Thursday, May 29, 2014

Good Morning America, How Are You?

Bad day physically yesterday, and that is all I have to say about that.

I had a wonderful note from my Uncle and Aunt thanking me for research on asset allocation.  They are moving into assisted living quarters soon.  When I was in elementary school and high school, they assisted my grandparents in much of the external training I received for baseball and martial arts.  I am very fond of them.

Summary:

1.   The GDP revision for first quarter was a negative - 1.0%.  It was blamed on the weather.  The GDP should be bad for the dollar.  As of 6:00 AM PDT the US Dollar Index was down.  This is the first shrinkage in the US economy in years.

2.   Yesterday, the DOW Jones closed down (a very small amount).  As of 6:00 AM the DOW is in rebound mode along with the S&P and Nasdaq.  Readers, the news remains mixed on the economy.  10 year notes dropped sharply to 2.44%.  Normally that kind of drop (and rise in bonds) are on economic concerns.  However, DOW Transportation Average made another record high.  There are other concerns, however, about the economy including but not limited to lumber prices, probability of fed fund rate hike in July 2015 is decreasing, the underperformance of the financial sector  indicates were are late in the business cycle.  The DOW Transportation stands in contradiction of negatives.  That is noteworthy.
 

3.   Weekly Jobless claims fell sharply.  They were down 27,000.  The 4 week average is down sharply as well.  That should bode well for the stock market. 

4.   Corporate Profits however are down.  That will only slow the rise in stocks, I think.

5.   European Central Bank meets today.  They will announce minus interest rates (it costs the depositor money to deposit with the ECB).  It encourages loans.  There is not expected to be any other surprises.