Hello. My name is Lamarcus R. Coleman. I am an investment advisor/wealth manager and business consultant. This blog is to inform you of what is going on in the financial markets, provide educational information, and offer insight into leading events. I developed an interest in the financial markets during my collegiate tenure. I had anticipated entering law school upon graduation, having already taken the LSAT, and having toured the law school of my choice. Prior to graduation, while enrolled in a Principles of Economics course, I became intrigued with the mystique of the markets. From that point forward I immersed myself in everything dealing with the investment world. I created an investment account and began to employ the methods that I learned. Overtime I expanded my investment discipline to encompass not only equities and fixed income, but to expound upon option, futures, and foreign exchange. I even surveyed the arena of securitization. During my investment education stent, I completed my M.B.A. with an emphasis in Management and Finance. I then began pursuing my Doctorate of Business Administration with an emphasis on Portfolio Risk Management. Within my studies I proposed what I call the Theory of Connectivity and Optimal Decision Making. The theory proposes a correlation between everyday behavior and decision-making and that of the markets. Also within my doctoral studies, I proposed a proprietary leadership and team building diagnostic and intervention model. I developed a proprietary investment strategy based on my past experiences and proposed theory. I currently serve as a business/financial columnist for a publication in my area and have conducted several business and investment related workshops. I am currently writing an industry related text that will be available next year. I am available to provide any assistance on wealth management, planning and portfolio construction.
With the elections behind us, investors, as well as the rest of the world are now focused on the fiscal cliff. The expiration of the Bush tax cuts, and automatic cuts in government spending serve as the primary concern for the market. The Dow Jones Industrial Average dropped in midday trade on last Wednesday by over 300 points as investors speculated what would happen in Congress by year end. This represented the lowest point on the Dow since August.
It’s inevitable that the global economy will be affected by the changes or lack there of in our fiscal policies. However, investors must focus on opportunities created by this debacle and not over emphasize the debacle itself in order to protect their portfolios. With the rapid decline in the major averages, multiple buying opportunities are and will continue to unfold as we near the possible fiscal cliff.
The market is driven by value and emotion. When the two begin to diverge greatly, opportunities are created. The response by the market has some emphasis on valuation, however, much emotion driven investing is also clouding true value. Moving forward, the most successful investors will be those that are able to quantify the divergance of value and emotion and identify the opportunities created.
Home building increased. Residential construction is at its highest level in four years. New home construction increased by 15% since August and 35% since September of last year. Housing starts haven’t been this high since July of 2008. The current growth trend substantially exceeded economists forecasts. According to the National Association of Home Builders, one new home creates 3 new jobs, and in its current trend, the housing recovery could play a substantial role in lowering the unemployment rate currently at 7.8%. Single family homes led the increase, accounting for 69% of housing starts last month.
Google’s stock takes a hit during regular trading due to a tech glitch that prematurely published the firm’s third quarter results with profit falling by 20%. The stock later rose by 1% in the after hours session.
The company’s growth in revenue has slowed, currently at 19%. Motorola’s hardware unit played a significant role in the revenue, but remained less than expected. The Motorola unit also incurred a larger than expected operating loss. Of greater concern was the decline in the firm’s search engine and Youtube ad sells. Ad sales are up 15% but down 24% versus a year ago. THis drop was due to a decline in pricing, not advertiser traffic. According to analysts, the increase in mobile ads attributed to the decline.
Dow: -.06% @ 13,548.94
S&P: -.24% @ 1457.34
Nasdaq: -1.01% @ 3,072.87
Stoxx 600: .19% @ 276.18
CAC 40: .22% @3535.18
FTSE 100: -.07%
Shanghai Comp.: 1.24% @ 2131.69
Hang Seng .48% @ 21,518.71
NIkkei: 2% @ 8982.86
USD Index: .03% @ 79.37
U.S. 10 Year: 1.83
France 10 Year: 2.12
German 10 Year: 1.637
Crude: -.05 @ 92.05
Nat. Gas: -4/10 basis points @ 4.024
Gold: -1.6% @ 1743.1
Copper: -.01 @ .74
Earnings to look for tomorrow:
General Electric (GE), Honeywell (HON), Manpower (MAN), McDonald’s (MCD), Parker Hannifin (PH), and Schlumberger (SLB)
Tomorrow’s Economic Events:
Japan: All Industry Index
Today the markets received weak manufacturing data from the U.S., Eurozone and China.. The Dow gave .42% to close at 13035.94. The Transports gained a modest .02% to close at 5008.36. The Nasdaq declined .21 points to close at 2772.03. The S & P 500 fell by .12% to close at 1404.94.
The FTSE 100 fell by 1.5% to 5672.01. The DAX fell 1.17 to 6932.58 and the CAC 40 fell by 1.58% to 3399.04. Spain’s IBEX 35 gained .73% to rise to 7488.20.
The Nikkei fell by .10% to 8775.51. The Hang Seng fell by .66% to 19429.91 and the Shanghai Composite fell by 75 bps to 2043.65.
Rates illustrated a shift into more riskier assets. The US 10 yr rose 1.47% to 1.576, German 10yr rose 100 basis points to 1.392. The Italian 10yr fell almost 200 basis points to 5.585. Spain’s 10yr fell 3.75% to 6.569. The U.K. 10yr fell 1.4% to 1.461 and Japan’s 10yr rose .264% to 0.798
Crude futures rose 21 basis points to 95.50, Gold rose 10 basis points to 1697.70, Corn fell 3 basis points to 804.75 & Silver fell 17 basis points to 32.36
The Brazilian Real weakened against the USD after beginning the session strong on increased volume. Traders reacted to a downgrade of the Eurozone by Moody’s. Traders were also concerned with the nation’s near term export prospects. Industrial output also rose less than the prior month, albeit posting a .3% increase vs analysts’ .2% forecast. The country’s Ibovespa fell 1.8% on slow growth abroad.
The USD strengthened amid weak manufacturing data globally.
The Canadian Dollar was mostly flat on the day.
The RBA left interest rates at 3.5%. Swiss GDP contracted. GDP for the quarter was down .1% from the prior quarter. Annual GDP slow to .5 from 1.2 prior. Numbers came in way below expectations of 1.6.
EU PPI rose. Ex construction prices were up 40 basis points vs June numbers. This was the largest monthly increase since March. Annual PPI remained at 1.8% Energy prices acconted for a majority of the increase in prices.
Great Britian posted better than expected PMI reading, 53.7 vs an expected 51.0
Netflix (NFLX) fell 6.35% on a new deal between Amazon and Epix. to stream Amazon’s content. NFLX’s exclusive deal with Epix ended on Sept. 1st.
Today the U.S. markets were closed in observance of Labour Day. European markets were up. European markets were led by mining stocks as investors continued to bet on mor stimulus. The FTSE 100 gained 0.8%, the DAX gained .6%, the CAC-40 gained 1.2% and Spain’s IBEX-35 gained .2%.
The German 10yr gained 3.4%, the U.K. 10yr gained 1.2%, while Italy and Spain’s 10yr yields declined as investors shifted into more riskier bonds, betting on bailout efforts.
Crude gained 2.57%. Gold gained 2.28%, Corn declined by 1.05%, while Silver gained 5.55%.
Global manufacturing data was weak. German PMI came in below expectations. German manufacturing is on course for worst quarterly performance in 3 years.
Global currencies higher against the dollar on hopes of QE by ECB and weak manufacturing data..
The AUD touch its lowest level against the USD since July 25th. The AUD went lower after a decline in retail sales.
The Brazilan Real weakened against the USD on low industrial output. The Brazilian Ibovespa closed higher amid hopes for Spain.
The Chinese Yuan hit a 3-month high ahead of a visit by Secretary of State Hiliary Clinton. The Yuan is down .7% against the USD this year. The currency was down as much as 1.6% in July.
Chinese PMI data was weak, despite this, Asian stock indicies rose on hopes for more stimulus. The Hang Seng rose by .4%, the Shanghai Composite rose by .6%, the Nikkei declined by .6% on a stronger yen. The AU S&P ASX 200 rose by .3%
Indian stocks fell. The Bombay Stock Exchange fell by 45.16 points to a one month low amid disappointing auto data. The National Stock Exchange’s Nifty fell by 4.75 points.
The French Gov. plans to bail out its struggling lender CAisse Centrale du Credit Immobilien de France, (CCCIF). The bank specializes in loans to housing programs. The bank sought assistance after failing to raise capital after being downgraded by Moody’s. The CEO was also replaced.
The Dow ended the month of August up, rallying behind comments from Fed Chairmen Ben Bernanke. The Dow had fallen to a 1 month low amid fears concerning Europe prior to the rally on Friday. The S&P and Nasdaq also finished up. The technology sector led the 10 sectors of the S&P.
Jobless claims of 374k was more than expected and the prior weeks numbers were revised higher. Consumer spending rose the most in 5 months, meeting expectations. Personal Income rose for the 8th straight month. Manufacturing also improved.
The Beige Book reported an increase in retail spending. The U. S. economy expanded marginally by 1.7%. Existing home sales increased to a 2yr high. Pending sales were up 2.4% in July, the highest since April 2010.
The ongoing drought in the Midwest damaged production of several crops, driving commodity prices higher.
Several districts in the Beige Book survey stated weak demand in Asia was an additional issue to that of Europe. The Fed indicated it is prepared to take additional steps to stimulate the economy.
On Friday, European markets rose, Asian markets were weak led down by the Nikkei, which was down for the 2nd straight week. China’s Shanghai was at a 3 1/2 year low, falling for its 4th straight month. Crude futures rose and the 10 year fell amid increased demand. The Japanese Nikkei fell by 1% on Friday after July retail sales fell from a year ago.
The German job market worsened with jobless claims rising more than expected. This represented the 5th straight month of jobless claims increases.
Gold futures settled at a 5 month high. This was the largest monthly gain since January.
Iran doubled capacity to produce higher enriched uranium, while its leading nuclear scientist returned to the field.
Apple wins patent suit against Samsung.
Facebook (FB) fell to an all-time low after its price was cut to $23 by Merrill Lynch. The stock’s price target was cut to $15 by BMO Capital Markets.
Yelp rose by 23% on Wednesday due in large part to a short squeeze. Investors had bet that the stock would decline after the initial lock-up period expired. The stock rallied when insiders held their stakes squeezing the shorts..
Wellpoint (WLP) rose by 7.7% on the departure of its CEO.
Hertz agreed to acquire Dollar Thrifty. The deal was long-awaited and valued at 2.3 billion. To secure the approval of the deal, Hertz agreed to sell its Advantage brand.
Sears Holdings was replaced in the S&P 500 as of Sept. 4th by Lyondell Basel Industries.
Best Buy (BBY) founder Richard Schulze was permitted on Monday to access the companies financial records and to proceed with an attempt to privatize the struggling 1400 store chain. To date Schulze has been discussions with Credit Suisse and private equity firms. Mr. Schulze will have 60 days to present an offer. Best Buy will have 30 days to review the offer. If the offer is rejected, Schulze must wait until January 2013 to make another offer.
Ford (F) has indicated that it will offer its Lincoln brand in China in the second half of 2014. Earlier this year the company stated that it wasn’t going to penetrate the chinese market until things improved in the U.S. This year Lincoln sales are down 1.8% through July. The company anticipates sales to pick up later in the year.
IBM agreed to buy software maker Kenexa for 1.3 billion in cash. Kenexa is one of the leading suppliers of human resource software and consulting services.
Tiffany Co. (TIF) earnings were up 2%. The company said it expects earnings to decline in Q3 and recover in Q4 amid the holiday season. The company also lowered its full year outlook. Sales were strongest in Asia.
Lexmark International Inc. is winding down its ink jet business. The company should save 85 million next year. Shares were up 14% earlier in the week. The increase in mobile platforms has had an effect on the usage of traditional printing services.
M & T Bank announced plans to acquire Hudson City Bancorp.