Ed Yardeni

STOCKS SAG IN FRONT OF HOLIDAY WEEKEND

Stocks gapped up at the open but quickly lost momentum. The Dow is currently up 26 points and the SPX is up .25%. Most sectors are bouncing back a little after yesterday’s rout. But the energy sector continues to struggle under the weight of rising crude inventories. The market is of course wandering aimlessly on Tweets and headlines regarding trade. European markets closed up by about .6% and most of Asia was modestly higher overnight. Commodities are having their worst week so far this year, dented by trade & global growth fears. Copper is down 1.6% today (and nearly 9% so far this month) on China jitters. WTI crude oil is flat, trading around $60/barrel. Bonds aren’t moving much today after strong gains earlier this week. The 10-year Treasury yield is hovering around 2.32%.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

IT'S ALL ABOUT THE FED

Stocks opened sharply higher today (Dow +161 pts; SPX +.67%). Interest-rate sensitive sectors are moving in response to yesterday’s Fed meeting (see below). Homebuilders, REITs, and utilities are up nicely, while banks are down on the day. Commodities are mixed (gold down, copper and iron ore up). WTI crude oil is flat, hovering around $60/barrel. Bonds are sharply higher as well. The 10-year Treasury yield slipped to 2.52% after the Fed announcement. That’s a 14-month low. The yield curve flattened again; the difference between the 2-year and 10-year Treasury yields is down to 11 basis points (.11%).


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

May 25, 2016

Stocks surged again this morning (Dow +157 pts; SPX +.67%). And again, the cyclical sectors are leading the charge (energy +1.1%; financials +1%; materials +1.2%). At this point, the financials sector has nearly erased its losses for the year. In order for the stock market rally to reaccelerate, we really need the financials to wake up. Utilities is the only sector in the red this morning. The dollar is slightly lower and commodities continue to rally. Copper is up 1.5% in early trading. WTI crude is trading back up around $49/barrel. Jeff Currie of Goldman Sachs says the physical rebalancing of supply/demand in the oil market has begun. But there’s still a lot of oil in storage around the world. So the rebalancing process will be volatile as inventories are worked down. Bonds are roughly unchanged. The 5-year Treasury yield is flat at 1.40%; the 10-year Treasury is hovering around 1.85%. Only the really short-term Treasury bills are falling in price (rising in yield). 


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.