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David Moenning is a the Chief Investment Officer at Heritage Capital, which focuses on active risk management of the U.S. stock market. Dave is also the proprietor of StateoftheMarkets.com, which provides free and subscription-based portfolio services. Dave began his investment career in 1980... More
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  • Forget Oil, Is It All About Russia Now?

    Daily State of the Markets
    Wednesday, December 17, 2014

    Worries abound in the stock market these days as traders fret about the price of oil, deflation, high yield bonds, the global banking system, the economies of Europe, China, and Japan, what the Fed will do next (and when), and Russia. It's that last one that seems to be attracting the most attention at this stage. As such, it is a good idea to understand why Russian stocks and the country's currency has any bearing whatsoever on the stock and/or bond markets here in the good 'ol USofA.

    While trying to predict the outcome of crises can be problematic (if not a fool's errand), understanding why a crisis is occurring is vital. If investors can thoroughly understand WHY the markets are doing what they are doing, it can be much easier to deal with the price action on a daily basis. The key is to understand that a lack of understanding creates fear, and fear can lead to trading on emotion - and we all know how that tends to turn out.

    Remember, a big part of the problem for investors in 2008 was the fact that very few outside of Wall Street really understood the mess that was happening in the credit markets in response to the alphabet soup of securities that were imploding. Few, if any, investors understood the ramifications of the credit markets freezing. And not many folks could comprehend what would happen if money market funds "broke the buck."

    So, while the current decline in the stock market may not qualify as a full-on crisis at this stage, it is still probably a good idea to understand why stocks have been diving alongside the price of oil.

    Forget Oil, It's All About Russia Right Now

    I know what you're thinking, "Wait, what? I thought this market was about oil. How the heck does Russia fit in?"

    We have spent a fair amount of time talking about oil lately. And thanks to Dr. Robert Barone for providing a professional economist's point of view on the subject yesterday. However, at this stage of the game, the action may be more about Russia than the price of "Texas Tea."

    First, let's look at the Russian stock market, which has been just plain ugly lately.

    Market Vectors Russia ETF (NYSE: RSX) - Weekly

    View Larger Image

    As the chart clearly shows, Russia has been a miserable place to invest for years now. However, the carnage has definitely accelerated in 2014 as the Russian ETF (NYSE: RSX) has fallen more than -47% since mid-year alone!

    Next up is the country's currency: the ruble. To say that the ruble has been falling would be an understatement. No, put succinctly, the ruble has collapsed as the currency has been hitting all-time lows against the U.S. dollar this week.

    So, between the action in the stock market and the ruble, it is safe to say that there could be an economic crisis happening in Russia. But again, why should you care?

    Markets Have Long Memories

    Given that I have a meeting with investors later this morning, I'm going to cut to the chase here. The bottom line is that the situation is Russia could very easily become the next big crisis in the markets.

    Anyone who has been in the game a while will remember what happened in 1998, which is commonly referred to as the "emerging markets crisis." While stocks in the U.S. did not officially enter a bear market, it was a very close call.

    If you will recall, it was Russia defaulting on debt payments that started the problem. And before long, one of the biggest hedge funds in the world - Long Term Capital Management - was in trouble and needed to be bailed out by Wall Street. Recall that the geniuses that ran LTCM had all the right pedigrees and a couple of them had even won the Nobel Prize for their work on valuing derivatives. However, in a classic case of book-smart vs. reality on Wall Street, the fool-proof approach used by LTCM never imagined that a country like Russia could default on debt or that the implications of such an event could cause their approach to crash and burn - OR - that a hedge fund collapse could threaten the banking system.

    Getting back to the point, the problem is that Russia is now in a world of hurt and this could create a spillover effect into the emerging markets, involving currencies, stock markets, and credit markets. In short, the worry is that the problems in Russia could trigger the next emerging market crisis.

    We saw hints of this yesterday, as the yield on the U.S. 10-year bond suddenly declined in earnest. This was the first REAL clue that there may be problems afoot as investors tend to flock to the relative safety of U.S. bonds during times of crisis. As such, we would continue to watch the yield on the 10-year as a proxy for whether or not an actual crisis is at hand.

    The Bottom Line

    So, is a -4.95% decline in the S&P 500 enough to discount the potential fallout from the debacle in oil and Russia? This is the real question at hand right now (well, that and if the "considerable period" language will come out of the FOMC statement - we say, yes).

    Just this morning, there is a report that MSCI could exclude Russia from its emerging market index. And if this occurs, think about the amount of money that will be FORCED to sell Russian equities due to indexing. Yikes.

    But the key is to understand that none of us knows how this situation will play out. Sure, you can place a bet on the outcome. And if you bet that the U.S. stock market will survive, you will likely win in the long run. However, it is not inconceivable to say that things could get uncomfortable for a while.

    So, while our crystal is in the shop (still), we can try our darndest to understand the questions facing the markets at this point. And this is what this morning's missive has been about.

    Turning To This Morning

    This morning's action is again all about Russia. Sure, there is an election coming up in Greece and Janet Yellen will talk to us today about the outlook for monetary policy and the economy in the U.S. However, the fact that the Russian Foreign Ministry decided to defend the ruble. In an attempt to stem the selling in the country's currency, Russia's Deputy Finance Minister Alexei Moisseyev was quoted as saying they will be selling "for as long as we need to". Many believe the move is seen as being (1) odd that the Russian Central Bank was not involved and (b) behind the curve. Reports suggest that Russia will need to take more aggressive action in terms of currency intervention and that capital controls may be needed to stem ruble pain. Here at home, all eyes will be on the Fed this afternoon as the FOMC is likely to remove the "considerable period" language from the FOMC statement describing how long rates are likely to stay at record lows. Traders will also be listening intently for any mention of the action in oil or the goings on in other parts of the world. U.S. stock futures are currently following the action in the ruble and point to a rebound at the open on Wall Street.

    Pre-Game Indicators

    Here are the Pre-Market indicators we review each morning before the opening bell...

    Major Foreign Markets:
    Japan: +0.39%
    Hong Kong: -0.37%
    Shanghai: +1.31%
    London: -0.85%
    Germany: -1.03%
    France: -0.79%
    Italy: -1.83%
    Spain: -1.19%

    Crude Oil Futures: -$0.98 to $54.95

    Gold: +$4.70 at $1199.00

    Dollar: higher against the yen and pound, lower vs. euro

    10-Year Bond Yield: Currently trading at 2.093%

    Stock Indices in U.S. (relative to fair value):
    S&P 500: +10.10
    Dow Jones Industrial Average: +88
    NASDAQ Composite: +22.30

    Thought For The Day:

    Happiness is in the heart, not in the circumstances. - Author Unknown

    Wishing you green screens and all the best for a great day,

    David D. Moenning
    President, Chief Investment Officer
    Heritage Capital Research
    Check Out the NEW Website!

    Positions in stocks mentioned: none

    Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

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    Heritage Capital Research's NextGen Active Risk Manager Can Help
    Contact Heritage for more information or call us at (847) 807-3590


    The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program.

    Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

    The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

    David D. Moenning, an advisor representative of CONCERT Wealth Management Inc. (CONCERT), is founder of Heritage Capital Advisors LLC, a legal business entity doing business as Heritage Capital Research (Heritage). Advisory services are offered through CONCERT Wealth Management, Inc., an SEC registered investment advisor. For a complete description of investment risks, fees and services review the CONCERT firm brochure (ADV Part 2) which is available from your Investment Representative or by contacting Heritage or CONCERT.

    Mr. Moenning is also the owner of Heritage Capital Management (HCM) a state-registered investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Neither HCM, Heritage, or CONCERT is registered as a broker-dealer.

    Employees and affiliates of Heritage and HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or Heritage/HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

    Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

    Dec 17 8:25 AM | Link | Comment!
  • Looking At Oil And The Charts

    Daily State of the Markets
    Monday, December 15, 2014

    Oil continued to collapse on Friday, taking the stock market down with it. And while there were other stories that attracted some attention at the end of last week, including London's airspace being closed and a downgrade of France's sovereign debt rating, there can be little argument that oil remains the focal point of the market.

    The question of the day is simple... Is the next big crisis upon us? Will oil's crash wind up being the trigger for a bear market in stocks? Is it time to head for the hills?

    While no one, including yours truly, can provide the answer to these questions ahead of time, we can do our best to (a) understand the issues at hand and (b) attempt to make an educated guess as to whether the next big thing in the stock market has arrived.

    So this morning, we will spend our time looking at the various issues as well as a lot of charts in an effort to try and fully understand what is turning out to be a truly amazing move in oil.

    Let's start with an updated chart on a proxy for the price of oil - the US Oil ETF (NYSE: USO).

    U.S. Oil ETF (NYSE: USO) - Weekly

    View Larger Image

    In case this is your first go round, the chart above illustrates what a crash looks like as the USO has fallen -45 percent since the middle of June.

    The first point, which should be uber-obvious by now, is that the big dive in oil prices is very good for consumers. For example, in the process of retrieving my youngest daughter from college for winter break (which means the very last tuition payment is just around the corner!), we wound up driving from Des Moines to Denver on Friday. And I can tell you first-hand that paying $2.40 a gallon for gasoline was a shock - in a good way! The thought that leapt to mind when the pump clicked off was, "Wow - that is a LOT less than normal!"

    Therefore, it isn't surprising to see that the stocks in the consumer discretionary sector are doing just fine, thank you.

    Consumer Discretionary Select Sector SPDR (NYSE: XLY) - Weekly

    View Larger Image

    However, the first problem to consider here involves the issue of deflation. Remember, in places like Japan and Europe, deflation has become the enemy. And while it sounds truly strange to anyone who has been in the business a while, central bankers are now trying their darndest to get inflation to move HIGHER. And the bottom line here is the massive decline in oil isn't helping the cause.

    PowerShares Commodity Index (NYSE: DBC) - Weekly

    View Larger Image

    You see, commodities are also in crash-mode at the present time. And again, the bottom line here is that a big decline in commodities is deflationary. So, if you are a central banker hoping/praying that your country can grow its way out of its debt/credit/banking problems, the crash in oil and commodities is definitely NOT your friend.

    Many analysts argue that the decline in commodities suggests that there is something darker and more worrisome happening in terms of global demand. The thinking is that if demand for commodities is falling, growth rates are sure to follow.

    Whenever there is a question about global demand, it is usually a good idea to check in on the message coming from "Dr. Copper."

    iPath Copper Subindex (NYSE: JJC) - Weekly

    View Larger Image

    The message from this chart is a good news/bad news situation. First, the bad news is that the weekly chart of copper is not a happy sight as prices have been trending lower for years now. This is likely due to the death of the commodity supercycle that is occurring in response to the decline in China's building/industrial revolution.

    The good news is that (a) the steady decline in copper is NOT new and (b) the price action of this key industrial metal has actually diverged from oil since October. As such, one can argue that global demand for copper (a proxy for industrial growth) is not crashing at this time and that the current problems are isolated to energy.

    Next, the Carnage in Junk Tells Us...

    Next up is the action in the junk bond market, which has clearly not been good.

    SPDR High Yield Bond (NYSE: JNK) - Weekly

    View Larger Image

    Traditionally, junk bonds are viewed as a "canary in the coal mine" in relation to the health of the overall stock market. The thinking is that as long as junk bonds are trading well it means that the credit markets are functioning normally and there is confidence in the overall economy.

    It is important to recognize that high yield bonds are often referred to as "stocks in drag." The key is that when the high yield market enters a negative phase, these bonds act like stocks and as such, provide little protection from a serious decline.

    It is also important to understand that junk bonds trade based on default risk. So, when the economy and/or the credit market starts to struggle, the risk of default on these lowly rated bonds rises - and in turn, prices go down. Therefore, analysts look at junk as a warning sign for trouble in the economy/credit markets.

    Because of the big dive in high yield prices seen lately, many analysts tell us that we should be worried about the underlying health of both the credit market and the U.S. economy.

    However, it is important to note that the high yield bond indices are heavily weighted in the energy sector. As such, it isn't surprising to see the high yield indices diving alongside the stocks of the oil companies.

    Then There is the Potential for a 1998 Russia Redux

    The next worry associated with the drop in oil is that state of Russia. It is worth noting that Russia's economy is already stinging from the economic sanctions imposed by the west over the situation in Ukraine. But with oil now diving too, the Russian economy finds itself in a world of hurt.

    An example of the pain occurring in Russia is the action in the Ruble. In short, the Russian Ruble hit an all-time low against the U.S. dollar last week. Ouch.

    Market Vectors Russia (NYSE: RSX) - Weekly

    View Larger Image

    Lest we forget, it was Russia's default on sovereign debt in 1998 that created turmoil in the financial markets. This purported "black swan" event took down the Nobel Prize-winning wizards at Long Term Capital Management, which caused great pain on Wall Street for a few months.

    So, with the Ruble and the Russian economy diving, and less revenues from oil coming in to pay the bills, analysts worry that another emerging markets crisis is just around the corner.

    Speaking of Emerging Markets...

    iShares Emerging Markets (NYSE: EEM) - Weekly

    View Larger Image

    Given that many emerging market countries are major oil producers, it isn't surprising to see these countries suffering as well. The key here is again, the risk of default and contagion. Remember, crises in the emerging markets are not exactly new, so traders know how to play this game!

    iShares Brazil (NYSE: EWZ) - Weekly

    View Larger Image

    The chart of Brazil's ETF should paint the picture quite clearly. While an improving economy in the U.S. has caused stocks to hit all-time highs recently, the stock market in Brazil (and most other emerging markets) continues to stink up the joint. And if the message is that economic conditions are continuing to weaken, can a big increase in default risk be far behind?

    But Remember, It's REALLY All About the Banks!

    Perhaps the most important thing to remember about any type of crisis that impacts the stock market is that, in the end, it's really all about the banks. A few oil companies, or even an oil-producing country or two defaulting on its debt doesn't really impact the earnings of IBM.

    No, the real key is the risk of contagion and how it might affect the health of the global banking system. Remember, this is what the 25 percent decline seen at the beginning of 2009 was all about. The fear was that the system was on the brink of collapse and that if bank runs began, they couldn't be stopped.

    So again, the real key here is the banks...

    KBW Bank Index - Weekly

    View Larger Image

    The good news (no, make that, the "really good news") is that there is no sign of panic in the U.S. banking index at this time.

    Compare the chart above to the chart of the banking index in 2007-09.

    KBW Bank Index - Weekly (2006 - 2009)

    View Larger Image

    The important takeaway here is that the banking index began breaking down in mid-2007, long before the overall stock market debacle began. Then the index continued to dive into early 2009 as traders became increasingly worried about the state of the global banking system.

    Thus, the banking index was a KEY early-warning sign that there was trouble in paradise in 2007!

    So... What is this index telling us now? Not much actually, as the index is just 5 days removed from an all-time high. This suggests that traders do not see any real threat to the banking system at this time. Therefore, one can argue that the current crisis in oil is NOT likely to trigger a bear market in the near-term.

    However, it is always a good idea to remain flexible and to keep your eyes and ears open. It might also be wise to keep your risk management toolbox close at hand. Remember, you just never know what is going to happen next in this game - so you've got to be ready.

    Turning To This Morning

    Although the focus remains on oil, there are other stories in the markets as traders begin the last full week of the year. First, Japan's PM Abe maintained his party's super majority on Sunday's elections. Next, it is a merger Monday as there are a couple of new deals happening. In Europe, there is more talk about the ECB going down the QE path as Bloomberg's survey shows 90% of respondents now expect sovereign bond buying to begin in 2015 - up from 57% last month. Speaking of central banks, the FOMC meets this week and the big debate is whether the "considerable time" verbiage will remain in the statement. And on the oil front, prices are being buoyed by tensions in Libya. U.S. futures currently point to a rebound at the open on Wall Street.

    Pre-Game Indicators

    Here are the Pre-Market indicators we review each morning before the opening bell...

    Major Foreign Markets:
    Japan: -1.57%
    Hong Kong: -0.95%
    Shanghai: +0.50%
    London: +0.20%
    Germany: +0.41%
    France: +0.61%
    Italy: +0.86%
    Spain: +1.01%

    Crude Oil Futures: +$0.18 to $57.99

    Gold: -$13.70 at $1208.80

    Dollar: higher against the yen and pound, lower vs. euro

    10-Year Bond Yield: Currently trading at 2.127%

    Stock Indices in U.S. (relative to fair value):
    S&P 500: +10.82
    Dow Jones Industrial Average: +99
    NASDAQ Composite: +28.72

    Thought For The Day:

    Even if you're on the right track, you'll get run over if you just sit there. -Will Rogers

    Wishing you green screens and all the best for a great day,

    David D. Moenning
    President, Chief Investment Officer
    Heritage Capital Research
    Check Out the NEW Website!

    Positions in stocks mentioned: none

    Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

    Advertisement
    Will You Be Ready For The NEXT Bear Market?

    Heritage Capital Research's NextGen Active Risk Manager Can Help
    Contact Heritage for more information or call us at (847) 807-3590


    The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program.

    Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

    The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

    David D. Moenning, an advisor representative of CONCERT Wealth Management Inc. (CONCERT), is founder of Heritage Capital Advisors LLC, a legal business entity doing business as Heritage Capital Research (Heritage). Advisory services are offered through CONCERT Wealth Management, Inc., an SEC registered investment advisor. For a complete description of investment risks, fees and services review the CONCERT firm brochure (ADV Part 2) which is available from your Investment Representative or by contacting Heritage or CONCERT.

    Mr. Moenning is also the owner of Heritage Capital Management (HCM) a state-registered investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Neither HCM, Heritage, or CONCERT is registered as a broker-dealer.

    Employees and affiliates of Heritage and HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or Heritage/HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

    Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

    Dec 15 8:37 AM | Link | Comment!
  • Making Sense Of The Oil/Stock Linkage

    Daily State of the Markets
    Thursday, December 11, 2014

    If your response to yesterday's trash job in the stock market was something along the lines of, "Wait, what?" you are likely not alone. Tuesday the stock market dove 220 points in the early going and then recovered almost all of it into the close. Thus, it looked like the dip buyers appeared to be back with a vengeance. But then the very next day, the Dow dove -268 points and the dip buyers were nowhere to be found. So, what gives?

    While it may sound a little silly, the U.S. stock market is now trading almost in lock step with the price of oil. Seriously. Look at a 1-minute chart of the US Oil ETF (NYSE: USO) and compare it to the S&P 500. Looks remarkably similar, right? Now compare the result of the S&P to the USO over the last 3-4 days. What you'll find is that when oil goes down, stocks go down - and vice versa. Yep, it's that simple right now.

    Granted, this is a very new development as the correlation between oil and stocks has only been in effect for a few days. But this would seem to explain the schizophrenic behavior seen in the stock market lately. The game isn't about the will-they or won't-they situation regarding QE in Europe. It isn't about China's stimulus, Japan's economy, the Holiday Shopping season, the Fed, or even earnings. No, it's about the crash in oil!

    And in short, understanding how the computers are playing the game right now may also help you from pulling your hair out.

    Why the Linkage?

    The logical question, of course, is why are stocks and oil joined at the hip right now? Oil has been crashing for nearly six months now but the stock market is only now starting to notice. Hmmm...

    US Oil Fund (NYSE:USO) - Weekly

    View Larger Image

    To be sure, the weekly chart of the USO is ugly. Now compare that to the chart of the S&P 500 over the exact same time period and it is fairly safe to say that oil's debacle has not been much of a problem for the stock market. So again, why the sudden linkage?

    S&P 500 - Weekly

    View Larger Image

    However, there is another pair of charts that makes the situation a bit clearer. First, take a peek at a daily chart of the USO. But fair warning, those with squeamish stomachs may want to avert their eyes.

    US Oil Fund (NYSE:USO) - Daily

    View Larger Image

    Now peruse the chart below. This is a daily graph of the SPDR High Yield Bond ETF (NYSE: JNK). While the charts are definitely not identical, it is fairly clear that the junk bond market has started to notice the big decline in oil.

    SPDR High Yield Bond ETF (NYSE:JNK) - Daily

    View Larger Image

    The reason here is simple. You see, something on the order of 25% of all junk bond issuances over the past few years have been for companies in the oil business. More specifically, the shale/fracking business.

    So, as the price of oil plunges, the default risk for these companies rises - dramatically so. Especially for those companies that are highly leveraged. Therefore, the junk bond market is pricing in the ever-increasing risk of companies defaulting on their bonds.

    But frankly, why should the S&P 500 care if a few oil firms go belly up in North Dakota?

    Lessons From the Credit Crisis

    Lest we forget, one of the key components of the market meltdown of 2008 and early 2009 was that credit dried up - almost completely. Remember, even GE couldn't float commercial paper at that time. Nobody was willing to lend money to anybody else. The credit market has seized.

    So, here we go. These energy companies at risk of default due to the dive in crude have lines of credit that they think they can use. However, if things get worse here, banks will likely cut those lines. This will speed up defaults. And the worry is that a credit contagion will follow. Suddenly truckers and railroads are at risk. Etcetera, etcetera.

    Just yesterday, there was word that the mess in the bonds of the energy sector is starting to spill over into the chemicals sector. And if this continues to spread, well, you get the idea.

    The bottom line is this... Nobody wants to even think about what might happen if the credit markets freeze up again. As such, it appears that a case of sell first and ask questions later may be developing.

    What Are Investors To Do?

    As has been written a time or twenty here, we don't make predictions or offer up advice in this column. No, we prefer to let our models and systems guide our exposure to market risk. But sometimes knowing and understanding the question at hand is half the battle in this game.

    So, the decision facing stock market investors at this stage appears to be fairly straightforward. If you believe that oil is going to continue to fall AND that the decline will create more havoc in the junk bond market AND that the ensuing problems in junk will spread to the banks, and then eventually cause liquidity problems in the banking system, then by all means, head to the sidelines.

    If, however, you believe that the contagion argument is a stretch, then any further declines in the stock market will present a buying opportunity.

    So, good luck to everyone and as they used to say on Hill Street Blues, "Let's be careful out there."

    Turning To This Morning

    All eyes are likely to remain on oil today as there is little in the way of overnight news to distract traders and their computers from the price of crude. Asian markets followed Wall Street lower on Thursday. Continued strength in the yen is becoming a problem in Japan as the Nikkei fell for a third consecutive session. In China a report circulated that authorities were making efforts to increase bank lending. This is in addition to expectations that the PBoC will do a system wide Reserve Requirement Rate cut in the near term. In Europe, there continues to be speculation relating to the central bank's implementation of a sovereign QE program sometime in Q1 2015. In addition the German IFO cut its GDP forecast to 1.5% in 2015 from the 2.2% projection in June. Here at home, traders will get weekly jobless claims before the open and U.S. futures are pointing slightly higher in the early going, but are already off their best levels as futures continue to track crude prices.

    Pre-Game Indicators

    Here are the Pre-Market indicators we review each morning before the opening bell...

    Major Foreign Markets:
    Japan: -0.89%
    Hong Kong: -0.90%
    Shanghai: -0.48%
    London: -0.49%
    Germany: +0.33%
    France: +0.05%
    Italy: +0.01%
    Spain: +0.17%

    Crude Oil Futures: +$0.17 to $61.41

    Gold: -$6.70 at $1222.70

    Dollar: lower against the yen and euro, higher vs. pound

    10-Year Bond Yield: Currently trading at 2.156%

    Stock Indices in U.S. (relative to fair value):
    S&P 500: +4.52
    Dow Jones Industrial Average: +45
    NASDAQ Composite: +5.53

    Thought For The Day:

    Man does not live by words alone, despite the fact that sometimes he has to eat them. -Adlai Stevenson

    Wishing you green screens and all the best for a great day,

    David D. Moenning
    President, Chief Investment Officer
    Heritage Capital Research
    Check Out the NEW Website!

    Positions in stocks mentioned: none

    Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

    Advertisement
    Will You Be Ready For The NEXT Bear Market?

    Heritage Capital Research's NextGen Active Risk Manager Can Help
    Contact Heritage for more information or call us at (847) 807-3590


    The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program.

    Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

    The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

    David D. Moenning, an advisor representative of CONCERT Wealth Management Inc. (CONCERT), is founder of Heritage Capital Advisors LLC, a legal business entity doing business as Heritage Capital Research (Heritage). Advisory services are offered through CONCERT Wealth Management, Inc., an SEC registered investment advisor. For a complete description of investment risks, fees and services review the CONCERT firm brochure (ADV Part 2) which is available from your Investment Representative or by contacting Heritage or CONCERT.

    Mr. Moenning is also the owner of Heritage Capital Management (HCM) a state-registered investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Neither HCM, Heritage, or CONCERT is registered as a broker-dealer.

    Employees and affiliates of Heritage and HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or Heritage/HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice.

    Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

    Dec 11 6:46 AM | Link | Comment!
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