Jon D. Markman

Will the Fed's Spending Drive Stocks Back Up to Their Pre-Lehman Levels?

By , Contributing Writer, Money Morning - • Print | Email

The Standard & Poor's 500 Index is up more than 10% in the past month, and it finally looks like all of the thin threads of strength we've seen over the past few months are starting to twine together into a single rope that may be strong enough to pull stocks back up to pre-crisis levels.

The key threads are:

Even if you are skeptical of these developments, remember one thing: The Fed has absolutely flooded the financial system with money.

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The Fed's Actions Are Boosting the Bull Cycle for U.S. Stocks

By , Contributing Writer, Money Morning - • Print | Email

News from the U.S. Federal Reserve is keeping the bull cycle for U.S. stocks alive and well. Despite investors taking a breather this week, the outlook is good for coming months.

The Standard & Poor's 500 Index fell 0.2% since Monday, while the Nasdaq 100, shown below, fell every day of the past week for a total slippage of 1.5%. The week felt a lot better than that for my subscribers because all but one of our exchange-traded funds (ETF) bets is on overseas stocks, and most rose 1.75% to 4.7%.

So we are exiting the best September since 1939, but it closed very softly for U.S. investors as the most critical earnings season in the past year looms on the horizon.

But to see why there's good news coming, read on...

Will the Mid-Term Elections Drive the Market Into High Gear?

By , Contributing Writer, Money Morning - • Print | Email

The past five days added more hues to the emerging snapshot of U.S. economic growth that is sluggish and top-heavy, but still rolling forward -- kind of like a tank that can't get out of first gear. New data shows that U.S. GDP is back to 70% of its pre-recession strength, but jobs have recovered only 9%. It's this disconnect between output and employment that has made the current "recovery" seem so anemic.

That was fine for investors, who bid up risky assets in the past week just as they had the previous three weeks. The S&P 500 rose 2%, the Nasdaq 100 rose 3.5%, overseas large caps rose 3.3%, and emerging markets rose 2.5%. Gold rose 1.7%, silver rose 3%, crude oil rose 2.1%, and even bonds rose 1.5%. Among the overseas markets we care most about, ishares MSCI Thailand Index Fund (NYSE: THD) rose 5.6%, Wisdom Tree India Earnings Fund (NYSE: EPI) rose 3.3%, and ishares MSCI Singapore Index Fund (NYSE: EWS) rose 2.4%. 



To find out why the mid-term elections are important to the market read on...

Leaders Emerging as the U.S. Economy Shakes Off Its Stupor

By , Contributing Writer, Money Morning - • Print | Email

The past five days added more color to the emerging picture of U.S. economic growth that is slow and unsteady -- but still in gear. Investors decided that was good enough, and bid up risky assets. The Standard & Poor's 500 Index rose 1.4%, emerging markets rose 1.8%, gold rose 2.2% and bonds fell.

Underlying breadth modestly weakened, as the market is primarily being propelled now by a withdrawal of sellers -- not an increase in buyers. News late in the week typified the entire span, as it mostly favored bulls.

Indeed, the U.S. economy faces an uphill climb but some companies are emerging as market leaders.

To find out which companies are dragging the economy forward read on...

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Why Investors Need to Pay Attention to These Emerging Markets

By , Contributing Writer, Money Morning - • Print | Email

The U.S. market showed improvement last week, but is still falling short of the continued growth and profit opportunities that emerging markets have to offer.

Stocks inched higher on Wall Street over the past week, taking heart from news of a modest improvement in jobs and a narrowing of the U.S. trade deficit.  Both acted to counter the argument that the U.S. economy is speeding for a cliff in a foreign-badged car.

Bonds finished down slightly, crude oil rose 2.6%, and gold was down slightly.

A tad dull, sure. But the fact that there wasn't a rout after the big gains of the first week of the month, though, has to be considered a win for the bulls. 

And some updates from the corporate world and overseas markets should keep investors cheering this week.

To read why investors have reason to celebrate -- and what opportunities they can't ignore -- click here.

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There's Reason to be Pessimistic about the U.S. Economy, but Never Panic

By , Contributing Writer, Money Morning - • Print | Email

Pessimism increased again among investors last week, as a slew of economic data stoked fears of a double-dip recession.

Indeed, housing and unemployment continue to weigh on the U.S. economy. But don't panic. Remember that the prospects for a full economic recovery are much better outside the United States, and that it's often good to be greedy when others are fearful.

To find out more about the precarious state of the U.S. economy read on...

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What to Expect on Wall Street as Nervous Investors Navigate a Slowing Economic Recovery

By , Contributing Writer, Money Morning - • Print | Email

Wall Street was hit hard last week with gloomy data that has kept buying interest stalled and investors spooked over a slow economic recovery.

Stocks slipped over the past week after investors learned from government reports that jobs are getting scarcer than straw hats in a wind tunnel, and it isn't always sunny in Philadelphia. 

The big-cap indexes lost around 1%, while safe haven assets like gold and the U.S. dollar were buoyant. The best investment around for the week was the U.S. long bond, up 2%.

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To read what’s in store after last week’s gloomy data, click here

Emerging Stock Markets Thrive as U.S. Shares Tumble

By , Contributing Writer, Money Morning - • Print | Email

As the U.S. stock markets struggle in the midst of slowing economic growth, emerging stock markets are thriving as their surging economies provide cover for savvy investors.

Stocks tripped over the past week after a weak jobless claims report and a lukewarm revenue outlook from Cisco Systems Inc. (NASDAQ: CSCO) on Thursday put an exclamation point on worries about a muddled Federal Reserve Bank policy. U.S. markets lost more than 4% in one of their weakest five-day spans of the year, including a 90% Downside Day on Wednesday that featured a rare event: All 30 stocks in the Dow Jones Industrials Average closed lower.

Small stocks had their throat slit, as the Russell 2000 plummeted below its 50-day and 200-day averages. It was the largest one-week loss for the index since early June when a Hungarian official compared his nation's debt woes to those of Greece. The index is back to early July, wiping out a month of gains. I'm not one to say "I told you so" but let me just note that we have strenuously recommended avoidance of the smalls in an effort to de-risk your portfolios.

Read on to find which markets are outshining the U.S....

With Mid-Term Elections Looming, Will Democrats Fire Back with a Second Stimulus

By , Contributing Writer, Money Morning - • Print | Email

Data last week showed a job market that's careening down a steep street with no breaks. Yet investors were able to shrug off employment concerns, as the stock market actually ended the week up 1.5% due to that rockin' Monday on the first day of the month.

That's because there is growing speculation that the Democrats are plotting a surprise stimulus in the run up to November's mid-term elections.

Let me explain...



Click here to read on...

Strong Second-Quarter Earnings Can't Keep the Bears at Bay

By , Contributing Writer, Money Morning - • Print | Email

The second-quarter earnings season has gotten off to a strong start, but it's been no match for bears who are less than thrilled with future earnings prospects.

More than half of the companies on the Standard & Poor's 500 Index have reported second-quarter earnings results. And so far, they've been strong, with two-thirds of those companies beating earnings estimates, three-fifths beating on sales and almost half beating on both earnings and sales. 

As a result, the consensus second-quarter earnings per share estimate has climbed to $20.63 from $19.60 at the beginning of the month. Merrill Lynch analysts expect final second-quarter earnings per share to come in at $20.75 - a 5% sequential improvement from the first quarter.

That would be a deceleration from the 15% sequential growth seen between the fourth quarter of 2009 and the first quarter of 2010, but it's good growth nonetheless. In fact, it puts 2010 S&P 500 earnings at about $83 per share. And at current prices, that gives the market a price-to-earnings multiple of just 13.3-times - below the long-term historical average of 15. 

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Wall Street's Mood Shift Is Signaling a Profit-Making Price Push Ahead

By , Contributing Writer, Money Morning - • Print | Email

A mood of mild optimism has begun to spread down Wall Street not long after there was nothing but long faces. Fancy that.

More good news out of Europe, better-than-expected new home sales, and the latest of a solid second-quarter earnings season has helped resuscitate the animal spirits that were missing in action since the spring. 

Stocks rose past some key milestones in their historic July over the past week, pushing the Dow Jones Industrial Average just barely into positive territory for the year. It was a very professional, low volatility rally this week, a welcome change from the intra-day dramatics that had put everyone on edge lately.

What has really changed from the point of view of government policy or corporate results? Nothing and everything.

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To find out what’s changing on Wall Street, click here

Stocks Stuck in Trading Range Despite Positive Earnings Reports

By , Contributing Writer, Money Morning - • Print | Email

Despite positive earnings reports last week from more than a few bellwether companies, stocks remain stuck in a trading range that continues to test investors' patience and skill.

Stocks launched higher last week in another round of the hyper-volatile action that has plagued the equity markets over the last three months. The good news is that some technical resistance was knocked out in the process, potentially setting the stage for a bigger rally in weeks to come.

The not-so-great reality: Stocks remain mired in the same range that has boxed them in for the past three months because, let's face it, despite their strong move they really only ended the week a fraction above where they started the previous week.


 

Read more about which stocks are leading the pack...

Why Upbeat Earnings Reports Mean Caution to Investors

By , Contributing Writer, Money Morning - • Print | Email

While earnings reports continue to pour out each day, investors should be careful before being excitedly swayed by strong financials - there is much more of the big picture to consider.

Stocks failed to get traction in the middle of last week after Alcoa (NYSE: AA) and Intel (Nasdaq: INTC) earnings reports underwhelmed investors, and Friday they spun off the road. The culprit: Fears that recent earnings gains represented a peak, and that weak readings on the economy were more representative of current conditions.

Retail sales disappointed and the Federal Reserve cut its 2010 growth forecast. Even word that Singapore grew at a record pace of 19.3% in the second quarter couldn't lift the air of despondency on Wall Street. 



To read why there's a cloud over Wall Street, click here.

Think Gold Prices Have Peaked? Think Again

By , Contributing Writer, Money Morning - • Print | Email

If you think gold prices have peaked, think again. Gold may have fallen from its June 18 record high of $1258.30 an ounce, but the yellow metal is in for the long haul.

In fact, Credit Suisse Group AG (NYSE ADR: CS) has increased its long-range forecast for gold, arguing in a new report that prices should remain near current levels for at least the next four years.

CS analysts' 2014 target is now $1,300 and ounce, compared to their previous forecast of $1,120. That may not seem like a very brave forecast since gold is already trading at nearly $1,200 an ounce. But it has profound implications for gold miners, because mining stocks are priced based on expectations of future earnings. Removing the expectation that gold futures prices could slide way back removes an impediment to shares going higher.

The rationale for the change: Credit Suisse believes there is an 80% chance of a renewed quantitative easing - or money printing - due either to a full-blown sovereign debt crisis or a new recession. This enthusiastic and inflationary activity would rev up the safe haven buying that has pushed up gold prices over the past few years. The feeling is that companies and government officials may cheat and lie, but gold is as steady as a rock as an irrefutable, trusted source of value.

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The S&P 500 is Set for a Surge… But It Won't Come Easy

By , Contributing Writer, Money Morning - • Print | Email

Stocks zipped higher in the past week, capping the first four-day rally since early 2009. Get out the party hats and confetti, right? Bears tried to knock shares lower on Tuesday and early Thursday, but after they failed bids hit the tape in a big way and gave it lift.

Technically, stocks continued to move out of the invalidated head-and-shoulders pattern we've discussed lately. With support below at 1,040, the S&P 500 Index should be good for a run to resistance at the 1,095 to 1,115 area in coming days as long as earnings reports and corporate outlooks are supportive.
But the bulls have their work cut out for them there.



To find out more about where stocks are headed next read on...

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