Archive for July, 2010
Friday, July 30th, 2010
This morning the first look at the second quarter GDP showed growth coming in at 2.4% when the expectation was for 2.5%. The weaker than expected second quarter number sent stock prices down at the opening but within the first hour July’s Chicago PMI number was released and it was much stronger than expected followed by the final look at July’s consumer sentiment which was revised up from just a couple weeks ago. The market began to recover.
Even in the weaker GDP number for the second quarter there were some bright spots. Imports increased 28.8% while exports increased 10.3% which resulted in a drag on GDP of 2.78%. This import/export surge is a good thing (imports and exports are only part of the computation of the GDP). It shows strength not weakness, but imports detract from our economic growth while exports add. The difference in the two numbers impacts growth of GDP. There was also weakness in the GDP report. Retail sales, while up for the quarter, showed a consumer that is not spending much.
The next big economic statistic everyone will be looking forward to is the jobs report for July. It will come out next week or the week after. There won’t be much in the way of new job growth. However, whatever that number is, it will move the market.
Good Trading
Steve Peasley
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Friday, July 30th, 2010
Today’s Stocks and Topics: (SNY) Sanofi-Aventis SA, 401(k), Real Estate Investment Trust (REIT), ETFs, Life Insurance, Energy ETFs, The Stock Market.
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Thursday, July 29th, 2010
Today’s Stocks and Topics: Risk and Return, Mutual Funds, (Y) Alleghany Corp., (VNDA) Vanda Pharmaceuticals Inc., (CRUS) Cirrus Logic Inc., (ETP) Energy Transfer Partners LP.
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Wednesday, July 28th, 2010
This morning the market started the day on the weak side. In pre-market activity more strong earnings were reported by corporations, but a report on June’s durable goods was weaker than expected.
Sales of durable goods fell 1% when it was expected to be up 1%. That is the second month in a row with weaker than expected numbers and is actually shrinking. However, orders for non defense items excluding volatile aircraft actually rose .6% after increasing 4.6% in May which is an indication that corporations are spending some of their cash they’ve been hording, but the overall trend is not strong. This is another indication of the soft spot in our economic recovery.
Many investors and traders are wondering where we go from here. Does the economy shake off the soft spot or are we going to fall into the infamous double dip recession? There seems to be a shift away from the double dip and towards an assumption by most economists that we are going to continue to grow but slowly. Economists are not investors or traders so it is the investor’s and trader’s opinions that matters to stock prices.
With more and more companies reporting we are seeing surprisingly strong earnings and the projections have been very good. This certainly gives the market a sound footing as stock prices are not expensive in comparison to historical norms.
The result may well be a choppy market until we see further signs of economic recovery or weakness.
Good Trading
Steve Peasley
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This morning the first look at the second quarter GDP showed growth coming in at 2.4% when the expectation was for 2.5%. The weaker than expected second quarter number sent stock prices down at the opening but within the first hour July’s Chicago PMI number was released and it was much stronger than expected followed by the final look at July’s consumer sentiment which was revised up from just a couple weeks ago. The market began to recover.
