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2Q GDP Report Lifting Stocks

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      The domestic equity markets are rebounding from yesterday's late-day slide as Russia was slapped with further sanctions from the West, aided by a stronger-than-expected rebound in 2Q U.S. GDP output. Meanwhile, traders are awaiting this afternoon's monetary policy decision from the Federal Reserve. In other U.S. economic news, ADP reported a smaller-than-anticipated rise in private sector job growth, while mortgage applications declined. In earnings news, Dow member American Express topped the Street's earnings expectations and Express Scripts bested quarterly … [Read more...]

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    by Larry Levin   The markets took a dive Tuesday afternoon after the decision to sanction Russia's largest banks (and ban trading and capital markets access). This clearly has ramifications for the global financial system's stability given the increasingly inter-connected nature of the world. According to Bloomberg: About 74 percent of foreign banks’ claims on Russia originated from Europe in the first quarter, according to the Bank for International Settlements. French banks had the most claims ($47 billion), followed by the U.S. ($27 billion) and Italy … [Read more...]

Interpretation

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      by Larry Levin   After the morning dump, the market came back with the typical low volume, algo driven melt-up. While the economic news was bad (a decline in June existing home sales) and the geo-political situation continued to deteriorate, things weren’t bad enough to warrant new all-time highs, just a mostly positive close. With the VIX below 13, clearly there is not a care in the world! It will take more than a powder keg in the Middle East and the most tense US –Russian relations in years to spook these markets. So what economic data do … [Read more...]

Equities Pare Gains as EU Agrees to Further Russian Sanctions

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      The U.S. equity markets have pared gains but remain modestly higher in afternoon action, with exacerbated geopolitical concerns as the European Union agreed to impose further sanctions on Russia partially offsetting some upbeat earnings and economic data. Dow member Merck & Co topped the Street's quarterly expectations, while U.S. Consumer Confidence jumped to the highest level since October 2007. Meanwhile, traders are awaiting tomorrow's monetary policy decision from the Fed, along with the first read on 2Q U.S. GDP. Treasuries are mixed, with a separate … [Read more...]

More Bubbles

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      by Larry Levin   Is the market properly priced, overpriced, or in a real bubble? According to John Hussman, http://www.hussmanfunds.com/wmc/wmc140728.htm, it is the latter. Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is … [Read more...]

Equities Seeing Pressure Ahead of Heavy Dose of Data

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    The domestic equity markets are moving to the downside in late-morning action, amid lingering geopolitical concerns, and as the Street is bracing for another busy week from the earnings calendar. Also, throughout the week, the domestic economic calendar is set to deliver the July nonfarm payroll report, the Fed's monetary policy decision, and the first look at 2Q GDP. Meanwhile, U.S. releases today showed pending home sales unexpectedly fell and growth in business activity slipped, while expansion in regional manufacturing activity accelerated. Treasuries and the U.S. dollar … [Read more...]

Stockman

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      by Larry Levin   David Stockman recently penned an article "This Time is Not Different" that was interesting in light of the daily new highs in market indices, despite amazingly low volume and amazingly high apathy (read: zero volatility). All charts in the following text can be found here http://davidstockmanscontracorner.com/this-time-is-not-different-why-the-market-is-heading-for-a-fall/ The 2008 Wall Street meltdown is long forgotten, having been washed away by a tsunami of central bank liquidity. Indeed, the S&P closed yesterday at … [Read more...]

Housing Report Dissipates Stock Market’s Sails

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      After gaining ground in early action following some upbeat business activity reports out of China and the eurozone, as well as an unexpected drop in U.S. jobless claims, the domestic equity markets have pared their advance and are mixed in late-morning trading. Stocks lost steam following a sizeable miss in June U.S. new home sales, possibly dampening optimism about a reacceleration in the housing market during the second half. Meanwhile, another heavy dose of earnings reports is fostering a mixed reaction, with Dow member Caterpillar posting divergent results and … [Read more...]

Unintended Consequences

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      by Larry Levin   You can’t keep a resilient market down. Sure, it seemed early on in the trading day that the markets were finally pricing in the geopolitical S#%T storm. But a midday rampfest erased much of the earlier losses. Sound familiar? Speaking of familiar, once again we see misguided foreign policies by intervening governments yielding unintended consequences. From Zero Hedge: • "Considering that the services industry probably kept expanding, seasonally and workday-adjusted gross domestic prodIt is no secret that the gist of … [Read more...]

Stocks Gaining Ground Following Flood of Earnings Reports

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      The domestic equity markets are moving higher in early action, with relatively subdued geopolitical concerns helping stocks rebound from yesterday's declines. Meanwhile, the Street is digesting a plethora of corporate earnings reports, highlighted by Chipotle's stronger-than-expected results, while Dow member McDonald's Corp's performance missed analysts' forecasts. Treasuries are mixed ahead of a read on U.S. housing sales, while a separate report showed domestic consumer price inflation rose inline with forecasts, though core consumer prices came in cooler than … [Read more...]