First and foremost, Happy Holidays to all! Thank you for your readership throughout 2010; I promise that in 2011 my continued focus will be on providing quality blog content.
Usually, in the minutes following a monthly Unemployment report, I quickly send out a blog with my commentary and market strategy.
Over the past several days, I have received numerous requests to identify how deep the current selloff in the euro could be.
Once again, concerns emanating from the euro zone are front and center for investors.
The S&P 500 Index closed on Wednesday, November 24 @ 1198.35, incrementally higher from the Wednesday, November 3rd closing price of 1197.96.
Thankfully, the bell has rung and ended a rather difficult session for Tuesday, November 16.
I am back from an enjoyable few days in the wonderful state of California. The dynamics of California are so intriguing with its troublesome economy, teetering on the brink of oblivion, vilified in the media on a regular basis for its missteps.
The historic election of 2010 has passed with the Republicans picking up 6 U.S. Senate seats to gain on the still Democratic majority of 53 to 47 in the Senate.
Overall employment rose by 151,000 jobs
The Central Banks of India and Australia both moved interest rates higher ahead of the U.S. FOMC meeting.
Let’s look at the components of the capital markets, see where we stand, and where they could be headed.
Monday November 1 - ISM. October 54.4; November Consensus Range 53.0 to 53.8. The market expects further deterioration in the ISM.
China PMI: 1. China’s October PMI rose to 54.7 from 53.8; the consensus estimate was 53.7
In September, we introduced an economic calendar on the Virtus website. As I craft that calendar each month, I generally identify one theme that shapes the monthly events.
Initial Jobless Claims declined 23,000 to 452,000; consensus was 450k to 460k
Looking back at August, there is no doubt that we experienced a double dip in pessimism.
An overuse of any particular market tool will lead to underperformance, that is historically proven.
The week of October 11 begins with the Columbus Day Holiday on Monday. Clearly, one of my all-time favorite trading days was Columbus Day 2008, when the S&P 500 Index surged from 899.22 to 1003.35.
The most active earnings week is October 25 when 35% of S&P 500 Index companies report
Overall employment fell by 95,000 jobs.
Take a $100 bill out of your wallet and stare at it closely – it looks the same as it always did. Well, not really, it may look the same but its purchasing power continues to diminish.
The Friday October 1st ISM release provided investors with further evidence that FOMC will decide to expand the size of its balance sheet from $2 trillion at the two day November FOMC meeting.
1. China’s September PMI rose from 51.7 to 53.8, above the 52.5 consensus
The week ahead closes September. Since the credit crisis began in the 3rd Quarter of 2008, the first business day of each calendar month has been a highly anticipated day for me.
Velma Hart stole the show during Monday’s town hall on CNBC with a brilliant question, “Is this my new reality?”
On Tuesday, September 21, the Federal Open Market Committee (FOMC) will hold its sixth meeting for 2010.
1. Initial Jobless Claims “surprisingly” declined 3,000 to 450,000, the lowest level in two months
1. Trade Data (Exports and Imports) - % change YOY from July to August
Real Estate Investment Trusts (REITs) continue to outperform the S&P 500 Index.
Economic globalization - a world with transparent boundaries!
Fear rose during the month of August as deflationary economic signals weighed on equity prices. Investors aggressively purchased safe haven assets, U.S. Treasuries, in particular.
Treasury Auction Schedule Week of September 6
As we head into September, I’ve developed a calendar of key economic indicators and meaningful market events that I’ll be watching throughout the month.
The capital markets continue to navigate through some strong headwinds in the form of softening economic data.
1. Initial Jobless Claims fell 31,000 to 473,000
The equity market recovery in July has encountered multiple headwinds in August. I believe it began with Wednesday, August 11th’s import data from China (Fig 1.1).
The capital markets continue to navigate through a period of heightened sensitivity to every economic report.
Initial Jobless Claims rose 12,000 to 500,000
The first half of 2010 was clearly as challenging a period for the euro zone as it has experienced since the creation of the euro itself.
The capital markets head into the final three weeks of August with light volume, abundant pessimism, and maximum frustration.
On the morning of Wednesday, August 11, investors woke up to a significantly lower S&P 500.
During the mid-2000s, rising demand for agriculture from the emerging markets, in particular China, encouraged investors to actively incorporate agriculture investments in their portfolios.
CHANGE IN LANGUAGE – TONE: From the June 23rd meeting, 1st paragraph: “Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually. Household spending is increasing”
Last Friday’s disappointing jobs report and the post-market corporate news from Hewlett Packard (HPQ) should have vacationing money managers draining cell phone batteries checking in with the office early this week.
Overall employment fell by 131,000 jobs.
During the last week of July, market expectations for the upcoming China PMI began to fall, somewhat dramatically.
Oil inventories continue to rise here in the United States; in fact, they are approaching the uncomfortably high levels of May 2009.
For all the negative sentiment that flavored our 4th of July bar-b-ques, I would say the month of July caught most money managers by surprise.
On July 26, the S&P 500 Index closed above its 200 day moving average for the first time since June 21.
Let's begin with a quick summary of the July 23rd Committee of European Banking Supervisors (CEBS) stress test for 91 European Banks.
The S&P 500 Index aggressively declined 2.88% on Friday, July 16, quickly dropping the monthly gain for the Index to 3.315%.
Remember the Dubai debt crisis? I believe most of us have forgotten by now about the Thanksgiving 2009 event that was predicted to roil the markets.
Historically, the first ten calendar of January, and “sometimes” in July as well, are a time for money managers to deploy fresh investor capital into the Equities market.
Here we go - another round of earnings is upon us. For this reporting period, I am focused on what corporations will tell us, what guidance they will give.
During the week of July 12, 23 companies in the S&P 500 Index will report earnings.
Corporate Bonds – 6 reasons that an investment in Corporate Bonds is still warranted.
One of the better indicators for telegraphing price direction in the capital markets is the ISM Manufacturing Survey.
One of the better performing sectors since the credit crisis unfolded in the fall of 2008 has been technology.
Former President George W. Bush was often playfully referred to as 'W.' Ironically, President Obama might have to deal with 'W' once again.
Unfortunately my last blog 'Two Minute Warning' accurately described a classic example of 'Good News, Bad Price Action'.
Believe it or not, here we are. Sound the whistle - it is time for the two minute warning for the first half of 2010.
On Saturday, June 26, G20 leaders will begin a two day summit in Toronto.
Wow, it’s already June 15! Receiving a phone call to begin preparing for our next quarterly commentary is a gentle reminder that 2010 will soon be at the halfway point.
Generally, markets spend more time consolidating, pausing before restoring either the prevailing bearish or bullish trend.
Clearly, the absence of private sector job growth in this morning’s Unemployment Report is rather troubling.
In my last quarterly commentary I briefly discussed the critical question coming into this year - what is the path for 10 year Treasury yields?
First, let’s touch on the equity markets coming out of May. I currently remain “invested,” having moved in late May from “underweight” back toward “market weight.”
After many years contributing to business network television, I appreciate the mindset of producers. Telling the story of the markets and pointing investors in the proper direction is important.
Here it is, the final week of May. This time next weekend America pulls back the curtain on another summer season.
Over the past few weeks, I have had more than a few questions asking "why not just get short?" You suggest a "baseball season of frustration is upon us."
I am back from Las Vegas and looking for thanks from my fellow New Yorkers for bringing back some Vegas weather - sorry I missed that Northeast rainstorm this week.
Here we are happily one week removed from the 'Flash Crash' of Thursday May 6 and several days past the European Union’s 'shock and awe' defense of the euro.
In a 'Baseball Season of Frustration,' investors can certainly expect a bunch of strikeouts, caught stealing, and walks by the pitcher. Yesterday’s entire trading session was one lousy inning of baseball highlighted by some very wild pitches.
I have a very reliable calculator that I am guessing is around 16 years old. As I get older, I unfortunately find myself using that calculator more and more.
The events surrounding the Deepwater Horizon Rig crisis, which began on April 20, has now reached the impact point for oil prices.
Greetings from 34,989 feet above our great country. Let’s be exact - that is 34,989 feet above Omaha, Nebraska. Hello down there, Mr. Buffett.
The Federal Open Market Committee meets Wednesday April 28, a one day event. During the credit crisis, which now feels like it didn't even occur; the FOMC added an additional day.
By now, most of you know that I am a huge hockey fan. My love affair with the game was fostered during my childhood when I had the privilege of watching my favorite team, the New York Islanders, raise four Stanley Cup banners.
G-20 leaders met over the weekend of April 23 in Washington D.C. – Some important takeaways.
Oil prices continue to “grind” higher despite the headwind of continued rising inventories and an OPEC consortium that, as usual, cannot adhere to their quotas.
Obviously, as I stated on the evening of Friday April 16, the most critical indicator for the week of April 19 might just be the reaction to the SEC / Goldman Sachs news as Asian markets open Sunday evening April 18.
I believe in allowing time to pass before letting Mr. Mouth express any thought that is not internally questioned and properly reflected upon. So, 24 hours have passed, enough time for me to offer some thoughts on the SEC suing Goldman Sachs (GS) for fraud. The one thing that I keep focusing on is 'how this will impact the markets.' I will survive however it turns out for GS. Sorry, call me superficial, but that is my concern, and maybe yours as well so, let’s dig a little deeper.
Heading into 2010, advocates of Dow Transport outperformance were chided in a similar fashion to our Virtus friend Pete Batchelar suggesting that his Montreal Canadiens can eliminate the Washington Capitals.
First, let me once again state what I told the students at the University of Connecticut School of Business back in early February - the best trade out there is to take a thirty year mortgage. I still believe that; it is a generational opportunity.
I am done with my Fast Money oil price predictions ($90 before $60), taking my official bow and stating that $87.09 on April 6th is good enough for me - close enough to $90.
Late last year on Fast Money, I began suggesting that the “affluent consumer” was significantly contributing to, and supporting, overall consumer spending.
'Now leading off for the Bull Market - ALCOA (AA)!' Well, not exactly Derek Jeter or even Johnnie Damon (circa 2004 Bosox), but Alcoa (AA) it is.
Asset prices continue to slowly move higher as we begin the next earnings season. Investors need also pay attention to the Greece / ECB drama and some domestic economic events. Let's quickly highlight those events.
Heading into the end of March European Summit, the 16 nations that comprise the European Union have one thing on their minds - the rapidly declining value of their currency.
Tuesday’s FOMC statement did little to stall the bullish momentum the Commodities space has exhibited during the month of March.
Here I sit one week removed from the yearly family trip to Disney, utterly missing every minute of the trip. Certainly, my kids miss the trip, in particular the relaxed, no rules environment a vacation week with Dad brings.
Wow, basically we have two weeks left in the quarter. From a market action perspective it feels like it is still January 10th. Over the next two weeks I think the market will have support underneath it.
So, here we are, one year removed from one of the greatest generational buying opportunities in the history of our capital markets.
Back in December, I wrote about the correlation between a “sideways” market and the temptation to alter portfolio strategies. The 2004 and 1994 markets provide templates.
Unfortunately most of the “meat" never gets exposed to investors; they just witness “the fat".
One of the more frustrating components of investing is when your investment plan is challenged by an aggressive sell-off in the market.
New decade, new beginning, a global economic recovery reflected in rising capital market prices.
Everybody knows that Americans love trucks. We buy them in all sizes and even sport them up more after the purchase. At this time last week, not many Americans figured that one man's love of a truck in Massachusetts would initiate a series of political events that ended the week of January 18th with the capital markets in disarray.
On Thursday, January 21st earnings reports will be released for Google, Goldman Sachs, American Express, and Freeport McMoRan.
Friday’s December jobs report provided a much needed reminder that the FOMC will stand by its accommodative policy for an extended period of time. For all the criticism Ben and his boys have taken this week, they have accurately assessed and addressed the stresses in the economy and the capital markets.
The litany of predictions for 2010 all seemed to suggest tepid performance for the capital markets. I myself have suggested that volatility, as measured by the VIX, will continue its current trend lower.
Here we are in 2010 and, for all those who are preparing for dramatic changes, I posit that the sun still rose in similar fashion to 2009.
Past performance is not a guarantee of future results.
Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.