If the inflationary environment in which we live is beginning to tear away at your pockets, it's due time to buy some stocks. Everything is going up, and mostly, energy. I suggest you purchase some shares of your local utility company and at least one of the big oil companies - Exxon/Mobil, Chevron, British Petroleum or Royal Dutch Shell (if you're feeling a bit foreign). An agrifood conglomerate like ADM might also make your list.
With prices rising, the companies which supply the energy and foodstuffs of our nation are passing those higher prices on and making healthy profits. Owning some shares of the right companies will keep you somewhat even with them. Somewhat...
Dow 13,639.48 +85.76; NASDAQ 2,626.71 +27.30; S&P 500 1,532.91 +9.94; NYSE Composite 10,013.93 +87.14
The Consumer Price Index rose 0.7% in May, but stripping out food and energy, the core index was up only 0.1%. Translated, that means food and motor fuel (gas) was much costlier than in April. No surprise there for anyone who drives and pays for their own gas. Motor fuels were up a nifty 10.4%, which pretty much overshadowed any increases anywhere else, though prices for meats have been rising steadily. Through the first five months of 2007, beef prices are up 5.1%, poultry, 4.3%, and pork, 3.4%. Vegans rejoice.
Stocks were also assisted by another dip in the 10-year bond yield, back to 5.171% after cresting over 5.20% earlier in the week and causing a mini-panic on Tuesday.
As weeks go, this one was stellar. The NASDAQ advanced 53 points or 2%, hitting a 6-year high on Friday. The Dow was up 215 points, or roughly 1.5% and the S&P 500 was up 26 points, about 1.7%.
On the day, advancing issues overwhelmed declining one by a 5-2 ratio, while 565 new highs subsumed the paltry 95 new lows.
Oil peaked above $69 per barrel (a 2007 high) before backing off to close up just 35 cents at $68.00.
Gold and silver were both up, but hardly anyone cares anymore.
Friday, June 15, 2007
Thursday, June 14, 2007
Boffo!
Stocks moved ahead again as the May core PPI figures showed a mere 0.2% increase. Of course, the headline number (which includes food and energy) was up a whopping 0.9%, or an annual rate approaching hyperinflation. Traders took this information in stride, boosting stock prices for the second straight day and looking forward to a positive close for the week.
Dow 13,553.72 +71.37; NASDAQ 2,599.41 +17.10; S&P 500 1,522.97 +7.30; NYSE Composite 9,926.79 +63.29
Bonds were higher, but not startlingly so, with the 10-year note up 0.017 to end the session at 5.217. Investors are accepting just about any kind of news today and using selective reasoning to accentuate only the positive and put an optimistic spin on anything that might cause the long, long rally to derail. So it was with today's PPI number. In another time, such a huge jump might have induced panic. Not so today, as apparently, a 10.2% increase in the price of gasoline is ignored in the face of the "benign core rate." It's pretty much a specious argument, but it's what moves the markets today.
Today's upside was broad-based, with 348 new highs against 120 new lows and a 5-3 edge for advancing issues over decliners.
Once again, the US dollar improved against foreign currencies, including the Yen and Euro, reflecting a possible bottom in the long downtrend of the greenback.
With stocks higher and nobody apparently concerned about the high prices for petroleum products, oil traders sent crude futures skyward, to $67.65, a gain of $1.39 for the day. Gold and silver remain stuck in their respective channels. Gold gained $3.20 and silver rose 11 cents.
The current state of affairs certainly seems rosy, though the PPI figures cannot just easily be dismissed. Energy costs have become a major factor in the lives of every American and all businesses worldwide, without anybody lifting a finger to make needed adjustments in lifestyle or best practices. If crippling energy bills become the norm, this 53-month bull run could become memorable as the last grand hurrah.
Dow 13,553.72 +71.37; NASDAQ 2,599.41 +17.10; S&P 500 1,522.97 +7.30; NYSE Composite 9,926.79 +63.29
Bonds were higher, but not startlingly so, with the 10-year note up 0.017 to end the session at 5.217. Investors are accepting just about any kind of news today and using selective reasoning to accentuate only the positive and put an optimistic spin on anything that might cause the long, long rally to derail. So it was with today's PPI number. In another time, such a huge jump might have induced panic. Not so today, as apparently, a 10.2% increase in the price of gasoline is ignored in the face of the "benign core rate." It's pretty much a specious argument, but it's what moves the markets today.
Today's upside was broad-based, with 348 new highs against 120 new lows and a 5-3 edge for advancing issues over decliners.
Once again, the US dollar improved against foreign currencies, including the Yen and Euro, reflecting a possible bottom in the long downtrend of the greenback.
With stocks higher and nobody apparently concerned about the high prices for petroleum products, oil traders sent crude futures skyward, to $67.65, a gain of $1.39 for the day. Gold and silver remain stuck in their respective channels. Gold gained $3.20 and silver rose 11 cents.
The current state of affairs certainly seems rosy, though the PPI figures cannot just easily be dismissed. Energy costs have become a major factor in the lives of every American and all businesses worldwide, without anybody lifting a finger to make needed adjustments in lifestyle or best practices. If crippling energy bills become the norm, this 53-month bull run could become memorable as the last grand hurrah.
Wednesday, June 13, 2007
Stocks Soar; Dow Posts Best 2007 Gain
Investors responded positively to a 1.4% gain in May retail sales and positive news from the Federal Reserve's Beige Book, which witnessed moderate growth in the economy and reported inflationary pressures as minimal in many areas of the country.
The Dow posted its best one-day gian since July 2006, and other indices showed similar impressive advances.
Dow 13,482.35 +87.34; NASDAQ 2,582.31 +32.54; S&P 500 1,515.67 +22.67; NYSE Composite 9,863.50 +139.01
Some easing in the bond market also fueled the rally in stocks as the 10-year note fell back to a 5.21% yield, though oil prices continued to charge ahead.
Light crude on the NYMEX priced out at $66.26 per barrel, an increase of 91 cents. Gold and silver were marginally lower, and remain moribund.
Internal indicators revealed that the rally was widespread, with advancing issues trouncing decliners by a 7-2 ratio. There were 242 new highs and 191 new lows - a positive development that we've been hoping for - equilibrium and stability.
With some important economic numbers due out tomorrow (PPI) and Friday (CPI, Capacity Utilization), get ready for a stunning close to the trading week, especially if those numbers follow today's lead set by the Beige Book reading.
The Dow posted its best one-day gian since July 2006, and other indices showed similar impressive advances.
Dow 13,482.35 +87.34; NASDAQ 2,582.31 +32.54; S&P 500 1,515.67 +22.67; NYSE Composite 9,863.50 +139.01
Some easing in the bond market also fueled the rally in stocks as the 10-year note fell back to a 5.21% yield, though oil prices continued to charge ahead.
Light crude on the NYMEX priced out at $66.26 per barrel, an increase of 91 cents. Gold and silver were marginally lower, and remain moribund.
Internal indicators revealed that the rally was widespread, with advancing issues trouncing decliners by a 7-2 ratio. There were 242 new highs and 191 new lows - a positive development that we've been hoping for - equilibrium and stability.
With some important economic numbers due out tomorrow (PPI) and Friday (CPI, Capacity Utilization), get ready for a stunning close to the trading week, especially if those numbers follow today's lead set by the Beige Book reading.
Tuesday, June 12, 2007
Inflation, Anyone?
Stocks on US indices closed lower again on Tuesday following a lackluster performance to open the week's trading. While investors hunt for bargains, search for insight and generally take whatever profits are available, many were glued to the bond bourses, which pushed yields to recently-unprecedented levels. The 10-year note closed with a yield of 5.248%, up more than 100 basis points from yesterday.
Dow 13,295.01 -129.95; NASDAQ 2,549.77 -22.38; S&P 500 1,493.00 -16.12; NYSE Composite 9,724.49 -117.24
As interest rates rise, so do inflation fears, or vice versa, depending upon which side of the fence you're so inclined. Consumers have watched energy - and to some extent, food - prices climb without pause for the past six months, and the pain at the pump is finally spreading to stocks and bonds.
It's little wonder that bond yields are rising. They've been at or below the level of inflation for years. The current upticking indicates a number of thorny issues are about to slap the US economy in the face: a slumping housing market, stagnant wages, China's floating of the Yuan and the twin deficits produced by the government in trade and budget, to name just a few.
The price increases in just about everything, juxtaposed against a weak dollar, are making investments in US stocks somewhat difficult to swallow for foreigners who must fund US excess or watch as the entire global economy dissipates into the ether. They don't have much of a choice, but there are moments - like the past few weeks - in which they take stock, pause, and sell. It isn't perfect science, but it does make as much sense as any other explanation for recent market ups-and-downs.
Today's dip certainly cannot be laid at the feet of the oil barons. The price of their filthy, slimy lucre actually declined by 62 cents, though it's still a pricey $65.35. The mini-rally in metals was cut short as both gold and silver gave back much of yesterday's gains.
Tracking the internals, today's market losses were indeed as bad as they looked. Declining issues overwhelmed advancers at nearly a 5-1 rate. New lows were over the top at 236 as compared to the paltry number of new highs: 124. Not to worry. We've been down this particular road before and won't become concerned until the new lows reach and remain above 320.
Relax, we're in an adjustment/consolidation phase.
Dow 13,295.01 -129.95; NASDAQ 2,549.77 -22.38; S&P 500 1,493.00 -16.12; NYSE Composite 9,724.49 -117.24
As interest rates rise, so do inflation fears, or vice versa, depending upon which side of the fence you're so inclined. Consumers have watched energy - and to some extent, food - prices climb without pause for the past six months, and the pain at the pump is finally spreading to stocks and bonds.
It's little wonder that bond yields are rising. They've been at or below the level of inflation for years. The current upticking indicates a number of thorny issues are about to slap the US economy in the face: a slumping housing market, stagnant wages, China's floating of the Yuan and the twin deficits produced by the government in trade and budget, to name just a few.
The price increases in just about everything, juxtaposed against a weak dollar, are making investments in US stocks somewhat difficult to swallow for foreigners who must fund US excess or watch as the entire global economy dissipates into the ether. They don't have much of a choice, but there are moments - like the past few weeks - in which they take stock, pause, and sell. It isn't perfect science, but it does make as much sense as any other explanation for recent market ups-and-downs.
Today's dip certainly cannot be laid at the feet of the oil barons. The price of their filthy, slimy lucre actually declined by 62 cents, though it's still a pricey $65.35. The mini-rally in metals was cut short as both gold and silver gave back much of yesterday's gains.
Tracking the internals, today's market losses were indeed as bad as they looked. Declining issues overwhelmed advancers at nearly a 5-1 rate. New lows were over the top at 236 as compared to the paltry number of new highs: 124. Not to worry. We've been down this particular road before and won't become concerned until the new lows reach and remain above 320.
Relax, we're in an adjustment/consolidation phase.
Monday, June 11, 2007
Half A Loaf
US markets witnessed both sides of the ledger on Monday as the Dow and NASDAQ closed marginally lower while the S&P 500 hung on to a measly 1-point-and-change gain. Following last week's roller coaster, indecision was the rule of the day, amid low volume, though typical for a summer session.
Dow 13,423.01 -1.38; NASDAQ 2,572.15 -1.39; S&P 500 1,508.97 +1.30; NYSE Composite 9,941.73 +15.66
Advancing issues lagged decliners 11-10, though some relative strength was shown in the 166 new highs as compared to 126 new lows.
Interest rates and inflation are still weighing on investment decisions. The benchmark 10-year note is yielding 5.137%, a tempting rate for conservative investors. Unfortunately, with inflation galloping along at a 3% or better rate, the 2% spread is only a hedge or a way to preserve money rather than making some.
On the heels of the bond momentum comes a healthy gain in gold and silver. Both were up on the day - gold by 8.70, to finish at $659.00; silver gained 24 cents to $13.28. The metals have been stuck in a range for 14 months and are closer to the low end of their respective ranges than the high end and have not moved ahead since the spectacular bull stage of 2002-2006.
However, with bonds rising, the metals should follow, though they were likely overbought at the high ends of the 2006 rally. Thus, they also serve only as hedges, not investments unless one is willing to actively trade them through their troughs and peaks.
Oil was back up again by $1.21, closing at $65.97. This price is still close to catastrophic for the US and world economy and not enough is being done by either the financial world, environmentalists or governments to force the high prices back down to more comfortable levels, say, $45-50 per barrel. The protracted expensive nature of crude and distillates has become a significant drag on growth as the most recent GDP illustrates.
The longer the oil companies and sheiks are allowed to maintain near-predatory pricing, the greater the threat to standards of living worldwide. Without relief, costs for almost everything will continue to spiral higher.
A few thoughts for tomorrow and the next day.
Dow 13,423.01 -1.38; NASDAQ 2,572.15 -1.39; S&P 500 1,508.97 +1.30; NYSE Composite 9,941.73 +15.66
Advancing issues lagged decliners 11-10, though some relative strength was shown in the 166 new highs as compared to 126 new lows.
Interest rates and inflation are still weighing on investment decisions. The benchmark 10-year note is yielding 5.137%, a tempting rate for conservative investors. Unfortunately, with inflation galloping along at a 3% or better rate, the 2% spread is only a hedge or a way to preserve money rather than making some.
On the heels of the bond momentum comes a healthy gain in gold and silver. Both were up on the day - gold by 8.70, to finish at $659.00; silver gained 24 cents to $13.28. The metals have been stuck in a range for 14 months and are closer to the low end of their respective ranges than the high end and have not moved ahead since the spectacular bull stage of 2002-2006.
However, with bonds rising, the metals should follow, though they were likely overbought at the high ends of the 2006 rally. Thus, they also serve only as hedges, not investments unless one is willing to actively trade them through their troughs and peaks.
Oil was back up again by $1.21, closing at $65.97. This price is still close to catastrophic for the US and world economy and not enough is being done by either the financial world, environmentalists or governments to force the high prices back down to more comfortable levels, say, $45-50 per barrel. The protracted expensive nature of crude and distillates has become a significant drag on growth as the most recent GDP illustrates.
The longer the oil companies and sheiks are allowed to maintain near-predatory pricing, the greater the threat to standards of living worldwide. Without relief, costs for almost everything will continue to spiral higher.
A few thoughts for tomorrow and the next day.
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