrow and ADP private payrolls, and ISM
non-manufacturing on Wednesday. Then, on Friday, we get the all-important
non-farm payroll number. Remember, last month’s jobs number was way less than
expected, so this week’s number will be extremely interesting. Early estimates
are for about 177,000 new jobs were created in March. Stay tuned, it’s going to
be a busy week.

Have a nice evening everyone.

Jim

Friends

After a terrible 4^th quarter of 2018 where we saw
that worst December for stocks since the 1930’s, market participants were the
recipient of a stellar 1^st quarter of 2019. After the Dow had tumbled
nearly 10 % just in December, highlighted by a 2.35% drop on Christmas Eve
alone, we saw the new year begin with a more than 2% drop on January 3^rd.
 Needless to say the psyche of investors was challenged at that point.
But, from that moment on stocks began to recover and over the next three months
we erased Decembers losses. We haven’t yet made it to new highs but at least
some of the bad taste left in the mouths of investors from Q4 2108 has been
washed away.

On this final trading day of the quarter, the Dow Jones
Industrial Average was up 211 points to close at 25,928. The S&P 500 was up
18 points to finish the day at 2,834. Gold was up $1 to trade at $1,296 per
ounce, while oil was up $.91 to trade at $60.21 per barrel WTI.

It was a great 1^st quarter for both stocks and
bonds, but as we look into the 2^nd quarter of the year we face some
challenges. The yield curve has inverted and economic slowdown appears to be at
hand. We will be entering an interesting earnings season over the next 30 days,
one that comes with lowered expectations and much angst. The Fed is firmly in
the dovish camp now, but that comes with concerns of its own with regards to
the Fed’s views about the economy going forward. But, as we have seen in recent
years TINA might come back in play, where stocks are the only game in town. For
now, let’s enjoy the quarter that is now in the books and be ready to get back
at it next week.

Have a great weekend everyone.

Jim

Friends

I half expected Fed Chair Powell to conduct his post FOMC press conference from an aircraft carrier donning a fighter jacket, while declaring “mission accomplished”. Indeed, the normalization of monetary policy has apparently been achieved – at least for now. Today, the Fed made it clear that they were done raising rates for the foreseeable future. Now, one could interpret their increased dovishness as concern that the economy is under pressure and is likely to slow as the year progresses. Whatever the case, market participants are left to decipher whether this is good for stocks (remember TINA) or is this a capitulation that spells difficult times ahead for equity investors.

As for today, stocks had been weak before the Fed statement due to President Trump’s China tariff comments, then rallied after the release of the statement, only to weaken once again in the last hour of trading. By the close, the Dow Jones Industrial Average was down 141 points to finish the day at 25,745. The S&P 500 was down 8 points to close at 2,824. Gold was up $7 to trade at $1,314 per ounce, while oil was up $1.09 to trade at $60.12 per barrel WTI. Bonds may have been the bigger story today with the 10 year Treasury note yield falling to 2.53%. Remember, the 3 month yield is 2.46%, so the yield curve is virtually flat, and getting flatter.

Another disappointing earnings report from Federal Express yesterday may be confirming a global slowdown, which would support the Fed’s more dovish stance. Anyway, the market now has the Fed firmly in a dovish stance which likely removes that headwind for stocks for some time. But, did the Fed flash an economic warning sign that would become a different headwind for stocks? Hmm.

Have a nice evening everyone.

Jim

Friends

The fifth time was a charm. After 5 tries since the 4th quarter of last year, the bulls finally penetrated the 2800 (2815 level to be exact) on the S&P, and were able hold it into the close. The economic data was mixed with consumer confidence and job openings stronger than expected, while the industrial production number was softer than expected. All this basically leads to the Fed being able to be “patient” with regards to monetary policy, but in the meantime the bulls can point to the fact that recession talk might have been premature.

As for today, by the close the Dow Jones Industrial Average was up 139 points to finish the day at 25,849. The S&P 500 was up 14 points to close at 2,822. Gold was up $6 to trade at $1,301 per ounce, while oil was down $.18 to trade at $58.43 per barrel WTI.

Despite the woes for Boeing, which weighed on the Dow, it was a good week for the bulls. Now that we have closed above 2815 on a daily and weekly basis, let’s see if the bulls have cleared a runway to the old highs of 2940 on the S&P. The FOMC meets next week, but we obviously don’t expect the Fed to change interest rates at this point. They might give us more clarity on the quantitative tightening (bond run off) program, which could add to the overall dovish tone that the Chair has exhibited recently. We’ll let you know how things play out next week. Stay tune.

Jim

Friends

10 years ago today (actually March 9^th 2009) in the midst of the great financial crisis, stocks finally bottomed after a more than 50% drop in a year and a half. At that moment it was the second more than 50% drop in the stock market in less than 10 years. I had been through the crash of October 1987 (at Merrill Lynch at the time), and the dot.com bubble bursting bear market which began in early 2000, but without a doubt the financial crisis bear market of 2008 and early 2009 was the worst period of time in my 34 years in the business. It really wasn’t about the stock market in 2008, it was more about the survival of the financial system. When liquidity disappeared, stocks were the only liquid game in town, and thus were under relentless selling pressure for months. In 2000, the dot.com craze pushed stocks to unsustainable levels. The subsequent downturn was a stock market event. But, not 2008 and 2009. Stocks were reasonably priced at the time. Unfortunately real estate was not.

This daily update was born in October of 2008. In an attempt to keep lines of communication open with our clients, at a time when no one really knew what was unfolding and what the future held, we decided that the only way to keep everyone informed and up to date on a daily basis was with an email. It would be impossible to talk to everyone every day, so this was our alternative. Well, as we found out, it became a comfort to our clients to hear from us each and every day, and though we didn’t necessarily have any answers, at least we kept them informed about what was going on. And, there was a lot going on. The Fed, Congress and the President all were grasping for answers, but solutions seemed difficult to agree upon. In the end, we got through it all and the S&P 500 is now more than 4 times higher than it was on March 9, 2009. Along the way, our clients seemed to enjoy the daily updates even when we weren’t in time of crisis, and thus I still try to write an update every day. I hope you continue to enjoy them.

As for today, stocks slumped after a surprisingly weak jobs number, but recovered most of those losses in the last hour of trading. Sure, the unemployment rate fell to 3.8% and wages continue to climb, but 20,000 new jobs was way lower than expected. Again, January’s number was way higher than expected, so averaged out the numbers seem about right.

For the day, the Dow Jones Industrial Average was down 23 points to close at 25,450. The S&P 500 was down 5 points to finish the day at 2,743. Gold was up $13 to trade at $1,300 per ounce, while oil was down $.57 to trade at $56.09 per barrel WTI.

We’ll leave it there for today. Let’s see what next week has in store for us.

Have a great weekend everyone.

Jim