Leveraging the power of the mobile smart phone market, the internet and social media are key elements of a number of emerging new businesses, some of which could evolve into the "next big thing."
One such company is Digital Development Partners, Inc., a mid-tier start-up company (already listed on the OTCBB under ticker symbol DGDM) with a flagship platform under development which promises to leverage the mobile internet and social media with online couponing for merchants of all sizes.
Already under development is their flagship YuDeal.com platform, set for pilot launch in Q2 2010. The company plans to launch the pilot in Asheville, NC and quickly roll out in cities nationwide. YuDeal integrates social networking, real time consumer discounts and advertiser analytics to help advertisers identify and quantify a "Real Time" advertising campaign.
While details are as still sketchy, it would appear that Yudeal.com will offer small to medium-sized merchants competitive pricing to market on the platform, which will probably appear as an iPhone App (and also be compatible with other smart phones) for consumers, accessible from either a mobile phone or by computer.
The company's stated goal is to completely change the way advertisers use coupons in much the same way Google changed advertising on the internet with their branded AdWords and AdSense text-ad platform.
DGDM began trading in November and is currently priced around $1 per share.
Digital Development Partners, Inc. (OTCBB: DGDM)
Wednesday, December 23, 2009
Tuesday, December 22, 2009
Another New NASDAQ Top; S&P Follows; Dow Lags
Anyone who thinks that technology companies aren't leading the market should just take a look at a comparison 1-year chart of the three major indices. Not only did the NASDAQ suffer a smaller decline (by about 5%), it has outperformed the Dow by 20% and the S&P by almost the same amount. Thus, it was no surprise that the tech-heavy index broke out further to new 14-month highs for the second straight day. The S&P followed along to a new 2009 and 14-month high as well, while the Dow gained, but is still 36 points below the closing top of 10,501.05 on December 14, that being just more than a week ago, the Dow stocks can be excused for their lack of enthusiasm, though not for long.
Today was also another day in which the US dollar rose and so did stocks. It appears that the overt efforts of central bankers to break down the dollar carry trade has been successful. Just a few weeks ago, the Dollar Index had broken down to long-term lows below 74.50. Today, when the stock markets were finished with their funny business, the index stood close to 78.30, a nifty 4.8% move in just over three weeks, which is a powerful rally for a currency. A look at the "Dixie" chart reveals that the move was predictable. with a triple bottom at 18-month resistance in the 74.25-74.45 area. The lows of 2008 - in the 72 range - now appear to be well in the past, a very positive sign that a strong US recovery is well underway.
That stocks have begun to trend higher on days of dollar strength is another very positive development and is actually the normal way US equity and currency markets usually operate. The risk trade of the recent past - at least we believe it to be unwinding - may have been a useful tool in economic revival, whether planned or unplanned. The cheap currency allowed nearly risk-free investment in hammered down US stocks, spurring economic growth from the inside out. If there's any validity to supply side economics - the jury's still out on that one - money should begin flowing (trickling, as they say) to Main Street any day now, in the form of a less-strident consumer, job creation and capital flows to small business. We can hardly restrain our excitement!
The one item that supply siders always fail to mention is that for all their praise and devotion to the "Reaganomic doctrine" are the outsize federal deficits which accompany their economic boom. The Reagan years were marred by the same lower levels of government receipts as today's, though this time the borrowing by Treasury has been much higher, for a longer period and aided by the Federal Reserve through their policy of quantitative easing. Digging the federal government out of a $12 billion (and growing) hole is going to take some time and the resultant higher stealth tax rates (read: Medicare, Social Security and marginal increases to the wealthiest Americans) are likely to be a burden for years to come. Or, the government could just keep on spending and borrowing, which seems to be the preferred practice in congress, as it not only keeps the economy floating along on a mountain of debt, it works wonders for re-election campaigns.
Eventually, the debt will either have to be paid down or repudiated, a term which usually comes along just prior to another nasty utterance, war. Owing oodles of money to the Chinese, it seems almost inevitable that we'll come to blows with our Far East creditors, though likely in a proxy fight in some place like Africa, Afghanistan or some other remote area which neither party really wants. Of course, there is another way. The world currencies could be - in fact, they constantly are - recalibrated to reflect more realistic exchange rates. Besides the US, Europe also has berated the Chinese recently about devaluing the Yuan, mostly to deaf ears. The Chinese know they are now in control of global economic destiny and they're not about to take second best. The best we can hope for is continued prosperity and that our business and political leaders grin and bear it. After all, life in the USA is still pretty top-notch for the majority of folks.
By the way, in case you're confused about the difference between the Yuan and the Renminbi, there isn't one. It's called the Yuan on international circuits, but the term "Renminbi" means "the people's money," so, in China that's how it's known.
Dow 10,464.93, +50.79 (0.49%)
Nasdaq 2,252.67, +15.01 (0.67%)
S&P 500 1,118.02, +3.97 (0.36%)
NYSE Composite 7,184.18, +37.03 (0.52%)
On the day, advancing issues managed to clamber over decliners, 4009-2497. New highs remained ahead of new lows, 459-100, though there have been more new lows appearing by the day, a sign that stocks are beginning to top out rather severely. With the rally on a nine-month run, the past two have hardly been stellar, and making new tops seems to be almost more struggle than it's worth, unless, of course, you're smart enough to be in the right stocks. Volume was slow again, as it should be. There's only one more full session - tomorrow - before Christmas and a three-day break in the action.
NYSE Volume 4,196,486,000
Nasdaq Volume 1,751,327,250
Commodities were mixed as colder weather encouraged buying in the energy complex, with oil up 88 cents, to $74.60. Gold continued to fall, losing $9.30, to $1,086.70. Silver followed along diligently, dropping another 4 cents in value, to $17.00.
Prior to the open, the government released its third and final revision to 3rd quarter GDP, which came in at 2.2%, something of a disappointment, as the prior readings were 3.5% (advance estimate) and 2.8% (second). As it turns out, GDP grew, but by something on the order of 60% less than we were originally told. That the advance estimate was politically-sensitive is likely, but so is this revision, guiding expectations lower in order to deliver better-sounding results when 4th quarter results are announced on January 29, 2010. That appears to be how this administration wishes to play the game, so one should not be too amped up when 4th quarter GDP comes in around 3.0%.
The NAR announced that existing home sales for November stood at an annual rate of 6.54 million units, up 7% from October. Prices are still falling, albeit slower than they have been, down 4.3% from the same month a year earlier.
Today was also another day in which the US dollar rose and so did stocks. It appears that the overt efforts of central bankers to break down the dollar carry trade has been successful. Just a few weeks ago, the Dollar Index had broken down to long-term lows below 74.50. Today, when the stock markets were finished with their funny business, the index stood close to 78.30, a nifty 4.8% move in just over three weeks, which is a powerful rally for a currency. A look at the "Dixie" chart reveals that the move was predictable. with a triple bottom at 18-month resistance in the 74.25-74.45 area. The lows of 2008 - in the 72 range - now appear to be well in the past, a very positive sign that a strong US recovery is well underway.
That stocks have begun to trend higher on days of dollar strength is another very positive development and is actually the normal way US equity and currency markets usually operate. The risk trade of the recent past - at least we believe it to be unwinding - may have been a useful tool in economic revival, whether planned or unplanned. The cheap currency allowed nearly risk-free investment in hammered down US stocks, spurring economic growth from the inside out. If there's any validity to supply side economics - the jury's still out on that one - money should begin flowing (trickling, as they say) to Main Street any day now, in the form of a less-strident consumer, job creation and capital flows to small business. We can hardly restrain our excitement!
The one item that supply siders always fail to mention is that for all their praise and devotion to the "Reaganomic doctrine" are the outsize federal deficits which accompany their economic boom. The Reagan years were marred by the same lower levels of government receipts as today's, though this time the borrowing by Treasury has been much higher, for a longer period and aided by the Federal Reserve through their policy of quantitative easing. Digging the federal government out of a $12 billion (and growing) hole is going to take some time and the resultant higher stealth tax rates (read: Medicare, Social Security and marginal increases to the wealthiest Americans) are likely to be a burden for years to come. Or, the government could just keep on spending and borrowing, which seems to be the preferred practice in congress, as it not only keeps the economy floating along on a mountain of debt, it works wonders for re-election campaigns.
Eventually, the debt will either have to be paid down or repudiated, a term which usually comes along just prior to another nasty utterance, war. Owing oodles of money to the Chinese, it seems almost inevitable that we'll come to blows with our Far East creditors, though likely in a proxy fight in some place like Africa, Afghanistan or some other remote area which neither party really wants. Of course, there is another way. The world currencies could be - in fact, they constantly are - recalibrated to reflect more realistic exchange rates. Besides the US, Europe also has berated the Chinese recently about devaluing the Yuan, mostly to deaf ears. The Chinese know they are now in control of global economic destiny and they're not about to take second best. The best we can hope for is continued prosperity and that our business and political leaders grin and bear it. After all, life in the USA is still pretty top-notch for the majority of folks.
By the way, in case you're confused about the difference between the Yuan and the Renminbi, there isn't one. It's called the Yuan on international circuits, but the term "Renminbi" means "the people's money," so, in China that's how it's known.
Dow 10,464.93, +50.79 (0.49%)
Nasdaq 2,252.67, +15.01 (0.67%)
S&P 500 1,118.02, +3.97 (0.36%)
NYSE Composite 7,184.18, +37.03 (0.52%)
On the day, advancing issues managed to clamber over decliners, 4009-2497. New highs remained ahead of new lows, 459-100, though there have been more new lows appearing by the day, a sign that stocks are beginning to top out rather severely. With the rally on a nine-month run, the past two have hardly been stellar, and making new tops seems to be almost more struggle than it's worth, unless, of course, you're smart enough to be in the right stocks. Volume was slow again, as it should be. There's only one more full session - tomorrow - before Christmas and a three-day break in the action.
NYSE Volume 4,196,486,000
Nasdaq Volume 1,751,327,250
Commodities were mixed as colder weather encouraged buying in the energy complex, with oil up 88 cents, to $74.60. Gold continued to fall, losing $9.30, to $1,086.70. Silver followed along diligently, dropping another 4 cents in value, to $17.00.
Prior to the open, the government released its third and final revision to 3rd quarter GDP, which came in at 2.2%, something of a disappointment, as the prior readings were 3.5% (advance estimate) and 2.8% (second). As it turns out, GDP grew, but by something on the order of 60% less than we were originally told. That the advance estimate was politically-sensitive is likely, but so is this revision, guiding expectations lower in order to deliver better-sounding results when 4th quarter results are announced on January 29, 2010. That appears to be how this administration wishes to play the game, so one should not be too amped up when 4th quarter GDP comes in around 3.0%.
The NAR announced that existing home sales for November stood at an annual rate of 6.54 million units, up 7% from October. Prices are still falling, albeit slower than they have been, down 4.3% from the same month a year earlier.
Monday, December 21, 2009
Deals, Upgrades Boost Stocks; NASDAQ Breaks Out
Led by news that Sanofi-Aventis (SNY) will buy retail health products firm Chattem (CHTT) for $1.9 billion and upgrades of key Dow components Intel (INTC) and Alcoa (AA) helped stocks kick off the short Christmas week with a bang.
Stocks soared right off the opening bell and held onto most of their gains through a somewhat listless session, though there was plenty of M&A news to keep participants interested. Besides Alcoa surging nearly 8% at the close, merger mania seems to have overtaken the health care sector, as pharma firms flush with cash seek to expand into the consumer market.
With the US senate voting to suspend debate on the health care bill, the major drug companies seem confident they have wrung the very best deal they could out of their congressional puppets. Many firms in the sector have been up sharply in recent days, including Dow components Merck (MRK) and Pfizer (PFE), considering the reform measure to be nothing more than bluster and Democratic party PR, void of substantive change. Thus, big pharma and health care providers will continue their rapacious plundering of the American people well into the next presidential cycle without a hitch.
Since US politics has been and continues to be largely held hostage by Wall Street, the pharmaceutical companies got whatever they wanted from a compliant Congress, meaning no real reform and no tax changes. It all adds up to business as usual for American medicine - the public pays, and if it can't, taxpayers foot the bill.
Dow 10,414.14, +85.25 (0.83%)
Nasdaq 2,237.66, +25.97 (1.17%)
S&P 500 1,114.05, +11.58 (1.05%)
NYSE Composite 7,147.15, +60.96 (0.86%)
Simple indicators affirmed the upside bias, suggesting further price appreciation for equities as advancing issues trumped decliners, 4503-2061, and new highs beat new lows, 499-94. Even though the dollar was higher against foreign currencies, stocks managed healthy gains, with all ten sectors advancing. Volume was slightly lower than normal, due to the closeness of the holidays, but not so poor as to suggest that traders were completely disinterested.
As the Dow and S&P were churning over ground already harvested, the NASDAQ broke out to new highs, as financial services and technology led the index higher. Amazon (AMZN), Google (GOOG) and Apple (AAPL) all posted strong gains.
NYSE Volume 4,531,713,500
Nasdaq Volume 1,837,347,875
The commodity complex was buffeted by the rising greenback. Oil slipped 89 cents, to $72.47. Gold fell dramatically, below the psychological $1100 level, down $15.50, to $1,096.00, in a continuation of the pull-back from all-time highs. Silver responded in like fashion, losing 28 cents, to $17.04.
With just three more days remaining in the shortened week (plus, Thursday will be a half-session), Tuesday's trade is likely to be more tempered as the third and final GDP estimate for the 3rd quarter is released at 8:30 am and existing home sales data for November will be announced at 10:00 am. At the same time on Wednesday, the National Association of Realtors (NAR) will release new home sales figures for November.
Stocks soared right off the opening bell and held onto most of their gains through a somewhat listless session, though there was plenty of M&A news to keep participants interested. Besides Alcoa surging nearly 8% at the close, merger mania seems to have overtaken the health care sector, as pharma firms flush with cash seek to expand into the consumer market.
With the US senate voting to suspend debate on the health care bill, the major drug companies seem confident they have wrung the very best deal they could out of their congressional puppets. Many firms in the sector have been up sharply in recent days, including Dow components Merck (MRK) and Pfizer (PFE), considering the reform measure to be nothing more than bluster and Democratic party PR, void of substantive change. Thus, big pharma and health care providers will continue their rapacious plundering of the American people well into the next presidential cycle without a hitch.
Since US politics has been and continues to be largely held hostage by Wall Street, the pharmaceutical companies got whatever they wanted from a compliant Congress, meaning no real reform and no tax changes. It all adds up to business as usual for American medicine - the public pays, and if it can't, taxpayers foot the bill.
Dow 10,414.14, +85.25 (0.83%)
Nasdaq 2,237.66, +25.97 (1.17%)
S&P 500 1,114.05, +11.58 (1.05%)
NYSE Composite 7,147.15, +60.96 (0.86%)
Simple indicators affirmed the upside bias, suggesting further price appreciation for equities as advancing issues trumped decliners, 4503-2061, and new highs beat new lows, 499-94. Even though the dollar was higher against foreign currencies, stocks managed healthy gains, with all ten sectors advancing. Volume was slightly lower than normal, due to the closeness of the holidays, but not so poor as to suggest that traders were completely disinterested.
As the Dow and S&P were churning over ground already harvested, the NASDAQ broke out to new highs, as financial services and technology led the index higher. Amazon (AMZN), Google (GOOG) and Apple (AAPL) all posted strong gains.
NYSE Volume 4,531,713,500
Nasdaq Volume 1,837,347,875
The commodity complex was buffeted by the rising greenback. Oil slipped 89 cents, to $72.47. Gold fell dramatically, below the psychological $1100 level, down $15.50, to $1,096.00, in a continuation of the pull-back from all-time highs. Silver responded in like fashion, losing 28 cents, to $17.04.
With just three more days remaining in the shortened week (plus, Thursday will be a half-session), Tuesday's trade is likely to be more tempered as the third and final GDP estimate for the 3rd quarter is released at 8:30 am and existing home sales data for November will be announced at 10:00 am. At the same time on Wednesday, the National Association of Realtors (NAR) will release new home sales figures for November.
Thursday, December 17, 2009
Get Away Day on Strong Dollar, Options Expiration
As is usually the case, foreign markets reacted to Wednesday's Fed statement with more conviction and honesty than US media and economic pundits. Here in the USA, the widely-accepted response to the Fed was that the statement contained nothing new, and that money would continue flowing freely, courtesy of extraordinarily low interest rates fostered by Fed accommodation.
In the Far East, Asia and Europe, the response was vastly different and it had far-ranging effects on US equities. Most foreign currencies - especially the Euro, Pound Sterling and Yen - fell sharply against the US Dollar as leaders and market participants overseas saw the Fed announcement for what it really was: an early warning that accommodative policies would soon end. With the rise of the dollar, those enganged in the risk trade (shot the dollar, long stocks) on Wall Street were stung and forced into selling off a wide swath of positions, sending the markets to their worst one-day slide in over a month.
Contributing to the decline was options expiration on Friday, which raised volatility and exacerbated a descent which really needed little help. In the horse-racing business, they call day's like these "get-away days," as owners sell off unwanted or damaged horse flesh in claiming races or to private parties, raising cash for their next foray. So it was on Wall Street today, with investors exiting unwanted positions and trimming back on strong ones. Some, however, were selling everything to cover their short positions against the US Dollar.
Dow 10,308.26, -132.86 (1.27%)
Nasdaq 2,180.05, -26.86 (1.22%)
S&P 500 1,096.07, -13.11 (1.18%)
NYSE Composite 7,063.75, -117.02 (1.63%)
The decline was broad-based, with declining issues far outpacing advancers, 4851-1780. The relationship of new highs to new lows was flattened, with the highs at 227, to 73 lows. Volume, which was extraordinarily high on the NYSE, is indicating that the selling may only have begun, though there are still enough unhedged bulls about to keep declines in order.
NYSE Volume 6,782,270,000
Nasdaq Volume 1,928,465,625
Commodities were hard hit, as is the usual case with dollar strength. Oil dropped only a penny by the close, though it traded down as much as $1.40 during the day. Gold fell $29.00, to $1,107.20, while silver dipped 49 cents to $17.20.
In general, the day's trade was tied almost exclusively to dollar strength, a counter-trend trade that may have legs. The number of short positions in the dollar is immense, and if there are continuing signs that the US economy is improving rapidly - and there are some - the unwinding of these positions and the corresponding sell-off in stocks could be profound in a classic short-squeeze, likely engineered by a concerted effort by central banks with more at stake than equity positions.
The message may become all-too-clear if central banks work together to promote dollar stability and global strength: Stocks be dammed; whole economies are of far more importance. It's a dicey situation, though a correction may not exceed a 15% in equity values, not a bad haircut, but more of a trim after the robustness during the liquidity-driven rally of the past 9 months.
Overall, the markets are functioning well, and an unwinding of the short dollar - long stocks trade may be just the tonic needed to promote overall prosperity. Wall Street needs to give some heed to Main Street, which is still suffering.
There were a number of positive signs beyond the Fed announcement from Wednesday. After new unemployment claims disappointed with a 7,000 net rise from a week ago, to 480,000, the Philadelphia Fed Index reported a healthy rise, from 16.7 in November to 20.4 in December, and the Conference Board's Index of Leading Economic Indicators posted an increase of 0.9% for November, ahead of expectations (0.7%).
There is no economic data due out tomorrow and options traders must close positions by noon. There was a positive quarterly report by Research in Motion (RIMM) after the bell, which may provide some impetus to the upside in the tech space, though it appears that much of the trading for 2009 has concluded and new highs for the markets are unlikely until January.
In the Far East, Asia and Europe, the response was vastly different and it had far-ranging effects on US equities. Most foreign currencies - especially the Euro, Pound Sterling and Yen - fell sharply against the US Dollar as leaders and market participants overseas saw the Fed announcement for what it really was: an early warning that accommodative policies would soon end. With the rise of the dollar, those enganged in the risk trade (shot the dollar, long stocks) on Wall Street were stung and forced into selling off a wide swath of positions, sending the markets to their worst one-day slide in over a month.
Contributing to the decline was options expiration on Friday, which raised volatility and exacerbated a descent which really needed little help. In the horse-racing business, they call day's like these "get-away days," as owners sell off unwanted or damaged horse flesh in claiming races or to private parties, raising cash for their next foray. So it was on Wall Street today, with investors exiting unwanted positions and trimming back on strong ones. Some, however, were selling everything to cover their short positions against the US Dollar.
Dow 10,308.26, -132.86 (1.27%)
Nasdaq 2,180.05, -26.86 (1.22%)
S&P 500 1,096.07, -13.11 (1.18%)
NYSE Composite 7,063.75, -117.02 (1.63%)
The decline was broad-based, with declining issues far outpacing advancers, 4851-1780. The relationship of new highs to new lows was flattened, with the highs at 227, to 73 lows. Volume, which was extraordinarily high on the NYSE, is indicating that the selling may only have begun, though there are still enough unhedged bulls about to keep declines in order.
NYSE Volume 6,782,270,000
Nasdaq Volume 1,928,465,625
Commodities were hard hit, as is the usual case with dollar strength. Oil dropped only a penny by the close, though it traded down as much as $1.40 during the day. Gold fell $29.00, to $1,107.20, while silver dipped 49 cents to $17.20.
In general, the day's trade was tied almost exclusively to dollar strength, a counter-trend trade that may have legs. The number of short positions in the dollar is immense, and if there are continuing signs that the US economy is improving rapidly - and there are some - the unwinding of these positions and the corresponding sell-off in stocks could be profound in a classic short-squeeze, likely engineered by a concerted effort by central banks with more at stake than equity positions.
The message may become all-too-clear if central banks work together to promote dollar stability and global strength: Stocks be dammed; whole economies are of far more importance. It's a dicey situation, though a correction may not exceed a 15% in equity values, not a bad haircut, but more of a trim after the robustness during the liquidity-driven rally of the past 9 months.
Overall, the markets are functioning well, and an unwinding of the short dollar - long stocks trade may be just the tonic needed to promote overall prosperity. Wall Street needs to give some heed to Main Street, which is still suffering.
There were a number of positive signs beyond the Fed announcement from Wednesday. After new unemployment claims disappointed with a 7,000 net rise from a week ago, to 480,000, the Philadelphia Fed Index reported a healthy rise, from 16.7 in November to 20.4 in December, and the Conference Board's Index of Leading Economic Indicators posted an increase of 0.9% for November, ahead of expectations (0.7%).
There is no economic data due out tomorrow and options traders must close positions by noon. There was a positive quarterly report by Research in Motion (RIMM) after the bell, which may provide some impetus to the upside in the tech space, though it appears that much of the trading for 2009 has concluded and new highs for the markets are unlikely until January.
Wednesday, December 16, 2009
Early Rally Battered by Fed Rate Decision
Although there was no change in federal funds rates when the FOMC announced their decision at 2:15 pm on Wednesday, there was enough of an indication from the central bank committee that other aspects of their recent easy money policy were coming to an end. The statement which accompanied the "no change" decision was sprinkled with enough mention of the end of certain Fed programs and strengthening economic conditions to scare off year-end investors as the trading session ground to a close.
Even their opening sentence, "Information received since the Federal Open Market Committee met in November suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating, " was more bullish than previous announcements, a sign that the Fed would probably change the key wording: "exceptionally low levels of the federal funds rate for an extended period" within the next two meetings and that rate increases would be forthcoming by Summer of 2010.
The trick for traders is in the timing of their trades and the key at this particular time is to get out ahead of any Fed rate increase, because that event will almost certainly result in halting stocks' heady advance. As it is, the great rises in stocks has recently abated to a large degree, as trading since the last Fed meeting has been mostly sideways to slightly higher. Locking in gains or selling losers for the year would seem to be imminent following one of the last great market-moving events of the year.
With strong mention concerning the ending of certain liquidity programs, the Fed's last paragraph really set the tone for this meeting and what would occur in terms of policy in the first months of 2010.
With all of these programs coming to an end, the Fed obviously sees the US economy as essentially healed and will begin to focus more on reining in liquidity and keeping inflation under control. Most astute economy watchers believe that the Fed will begin to raise rates during the second quarter of 2010, if not sooner, and will increase them 25 to 50 basis points at a crack until the end of the year. By this time next year, the federal funds rate should be approaching 2% with 2 1/4% at the high end. That should certainly be accommodative enough to keep stocks from keeling over and low enough to not hamper economic growth.
As the market wound down, traders took the Fed's message to heart, trimming some of the day's earlier gains and actually sending the Dow to its second straight negative close. Other indices managed to hold onto marginal gains. The broader market, as measured by the NYSE composite, outperformed all other indices handily.
Dow 10,441.12, -10.88 (0.10%)
Nasdaq 2,206.91, +5.86 (0.27%)
S&P 500 1,109.18, +1.25 (0.11%)
NYSE Composite 7,180.76, +39.32 (0.55%)
Simple indicators were out of line with the modest headline numbers, most likely due to speculation on less-followed stocks as options expiration neared (Friday). As a matter of fact, much of the movement in stocks the past two days was more than likely unduly influenced by options, as Friday is a quadruple witching day. Advancing issues finished well ahead of decliners, 4089-2429. New highs outpaced new lows, 538-83. Volume was better than normal, another factor of options expiration at the end of the week.
NYSE Volume 5,370,022,500
Nasdaq Volume 2,037,267,500
Commodities responded to a weaker dollar prior to the Fed announcement, though the buck strengthened after the decision. Oil rose $1.97, to $72.66, though much of that gain was attributed to government figures showing a decline in inventory of 3.9 million barrels. Gold gained $13.00, to $1,136.00; silver was higher by 24 cents, to $17.70.
Other economic news included November CPI data which showed consumer prices increasing at a rate of 0.4%, in line with expectations. Housing starts and building permits were also up.
Looking ahead to Thursday, initial unemployment claims are expected to continue to moderate down to 450,000, though that number would, in normal times, be a cause for panic, considering it is the height of the retail season and jobs should be plentiful. Such a number indicates that the economy is not as yet fully healed, with jobs creation remaining extremely weak. Uncertainty of government measures, notably the health care debate and consideration of higher taxes, plus the overhang on business from last year's near financial meltdown, are contributing to slack demand for labor.
That should ease by Spring and Summer of 2010, but for now, the numbers are still quite discouraging, especially for those seeking employment.
Fed Chairman Ben Bernanke was named Time magazine's Person of the Year, which was probably more of a planned coincidence than happenstance. Bernanke is scheduled to be re-appointed for another term by the Senate tomorrow. Speaker of the House Nancy Pelosi was runner-up for the honor, which says plenty about the rigor of the selection committee.
Even their opening sentence, "Information received since the Federal Open Market Committee met in November suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating, " was more bullish than previous announcements, a sign that the Fed would probably change the key wording: "exceptionally low levels of the federal funds rate for an extended period" within the next two meetings and that rate increases would be forthcoming by Summer of 2010.
The trick for traders is in the timing of their trades and the key at this particular time is to get out ahead of any Fed rate increase, because that event will almost certainly result in halting stocks' heady advance. As it is, the great rises in stocks has recently abated to a large degree, as trading since the last Fed meeting has been mostly sideways to slightly higher. Locking in gains or selling losers for the year would seem to be imminent following one of the last great market-moving events of the year.
With strong mention concerning the ending of certain liquidity programs, the Fed's last paragraph really set the tone for this meeting and what would occur in terms of policy in the first months of 2010.
In light of ongoing improvements in the functioning of financial markets, the Committee and the Board of Governors anticipate that most of the Federal Reserve’s special liquidity facilities will expire on February 1, 2010, consistent with the Federal Reserve’s announcement of June 25, 2009. These facilities include the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility. The Federal Reserve will also be working with its central bank counterparties to close its temporary liquidity swap arrangements by February 1. The Federal Reserve expects that amounts provided under the Term Auction Facility will continue to be scaled back in early 2010. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30, 2010, for loans backed by new-issue commercial mortgage-backed securities and March 31, 2010, for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.
With all of these programs coming to an end, the Fed obviously sees the US economy as essentially healed and will begin to focus more on reining in liquidity and keeping inflation under control. Most astute economy watchers believe that the Fed will begin to raise rates during the second quarter of 2010, if not sooner, and will increase them 25 to 50 basis points at a crack until the end of the year. By this time next year, the federal funds rate should be approaching 2% with 2 1/4% at the high end. That should certainly be accommodative enough to keep stocks from keeling over and low enough to not hamper economic growth.
As the market wound down, traders took the Fed's message to heart, trimming some of the day's earlier gains and actually sending the Dow to its second straight negative close. Other indices managed to hold onto marginal gains. The broader market, as measured by the NYSE composite, outperformed all other indices handily.
Dow 10,441.12, -10.88 (0.10%)
Nasdaq 2,206.91, +5.86 (0.27%)
S&P 500 1,109.18, +1.25 (0.11%)
NYSE Composite 7,180.76, +39.32 (0.55%)
Simple indicators were out of line with the modest headline numbers, most likely due to speculation on less-followed stocks as options expiration neared (Friday). As a matter of fact, much of the movement in stocks the past two days was more than likely unduly influenced by options, as Friday is a quadruple witching day. Advancing issues finished well ahead of decliners, 4089-2429. New highs outpaced new lows, 538-83. Volume was better than normal, another factor of options expiration at the end of the week.
NYSE Volume 5,370,022,500
Nasdaq Volume 2,037,267,500
Commodities responded to a weaker dollar prior to the Fed announcement, though the buck strengthened after the decision. Oil rose $1.97, to $72.66, though much of that gain was attributed to government figures showing a decline in inventory of 3.9 million barrels. Gold gained $13.00, to $1,136.00; silver was higher by 24 cents, to $17.70.
Other economic news included November CPI data which showed consumer prices increasing at a rate of 0.4%, in line with expectations. Housing starts and building permits were also up.
Looking ahead to Thursday, initial unemployment claims are expected to continue to moderate down to 450,000, though that number would, in normal times, be a cause for panic, considering it is the height of the retail season and jobs should be plentiful. Such a number indicates that the economy is not as yet fully healed, with jobs creation remaining extremely weak. Uncertainty of government measures, notably the health care debate and consideration of higher taxes, plus the overhang on business from last year's near financial meltdown, are contributing to slack demand for labor.
That should ease by Spring and Summer of 2010, but for now, the numbers are still quite discouraging, especially for those seeking employment.
Fed Chairman Ben Bernanke was named Time magazine's Person of the Year, which was probably more of a planned coincidence than happenstance. Bernanke is scheduled to be re-appointed for another term by the Senate tomorrow. Speaker of the House Nancy Pelosi was runner-up for the honor, which says plenty about the rigor of the selection committee.
Subscribe to:
Posts (Atom)
Posts
