Archive for February, 2013

Weekly Recap & Outlook – 02.22.13

Friday, February 22nd, 2013

Tower Private Advisors

Below

  • Boring
  • Gasoline rant

Capital Markets Recap

wro

Top Stories

A collection from this week’s daily CFA Smartbrief…

  • A survey of readers of the Smartbrief showed that 39.1% are concerned about “significant inflation arising within the next thre years;” 19.6% think it’ll take more than three years; 13.8% say there’s “no risk of significant inflation at this time;” and just 5.8% see it being an issue in the next 12 months.
  • Apparently, there is starting to be some concern amongst the Fed’s members about continued bond buying, and a push seems to be developing to end the purchases before the Fed’s targeted 6.5% unemployment rate is reached. (Minutes word cloud below.)
  • In what I think is the equivalent of an electronic corkboard, Pinterest appears to be valued at $2.5 billion!
  • “Obama warns of harm to economy if sequester takes effect.” GASP! Funny that he championed the sequester at the time.
  • A spokesman from the ECB expects the Eurozone economy to improve in 2013
  • Office Depot and OfficeMax are apparently hooking up in an effort to combat Staples’ strength.
  • John Mauldin has referred to Japan as a bug in search of a windshield. That was more evident this week, as that country’s leader asked the President to allow natural gas exports to Japan, whose power production has been greatly curtailed what with its shuttered nuclear power plants.

This Week

The minutes from the January meeting of the Federal Open Markets Committee were released this week. The word cloud of the text is below. As usual, the Fed wiseguys are concerned about inflation (wishing for it?).

mins

A slew of housing data was released this week. The National Association of Homebuilders saw its eponymously named index decline by a point (47 v. 46) and come up two shy (46 v. 48) versus expectations. The decline was  a result of lower prospective buyer traffic. Housing Starts declined by 8.5% over December, while Building Permits continued to climb higher. The former doesn’t look like a significant setback.
 startsperms

The desire to keep this budding housing recover–it’s been budding for quite a while–alive is one major reason the Fed won’t allow rates to rise significantly. I wish some government smarty-pants would take the same approach to gasoline prices. I was sorta liking paying $3.25 a gallon. I’m all for free markets and all of that, but this is crazy…+18% in two months? What about that boom in U.S. energy production?

gas

This prolly explains some of it. U.S. refineries are operating well below average and at some of the lowest capacity utilization levels on record.

refcap

It looks like the speculators have had considerable influence on gasoline prices. The small and large speculators–as distinguished from the producers, who are considered the hedgers, as they’re hedging the prices of their production–have nearly record long positions in the unleaded gasoline. (The small speculators–typically, the dumb money–do have a record short position.) Meanwhile, the producers have a near record short position. I foresee lower gasoline prices in our future. Chart below courtesy of SentimenTrader.com.

gascot

 Next Week

Key indicators to watch

  • Chicago Fed National Activity Index
  • Q4 GDP – second iteration
  • Initial Jobless Claims

Housing indicators

  • Case Shiller Home Price Index
  • New Home Sales
  • Pending Home Sales

Regional activity surveys

  • Dallas Fed Manufacturing Activity
  • Richmond Fed Manufacturing Index
  • NAPM – Milwaukee
  • Chicago Purchasing Managers Index
  • Kansas City Fed Manufacturing Activity

Graig P. Stettner, CFA, CMT
Chief Investment Officer
Tower Private Advisors

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Weekly Recap & Outlook – 02.08.13

Friday, February 8th, 2013

Tower Private Advisors

A really short one this week…

wro

Everything’s okay as long as everything’s okay. Well, it’s not as poetic as c’est la vie (such is life) or que sera, sera (what will be, will be), but Europe looks okay so long as Europe looks okay, which is to say it ain’t fixed yet. Yields rose and stocks fell in Spain and Italy, as the former reeled from allegations that senior government officials benefited from some sort of slush fund; in the latter, crackpot Silvio Berlusconi’s surge in PM polls upset markets there.

yields

In the U.S., markets shrugged off those worries, with only the S&P 500 declining on the week, and that just barely. Here, we are awash in enthusiasm. Stocks saw record inflows in January, and there is increasing talk of investors finally coming back to equities. Unfortunately, January is always a big month for equity inflows, and this January was probably an exceptional one, as investors who rushed to sell before the inevitable fiscal-cliff induced capital gains tax rate increase now were flush with cash to invest. It’s likely that the record inflows reflected some of that reinvestment.

One survey, conducted by the National Association of Active Investment Managers showed a record level of enthusiasm for stock, as is shown below. It showed managers 104% invested, meaning they were using leverage to get additional exposure. That was last week. This week’s survey showed a drop to a still-quite-elevated level of 94% invested. What I didn’t see mentioned regarding the survey is the near-record drop in the number of participants that week. Maybe that left the lunatics running the asylum–and it’s not to deny that enthusiasm is running quite high; it is.

NAAIM

Graig P. Stettner, CFA, CMT
Chief Investment Officer
Tower Private Advisors

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What’s your 118?

Friday, February 8th, 2013

118

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Weekly Recap & Outlook – 02.01.13

Friday, February 1st, 2013

Tower Private Advisors

Below

  • Take a survey
  • Tepid employment report

(more…)

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