Skip to comments.Investment & Finance Thread (May 26 edition)
Posted on 05/26/2014 3:43:48 PM PDT by expat_panama
Last week we were going on about the fact that since stock indexes have been flat for so long that we needed to focus on sectors --here are the top ytd sectors (from here) --
-- and (hat tip to Lurkina.n.Learnin) this link shows a daily 'heat map' of most sectors listed by alpha. We always hear a lot about how the 'big boys' always seem to have more info but imho lack of info is not the problem anymore. These days we're drowning in info and the task we got is making sense of it all.
This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our--
Open invitation continues always for idea-input for the thread, this being a joint effort works well. Keywords: financial, WallStreet, stockmarket.
The "evening before" ping...
Hope you’re having a good Memorial Day.
Now if some one could tell us which will be the top sectors or the NEXT quarter or two, that would be very helpful.
Past performance is o little use for future investing.
Thank you —you’re very kind and likewise. What’s amazing is I’m visiting my kids and I just got back from NASA where one of ‘em is beginning work as a robot engineer. My smile muscles may never recover...
true, we keep having to deal with the fact that we're forced to drive down the freeway while only being able to see out the rear window --and the only reason we keep looking out it is because it's the only window we got...
You’re very blessed.
“stock indexes have been flat for so long that we needed to focus on sectors”
I would predict a topping pattern. Best sectors - BOND funds
H S Dent says future investments should be in emerging markets and India.
That’s awesome. He picked a good field to go into. Automation and robotics will take him a long way into the future.
India already jumped 8% this week after Mr Modi elected Prime Minister.
Whoa, things happening today! Futures in general are off but STRONG for stock indexes. (Good morning btw --awkward day to oversleep.) Reports today include durable orders & consumer confidence w/ lots of other stuff throughout the week (GDP Wed.). News:
- World stocks mostly higher on US optimism HONG KONG (AP) World stocks mostly rose Monday on optimism about the U.S. economy, hints from China about further stimulus and hopes for greater stability in Ukraine after its elections. Associated Press
- Why stocks are being held back from a big breakout The three main U.S. stock benchmarks are finally positive for the year, and the S&P 500 closed Friday at a record above 1,900. So where are the rally caps?
- This is a huge sign the markets aren't healthy The market is making new highs on the backs of fewer and fewer stocks. And, there may be other big problems as well.
- Krugman Warns ECB Panel World's Central Bankers Have It Wrong Bloomberg - 27 minutes ago Speaking to a gathering of the European Central Bank's top researchers and policy makers, the Nobel Laureate said the ECB and other banks around the world need to raise the inflation targets they have clung to since the 1990s.
- Young people open to alternative banking A Google or Walmart bank would be attractive to a large slice of young consumers, according to a survey that also shows almost four in 10 people aged between 18-34 would switch to a bank without a physical ...
Durables +0.8% vs -0.7% estimate
Defense capital goods orders climbed 39% in March, leading the headline reading higher. Computers shipments were also up double digits at 10%. Nondefense aircraft and parts orders fell most at -4.1%.
Here’s the full rundown:
Headline reading: 0.8% Consensus: -0.7% March revised: 3.6%
Ex-transportation: 0.1% Consensus: 0.0% March revised: 2.9%
Nondefense capital goods orders: -1.2% Consensus: -0.3% March revised: 4.7%
Nondefense capital goods orders ex-aircraft: -0.4% Consensus: -0.2% March revised: 2.1%
U.S. markets will be closed for Memorial Day.
Durable Goods (Tues): Economists estimate orders fell 0.7% in April following March’s 2.6% jump. Nondefense capital goods orders excluding aircraft a proxy for business investment is estimated to have declined by 0.3%. “Boeing orders shifted lower in April following a very strong March,” noted Credit Suisse economists. “This should drive headline orders into negative territory. We expect a 0.5% gain in ex-trans, slower than Marchs 2.1%, but still consistent with an improvement in 3-month momentum (see Exhibit 2). The investment components core capital goods orders and shipments should get plenty of focus, as equipment capex was a sour spot for the economy in Q1.”
S&P/Case-Shiller Home Price Index (Tues): Economists estimate prices climbed 0.7% month-over-month in March or 11.8% year-over-year. “Looking ahead, we expect home price appreciation to slow as valuations continued to get stretched,” said BofA Merrill Lynch economists.
Markit US Services PMI (Tues): This services index registered at 55.0 in April. “May manufacturing measures maintained momentum,” said UBS’s Kevin Cummins.
Consumer Confidence (Tues): Economists estimate the Conference Board’s index of sentiment climbed to 83.0 in May from 82.3 in April. “The preliminary reading of the University of Michigan consumer sentiment declined in early May,” noted Nomura economists. “However, higher equity prices and lower initial jobless claims this month suggest that consumers might be more optimistic in May.”
Richmond Fed Manufacturing Activity (Tues): Economists estimate this regional activity index slipped to 4 in May from 7 in April.
Dallas Fed Manufacturing Index (Tues): Economists estimate this regional activity index declined to 9.0 in May from 11.7 in April.
GDP (Thurs): Economists estimate Q1 GDP growth was revised down to -0.6% from an earlier estimate of 0.1%. Here’s Goldman Sachs’ Jan Hatzius: “The first-quarter disappointment has resonated among economists and market participants for two reasons. First, it brings to mind the 2011 precedent, and more broadly the repeated downside surprises on growth in recent years. Second, it comes in the wake of the debate around secular stagnation that was kicked off by the speech by Lawrence Summers at the November 2013 IMF research conference. If the US economy cannot accelerate to a clearly above-trend pace even after the end of the private and public sector retrenchment at a time when monetary policy and financial conditions still look very supportive, then it is certainly appropriate to ask whether the forces holding the economy back are deeper and more structural in nature. In that sense, it is really ‘showtime for the recovery’ ... “
Initial Jobless Claims (Thurs): Economists estimate claims fell to 320,000 from 326,000 last week. “Still, first filings over the last three months have averaged 320,000, providing little information about the direction of the labor market,” said Citi’s Peter D’Antonio. “In contrast, the story for beneficiaries has been unambiguously better. We forecast another drop in this figure, which would keep the insured rate at 2.0% for a fourth week. Since the beginning of the year, continuing claims have fallen by more than 200,000 and recent readings point to further improvement in the labor market ahead.”
Pending Home Sales (Thurs): Economists estimate pending sales climbed 1.0% in April. “We look for pending home sales, which track signed contracts on single-family homes, condos, and co-ops, to rise 2.0% m/m in April to 96.2,” said Barclays’ economists. “Factors in our forecast are MBA applications for purchase, which rose 4.7% on the month, and buyer traffic in the NAHB home index, which rose to 32 in April from 31 in March. Improvement in both inputs is likely driven by better weather, and suggests upward momentum.”
Personal Income And Spending (Fri): Economists estimate income climbed 0.3% and spending increased by 0.2% in April. “Personal spending surged 0.9% [in March], partially due to the implementation of the Affordable Care Act (ACA), which fueled health-related spending as enrollees piled into the exchanges,” noted Wells Fargo’s John Silvia. “The weather-related rebound and higher spending on healthcare likely are not sustainable.”
Chicago Purchasing Managers Index (Fri): Economists estimate this regional PMI fell to 60.0 in May from 63.0 in April. “April showed sharp increases in the employment, new orders, and production sub-components, and the Philadelphia Fed and Empire State indices also showed gains in May,” said Barclays’ economists. “Taken together, these factors suggest that the April rise was backed by solid underlying fundamentals and should favor a strong print in May.”
Univ. of Michigan Confidence (Fri): Economists estimate the final print of this sentiment index climbed to 82.8 in May from 81.8. “An improving labor market should contribute to improved financial conditions and expectations for consumers,” said BofA Merrill Lynch economists. “Businesses have pointed to increased sales and expectations for continued improvement in business conditions. Unfortunately, weak wage growth, increasing food and gas prices, and a declining saving rate may drag on consumers assessments of their respective financial situations. The slow-to-recover housing market is likely still weighing on consumers as well.”
I may even have to buy something today...
ANALYST: If There Isn’t An Economic Boom, Then There Can’t Be An Economic Bust
Oppenheimer’s investment research team is out with its latest market strategy note, and the firm’s current mantra: “No boom, no bust!”
It’s an optimistic take on lackluster global growth.
From Oppenheimer’s John Stoltzfus (emphasis theirs):
“It is our opinion that the Federal Reserve (as well as the ECB) is less likely to take a misstep in anticipating a change of rates so long as the Fed and the ECB maintain the level of vigilance that they have had in place over the past few years since the Great Crisis... We believe that a slow growth environment coming out of the Great Crisis is best for the economy, the markets, and their respective constituencies. It is our opinion that a modest expansion is preferable to a boom anytime as every boom we can recall in the last three decades has led to a bust of some kind. ‘No boom, no bust!’ is our mantra for now.”
The note comes after meetings with investors in the U.K. and Europe, which the firm said reflected “nearly universal” acceptance by investors that international markets are interconnected and interdependent.
“Ironically, this acceptance among investors has arrived at a point when political leaders in Asia, particularly Russia, China and Japan appear to be embracing with increasing fervor nationalist and regionalist objectives with regard to trade, border and mineral rights disputes,” said Stoltzfus. Read more about those stories here and here.
Interesting, I was just about to mention that while we got S&P this AM poking an all time high, it's only up less than half a %. Very stodgy growth here. I'm glad I did my screening/watchlist homework yesterday because I'll be needing it...
April 2014 U-6 unemployment rate is 11.8% BLS and 16.6% Gallup
Labor participation rate worst in 35 yrs
Real wages stagnant if not falling
% part-time work rising
% full-time work falling
People/families getting food stamps at record highs
People receiving federal disability at record highs
Other than a few warm spots, all housing except super-rich anemic at best
Minorities unemployment rate very high (for legal workers)
Recent grads can't find good jobs, if at all
Many graduates crushed by high college debt
Many young adults work part-time & live w/ parents/relatives
Unbelievably, new housing & car loan bubbles already being pushed
Illegal immigrant/underground economy steady or rising
Retail/service stagnant or falling
General inflation higher than the official rate
Inflation for necessities even higher
Bernake (now Yellin) phony bucks, called QE
0bamacare raising costs, killing jobs
General medical costs up
Most construction slow to sporadic at best
Overall energy costs still too high
Businesses strangled by excessive regulations
Small business start-ups anemic
Stock market/bank money not "trickling down"
And like that NYC guy said "The rent is too damned high!"
....A partial list of things holding Americans down....
We’ve talked about it on this thread a bunch but the fiscal and regulatory forces exerted on business is the leading cause of slow growth. Growth is just being choked off by the government. All those things you list are the symptoms of that disease.
For the masses, they can't "manage" a slow modest expansion or control 'boom' growth or insulate from recession or smooth out the bumps or anything else.
What they can usually do is generally insure that the connected wealthy and politicos and the big banks and investments firms will prosper in all economic conditions.
You know, I used to think this was conspiracy theory BS. But man is it true. And it's true for ALL politicians. GOP is just as guilty as the Dems. It's also true for executive and board compensation. The game is rigged by the players. They are all in on it together. I've seen way too much of it to dismiss it.
I have a cousin who is an electrical engineer and he works on black projects and has a security clearance. When my uncle comes to town and tells us about it he grins from ear to ear and I imagine his smile muscles have a difficult time recovering as well.
We have follow through,,,, finally.
Yeah, and here I am packing for a couple days of travel. Ah well, I’ll just quick buy a bunch of stuff and check it Monday. What could possibly happen?
First the news:
05/27/2014 07:08 PM ET - The Nasdaq and S&P 500 gave bullish signals Tuesday, putting the market on a confirmed uptrend. The Nasdaq climbed 1.2% in higher volume. The gain was sufficiently large to make it a follow-through a confirmation of a long-attempted rally started on April 15. It's unusual for a follow-through to hatch so late...
--and it seems we got this morning's futures consistant w/ our new direction. Back to life in the fast lane. fwiw, Mortgage Index today & GDP w/ claims tomorrow. Other stories:
All this exuberance is really starting to scare me. Tulips anyone?
Yes, sir, that’s always been the way of it. But that’s the way the crumbs get dispersed to us little people.
Some people spend their crumbs week-to-week on instant gratification trinkets. Us saver-type worker bees plan for the future with savings and investments, frequently anchored by a home and/or property. This is all good until our overlords decide to alter the economic matrix to benefit themselves and I’m faced with increasing inflation and a devaluing savings account, as I am now. Or my home investment is treading water if not under it, etc.
I’m not concerned with my condo’s appraisal, as I paid cash for it and I expect to die in it. I’m “in the market” with my 401k and that’s enough for me, the savings money will sit and hopefully will only slightly lose value. I’ve got three years until SS retirement age and my health is only so-so, but I am hoping to have a few ‘golden years’ ahead of me.
Healthcare (and my health) and a totally frigged world economy could change all that. Oh, yeah, and the coming ice age, if it arrives quickly and comes on hard. No one knows yet what the timing or the severity will be but it will happen pretty soon, so say the solar scientists.
If they are correct, I’ll enjoy watching the global warming charlatans squirm but all in all, I’d rather forego that small pleasure and have the world not get considerably, and perhaps a lot, colder.
That’s great, congrats to you and your kid!
Top of the new day to all! Metal futures this AM are off but stock futures are up a bit after yesteday's "mild retreat". Should be more excitement today w/ GDP, claims, home sales, crude & gas inventories. Morning reading:
- Japan Retail Sales Dives Over Tax Increase Israel Diamond Portal - 4 hours ago After Japan increased consumption taxes for the first time in 17 years, retail sales in the country decreased by 13.7% in April, month-over-month, a record drop.
- World stocks lackluster ahead of US growth update Businessweek - 4:09am MUMBAI, India (AP) - World stock markets were mostly down Thursday ahead of U.S. government reports on jobs and economic growth. Expectations the data would paint a mixed picture of the world's biggest economy instilled caution among investors.
- Shares flirt with record highs on ECB easing bets Reuters - 3 hours ago LONDON (Reuters) - Global shares flirted with an all-time peak on Thursday while German bond yields held at the lowest levels in a year on bets the European Central Bank would unveil new stimulus measures next week.
- What's Going On With Gold?Gold's price fell to a nearly four-month low Tuesday, but good luck getting strategists to agree on why. To Deutsche Bank's Jim Reid, the Tuesday gold selloff -- which sent the most actively traded futures contract in New York down 2% -- is about improving U.S. economic data. It's also, per Reid, Barrons.com
NYSE Morning Update:
Ahead of the Bell: Dow futures are trading up 14 points and S&P futures are trading up 2 points. Expectations of monetary easing by the European Central Bank is driving global shares higher. Investors are betting that the ECB will unveil new stimulus measures in the form of interest rate cuts and new long-term cash for banks to lend to small and medium-sized firms. According to reports, ECB policy officials have opened the door to a rate cut, effectively charging banks to hold cash at the central bank’s overnight facility. Bond markets around the globe have pushed yields to the lowest levels in a year on growing evidence central banks can keep stimulating economic growth without igniting inflation.
On the economic calendar today, a second reading of first quarter GDP will be out before the market opens, it is forecast to be -0.5% compared with 0.1%. Weekly jobless claims will also be out before the opening bell and its expected to be 317K versus 326K for the week prior.
Yesterday, stocks fell on speculation the US economy shrank 0.5% last quarter, following a preliminary estimate of 0.1% annualized growth.
The dollar is up against the Japanese yen and down against the euro and the British pound. Gold is trading at $1,252. Crude oil is currently trading at $102 a barrel.
On CNBC this morning, Ken Langone, Co-founder of Home Depot and Chairman, President, and CEO of Invemed Associates, Inc., discussed the pulse of the consumer. Langone said there is no inflation but the economy is not strong. All this talk about a robust economy, Langone said he is not seeing it. The housing rental market is booming because people cant afford to buy a house; the younger generation is renting. Banks are facing a tremendous amount of regulation. He added this is the price we will pay for this insanity of regulation on businesses.
1Q GDP -1.0% 2nd revision
They missed that initial number by a Missouri mile.
Yep. Worst quarter since 2011.
Bill Bennett’s show just reported that the 1st Qtr. GPD was revised downward to -1%. I think most of us were expecting that.
Haha, I see you guys were already all over that! :)
As soon as I saw the initial 1st qtr. GDP at 0.1%, I suspected they had reported it that way so as to avoid reporting a negative growth rate.
lol...no inflation? Sounds like Kornball Kenney hasn't been to the grocery store lately.
Of course Obama’s DOL would not lie to us !!! /s
If you have alternate data please provide.
I’m sure you have seen the “up huge this year” charts. Just thought I would show the long run.
Wells Fargo’s take:
Where Is the Growth?
There is clearly more to the economys unexpected weak start to 2014 than the harsh winter weather that hit the east coast earlier this year and a reduction in inventory building. While both factors are apparent in the data, we are hard pressed to find much encouragement in this report. Real final sales rose at just a 0.6 percent pace and final sales to private domestic purchasers, our preferred measure of final demand, grew at just a 1.5 percent annual rate, both are 0.1 percentage points less than initially reported. Moreover, the recent shortfall in growth is not a short-term phenomenon. Real GDP growth has averaged just a 2.2 percent pace since the recession ended five years ago, which is about a third short of what was seen in previous recoveries. Final sales to private final domestic purchasers
had been rising closer to its long-term norms before the recent slowdown.
From a technical standpoint, consumer spending was a bright spot in the first quarter, with outlays rising at a seemingly respectable 3.1 percent pace. Most of that growth, however, came from services outlays, which were
driven primarily by the implementation of the Affordable Care Act that boosted payments for health insurance. While this growth does reflect actual activity, the timing reflects the political calendar and not the economys underlying momentum. Without the bump in healthcare
outlays, consumer spending would have risen at just a 2.1 percent pace and real GDP would have tumbled at a 2.0 percent pace. That would have been a pause that truly depressed overall economic growth.
There were a few tepid areas of activity. Consumer spending on durable goods rose at a 1.4 percent pace during the quarter, which was actually nearly twice the initial estimate, and spending on nondurable goods rose at a 0.4 percent pace, which was better than the initially reported 0.1 percent gain. Both are meager gains, however, and were helped out by a surge in spending in March, when the weather improved. That rebound did not carry over into April, as retail sales data for that month were discouraging.
Business fixed investment was also disappointing during the quarter. The revised figures show a smaller decline in equipment outlays than first reported, but spending for private nonresidential structures fell at a 7.5 percent pace, compared to an earlier reported 0.2 percent rise.
If there is a saving grace in the GDP data it is that inventories grew much less than first reported, rising by $49 billion instead of the initially reported $87.4 billion. The moderation in inventory building sliced 1.6 percentage points off of first quarter growth, which was nearly a percentage point more than first reported. Inventories are now much better aligned with final
demand and should present less of hurdle to GDP growth going forward. The only question mark is final demand, which appears to still be firmly on the slow growth track.
No WT, just anecdotal personal experience. Another thing I have notices is that manufactures are hiding the inflationary issue by shrinking packages. I wonder how that factors into apples to apples comparisons when it comes to inflation data.
How are CPI prices collected and reviewed?
Each month, BLS data collectors called economic assistants visit or call thousands of retail stores, service establishments, rental units, and doctors' offices, all over the United States, to obtain information on the prices of the thousands of items used to track and measure price changes in the CPI. These economic assistants record the prices of about 80,000 items each month, representing a scientifically selected sample of the prices paid by consumers for goods and services purchased.
During each call or visit, the economic assistant collects price data on a specific good or service that was precisely defined during an earlier visit. If the selected item is available, the economic assistant records its price. If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, eggs sold in packages of ten when they previously were sold by the dozen) of the good or service since the last time prices were collected, the economic assistant selects a new item or records the quality change in the current item.
The recorded information is sent to the national office of BLS, where commodity specialists who have detailed knowledge about the particular goods or services priced review the data. These specialists check the data for accuracy and consistency and make any necessary corrections or adjustments, which can range from an adjustment for a change in the size or quantity of a packaged item to more complex adjustments based upon statistical analysis of the value of an item's features or quality. Thus, commodity specialists strive to prevent changes in the quality of items from affecting the CPI's measurement of price change.
Those are rather dismal statistics.
Like you said earlier, the mandated 0-care implementation related spending halved the GDP growth loss but that spending must have decreased spending in other areas and will likely continue to do so in the coming months and years.
Perhaps things will improve during Recovery Summer 5.0....or are we at RS 6 this year?
“Perhaps things will improve during Recovery Summer 5.0....or are we at RS 6 this year?”
Maybe Recovery Summer will do like the Arab Spring and morph into the Silent Spring and we won’t hear anymore about it.