Succinct Summation of Week’s Events 5.29.15 (& bonus)

This is probably the longest weekly summation I've ever seen - 10 positive items, 8 negatives.  But I think everyone should find the bonus this weekend rather entertaining -- a graphic displays pearls of wisdom dispensed by Apple CEOs from their best commencement speeches.

Dynastic Billionaire Wealth Under Siege!

I'm not sure if the intention here was for humor or not, but I thought it was pretty comical.  What do you think?  I mean ... poor babies!

Wall St. ends down after weak economic data but gains in May

The Dow is down 115 today due to a so-called report showing GDP contracted 0.7% annualized as opposed to a previous estimate of 0.2% growth.  The only problem with this report is that it's wrong!  It was actually reported at the beginning of April that the forecast of a +0.1% increase in Q1 GDP was in fact a minus 0.6% so investors rightfully should have already had that factored in, thus making today's big sell off somewhat inexplicable.  Adding to the confusion was our own Treasury Secretary issuing dire warnings that Greece may very well pull out of the EU, even though all prior reporting has been quite emphatic that this almost certainly will not happen.  Greece's own polling data about a month ago showed an overwhelming 80% approval rating for staying in the EU.  The only real challenge with Greece is for the ECB to find a way to get Athens' new leftist government to go back on a few campaign promises without losing face.  And that is what they have been and will continue to do.  We've heard much talk lately about "irrational exuberance" but the real problem is that the market has actually been freely swinging back and forth between irrational exuberance and irrational panic, today being an example of the latter.  Today's sell off was on quite brisk trading of 7 billion shares.

Wall St. inches down on Greece, China worries

Today everyone took a little hit and this is why.  Tuesday it was all jitters about Greece missing their debt payment.  And the Dow plummeted.  Yesterday Greece said a deal was imminent and everyone listened to that story even though the EU denied it.  And the Dow shot way up.  Today everyone is listening to the EU belying Greece's claim that there would be a deal by week's end.  But at least the two stories are getting a little closer together -- Greece says a deal by Sunday, the EU says it must be Friday or it's off.  The EU has tried posturing like this before and then blinked.  This is likely the reason the Dow only got hit by 36 points.  Volume was again very light - 5.7 billion - probably because everyone's waiting for tomorrow's GDP report.  This will be the first since the weak Q1 data so it will be important.  Stay tuned.

Tech, healthcare lead Wall St. higher; Nasdaq hits record

What a difference a day makes!  The Dow was way down yesterday because of good news taken as bad and continued worries over Greece.  Magically today, good news is taken as good news and Greece is no longer the albatross it was yesterday so the Dow shot back way up another 121 points.  Once again, the rising dollar made oil take a hit but why today's good news of a rebound in the tech and healthcare sectors was met with enthusiasm whereas yesterday's good news about business investment and housing prices were met with anxiety can only be explained as "voodoo economics."  Even the turnaround on Greece is a mystery.  The financial media is reporting that Greece is near a deal with the EU despite explicit statements from the EU that this is not true.  Yesterday investors believed the EU; today they choose to believe the media.  But once again none of this hodgepodge really matters much as volume remained below average at 5.8 billion.

Wall St. drops on rate concerns, Greece

History has certainly been repeating itself a lot lately.  Today was another major bath with the Dow sinking 191 points due to too much good news combined with apprehension about possible upcoming bad news.  Among the good news was a string of buoyant data showing business investment and house prices solidly increasing and consumer confidence perking up.  This of course just added more fuel to the continuing seesawing fears that good news may lead to an earlier interest rate hike.  The dollar was also up, which meant that oil was also down and Greece ... well, Greece is Greece.  They are now cautioning about possibly missing their June debt payment.  Such jitters will continue to upset investors until Greece has settled down, which might not be for years.  But at least volume wasn't drastically different, at 6.3 billion quite in line with recent averages.

Apple Is King

For Memorial Day,  a chart that says a lot about where we are and where we are heading.  In B-school they preached the gospel of "Cash Is King."  It didn't matter how wonderful your products, how much market share you commanded, or how popular you were with Wall Street.  The only thing that really counted was that your bills were paid with cash and no company could survive that could not pay its bills.  No amount of great product, no percentage of market dominance, no mountain of good reviews could keep you alive.  Only cash!  So as an MBA student, and later as a financial analyst and manager, it was drilled into me the critical importance of appropriate cash management.  Companies run only on cash.  The world runs on cash.  So for this Memorial Day, Barry Ritholtz has chosen his column as a tribute to the vast cash holdings of the 25 largest companies in the U.S., and the enormous cash holdings of our #1 company, Apple!  There may be a reason besides its popular products that Apple is #1.

Top 10: Wall Street Sayings That Should Be Questioned

It's a holiday weekend so again there is no summary for the week.  Given that it's a holiday, here's a little treat offered up in the spirit of humor as a tribute to the end of David Letterman's unprecedented 33 year run on television.  There are still the biases in this Top Ten List that so characterizes this industry that Wall Street is capable of no wrong and government is capable of no right, a position I find thoroughly simplistic and naive.  The real world simply is not that black-and-white, all the pity since, if it were, we'd all be wealthy.  Still, if you can put such biases on hold, this is pretty funny stuff.  Enjoy ... and enjoy your holiday.

10 Weekend Reads

Another fun reading list, especially the item about getting rich being an art forger.  Enjoy!

Wall St. ends lower after Yellen comments fail to inspire

I'm not exactly in agreement with today's market report.  First the Dow took a 70 point dive until about noon, then regained everything by 2 p.m. before losing it all again in the last half hour to close 53 points down for the day.  The opinion was that this was all a reaction to tepid remarks from Janet Yellen's speech this morning, yet she said nothing in her speech except to continue to confirm previously oft-stated policy that there would be no interest rate hikes at least until September and even then only if positive economic data supports it.  There was another opinion that investors have been blessed for some time now with a relatively calm market, but that this will get increasingly volatile after interest rates are raised.  What pray tell kind of charts are these people looking at?  The major problems with the markets in the past several years have been the enormous swings up and down as investors (mostly unsuccessfully) try to second-guess the Fed.  How can any objective party characterize such an environment with the word "calm"?  And how can any objective person characterize Yellen's remarks today as uninspiring when she told the market exactly what it wanted to hear -- that is that the expectations are exactly what she's planning.  Nope, none of this makes sense.  But once again it doesn't matter since the trading going into the holiday weekend was astounding light -- 4.9 billion. 

S&P ends at all-time highs but traders eye weak volume

Day #3 of boring and something that rarely happens - the Dow ended exactly where it began, give or take a third of a point.  There was a little bit of bad news -- jobless claims rose more than expected, an unexpected decline in home resales, and a weak manufacturing report.  But what's really going on is that most investors simply are not buying into these recent record highs, showing little confidence they can be sustained despite the complete lack of fundamental data to support such a position.  The very light volume of 5.6 billion shares evidences that everyone continues sitting on the fence awaiting the next big event.  And that would be tomorrow as Janet Yellen gives yet another speech and everyone, but everyone, will be dissecting every word used (plus every word not used) looking for clues about interest rates.  This again is despite the fact that the Fed has been pretty clear on this issue for a very long time now.  But that's what investor anxiety does to the market.  Until interest rates are raised and everyone can see that nothing's going to fall apart, this anxiety is not going to go away.

Dow, S&P 500 end slightly lower after Fed minutes

A second boring day in a row, yesterday sending the Dow up 13, today sending it down 26.  What happened was a new Fed report that basically said ... nothing.  That's right, they stated the same position they've been stating all along, that there would likely be no interest rate hike until September at the earliest, thereby offering no evidence of anything on the horizon that the market is not already anticipating.  Despite the lack of any surprises, the timing of any impending hikes continues to keep the market on edge.  Still, not too much on edge as volume continues on the light side at 5.8 billion.

Equities gain, euro slumps as ECB eyes faster bond buys

It wasn't a terribly exciting day with just a few bits of good news that sent the Dow up modestly another 13 points (but enough for yet another all-time high.)  The good news included the best housing starts report in 7-1/2 years, which again boosted the dollar a bit which in turn weakened oil a bit.  Perhaps the lack of excitement was precisely the problem, like when a hypochondriac is told by the doctor that there's nothing wrong, then they start imagining the worst.  Today's dullness just raised everyone's anxiety levels.  With nothing else concrete to worry about, the focus is once again on fears of an interest rate hike.  It will not end until it begins.  Sorry, I was late getting to Reuters tonight so I have no volume data until tomorrow.

Dow, S&P close at record highs as rate-hike angst abates

For the third consecutive day, the S&P edged up a few more points and since Thursday was a new all-time high, both Friday and today became newer all-time highs.  It was what investors regarded as "tepid economic data" that left the market reassured that no Fed action on interest rates was imminent that pushed the indices higher, if only modestly so. The Dow was up 26, the S&P 6. But the data really wasn't all that tepid.  Homebuilder sentiment reportedly fell in May even though most builders view the market favorably.  The dollar also strengthened which lately has been viewed as bad news but today the market saw it as a good news as a strong dollar can now be a hedge against all the turmoil in the Middle East.  And even if Wall Street does see "tepid data" as good news, this afternoon the Fed issued a new report with a detailed technical analysis as to why the economy is actually doing a good deal better than has been suggested.  But the main mover today was Apple which gained over 1% after Carl Icahn opined that the company's stock was likely worth at least twice as much as it is currently trading.  So all this qualified as "tepid data" eh?  We should have a lot more tepid days like today.  However, all of the above doesn't really amount to much since it was all on quite light volume - only 5.3 billion shares traded.

Succinct Summations of Week’s Events 5.15.15 (plus new reading list)

It's that time of the week and the snapshot all of you wait for to sum up the week's events.  An interesting reading list today too, with several articles discussing various investment topics, including the age-old subject of how to get young adults interested in finance, and maybe even some words of wisdom as to why that might just be our fault.  Being a film producer, I was particularly interested in the item at the bottom of the list about Oskar Schindler of "Schindler's List."  This story sounds like it might have the makings of another terrific movie.

Hot Enough for Stocks, Cool Enough for Bonds?

For your weekend fun, here's a nice little 5 minute video that seeks to add some clarity to a murky market.  Is the market hot enough to continue the rally in stocks, or is it in a cooling trend more conducive to bonds? Yesterday, Barry Ritholtz had some interesting insights into this question.

Economy: Hot Enough for Stocks, Cool Enough for Bonds? | The Big Picture

S&P ekes out second record close after lackluster data

It's being called a day that the S&P reached still another record (as it went up a big 1.6 points so, since yesterday was a new record, today became another new record) and yet the Dow went up 20 points despite "a ream of weak data."  This was the weak data:  industrial output fell 1/3%, consumer confidence slipped a bit too, though it was way up last month so even the slip probably still has it up for the year (exact numbers not in the Reuters), the major markets spent most of the day in the red, even though the "red" was only to the tune of about 30 points before recovering 20 points up, and all of the above triggered most forecasters to predict further cuts in both future U.S. economic growth and job market gains.  Wow, that's a lot of negativity to try to justify the index being up 20 points.  This is what is called bandwagon economics.  One person cries foul (evidently some regard a 1/3% decline in factory output for one month to be foul) and everyone else feels obliged to follow suit.  Again, this is irrational behavior which is not at all supported by the fundamentals.  The good part is that volume was below average at 5.7 billion so not everyone was feeling so cynical today.

S&P 500 ends at record high as dollar loses ground

For quite some time now with the economy in a slow but steady recovery, the dollar has been getting stronger and stronger, something that happens in a good economy and is usually considered very good news.  And for quite some time now, due to Wall Street's extensive overseas exposure, the strong dollar has been considered a bad thing, causing massive sell offs, due to the fact that it makes it harder for other countries to buy the products of our multinational firms, thereby potentially impacting revenues and earnings.  The dollar reached a multi-year height this year but for whatever reason, as it occasionally and momentarily does, it softened today.  Suddenly investors are awakened to all the profits multinational companies might now make and the Dow went zooming up 191 points.  Also adding to the optimism was a dip in unemployment claims, a general consensus that there will be no interest rate hikes until September at earliest, and the S&P reaching a new all-time high with 22 new points.  So once again the market had a big rally based on the thinnest of good news, just as the big sell offs earlier this month were based on the thinnest of bad news?  When will all this craziness end?  Today's expert summed it up beautifully with remarks to the effect -- it's pretty obvious there will be no rate hikes for a while, so why have we spent two years fretting about this (with all the subsequent volatility such irrational fretting has produced) and why can't we just focus on the fact that the economy is steadily improving?  I often don't agree with the daily expert opinion on Reuters but this guy got it right on.  Volume was just about on target with averages at 6 billion.

Wall St. little changed in earnings, data lull

Today everyone was in sit-and-wait mode.  Last week the market was up due to positive data suggesting the economy was continuing to improve, but not so good to threaten higher interest rates.  This week, with a 1/2% interest rate hike being levied in Germany and around the world, the markets have tightened again.  Still the overall consensus is that we are continuing to experience more healthy activity, that there has been a return to conviction among investors that things are in the right direction. So nothing much happened, the Dow dipping a mere 7 points, but the real story is that everyone is now once again on the fence waiting for more data -- specifically news on inflation, news on oil, and of course the next jobs report, all looking for any hints of what the Fed might do next.  This is all despite the fact that the Fed has been quite clear what it's going to do next, yet none of this has quelled fears that there might be an interest rate hike in June instead of September.  At 6.1 billion, volume was pretty much in line with recent averages.

Wall St. ends weaker as global bond worries deepen

As anyone who has taken Econ 101 would know, as interest rates rise bonds become more attractive and stocks less.  When bonds go up, stocks go down and vice versa.  That's why any healthy portfolio should contain a mix of both as they provide a hedge against each other.  For the past several days, countries around the world lead by Germany have been increasing their interest rates which has subsequently triggered the recent sell offs in the stock market, today to the tune of 36 points on the Dow.  With the markets tightening, concerns have once again been raised about the timing of the much anticipated Fed actions on U.S. interest rates.  Today's expert opinion is that the Fed is getting close to being out of options.  If I had a dollar for every time someone has predicted our imminent demise, I wouldn't need an IRA.  The big news for today is Verizon's purchase of AOL for $4.4 billion.  Since I have been an AOL customer since the early 1990s, this was of particular interest to me.  Volume was just below recent averages at 5.9 billion.

Wall Street ends down on global jitters; oil stocks lower

The market seems now to be in an environment where it needs to have something to worry about.  After all the really good news last week, in the absence of more good news, investors go looking for bad news.  So, as you might guess, Greece and China are back on the radar driving the Dow down 85 points.  Worries over Greece are particularly puzzling as their financial plans seem to be both in order and on schedule as they have just made a 750 million euro payment to the IMF.  The concerns over China are a little more rational as the Chinese are now mimicking the Fed by cutting interest rates to stoke its sputtering economy.  The problem is it might be too little too late, not to mention the fact that its robust growth in the past several years has been mostly due to cheating so China's economy is basically just a house of cards.  Right now, the whole world (including our own country) is much too dependent on them and the sooner we all move away from that, the more secure we'll be, much like we all moved away from Russia when it was similarly playing games with smoke and mirrors a decade ago.  Despite these worries, the dip was not considered a big deal, especially on very light trading of only 5.6 billion shares.

A Dozen Things I have Learned from Barry Ritholtz about Investing

No weekend recap this Sunday, just the bonus.  Ritholtz must be on vacation because that's the only time he ever skips the summary, though he still does a blog posting (usually several) every day even when he is off.  So this Sunday it's just the bonus, but this is pretty good, a one-page course on all the most important fundamentals for investing.  I love these little snapshots.  They put very complicated concepts in perspective very nicely.  Hope everyone had a great Mother's Day.

World War II: 70 Years On

Yesterday was the 70th anniversary of Germany's unconditional surrender in Europe.  The war in the Pacific would end a few months later and, for better of worse, usher out the greatest depression in history and usher in a whole new era of the most unprecedented economic prosperity the world has ever seen, still continuing seven decades later.  We have our veterans to thanks for all this and today's posting from Barry Ritholtz is a salute to them, and a stark reminder that the WWII era veterans are a quickly vanishing breed, 16 million at the end of the war down to just 2 million in 2010 and half that again now.  What follows is a wonderful graphic that sums up the whole picture and remind us how lucky we are to have the legacy of all those brave souls.

Stocks leap as Wall Street lauds jobs growth

For once, the geniuses were exactly right.  The prediction yesterday was that if the jobs report was right and added an expected 230,000 new jobs, investors would be thrilled.  For quite some time now, any good news on the recovery has caused a big panicky sell off since it would be stoking fears of an interest hike.  But the experts felt that the 230K was just high enough to please the markets without being so high to induce the Fed to earlier action.  (I predicted any number close to something healthy would just cause another panic.  Glad to be wrong this time.)  The market wasn't just thrilled, it was delirious to the tune of a whopping 267 points.  The actual number was 223K which was just about ideal.  If Yellen was right the other day about the market being overvalued, its overvalued even more now.  Yet the other day her comments caused a big sell off; today's job report caused another big rally.  Are we looking then at another big sell off on Monday?  Stay tuned.  At 6.6 billion shares, volume was just a little below recent elevated averages.

Wall Street ends stronger as global debt worries fade

Another wild and crazy day with the Dow at various times swinging from nearly 50 points down to nearly 200 points up, but finally settling at close 82 points up.  Unemployment claims holding at a 15 year low was just one of many pieces of terrific news today.  After yesterday's panicked rout in the bond market following Germany's interest rate hike on Tuesday, bond markets world wide settled down very nicely today, giving investors new hope.  The elephant in the closet now is tomorrow morning's April payroll report which is expected to be a healthy 230,000 new jobs added last month.  Though all the smart money says this is a plenty high enough number to stimulate more confidence, they also happily predict it's not high enough to trigger a June interest rate hike.  So it should be the best of both worlds for a change.  But my guess is that if it really does come in around 230k, it will trigger more panic selling.  Volume was pretty healthy at 6.9 billion.

Wall St. ends lower on global bond rout, Yellen warning

So Janet Yellen is making one of her routine speeches this afternoon and, during the Q&A, she made a casual remark positing an opinion that the current stock market is overvalued.  A lot overvalued?  No.  In fact, it's just barely out of range of normal with the S&P having now reached 17 times earnings whereas the 10 year median is 15.  Yellen even made clear that this was nothing to get excited about, just something to keep an eye on.  But excitement (or panic) was exactly how investors reacted to these off-the-cuff comments.  As anyone who has taken Econ 101 is well aware, one way to calm down a rallying market is to raise interest rates.  Her remarks were thus taken exactly in that spirit with an immediate sell off of over 200 points.  Later in the session there was another big rally of 300 points such that at one point this afternoon the index was actually 100 points ahead, but soon after falling again to end 86 points down.  Yesterday's announcement of Germany raising interest rates on their bonds triggered a worldwide sell off of bonds which also contributed to today's panic and wild swings.  It is still the widely held consensus that the soonest hike will almost certainly not occur until September and, though the Fed has made numerous statements that any hikes at all will be both incremental and gradual, the panic is all due to fears that hikes may be big ones.  Volume was above average at 6.7 billion shares but below yesterday's frantic trading at 7.3 billion on the news the GDP might be shrinking.

Wall St. ends lower on weak trade data; investors eye Fed

Last week the market had a panic attack when the GDP report, which was expected to come in at a +1.0% annualized, instead came in at 1/10th that, +0.1%.  But at least it was a positive number in an environment where the entire industrial complex had been expected to take a minus 4% hit for Q1.  So today, when the March trade deficit came in at a 6-1/2 year high ($54.1 billion vs an expected $45.2 billion), the conclusion was that the economy must have shrunk worse than was previously thought and is likely now a negative number.  We're still awaiting verification of this suspicion but panic set in anyway driving the Dow down 142 points.  Higher interest rates announced by Germany didn't help the picture at all.  Three more days for the April payroll numbers and the next big move.  If the numbers are good, there will be another big sell off in anticipation that the Fed will be raising interest rates after all.  Today's panic was on high volume at 7.3 billion shares.

Wall Street ends on upbeat earnings from Berkshire, Cognizant

With three-fourths of Q1 reports in and most beating estimates, the Dow was up 46 points.  Berkshire Hathaway and Cognizant came in with particularly good reports.  More good news included the biggest increase in 8 months for U.S. factory orders.  Despite the fact that today's news was just another in a long line of positive data of late, the opinion is that the market "is being driven by a lack of substantial negative news."  I guess there are some people you just can't please.  Now all eyes are on the April payroll report due Friday which investors are hoping will be bad news to continue quelling fears of a Fed interest rate hike.  Volume was a little below average at 5.6 billion which could just mean that, after last week's frenetic activity, investors are now taking a breath.

Succinct Summation of Week’s Events 5.1.15 (plus career bonus)

The usual Sunday night summations of the week, and this particular Sunday I am offering a different kind of bonus.  This article from this week's Fortune (reprinted from Entrepreneur Magazine) I just haven't been able get it out of my head which means it's probably something that deserves sharing.  Pablo Picasso, Stephen King, and Albert Einstein submit their thoughts on the requirements for success.  Of course this is intended as an essay on success in business (investing too?), but it really could just as easily be applied to success in life.  This very short article contains some remarkable wisdom that we can all benefit from.  I found Stephen King's musings particularly on target.

10 Weekend Reads

It's been a while since I've supplied a weekend reading list.  This one looks better than average, especially since we've just recently discussed the flash crash fiascoes (Item #3).  Enjoy and enjoy the rest of your weekend.

Wall St. ends up sharply as investors buy beaten-down shares

Yesterday the headline was "Stock market hammered despite upbeat data" as the Dow plummeted 195 points despite mostly positive news.  Today evidently investors caught on to the "upbeat data" as the profit-takers took over and decided to swoop in on all the bargains that had been created in the last few sessions.  The resulting rally pushed the Dow up 183 points helped partly by Apple regaining its losses for the week with a 3% jump in its stock price to counter the 2.7% loss Thursday.  There was more good news including GM and Ford car sales coming in better than expected, thereby giving investors more assurances that we were coming out of the 1st quarter slump and assuaging the fears from yesterday that "the market was going to fall off a cliff."  (Of course it wasn't, not with all the positive data that's been coming in.  It was just more irrational panic, much as we have been seeing pretty regularly in the last couple years.)  No, what happened in the last two days was very simple.  The smart money was looking for an opportunity to buy in on a dip.  Yesterday that opportunity presented itself, today they took it.  Volume was about average at 6.3 billion.