April Fools’ review

A rash of disappointing economic data weighed on stocks. March auto sales largely declined from a year ago, manufacturing expansion slowed, and fewer-than-expected private-sector jobs were added to payrolls last month.

The Dow fell 77 points, with 22 of its 30 components retreating; the S&P 500 Index dropped 8; and the Nasdaq lost 20. Advancers narrowly led decliners on the NYSE and vice versa on the Nasdaq. The prices of Treasuries strengthened. Gold futures rose $25.00 to close at $1,208.20 an ounce, and the price of crude oil jumped $2.49 to settle at $50.09 a barrel, partly due to a report that showed a drop in gasoline supplies and a U.S. crude oil production decrease. Crude oil supplies, however, rose again last week to new 80-year highs.

In other business news:

Continue reading

Tagged , , , , , , | Be the first to comment

Understanding alternative investments: Part 1

Understanding alternative investments - picture of arrowsIdentifying and evaluating alternative investments. Dr. Brian Jacobsen joins Wayne Badorf, CFP®, CFS®, and Jon Lagerstedt to provide insight.

Listen to the podcast.

Wayne Badorf: Catchier than music from ‘Til Tuesday and A Flock of Seagulls, today we tackle alternative investments.

I’m Wayne Badorf.

Jon Lagerstedt: And I’m Jon Lagerstedt.

Wayne: This is The Essential Practice.

Joining us today, as we do every month, we have a special segment called Connecting Clients to Capital Markets. We are joined today by special guest Dr. Brian Jacobsen.

Brian Jacobsen: Thank you very much for having me back.

Wayne: It’s great to have you here and tackle this subject of alternative investments. We’re getting a lot of news about alternatives, and I wonder if you could start by what is an alternative investment and what are the characteristics?

Continue reading

Tagged , , , , , | Be the first to comment

Will consumer optimism boost retail store traffic?

Stocks declined following yesterday’s rally as oil prices fell for a third consecutive session. Today’s economic reports included gains for consumer confidence and home prices, but investors are most interested to see Friday’s March employment report. The Dow lost 200 points, with all but 3 of its 30 components retreating; the S&P 500 Index fell by 18 points; and the Nasdaq declined by 46. Decliners led advancers by three to two on the NYSE and on the Nasdaq. The prices of Treasuries strengthened. Gold futures fell $2.10 to close at $1,183.20 an ounce. The price of crude oil fell $1.08, settling at $47.60 a barrel.

In other business news:

Continue reading

Tagged , , , | Be the first to comment

Odd interview questions and odder answers

Stocks jumped on dovish comments from China’s central bank and increased merger activity in the health care sector.

The Dow jumped 263 points, with 28 of its 30 components gaining ground; the S&P 500 Index rose 25, led by the energy sector; and the Nasdaq gained 56. Advancers led decliners by nearly three to one on the NYSE and two to one on the Nasdaq. The prices of Treasuries weakened. Gold futures lost $15.40 to close at $1,185.30 an ounce, and the price of crude oil fell 19 cents to settle at $48.68 a barrel.

In other business news:

Continue reading

Tagged , , , , | Be the first to comment

Yellen: Fed’s here to help—not hurt—the economy

Sheets of paper with different interest rates listed.Federal Reserve (Fed) Chair Janet Yellen delivered a speech at a research conference sponsored by the Federal Reserve Bank of San Francisco. The title of Chair Yellen’s speech was, “Normalizing Monetary Policy: Prospects and Perspectives.” She didn’t bury the lede as she started by saying, “With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year. Of course, the timing of the first increase in the federal funds rate and its subsequent path will be determined by the Committee in light of incoming data on labor market conditions, inflation, and other aspects of the current expansion.”

The translation is that the Fed is preparing people for a rate hike because it will be appropriate to hike rates at some point, but the Fed’s not committed to a particular time or a particular path of rate hikes. It all depends on the data. The Fed isn’t omniscient, so it can’t commit to when it will hike rates, by how much it will hike, or even over what time frame it will hike rates. Heck, it may cut rates at some point if that’s what’s necessary.

Chair Yellen kept saying “later this year” for the when part of rate hikes. While that could mean midyear, I think it means she’s inclined toward waiting until later in the year. Chair Yellen likely doesn’t want to wait too long, as there is a risk of overshooting the Fed’s goal of sustainable full employment and stable inflation. There is also the risk of promoting too much risk-taking by investors. Despite the dangers of waiting too long, she seemed to downplay those risks relative to the risks associated with hiking too soon. She does not want to “impede continued solid growth in employment and output.”

Continue reading

Tagged , , , , , | Be the first to comment

Can worker productivity take the heat?

Without any major economic news to give them direction, stocks traded in a narrow range near their breakeven levels and eventually closed higher. The Dow rose 34 points, with 18 of its 30 components advancing; the S&P 500 Index gained 4; and the Nasdaq was up 27. Advancers led decliners by three to two on the NYSE and four to three on the Nasdaq. Treasury prices strengthened. Gold futures lost $5.00 to close at $1,199.80 an ounce. Crude oil gave up all of yesterday’s gains and slid $2.56 to settle at $48.87 a barrel.

For the week, the Dow lost 2.3%, the S&P 500 Index fell 2.2%, and the Nasdaq dropped 2.6%.

In earnings news:

  • Smartphone maker BlackBerry Ltd. reported an unexpected profit of $28 million in the fourth quarter, but revenue fell 32% to $660 million from $976 million a year ago. The company has been successful in controlling costs and now needs to focus on stabilizing revenue, according to CEO John Chen. BlackBerry’s stock (BBRY) gained 1.72%.
  • Shares of sports-apparel retailer Finish Line Inc. (FINL) fell 1.34% as a weak retail environment led to a decline in the company’s fourth-quarter earnings. The retailer also warned that it may miss profit expectations in the current year. Earnings fell 5% to $40.8 million, and revenue increased 6.3% to $551.3 million.
  • Cruise line operator Carnival Corp. posted first-quarter earnings of $49 million on revenue of $3.53 billion. Lower fuel costs and increased onboard spending contributed to the profit increase, and the company expects low fuel prices to continue to add to profits in the coming year. Carnival’s shares (CCL) added 6.08%.

In other business news:

Continue reading

Be the first to comment

How TripAdvisor reviews boost hotel rates

Stocks declined as investors weighed continued job market gains against other recent economic data showing mixed growth prospects. Meanwhile, the escalating Middle Eastern conflict sparked concerns of oil supply disruptions, which lifted crude prices by 4.5%.

The Dow lost 40 points, with 23 of its 30 components retreating; the S&P 500 Index fell by 4 points; and the Nasdaq declined by 13. Decliners led advancers by three to two on the NYSE and by five to four on the Nasdaq. The prices of Treasuries weakened. Gold futures rose $7.80 to close at $1,204.80 an ounce. The price of crude oil rose $2.22, settling at $51.43 a barrel.

In earnings news:

Continue reading

Tagged , , , , , | Be the first to comment

Municipals— taxes, yields, liquidity, and clouds

Lyle Fitterer

Lyle Fitterer

With us today is Lyle Fitterer, CFA, CPA, managing director of Wells Capital Management’s Municipal Fixed-Income team, in this excerpt of On the Trading DeskSM from Tuesday, March 24, 2015.

Listen to the full interview.

So what’s the connection between munis and taxes?
I think, for us, a couple of things. One, this time of the year, the muni market tends to underperform because many investors use their municipal bond portfolio as a source of cash to pay taxes. Second is how much of a bite the federal and state governments take. One of the ways to avoid those taxes is by investing in municipal bonds; when you start adjusting yield levels on municipal bonds to reflect that tax rate, the investments become more and more compelling. Coming out of tax season, investors will once again focus on the muni market, and we think it can probably perform pretty well.

On to yields. Why aren’t they higher here in the U.S.? Fundamentally and economically, things are looking OK, yet yields remain low.
If you look at rates in the U.S., you would say they are probably too low. But if you look at yields across the globe, German 10-year bond yields are 0.175%, Japanese bond yields are at 0.33%, and Switzerland rates are actually negative. So investors in these countries are looking for income in the U.S. Our 10 year is at 1.93%; that’s a lot of income, and I think that’s why you continue to see demand out there. Our personal view is that Europe is probably going to start to look a little bit better, maybe with the European rates moving up a little bit higher, which could lead to slightly higher rates here in the U.S. But until that happens, it probably means that rates are going to stay here or they could actually go a little bit lower.

Continue reading

Tagged , , , , , , , , | Be the first to comment

Markets: Why so gloomy about durable goods?

Storm cloudsYesterday’s February durable-goods report jarred investors back to reality. The rapid growth of the U.S. economy in the second half of 2014 was likely a bounce-back from a miserable winter in the first quarter of 2014. The decline in new orders for durable goods (goods expected to last three years or longer) was worse than could be explained by another bad winter of 2015.

The decline in oil prices is crimping spending on new exploration and production, but that will likely be more than made up for by an increase in consumer and business spending. The U.S. is still a net importer of oil, and energy intensive businesses will now have lower input costs. Drivers will have lower gasoline and heating bills. Those are positive things. The problem is one of timing: Sometimes the pain (cuts in spending by energy exploration and production companies) comes before the gain (spending by consumers and users of oil).

A stronger dollar is hurting exports a bit. The amount of drag from a strong dollar is easy to overstate, however. For the economy as a whole, exports just aren’t that important. For businesses, however, exports are more significant. One of the areas that I watch in the durable-goods report is the new orders for machinery (just under a third of machinery made in the U.S. is for export). This series has a strong correlation with the next quarter’s earnings per share of the S&P 500 Index. The nearly 2% drop in new orders for machinery should give people pause.

Continue reading

Tagged , , , , | Be the first to comment

Durable goods and biotech sink stocks

An unexpected decline in durable-goods orders in February helped push stocks lower on a light-volume day. The Nasdaq recorded its biggest percentage loss since last April.

The Dow fell 292 points, with 28 of its 30 components retreating; the S&P 500 Index dropped 30; and the Nasdaq tumbled 118 points, or 2.37%, dragged down by weak biotech stocks. The Nasdaq Biotechnology Index (^NBI) sank 4.14% on concerns of overvaluation after biotech’s recent run. Decliners led advancers by eight to three on the NYSE and more than four to one on the Nasdaq. The prices of Treasuries weakened. Gold futures rose $5.60 to close at $1,197.00 an ounce, and the price of crude oil gained $1.70 to settle at $49.21 a barrel.

In other business news:

Continue reading

Tagged , , , , , | Be the first to comment