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Jul 29, 2015
via Morning Bid with David Gaffen

Janet Kick a Hole In the Sky

The July meeting was never meant to be much of a thing with the Federal Reserve, and that’s exactly how it’s worked out. The Fed seems like it is still targeting a modest increase in rates in September, with – as many strategists have already noted – the real action to come later on down the road, as Janet Yellen and others have argued that the first move isn’t the one to really worry about.

With the Fed’s moves, what comes after that will be a long verification process of any effect it is having through the changes in the yield curve. As of Tuesday, the spread between the ten-year and 2-year yield was about 156 basis points, about as narrow as that spread has been since the beginning of June. That’s not considerably concerning, given the historic average has been about this point already, and a big spread like this – even though it has narrowed from about 255 basis points since the beginning of 2014 – is still suggestive of strong economic growth. The spread hit its trough in early February at about 120 basis points, so investors have seen a widening since then, but it has come in from about 175 basis points in early July.

Jul 29, 2015
via Morning Bid with David Gaffen

Janet Kick a Hole In the Sky

The July meeting was never meant to be much of a thing with the Federal Reserve, and that’s exactly how it’s worked out. The Fed seems like it is still targeting a modest increase in rates in September, with – as many strategists have already noted – the real action to come later on down the road, as Janet Yellen and others have argued that the first move isn’t the one to really worry about.

With the Fed’s moves, what comes after that will be a long verification process of any effect it is having through the changes in the yield curve. As of Tuesday, the spread between the ten-year and 2-year yield was about 156 basis points, about as narrow as that spread has been since the beginning of June. That’s not considerably concerning, given the historic average has been about this point already, and a big spread like this – even though it has narrowed from about 255 basis points since the beginning of 2014 – is still suggestive of strong economic growth. The spread hit its trough in early February at about 120 basis points, so investors have seen a widening since then, but it has come in from about 175 basis points in early July.

Jul 28, 2015
via Morning Bid with David Gaffen

Still about China

The broad effects of the selloff in Shanghai are beginning to spread. Notably, during the U.S. session on Monday was when China’s regulatory authority said the state would continue to support the equity market, the ultimate in treating a symptom rather than a problem. Whatever happens to the equity market, a steady diet of share-buying by the state isn’t likely to be able to stem the losses.

And we saw more of that overnight Tuesday, as Shanghai lost more than 1 percent. Government debt also was bid up, which may continue through the U.S. session if people are sufficiently worried about China, though the rebound in Europe suggests things may have stabilized – US futures are up as well.

Jul 28, 2015
via Morning Bid with David Gaffen

Still about China

The broad effects of the selloff in Shanghai are beginning to spread. Notably, during the U.S. session on Monday was when China’s regulatory authority said the state would continue to support the equity market, the ultimate in treating a symptom rather than a problem. Whatever happens to the equity market, a steady diet of share-buying by the state isn’t likely to be able to stem the losses.

And we saw more of that overnight Tuesday, as Shanghai lost more than 1 percent. Government debt also was bid up, which may continue through the U.S. session if people are sufficiently worried about China, though the rebound in Europe suggests things may have stabilized – US futures are up as well.

Jul 22, 2015
via Morning Bid with David Gaffen

Price-to-Blecch Ratio

This seems like a day best fit for Mad Magazine-style descriptions of what we’re about to see in the equity market. Suffice to say that in the past, the weak trend evinced in the quarterly stats for earnings growth were often restored to some sort of level people could live with once Apple figures were released.

Case in point – in January, fourth-quarter blended earnings growth was running at 3.4 percent; one day later, after Apple reported, it was plus 4.4 percent, and the tech sector jumped to 16.3 percent year-over-year growth from 11.5 percent in one day.

Jul 22, 2015
via Morning Bid with David Gaffen

Price-to-Blecch Ratio

This seems like a day best fit for Mad Magazine-style descriptions of what we’re about to see in the equity market. Suffice to say that in the past, the weak trend evinced in the quarterly stats for earnings growth were often restored to some sort of level people could live with once Apple figures were released.

Case in point – in January, fourth-quarter blended earnings growth was running at 3.4 percent; one day later, after Apple reported, it was plus 4.4 percent, and the tech sector jumped to 16.3 percent year-over-year growth from 11.5 percent in one day.

Jul 21, 2015
via Morning Bid with David Gaffen

A Fistful of Apples

The big Megillah of the market is out after the close, so naturally there will be a ton of scrutiny – and a ton of trading – surrounding Apple after the consumer electronics giant reports results and gives people an idea of how its signature iPhone and newcomer iWatch products are doing.

The iWatch of course is in the midst of its rollout and introduction to the world, so there’s probably still some room for columnists and others to declare that the product is doomed, which of course it probably is not. Still, comments on its relative strength in the early going are catnip for anyone diving into the stock at this time; the expectation is that the company will report earnings around $1.80 a share, with the SmartEstimate at $1.83, and if recent quarters are any guide, it should surpass those figures without a problem. And in four of the last five quarters, Apple has, within the next seven days, increased expectations for the quarter that has followed, so it has piled on to the already-strong momentum the stock has garnered.

Jul 21, 2015
via Morning Bid with David Gaffen

A Fistful of Apples

The big Megillah of the market is out after the close, so naturally there will be a ton of scrutiny – and a ton of trading – surrounding Apple after the consumer electronics giant reports results and gives people an idea of how its signature iPhone and newcomer iWatch products are doing.

The iWatch of course is in the midst of its rollout and introduction to the world, so there’s probably still some room for columnists and others to declare that the product is doomed, which of course it probably is not. Still, comments on its relative strength in the early going are catnip for anyone diving into the stock at this time; the expectation is that the company will report earnings around $1.80 a share, with the SmartEstimate at $1.83, and if recent quarters are any guide, it should surpass those figures without a problem. And in four of the last five quarters, Apple has, within the next seven days, increased expectations for the quarter that has followed, so it has piled on to the already-strong momentum the stock has garnered.

Jul 20, 2015

Gold slumps to five-year low, dollar at highest in months

NEW YORK (Reuters) – Gold prices plunged to their lowest in more than five years on Monday, at one point dropping by 4 percent, as the U.S. dollar hit a three-month high against a basket of major currencies on expectations U.S. interest rates are set to rise.

The U.S. equity market was flat in early trading, while European bourses posted modest gains.

Jul 20, 2015
via Morning Bid with David Gaffen

Little Blue

IBM, long-time stalwart of the Dow industrials, reports quarterly results after the close, the first of several major technology bellwethers to release its earnings figures. The stock has been a laggard compared with the benchmark S&P 500 over the last year or so, with the S&P’s greater-than-10-percent return easily dwarfing the losses from IBM in that time.

The results should help clarify whether the company is starting to see some traction in the cloud area that has been its bugaboo; it has been critiqued for having invested in and moved on that area later than the rest of the market, part of what has hurt the stock in the last couple of years.

    • About David

      "David Gaffen oversees the U.S. markets team, having joined Reuters in May 2009. He spent four years at the Wall Street Journal, where he was the original writer of the web site's MarketBeat blog. He is a frequent guest on Reuters TV, and has appeared on CNN International, Fox Business, NPR, and assorted other media and is the author of the book "Never Buy Another Stock Again.""
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