(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
GDP ESTIMATE ROCKETS UP BUT INTEREST RATES FALL, GOLD BELOW $1200
December 20, 2013
Q3 GDP – third estimate rockets up to 4.1% vs consensus of 3.6%. A more positive news for the U. S. economy is that the third estimate of GDP Deflator, which is a measure of inflation, came at 2.0% vs. consensus of 2.0%. In other words, the economy was a lot stronger than thought but inflation did not rise as is typical of a strong economy.
After the release of the data, uninformed traders initially ran interest rates higher because they were reacting to the headline of a stronger economy. Informed traders took advantage of the uninformed traders and started buying bonds at lower prices resulting in interest rates running down.
Gold is staying below $1200.
Gold futures are at $1196, silver futures are at $19.25, and oil futures are $98.98.
S&P 500 resistance levels are 1825, 1837, and 1850; support levels are 1800, 1775, and 1766.
DJIA futures are up 23 points.
TAPER BULLS TROUNCE TAPER BEARS
December 19, 2013
The Fed has announced that it will taper by $10 billion per month.
After the announcement, taper bears had an upper hand only for about a minute and then taper bulls stepped in to buy. At the first sign that the taper bulls may win, momentum players jumped in on the buy side and exaggerated the move up.
In early trading stocks are seeing are mostly unchanged.
Gold has fallen to $1200 which is a major support.
Interest rates are slightly higher.
Oil is mostly unchanged.
Gold futures are at $1201, silver futures are at $19.22, and oil futures are $97.80.
S&P 500 resistance levels are 1825, 1837, and 1850; support levels are 1800, 1775, and 1766.
DJIA futures are down 21 points.
A CRITICAL FED DAY
December 18, 2013
This afternoon, the Fed will announce its policy on taper. There are two camps of large investors. One believes that the market up-move is a sugar high because of QE and once the Fed stops feeding the sugar high, the market will fall.
The other camp believes that a Fed taper will show that the economy is getting strong and does not need as much support from the Fed. For this reason the market will go up.
This afternoon, we will find out if the Fed tapers or not. In any case, the battle between the two camps is ahead. Which ever camp initially develops an upper hand will attract momentum players to push the market in that direction.
Gold, oil, and bonds are subdued ahead of the Fed announcement.
Stocks are positive in pre-market trading.
Gold futures are at $1232, silver futures are at $19.93, and oil futures are $97.34.
S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1775, 1766, and 1750.
DJIA futures are up 31 points.
CONSUMER INFLATION UNEXPECTEDLY HIGHER
December 17, 2013
November Core CPI month over month came at 0.2% vs. 0.1% consensus. All other recent data points have indicated inflation lower than expectations. The Core CPI today is an outlier.
Core CPI year over year is at 1.7%, still well below the Federal Reserve target of 2%.
Stocks will start the day out trying to build on yesterday’s rally. We expect some sellers to emerge to counter the buying.
Gold is giving up much of recent gains in spite of a higher inflation number.
Gold futures are at $1233, silver futures are at $19.83, and oil futures are $97.38.
S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1775, 1766, and 1750.
DJIA futures are up 36 points.
STRONG START TO THE WEEK, PRODUCTIVITY RISES
December 16, 2013
The stock market in the U. S. is starting the week on a very strong note. Stock markets in Asia were weak but they are very strong in Europe.
Q3 Productivity came at 3% vs. 2.7% consensus.
Q3 Unit Labor Costs were revised to -1.4% compared to consensus of -1.3%. In other words, labor costs are falling and productivity is increasing more than expectations. This is bad news for gold.
Interest rates are falling.
Oil is also beginning to fall.
Gold futures are at $1234, silver futures are at $19.60, and oil futures are $96.90.
S&P 500 resistance levels are 1800, 1825, and 1837; support levels are 1750, 1725, and 1710.
DJIA futures are up 87 points.
