Tuesday, November 27, 2012

Market Wrap - Home Prices, Growth Slowing, and Stock of the Day

Stocks across the board closed lower with the S&P 500 falling by 0.5% and the tech-heavy NASDAQ holding up a little better with a loss of 0.3%.

The SPDR Gold ETF ($GLD) lost 0.4% and the US Oil ETF ($USO) gave back 0.7%.

  • The bears can thank Congress and the Fiscal Cliff for the afternoon selling binge that took stocks from unchanged to the red. When politicians come out and say there is no room being made in regards to the fiscal cliff it is never good for stocks. That is exactly what happened during the 2pm hour and why stocks gave back some of the gains from last week.
  • Before the opening bell the OECD slashed global growth estimates for 2013 and 2014. For 2013 the organization see growth of 2.9% versus previous estimates of 3.4% for the global economy. In 2013 the economy is expected to grow by 3.4%, however that is lower than the 4.2% they predicted in May. The OECD sees the US growing by 2.0% next year IF they take care of the fiscal cliff situation. The Eurozone will stay in recession according to the OECD and will contract by 0.1% in 2013 before returning to growth in 2014 with a gain of 1.3%.
  • Home prices rise in the month of September by 3% year-over-year according to Case-Shiller. Prices are now 26% off their 2006 peak. The 3% increase is the largest annual jump since July 2010 and the streak of increasing prices is now at 6 months. The iShares Dow Jones Home Construction ETF ($ITB) closed with a gain of 0.1% on the day.
  • Some top performing stocks and ETFs we follow at PFG:
    • Cree ($CREE) up 3.4%
    • iPath Grains ETN ($JJG) up 2.1%
    • Linn Energy ($LINE) up 1.0%
    • Dillard's ($DDS) up 2.2%
    • CAI International ($CAP) up 1.6%
    • Trex ($TREX) up 0.8%
  • Stock of the Day: Visa ($V) was down 0.3%, but is only two days removed from an all-time high and if the holiday sales number continue to impress it should be a boost for the credit card company.

Stocks Remain Attractive

In the last few weeks the estimates for 2013 earnings for the S&P 500 have come down slightly based on a poll of a number of analysts. This is never a good thing, however even with lowered expectations the market is trading at extremely attractive levels based on historical numbers.

The consensus estimate for 2013 is $113 in earnings for the S&P 500. Based on today's closing price the index is trading with P/E ratio of 12.37 using the estimate. The current 2014 estimate is for earnings to jump into the mid-$120's. Anyway you slice it, the market is CHEAP based on the futures earnings estimates.

The key word here is "estimates". The number can change dramatically if the US falls off the fiscal cliff or if Europe goes deep into a double dip recession. But, even if 2013 drops to $105 in earnings, the S&P 500 is still only posted a P/E ratio of 13.31.

THE BOTTOMLINE: Stocks are cheap if you are a long-term investor.

Monday, November 5, 2012

Market Recap - Romney Bounce?

Romney Bounce 
Was the stock market bounce during the last three hours of trading driven by something more than just late day buying? Or was it the fact that traders were betting on a Romney victory tomorrow to push stocks higher? Honestly, it was probably a few traders betting on Romney, but with such low volume the market can be moved easily. We will know more about what the market thinks during tomorrow's trading session. Regardless of who you are voting for, stocks would prefer a more "market friendly" Romney in the short-term.

S&P Holding Support
The  S&P 500 continues to hold support above the 1400 area with a low today of 1408 before bouncing and closing at 1417, up 3 points. Tomorrow will likely see more below average volume as traders wait for the announcement of the leader of the free world for the next 4 years. As long as the index can continue to trade above support the longer term uptrend remains intact and investors need to be leaning heavily to the bullish side.

Utilities Not Holding Support
One sector that has been lagging the overall market and is breaking through support is the Utilities. The SPDR Utilities ETF (XLU) was down 1.6% today is trading that the lowest level in 5 months. Even though the ETF offers an attractive dividend yield of 3.6%, the high valuation (for utilities) is too much for investors to ignore. There is also the fact investors are willing to take more risk today than they were last year and will prefer avoid the "safe" sectors such as utilities and consumer staples. I will continue to underweight the sector for the near future.

Falling Oil Good for Airlines
The price of oil bounced 1% today, but this is after falling about 15% in the last 6 weeks. This is good for anyone filling up their tanks (that is assuming you can get gas in the Northeast) and especially the airlines. Even Superstorm Sandy could not hold back the Airline stocks. Today the Guggenheim Airline ETF (FAA) gained 1.0% and is closing in on a 4-month high. We recommended buying FAA in our ETF Bulletin newsletter for subscribers in late September and the ETF is up 5% since that email alert.

**For more info on the ETF Bulletin newsletter please email info@pennfinancialgroup.com or call 1-877-383-7366


Thursday, September 20, 2012

Weekly Jobless Claims Remain High

The weekly jobless claims came in at 382k, higher than expected and last week's number was revised higher to 385k from 382k. The more important 4-week moving average rose 2k to to 378k, the highest level since June.

Earlier this month this number would have sent the market higher as it would have been a signal that QE3 was on its way. BUT, QE3 is already here. So now what? Well the market is off about 0.4% heading into the 9am ET hour.

If the Fed and Obama believe that QE3 will solve the unemployment picture they are more out of tune than I initially believed. Look for this number to remain high and it could be above 390k within weeks.

Wednesday, September 19, 2012

Housing Starts: Bullish or Bearish?







The chart below shows the US Housing starts and permits over the last few decades. Even with the rebound over the last 2 years, the housing market has a long way to go to get back to the bottom of the past recessions.

This can be view in 2 ways: 1) the housing market has a long way to go on the upside and this is only the beginning of the rebound (bullish) and 2) this recovery is weak and only a dead cat bounce off historic lows and the recovery is a farce (bearish).

In this situation I am in the bullish camp.


US housing starts and permits

Thursday, August 30, 2012

ETFs For QE3

Click on the link below to find out what 4 ETFs I feel will benefit from another round of quantitative easing by the Fed (QE3).

Click Here.

Wednesday, August 29, 2012

Investing is Hardest Job

This is according to an interesting article I came across on the internet this week. Below is the article. I suggest anyone investing their own money or doing it for a living like myself should take a few minutes to read the entire article.

Being a professional investor is the hardest profession on the planet.

Not because the financial markets are global and 24/7.  Not because the markets are full of extremely driven and intelligent competitors.  Not because the emotional highs and lows can be soul crushing.

It is because of the constant and measurable competition against passive benchmarks.
Each day, month, quarter and year a professional investor’s performance is measured against both the benchmark and their peers.  Outside of professional sports, I’m not sure there is any other industry that generates such objective and continuous measurements. And even in sports, there is no equivalent of a “passive benchmark”.  If a player is struggling, teams do not have the option to replace that player with a benchmark that guarantees them the averaged production of every player at that position .

Benchmarks are the most ferocious of competitors.  They show up for work everyday. They never get sick.  They don’t take vacation.  They are always 100% invested so their results are continuously compounding.  Most importantly, they’re not aware of their own performance.  The S&P 500 will never enter the 4th quarter feeling it needs to really press to have good numbers for the year.  Nor will it take December off to “lock in” a good year.

Not only is the pressure unrelenting, but your failures are public on a scale that again only professional athletes can relate to.  If you do become a successful professional investor and overcome all of the above, there is always the question of skill versus luck.

No fan in their right mind believes they have a chance of beating a Kobe Bryant or LeBron James at basketball.  Yet any investor can now buy a portfolio of index funds and have a good chance to outperform not just a few, but the majority of mutual and hedge fund managers.

This inconvenient truth is like a little voice in the head of every successful investor – “Am I really good at this or have I just been lucky?”.  A voice that never goes away as it only takes a couple bad years to destroy an lifelong track record.

A few quick thoughts I had after reading have to do with short-term results versus long-term investing. For example, investors love to know how they did last month or so far this year. When in reality they will not touch the money for at least 10 years if not longer. The real way to measure is over several years as there will always be up and down years. When basing long-term investing on short-term goals is the strategy, the odds of beating the market are very low.

 
It also hit home with me as an advisor that not only deals with the markets 24/7, but also with many different views on the market via my clients (basically my many bosses). I really think this article will open the eyes of all investors and I suggest you pass it along to your friends.

Friday, August 17, 2012

Must See Chart #2

Earlier this week I shared a must see chart. Here is chart #2.

The chart shows the flow of money into equity funds and bond funds. As you can see the amount of money going into bond funds is astronomical as money continues to come out of equity funds. This major spread between the two asset classes is often a sign of a buyers market for stocks. The exact opposite occurs when the spread is flipped.

Look just before the tech bubble in 2000 and the financial collapse in 2007 - both times money was flowing into equities at a much higher pace than bonds. The result was market crashes. Now that the spread is opposite, is it a signal of a market that is poised to rally? I would have to say the answer is yes for long-term investors that have at least a 5-10 year time horizon in the market.


Top Sector ETFs in August

The S&P 500 is near a 4-year high and the month of August has been good for stocks in general. The SPDR S&P 500 ETF ($SPY) is up 2.3%.

The chart below shows the performance of 6 sector ETFs along with SPY. It is interested to see that the sectors outperforming are those that are perceived as "riskier" and the more "stable" sectors such as the Utilities ($XLU) are lagging.

The best performer is Technology ($XLK) up 5.3% as the Utilities are down 2.6%; an 8% difference in just over two weeks is significant and it shows how money can quickly rotate from one sector to another. If the SPY breaks out it will be good for the riskier sectors such as Technology, Financials ($XLF), Consumer Discretionary ($XLY), and Materials ($XLB). The Utilities and Health Care ($XLV) will likely lag behind.

To view the chart please click on the link below.

Comparison Chart

My Appearance on BNN

Below is a link to my appearance today on Canada's BNN (Business News Network) talking about the markets, my favorite sectors, and some stock & ETF ideas.

Click Here to Watch.

Thursday, August 16, 2012

5 Stocks Sitting on Support

My morning stock scan was focused on stocks with strong uptrends that have pulled back from recent highs and are now near support levels and that have moved close to oversold levels. Five stocks that fit the bill are listed below.

  • Public Storage ($PSA) - Stock was mentioned yesterday, the REIT pays a 3.0% dividend and has a solid business model and long-term chart.
  • Realty Income Corp ($O) - REIT that invests in commercial retail real estate and pays a 4.3% dividend.
  • Ultrapar Holdings ($UGP) - A Brazilian oil & gas company that pays a 2.6% dividend.
  • Coca-Cola ($KO) - Warren Buffett's favorite stock pays a 1.3% dividend, but is a little pricey for me at current levels.
  • Franklin Electric ($FELE) - The most interesting stock with a PEG ratio of only 0.44 and a 1.0% dividend yield. Keep an eye on this relatively unknown company.

Wednesday, August 15, 2012

Stock Market Predicts Obama Victory?

Is the action in the stock market predicting an Obama win in November?


More Positive Housing News

The NAHB Housing numbers were released this morning and it came in better than expected with a reading of 37 versus expectations of 35. Last month the reading was 35.

The components that give readings on current sales conditions/traffic and expectations rose to their highest level in 5 years. 

There was one interested note that the builders are frustrated with inaccurate appraisals and continued difficulty to credit for potential home buyers. This is what happens after a bubble bursts - the extremes flip.

After the numbers the iShares U.S. Home Construction ETF ($ITB) is up 0.25%.

2 REITs Looking Good Entering the Day

Sifting through my charts this morning I came across a significant number of strong charts that are at or near oversold levels. Two that caught my eye were in the same sector - REITs.

  • Digital Realty Trust ($DLR) - Owns facilities that are leased mainly to technology companies to house their electronic equipment (think cloud computing). The larger servers and storage devices need to be in well maintained facilities that DLR offers. Stock is holding above support at $75 and pays a 3.9% dividend yield.
  • Public Storage ($PSA) - Sitting on support at $142.50, the REIT owns and operates storage facilities around the country. The current dividend yield is 3.0%.

Tuesday, August 14, 2012

ETF of the Day - US Bonds Breaking Down

Shares of the extremely popular iShares Barclays 20+ Year Treasury Bond ETF ($TLT) are down 1.3% today and are trading at the lowest level in over two months. This action has occurred as the yield on the 30-Year Treasury yield is back to 2.83%, well above the 2.45% hit just a few weeks ago.

As money flows into stocks and out of bonds the price of U.S. Treasuries will fall and yields will increase. ETFs that invest in U.S. bonds will also fall in price as they have an inverse relationship to the yield on the Treasuries.

As TLT and its peers fall, the ETFs that are short U.S. Treasuries will rise. The ProShares Short 20+ Year Treasury ETF ($TBF) is up 1.4% today and have risen 6% in the last two weeks. Investors that are ready to give up on TLT can either sell their shares or be more aggressive and sell and turn around and go long TBF.

Breakout Stocks

As the S&P 500 sits within 1% of a new 4-year high there are a number of stocks leading the breakout charge to new highs. Several we own for our portfolio management clients at Penn Financial Group and others are on our WatchList. A few that I find interesting are below.

  • Brookfield Infrastructure Partners ($BIP) - The stock is up for the 10th consecutive session and is at a new all-time high. Over the last year the stock has gained 32% and even after the rally it still pays a 4.3% dividend yield.
  • Philip Morris International ($PM) - Apparently people outside of the U.S. continue to smoke at a solid pace as the stock is back to a new all-time high. The dividend yield is 3.4%.
  • Ocwen Financial ($OCN) - The mortgage servicing company is on a tear recently and is up 83% in the last 12 months. This stock could move higher, but needs a sizable pullback before the next leg higher.
  • Packaging Corp of America ($PKG) - A multi-year high for a company that provides packaging goods for other corporations tells me the economy is not that bad. If demand for PKG's products is high it correlates directly to the health of the economy.

ETF Assets over $1 Trillion - Are you Missing Out??


With ETF assets increasing at a steady pace and set to overtake mutual funds in the coming years there are still a large number of individual investors that are not using the investment vehicles. Exchange-traded funds (ETFs) are cheaper, more transparent, and easier to buy and sell than their dinosaur cousins the mutual fund.

If you are not yet embracing the world of ETFs you need to contact Penn Financial Group immediately for information on how to take advantage of the options available.

Phone: 1-877-383-7366
Email: info@pennfinancialgroup.com


Monday, August 13, 2012

Investing in CDs vs. Stocks

The average interest rate on a 5-year CD has fallen below 1.0% for the first time in history.

Basically you will lend the bank your money for 5 years with an annual interest rate of 0.99%. Wow, now that sounds like one heck of a deal for the BANK. Yes the bank, not you!!

With rates so low it will likely lead to more cash going into stocks, corporate bonds, home improvements and maybe even a new home purchase.

If I had to choose investing in a 5-year CD or a quality diversified exchange-traded fund that invests in stocks the choice is a no-brainer - Stock ETF wins all day!!

Must See Chart

The stock market tends to move in a long-term pattern that includes 16-18 years of a bull market followed by a similar timeframe of sideways movement.This pattern can be traced back over the last century.

The chart below shows the Dow Jones Industrial Average dating back to 1945. The area that I want you to focus on is from 1966-1982, where if you invested in the Dow you would have gone absolutely nowhere in 16 years. More importantly during that time the percentage of total household financial assets in stocks and mutual funds fell to record lows.

During the current 12 year sideways movement the percentage has also dipped dramatically to the lowest level since the last 1980's. What does this mean to you and I? Well it means that when investors give up on stocks due to under performance it is the best time to begin building a portfolio of stocks.

The percentage began to pickup in early 1982, similar to the bottom in early 2009. For the next 18 years the stock market rallied to new all-time highs. Could a similar situation be upon us? I am not sure the rally lasts two decades, but what I do know is that this chart is evidence that using a contrarian strategy for investing will work over the long-term.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/08/20120813_boomer1.png

Low Volatility - High Dividends

In this crazy market there is an overwhelming demand for investments that pay high dividends and that are not caught up in the daily swings of the market. One area that is often overlooked is Preferred Stocks.

They hybrid between stocks and bonds have been a top choice of wealthy investors for years, but the average investor steered clear. We have owned preferred stocks for our clients as well as ETFs that investment in them for years.

Our favorite preferred stock ETFs for clients and subscribers of The ETF Bulletin is always available to our members. I am not going to give everything away today. However, there are 2 preferred stocks that have caught my eye recently and I will share them with you.

Annaly Captial Preferred A ($NLY-PRA) has a yield of 7.1% and has been moving sideways for months as the stock ($NLY) has done the same, but with much more volatility.

Public Storage Preferred P ($PSA-PRP) has a yield of 5.7% and has been on a slow uptrend for the last year. The stock ($PSA) has had a better overall return, but a lower yield and significantly higher volatility. 

There are pros/cons to both preferreds versus the common stock and they are not the best fit for all investors, but they are worth a look.

Junk Municipal Bonds Hit the WSJ

In this weekend's edition of the Wall Street Journal a columnist looks at the allure and relative value of high yield municipal bonds. The "junk" status bonds are often viewed as risky due to an elevated default risk, however the article shows that they are actually less likely to default than high yield corporate bonds.

Here at Penn Financial Group we have been investing in junk municipal bonds for years and after Meredith Whitney's terribly wrong call on municipals I adamantly backed the sector on TV and in the major newspapers. We have owned the Market Vectors Municipal High Yield Bond ETF ($HYD) for well over a year and have some big unrealized gains.

I suggest you look over the article if you are interested in learning more about the sector.

Click Here to Read.

Also give us a call/email if you wan to learn about other ETFs we are investing in before the major media find them.

1-877-383-7366
info@pennfinancialgroup.com

Tuesday, July 24, 2012

Poor Manufacturing Numbers - Good for the Market?

A slew of manufacturing numbers from around the globe were released in the last few hours. And the overwhelming theme was deceleration (except China).

China HSBC Flash PMI for the month of July was 49.5, a boost from the 48.2 reading a month earlier and the best level since February. This can be viewed in two ways. One it shows that the easing measures taken by China have helped improve the number. The other way to view it is that the number remains below 50 and shows demand and employment is still too low for the likes of the government. Even though the latter is negative, it does open the door for more easing, which should lead to improvement in the number and a higher stock market.

The Eurozone Flash PMI fell to 44.1 in July from 45.1 in June, hitting a new 37 month low. The silver lining is that the Services PMI is at a 4 month high of 47.6. The number should be of no surprise given the situation in the Eurozone.

The July Flash PMI in the US fell to 51.8 from 52.9 in June. Output and New Orders also fell from the prior month. The lone bright spot was Employment, which recorded an increase to 52.9 from 52.8 in June.

Considering all the numbers from around the world are not where they should be, it does open the door for more coordinated quantitative easing and stimulus packages. It has been working in China and the EU is more than likely going to be forced to do more, and the US now has the ability to implement QE3. The combination will result in a stock market rally the investors do not want to miss out on.


Home Prices Rise for First time in 5 Years

According to the Zillow Home Value Index, prices for home in the US rose by 0.2% year/year in the second quarter for its first gain since 2007. The average price for a home is now $149,300 and the increase was brought on by a boost in demand for homes, record low interest rates, and a tight supply of properties for sale.

Zillow goes on to say, " The solid Q2 in the midst of economic headwinds indicates the housing market has some organic fundamental strength on its own."

The homebuilders and related stocks have been outperformers this year and got a boost yesterday when Goldman Sachs upgraded the sector.

Some of our favorite homebuilders include: Lennar ($LEN), Toll Brothers ($TOL), along with two ETFs ($XHB and $ITB).

Monday, July 23, 2012

Homebuilders Rise as Market Tumbles - Time to BUY!!

An upgrade from Goldman Sachs helped propel the Homebuilders sector higher on Monday even as the overall market fell by over 1%. The firm upgraded the sector to Attractive from Neutral and cited the beginning of a long-term positive trend for the stocks.

Here are some of the positive factors Goldman believes the sector has and my thoughts in parentheses:

  • Renewed home price appreciation (likely considering prices are at or near multi-year lows).
  • 2011-1H12 job growth supports 200,000 more new home sales without further job adds (this I do not totally agree with because I am not sure where a big increase in home sales comes from without new jobs).
  • shadow supply has declined significantly, lowering the risk of another price shock (this is true and puts a bottom underneath current prices, thus limiting downside).
  • housing policy has been supportive since August 2011 and should remain so (well the government tried, but failed; however low interest rates by the Fed help keep mortgage rates at all-time lows that is a plus).

MDC Holdings ($MDC) was put on the Conviction Buy List and is up 5.6%. The SPDR S&P Homebuilders ETF ($XHB) is down 0.3% and the iShares US Home Construction ETF ($ITB) is up 0.2%.

Holding Up in a Sea of Red - Bonds and Dollar

There are not many stocks/ETFs that are holding their head above water today with the major US indices down nearly 2%. The selling has been fueled by heightened concerns in Europe, in particular Spain (poor GDP) and Greece (needs even more time).

Other than the inverse ETFs that move in the opposite direction of the index they track, the few bright spots today are Bond ETFs and the US Dollar ETF. With the Euro falling to a new 2-year low versus the greenback the PowerShares US Dollar Index Bullish ETF ($UUP) is up 0.50% to a new one-year high.

As far as bonds, the iShares Barclays 20+ Year Treasury ETF ($TLT) is up 1% and at the best level ever. Joining treasuries at a new all-time high is the Market Vectors High Yield Muni Bond ETF ($HYD), which is gaining 0.25%.

Corporate bonds are down slightly (-0.1%) as measured by $LQD and the Mortgage REIT ETF ($REM) is also holding up well with a loss of 0.3%.


Spanish Ship Sinking the World

A worse than expected GDP number out of Spain overnight has led to mass selling of equities in the country. The selling did not stop there as its European neighbors have followed the lead.

Spanish GDP -0.4% Q/Q in Q2, the Bank of Spain estimates vs. -0.3% in Q1. This marks the third straight quarter of negative growth. After the news hit the yield on the 10-year bond spiked. It was last up 23 basis points to nearly 7.50%. The word on the street that yields above 7.0% were not sustainable. It will be interesting to see if Spain has to ask for more of a bailout? Or does the country survive with such high yields?

The reason the yield is important is because that is the rate that the country must borrow money. The higher the yield, the higher the interest payment and for country's already in trouble, a spike in yields could cause a default.

One silver lining is the Eurostat release of EU debt numbers today. The report shows government debt to GDP ratios for all EU countries. The worst is Greece with a 132.4% reading, but Spain falls in the middle with 13 countries with worse ratios. Spain is currently at 72.1%.

The Spain ETF ($EWP) is set to open lower along with the SPDR S&P 500 ETF ($SPY). The futures in the US are pointing to a loss on the open of 1.3%.

Friday, July 20, 2012

Jeremy Lin Leaving NY - Good for Stocks?

When New York Knick fan favorite Jeremy Lin made his first start on 2/9/12 the price of Madison Square Garden ($MSG) shares were $29.49. In the following months the stock took off and rose as high as $39.57 in early July even though the team was not successful in the NBA playoffs. Since that time the stock has been down 11 out of 12 days as there was speculation, which became reality, that Lin was going to leave the Knicks for another basketball team.

The 30% rally from the time Lin started to the recent high easily outpaced the gain of only 2% for the S&P 500. So was the rise in the stock that owns the NBA's New York Knicks based on a no-name guy from Harvard that started less than 30 games?

There are many that believe so and that is why the stock has taken such a hit in the last two weeks. I on the other hand never bought into what was termed, "Linsanity". I feel it is a great move the over-hyped player is gone and it will eventually be a boost for the shares of $MSG. By not matching a ridiculous $25 million offer for Lin, the Knicks made some fans angry, but financially it was a great move.

As a matter of fact buying near $35, closed today at $35.27, is a solid investment for long-term investors. Let the Houston Rockets deal with the unnecessary hype that this kid from Harvard that will be a bust brings to town.


Two New IPOs Rocking Today

Facebook who??

Two technology IPOs are rocking and rolling today after they began trading for the first time as public companies.

Palo Alto ($PANW) a security software company and travel company Kayak Software Corp ($KYAK) are both up big in their first few hours of trading. Add that to yesterday's strong debut for retailer Five Below ($FIVE) and it was a decent week for IPOs. And next week looks like it will be active as well with 8 more names ready to hit the public markets.

A name that I know and love because of their great food and wine is Del Friscos Restaurant Group; the stock will begin trading next week.

The First Trust IPOX 100 ETF ($FPX) is down 0.6% today but has been in a solid uptrend over the last 6 weeks. The new IPOs this week are not in the ETF yet, but will most likely be added when the portfolio is rebalanced.

Chipotle Drags Down Entire Sector -Time to Buy Starbucks

Chipotle's ($CMG) revenue miss this past quarter was enough to hammer the widely-loved stocks price in early trading. At last check the stock is losing nearly 1/4 of its value as investors worry about slowing customer traffic and potentially higher food costs.

It is amazing how a stock gets crushed even though revenue rose by 21%, however it missed expectations by 2%. This is the stock market world we live in these days and why we must always do as much homework as possible to avoid a $CMG situation.

The unexpected negative news out of $CMG has taken its toll on other big name stocks in the sector. Dunkin' Brands ($DNKN) down 5%, Brinker International ($EAT) down 4.5%, Panera ($PNRA) down 5%, and Starbucks ($SBUX) down 4%. I am not sure what burritos have to do with coffee? Even the potential of rising input prices will not hurt Starbucks as much because their big cost is coffee beans, not commodities affected by the US drought.

We already own Starbucks for clients and look as today's sell-off as a buying opportunity for the stock as well as others in the sector.

Thursday, July 19, 2012

Airline Stocks Fall on Rise in Oil - Buy Now?

The airline stocks as measured by the Guggenheim Airline ETF ($FAA) are down over 2% today and have fallen 5% in the last 3 sessions from a multi-month high. The number cause has been a 15% rise in the price of light sweet crude oil in the last 2 weeks.

One of my favorite names in the airline sector, US Airways Group ($LCC) is down over 6% today and has lost 13% of its value in the last week. Last Thursday LCC closed at its best level since early 2008, now it is struggling to stay above its 50-day moving average.

The correlation between airline stocks and the price of oil is clear. If you feel oil is going to fall, a smart play would be $FAA or some of the better acting airline stocks. On the flip side, if you believe in $125/barrel oil in the coming months, please avoid the airline stocks.

I personal feel oil will be in the triple digits, however the price of black gold will fluctuate and when the triple digits arrive it will likely create an attractive buying opportunity for airline stocks. Therefore my strategy is to be patient and look for lower prices in the sector.

Millionaires Buy Stocks, Average Joe Buys Bonds

Millionaires added U.S. stocks more than any other asset in the latest year as average investors fled to bonds, according to a survey by Fidelity Investments.

Click to read the full article.

This should not be a big surprise as the average investor typically sells at the bottom and will wait for the news to turn positive before buying. Unfortunately when the headlines are brimming with confidence the stock market has already rallied. This leads to the Average Joe's missing out on making money in the stock market.

When everyone is zigging, you need to zag. Be a contrarian to make money investing.

Why Earnings are Important to Bull Markets

The rally this week to the best level in months for the S&P 500 has been led by better than expected earnings reports out of a large number of influential companies. Yesterday Intel ($INTC) beat estimates and the stock rallied over 3%. Last night after the bell Ebay ($EBAY) also beat and is up over 5% in pre-market trading.

With all the talk about earnings expectations being too high and the fear of the global economy slowing, corporations continue to surprise to the upside.

There are two important lessons to take from the situation.

  • There is a major disconnect between the economic headlines and the stock market. What this means is that if you only read the paper or the internet you would be convinced the stock market has been getting crushed the last couple of years. Where in reality the stock market has more than doubled from the 2009 low.


  • Earnings are important. Investors buy a company based on the earnings and expected earnings. If the S&P 500 companies can report earnings of $105/share for 2012 (it looks like they will and possibly beat that number), it suggests the index should be at an all-time high above 1600 if it were to trade at its average valuation.

Earnings are just one reason I remain bullish on stocks.

Thursday, June 21, 2012

Midday Market Update

Stocks are drifting to the lows of the day on the back of another round of weak economic numbers. The weekly jobless claims remained high (see earlier blog post) and the Philly Fed reading fell to a -16.7, well below the estimate of 0.

Combine that with weak manufacturing numbers out of Germany and China last night and it was the perfect storm for investors to continue selling after the markets best 4-day winning streak of the year ended yesterday.

The one silver lining I see out of today's economic numbers is that it is one more reason for the Fed and other central banks around the globe to ease monetary policy further. The odds of QE3 and other actions from foreign countries increased again today and I believe it is almost a certainty in the next couple of months. If I am correct it will result in a rally in stocks and commodities and a drop in the US Dollar. This is one major reason I remain bullish on the US and emerging market stock markets.

Breaking Down the Jobs Numbers

The weekly jobs number was released this morning at 8:30 and it appears the labor market is not improving. Here is the breakdown:
  • Weekly jobless claims came in at 387,000 a decline of 2,000 from last week but still way too elevated for even a modest economic recovery.
  • The claims from the prior reading were revised up by 3,000 to 389,000. This has been an ongoing trend - revisions are almost always higher the following week. The number could hit 390,00 if that trend continues next week.
  • The 4-week moving average increased by 3,500 to 386,250, the highest level since December of last year. This number is more important because it shows the trend and unfortunately it is going in the wrong direction.
  • The big question is whether this trend suggest the monthly numbers will be even worse? Unfortunately it appears that will be the case when the June numbers are reported in early July.

Wednesday, June 20, 2012

Investing "Cheap" Brazil

In a recent article in the Wall Street Journal the country of Brazil was highlighted along with the entire emerging markets sector as "cheap" based on valuations. The Bovespa, which is the major Brazilian stock index, is trading with a P/E ratio of 9.2 , below the 12.0 for the US and 9.7 for the Stoxx Europe 600.

In 2011 the Brazilian economy expanded by 2.7% and recent estimates have 2012 coming in at 2.5% and 2013 at 4.3%. The situation in Europe has weighed heavily on the country, however a government willing to stimulate the economy could boost the future growth. The valuations combined with good growth numbers make Brazil attractive as a long-term investment option.

Brazil ETFs

  • iShares Brazil ETF ($EWZ) invests in the large-cap stocks in the country.
  • EG Shares Brazil Infrastructure ETF ($BRXX) is a niche ETF that focuses on infrastructure-related stocks in the country. With the World Cup and Olympics coming to Brazil in the next few years it could spend upwards of $1 trillion on infrastructure.

Brazil Stocks
  • Brasil Foods ($BRFS) is a food supplier in the country that has pulled well back from higher earlier in the year and is now trading with a PEG of 0.72 - extremely undervalued.
  • CIA Energetica Minas Gerais ($CIG) is a large utility company in Brazil with a 3.5% dividend yield.


Fed Highlights

A few highlights from today's Federal Reserve announcement.

  • The Operation Twist was extended until the end of the year.
  • The statement said the Fed is prepared to take additional steps necessary.
  • Statement: "Growth in employment has slowed in recent months ... Household spending appears to be rising at a somewhat slower pace."
  • The market initially falls big on the news that a new round of QE was not announced, but it quickly rebounded to to levels (-0.3%) it was trading at before the announcement.
  • Expect more volatility around the 2:15et presser with Ben Bernanke.
  • Gold also took a dive after the announcement, but is trying to work its way back. $GLD is down 0.9%

Will Fed Extend Operation Twist??

The big question looming over the midday Fed announcement is whether or not they will extend Operation Twist or give any hint to a new quantitative easing plan?

Through the first 90 minutes of trading the stock market has been teetering between a loss of 0.3% and breakeven. I expect the narrow trading to remain until the Fed announcement is made around 12:30et. Overall the market is looking good after the S&P 500 broke above its 50-day moving average for the first time in months.

Sectors moving today include:

  • Consumer Staples ($XLP) are falling after Proctor & Gamble ($PG) has poor guidance last night.
  • Financials ($XLF) are moving higher after a rally in shares of JPMorgan Chase ($JPM).
  • Overall the moves (up and down) are muted.

Tuesday, June 19, 2012

Midday Market Update - SPY Breakout

Lunchtime on the East Coast has the stock market up 1% on the back of a slow news day out of Europe as a relief rally is underway.

Some of the hardest hit sectors/stocks are moving higher today as the risk-on trade is back in full force for at least the day. I expect the momentum could continue for a few more days.

The Solar Stocks are moving again with the Guggenheim Solar ETF ($TAN) up 2.2%to the best level in over a month. Do not get too excited, the ETF is still down 22% for the year!

Corn futures are spiking for the second consecutive day as hot and dry weather in the Midwest have speculators believing the result could be a lower crop output. The Teucrieum Corn ETF ($CORN) is up 8.5% in the last two sessions. One of our holdings in The "new" ETF Bulletin newsletter is also enjoying a rally on the corn news - Market Vectors Agribusiness ETF ($MOO) is up 2.3% today a new one-month high.

The SPDR S&P 500 ETF ($SPY) is trading above its 50-day moving average for the first time since 5/3/12 and the index has confirmed an intermediate-term breakout with today's move. Support for $SPY is now at the $135 area and the last trade is $135.83.  A few days of closing above the 50-day moving average is a very bullish signal for the near-term future of the ETF.


Free Colorado Seminar Details


At the end of the month Matt McCall will be a the featured guest at a Winning on Wall Street investment seminar taking place in Broomfield, Colorado.

This will be Matt’s first speaking appearance in Colorado in many years – do not miss the opportunity to find out what stocks and ETFs Matt is buying for the second half of the year.

The seminar will cover topics that range from:

·      Investment Ideas for the remainder of 2012
·      Increasing your savings income to 10% with ETFs and stocks
·      Learning to become your own Money Manager
·      Using ETFs for sector rotation and generating income
·      And the famous Crystal Ball Readings of your stocks and ETFs

The seminar is 100% FREE, but you must sign-up today to reserve your seat as there will be limited availability.

The seminar is taking place on Saturday June 30th at the Omni Interlocken Resort in Broomfield, Colorado from 10am to 1pm local time.

To sign-up today and reserve your Free Seat please go to:
www.WinningonWallStreet.com or call 303-442-6075

Markets Open Higher - Sector Leaders

The broad markets opened higher after the news out of Europe slowed and the yield on Spanish bonds halted their rise to unbearable levels.

This may be a short-term reprieve for stocks when it comes to news out of Europe, but as investors we will take what we are given. Plus the fact there are many other reasons to be bullish on the U.S. and Emerging Market regions.

The "Risk On" trade is definitely back on today and it is evident in the leading sector ETFs this morning. The top performers are:
  • iShares Biotech ETF ($IBB) up 2% and hitting a new all-time high!
  • SPDR S&P Retail ETF ($XRT) up 1.7% on the back on the weekly retail numbers.
  • SPDR Financial ETF ($XLF) up 1.5% as the fears of a banking collapse in Europe subside for the day.

The top performing Country ETFs are the countries that have caused most of the pain throughout the global markets. The top performers are Greece ($GREK), Italy ($EWI), and Spain ($EWP).

Monday, June 18, 2012

Market Wrap - Disappearing Greek Rally

As the election results came pouring in yesterday that the Greek elections will likely lead to the country remaining in the EU for the near future the consensus was a rally would take place today in the US markets. A rally overnight was greeted with selling this morning and an up and down session that saw the S&P 500 finish the day with a minimal gain of 2 points. The gain was enough to close at the best level in over a month for the index.

The attention quickly moved from the Greek election to the situation in Spain and Italy. The yields on the Spanish 10-year bonds rose well above 7% to levels that nearly every believes is unsustainable. The iShares Spain ETF ($EWP) fell by 3.5% and the iShares Italy ETF ($EWI) lost 2.8%. Even the Global X Greek ETF ($GREK) lost 2.5% after a major rally last week.

The SPDRs S&P 500 ETF ($EWP) is on the verge of breaking above its 50-day moving average for the first time since early May if it can close above $135/share. The ETF closed today at $134.41.

The rest of the week will be driven by news and rumors out of Europe as well as the Fed announcement midweek. Look for above average volatility.

**I remain a buyer on weakness!!

The Greek Election and Your Portfolio

Now that the anti-climatic Greek election is hours behind us, we can now turn our attention back to the U.S. market and making money. Or at the very least, not losing money.

The situation in Greece is still a mess. Just because the country will stay in the E.U. for the near-term it does not make the mess go away. If the New Democracy party would have lost yesterday it would have sent the markets much lower instead of flat (as they are midday on Monday). Many expected the market to rally on the news of the New Democracy victory on Sunday night, but as I was broadcasting live late Sunday I made it known that traders would sell into the strength and they did just that on Monday morning.

I do not want to get into the specifics of the Greek situation, but I want to cover briefly what the situation in the E.U. means to your portfolio.

  • Expect more volatility for the remainder of the summer as Greece attempts to put together a government and Spain deals with yields above 7.25%.
  • In the near-term the news out of the E.U. (other than Spain) could slow, thus putting the emphasis on the U.S. economic numbers. They are mixed with the government numbers trending lower, but U.S. corporations are doing well. This makes it difficult for investors cannot disconnect the two. Long-term investors must look at solid companies as well as diverse ETFs.
  • If the Spain yields continue to rise and the rhetoric out of the E.U. does not improve expect a coordinated effort by central banks around the globe to inject liquidity into the markets. This will result in stocks and commodities rallying. The odds of this happening are approximately 70%.

My 5 Favorite New 52-Week Highs

With the market flat at midday there are a handful of stocks breaking out to new highs and there are five that are grabbing my attention. They are either already on my WatchList or have been added today on the breakout.

Cerner ($CERN) - Healthcare IT company that is breaking out again. I love the business model.

Ebay ($EBAY) - This stock has been on my radar due to its PayPal unit and I am looking to enter in the near future.

Ross Store ($ROST) - The discount retailer has one of the best charts in the market and based on the current and future of the consumer it should continue to be a winner.

Equinix ($EQIX) - A play on the cloud computing craze, the stock has been a huge winner. That being said, with my view that money will start to move into technology the remainder of the year, EQIX looks good on a pullback.

iShares High Dividend Equity ETF ($HDV) - Had to add an ETF on here and one that we own for some clients. The large-cap dividend stocks continue to outperform and what better way to capture it than with a low-cost ETF.

Monday, June 11, 2012

Retail Investors Giving Up on Stock Market

From Seeking Alpha:

Since Facebook's bungled IPO, small investors have pulled out a net $4.9B from U.S. stock funds - including $3B in the week afterwards - adding to ~$370B of withdrawals following the "flash crash" of May 2010.


I would love to know where the retail investors is going? Are they putting their money into money markets? Bonds? Under their bed? 


With bond yields near historic lows and money markets paying next to zero, how will investors be able to grow their money for retirement?


Please add comments below!!

Wednesday, May 23, 2012

Searching for Yields - Look at Stocks Not Bonds

A chart by Bespoke Investment Group shows that 271 of the 500 stocks in the S&P 500 offer a dividend yield higher than the yield on the 10-Year Treasury.

And considering only 397 of the stocks in the index pay a dividend, it suggests 68% of all dividend paying stocks in the S&P 500 pay a higher yield than the 10-year.

Tuesday, May 22, 2012

Tuesday, May 15, 2012

Buy Signal on the S&P 500

The SPDR S&P 500 ETF ($SPY) that tracks the major US index is on the brink of generating an RSI Crossover Buy Signal. This occurs when the RSI reading crosses from oversold back into neutral territory. The last few times this has happened the $SPY and overall market rally for at least a week.

The odds are pointing to a short-term bottom in stocks and it could be a good time to pick up your favorite beaten down stock and ETF on your WishList.

How long such a rally lasts will be determined by the strength of the buying in the coming week.



ETF Loser of the Day - Greece

The Global X FTSE Greece 20 ETF ($GREK) is falling another 4% today as the odds of the country pulling out of the EU to go at it solo increases. The Greece stock index is trading at the lowest level since 1990!

The ETF is now down 45% from the mid-February high, but is only down 20% for 2012 due to a big rally to begin the year. Investors hoping for the best out of Greece have been buying the ETF on the pullback, but have been getting burned.

This is one situation where I would step back and let the gamblers play with this ETF and let them have restless nights.


ETF of the Day - Social Networking

The Global X Social Networking ETF ($SOCL) is higher by 1.7% in early trading as the major stock indices are near breakeven. The move is driven by news last night that Facebook ($FB) raised its pricing range.

Even though Facebook is not yet publicly traded and now in the ETF, it gave a boost to some of its global competitors such as Renren ($RENN) and Quepasa ($QSPA). Another member of $SOCL that is rallying today is Groupon ($GRPN), which reported better than expected earnings and is up 17% this morning.

Investing in $SOCL is still risky because several of the major holdings have yet to even turn a profit, so be cautious if you choose to proceed.

Monday, May 14, 2012

S&P 500 Yield is Bullish Signal


The yield on the S&P 500 is now 51 basis points higher than the yield on the 10-Year US Treasury Bond. The S&P 500 has only yielded more than the 10-Year once before in the last 50 years - at the 2009 low.

Could this be yet one more sign that investors should not be panicking and selling this week?


http://product.datastream.com/dscharting/gateway.aspx?guid=dfba5b24-9049-47fd-900a-0d56969de46c&chartname=U.S.%20dividend%20yield%20vs%20bond%20yield&groupname=U.S.&date=20120514&owner=ZRTN274&action=REFRESH


High Yield Bond ETFs Around the Globe

My latest article on high yield corporate bond ETFs that cover the globe.

CLICK HERE TO READ.

ETFs that Rise When the Market Falls

My latest article on ETFs that Rise When the Stock Market Falls.

Click here to read.

Friday, May 11, 2012

Short Interest Ratio - Calling a Market Top?

The short interest ratio on the NYSE hit 13.1 billion shares at the end of April, an increase of 3.9% from the previous month and the highest level of the year.

What is interesting to note is that last year at the end of April the short interest ratio was at the high for 2011. And the stock market topped out around that time before a pullback began.

Could the short interest ratio be calling for another top? Or should we take the contrarian view?

I am in the contrarian camp today!!

My favorite bank stock is....

US Bancorp ($USB) is my favorite bank stock due to its chart, its fundamentals, the dividend, and the fact it is not caught up in the same mess as many of the large international banks. More to come later, but wanted to share it with you as many people were asking.

Here is the chart below (and yes it is up today with $JPM down 9%).


Thursday, May 10, 2012

Special Market Update - Why I Remain Bullish

Special PFG Client Update

In the last five weeks the landscape has changed for investors due to the situation in Europe and the economic numbers in the U.S. The elections this past weekend in Greece and France have the market on edge as fears of more frivolous government spending arises along with fears of a continued collapse of sovereign debt.


I felt it was time to take a step back and analyze the big picture to help explain the situation to clients and subscribers.


1. Europe – The situation in Europe is ever-changing. In the last few weeks the elections in Greece in Europe have the potential to have anti-austerity as the platform versus cutting government spending. In Spain the government nationalized the 4th largest bank. The U.K. is officially in recession. The news is not positive and it has made its way across the pond and put a lid on the early 2012 stock market rally. This is a situation I consider a negative for the market, but that could change depending on several government decisions.


2. Employment – The unemployment number remains just above 8%, however the real number is likely much higher due to the manner in which the government tallies the numbers. The participation rate (percentage of working age people in the US that have jobs) is at its lowest rate since late 1981. This is not a good number. The one silver lining is that production remains decent despite the large amount of unemployed.


3. Technicals – The chart shows a 5% pullback from multi-years for the S&P500 and that has revealed some cracks in the foundation, but it is not yet falling apart. The 1343 level on the index on a closing basis is a level that must be watched closely in the short-term. That level is the closing low on 3/6/12 and the intraday low on Wednesday. Keep in mind the market is only 5% from a multi-year high – you must view the big picture.


4. US Economic Numbers – The economic numbers released by the government and independent firms have been mixed over the last five weeks. It is true that the majority are losing steam. It is also true that most are not at the point of pointing to a recession. The question that no one can answer today is if the slowdown is temporary or the beginning of a new trend. This is one area we watch closely every day.


5. The Fed – Do not fight the Fed is the mantra you have to take as an investor. You may not agree with the moves or lack thereof by Bernanke and his cohorts, but do you want to be right or make money? The likelihood of QE3 from the Fed continues to increase and if such an act takes place expect the market to rally to new highs. Our best guess is that QE3 occurs at some point this summer and stocks rally on the news.


6. Corporate Profits – The first quarter earnings season was a pleasant surprise and US corporate profits are at the best level ever. That statistic is touch to argue with and is one reason why stocks have the ability to move higher. At the end of the day, stocks move higher based on earnings.


7. Investor Sentiment – The latest AAII reading shows that investors are at the most bearish level since last October. So why is this bullish? Because we take the contrarian view. Similar to when our phone rings often with clients concerned about the market – it is often time to begin buying. With the internet, financial TV, and other media outlets it creates everyone to be on one side of the trade. Typically that trade is too late and it is better to go against the crowd.


8. Valuations – With our prediction for earnings of between $105 - $110/share for the S&P 500 in 2012 the P/E ratio based on the middle is 12.6. Well below the average of 15. For the S&P to get to the average P/E ratio it would put the index at 1612 – a new all-time high.


To make the update easier to understand I color-coded the 8 topics. The two red are negative, the two orange or moderate, and the four green are positive. The green outweigh the reds and therefore we continue to stand firm in the bullish camp today.


Sincerely,


Matthew D. McCall

Four Stocks with Bullish Charts

After combing through hundreds of charts this morning, a few were able to stick out and garnered more attention. Four of those stocks are highlighted below.

  • McKesson Corp ($MCK) - Delivers medicines, pharmaceutical supplies, and care management products for the healthcare industry. Trades with a PEG of 0.88 and pays a 0.9% dividend.
  • US Bancorp ($USB) - Banking and financial services center that has over 3000 branches in the U.S. PEG of 1.15 and 2.5% dividend.
  • Cooper Companies ($COO) - Medical supplies for vision care as well as healthcare deliver for women. PEG ratio of 1.0 and dividend of 0.1%.
  • Cerner Corp ($CERN) - Healthcare IT company with a PEG of 1.8 and no dividend.

4 Expensive Stocks to Avoid

My latest article on 4 Expensive Stock to Avoid. They are....

Click To Find Out

REITs Set to Outperform - 3 Favorites

The recent 5% pullback in the S&P 500 brought down most sectors along for the ride lower. One sector that held up well is the REITS. The iShares REIT ETF ($ICF) only fell by 1% and is back near its multi-year high.

As the ETF lost a small portion of its value, a handful of REITs were able to continue the rally and recently hit new highs. Some of my favorites in the group are listed below.

  • Tanger Factory Outlet ($SKT) - Owns outlet stores around the country - 2.6% dividend.
  • Post Properties ($PPS) - Owns multi-family apartment buildings - 1.8% dividend.
  • Digital Realty Trust ($DLR) - Owns data centers and specialized tech centers - 3.9% dividend.

Wide Moat ETF vs. S&P 500

My article on comparing a new ETF based on the wide moat strategy and the S&P 500 - Guess who wins??

Click to Read

Consumer Comfort Waning

The Bloomberg Consumer Comfort Index fell again this past week and the downtrend that began in March remains intact. The trend shown in the index is eerily similar to many other economic indicators.

The question is, whether this is a normal pullback or the start of a more troubling economic time ahead?


When Everyone is Bearish - Time to Buy

Below is the most recent AAII Sentiment numbers. As you can see, investors have turned dramatically bearish and away from the previous bullish stance. When this happens I go against the grain and look for buying opportunities.

Keep your eye out for some stock/ETF ideas in the blog later today.


The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.

Survey Results

Sentiment Survey
Results
Week ending 5/9/2012 Data represents what direction members feel the stock market will be in the next 6 months.
Bullish 25.4%
down 10
Neutral 32.5%
down 3.6
Bearish 42.1%
up 13.6

Change from last week:

Bullish: -10.0
Neutral: -3.6
Bearish: +13.6


Long-Term Average:

Bullish: 39%
Neutral: 31%
Bearish: 30%

Monday, May 7, 2012

Cost of Renting at an All-Time High

According to data firm RealFacts the average monthly rent in the US hit $1,008, the highest level ever, besting the old high set during the third quarter of 2008.

As the difficulty to obtain a loan increases and the number of unemployed Americans remains high, renting becomes the only alternative for many. As a NYer I am accustomed to high rents, but now parts of the country that in the past had the luxury of cheap rent are rising dramatically.

From an investment viewpoint there are a handful of apartment REITs available. They include:
  • $EQR
  • $UDR
  • $ESS
  • $AIV
  • $CPT

Rig Count Falls in April

Baker Hughes Incorporated ($BHI) announced today that the international rig count for April 2012 was 1,178, down 14 from the 1,192 counted in March 2012, and up 49 from the 1,129 counted in April  2011.

The average U.S. rig count for April 2012 was 1,961, down 18 from the 1,979 counted in March 2012 and up 171 from the 1,790 counted in April 2011.

The worldwide rig count for April 2012 was 3,297, down 366 from the 3,663 counted in March 2012 and up 195 from the 3,102 counted in April 2011.   

** The importance of this is that as more rigs come offline it lowers the supply of oil and natural gas in the market place. The less supply will lead to higher prices if demands does not drop.

Related ETFs: $USO $UNG $XLE 

Germany vs. Spain

German Factory Orders rose 2.2% in March vs. 0.6% previously, and sharply higher than estimates for 0.5%.

Meanwhile, Spanish Industrial Production declined today by
dove 7.5% Y/Y in March vs a 5.3% decline the previous month, and a 4.4% contraction the month before that.

Two of the largest nations in the EU are moving in opposite directions. One saves as the other borrowers. Guess who is who?

Here is a troubling chart of the Spanish Industrial Production numbers.
http://product.datastream.com/dscharting/gateway.aspx?guid=01740058-f5d5-4c9c-97ac-0234f08d1ab3&chartname=Spain%20industrial%20production&date=20120507&owner=ZRTN274&action=REFRESH

Monday, April 30, 2012

Bond Yields at 3-Month Low

The yield on the 10-year US note has fallen to 1.91%, the lowest level in nearly 3 months. This is a surprise for several reasons including the fact that stocks have performed well and the same time as US Treasuries.

Why is that?

One pretty simple explanation could be the Fed and "Operation Twist" that has the Fed buying Treasuries and artificially keeping interest rates low even as money goes into stocks. I cannot see this hand-in-hand movement continuing for the long-term and if stocks continue to make new highs it will be inevitable that Treasuries will fall and yields could skyrocket higher.

Natural Gas Set for a Rally

The number of rigs drilling for natural gas in the US fell to the lowest level in a decade as the low prices have forced companies to stop production. This could be the first step in the commodity ending its multi-year free fall.

The US Natural Gas ETF ($UNG) rallied over 10% in the last week from an all-time low. I am not suggesting the ultimate bottom has been formed. However, with less natural gas coming out of the ground it could create a bottom for the commodity as supplies drop.

Friday, April 27, 2012

The Real Jobs Numbers

My article and video on The Blaze that breaks down the "real" jobs numbers the country is facing.

Click here to watch and read.