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  • Proprietary Trading Weekly Market Recap For Friday, July 11, 2014

    Stocks Hits All-time highs Follow Robust Proprietary Trading

    U.S. equities continued to surge as the S&P 500 hit a fresh all-time high this week closing up 1.25% for the week at 1,985. The Dow Industrial Average added 1.28% while the Nasdaq Composite increased by 2%. Strong economic data released throughout the week was the impetus for strong gains, following a solid first half to 2014.

    (click to enlarge)

    Manufacturing for June started the week with a strong number that was slightly less than expected. U.S. ISM manufacturing index slipped to 55.3 in June from May's 55.4, contradicting market expectations for an small increase. However, the expansion has been accelerating since February, so the modest slowdown is not surprising and the index is still the second highest going back to December. The internals were decent as well. The employment component was unchanged at 52.8. New orders rose to 58.9 from 56.9. New export orders fell to 54.5 from 56.5. Production declined to 60.0 from 61.0. Prices paid fell to 58.0 from 60.0.

    U.S. ISM services index dipped to 56.0 in June from 56.3 in May, in line with market estimates. The business activity index declined to 57.5 from 62.1. Employment component improved to 54.4 from 52.4, the best since January. New orders edged up to 61.2 from 60.5, the highest since January 2011. Export orders climbed to 55.0 from 53.0. The expansion in prices paid slowed slightly as the index slipped to 61.2 from 61.4.

    On the private employment front, the ADP reported private payrolls surged 281 in May after the disappointing 179k gain in May. Gains were broad-based but paced by a 231k rise in the service sector. The goods producing sector added 51k workers. There was a 36k gain in construction workers. Manufacturing jobs were up 12k. Financial activities added 11k jobs, with professional and business employment rising climbing 77k and trade/transportation up 50k.

    The week culminated with a strong jobs report from the Labor Department. According to the Department of Labor, U.S. non-farm payrolls, surged 288k in June from 224k in May and 304k in April. The unemployment rate fell to 6.1% from 6.3% previously. The labor force rose 81k, while household employment increased 407k. Average hourly earnings increased 0.2% following a 0.2% May gain. Private payrolls climbed 262k, consistent with the ADP number, with the goods producing sector expanding 26k, while construction rose 6k, with manufacturing up 16k. The service sector expanded 236k. Government added 26k. Treasury rates are skyrocketing higher.

    The workweek sustained the bounce since March to 34.5 from a weather-depressed 34.3 in February, versus a 34.6 cycle-high in March of 2013. Hours worked increased by 0.2% in June, following gains of 0.2% in May, 0.3% in April and 0.7% in March.

    Earning season for the second quarter will begin in earnest in the coming weeks. With a strong macro backdrop now driving stocks, investors will see if earnings expansion can take over the reins and push stocks even higher

    Jul 14 9:50 AM | Link | Comment!
  • Proprietary Trading Weekly Market Recap For Friday, July 04, 2014

    Stocks Hits All-time highs Follow Robust Economic Data

    Proprietary trading of U.S. equities continued to surge as the S&P 500 hit a fresh all-time high this week closing up 1.25% for the week at 1,985. The Dow Industrial Average added 1.28% while the Nasdaq Composite increased by 2%. Strong economic data released throughout the week was the impetus for strong gains, following a solid first half to 2014.

    (click to enlarge)

    Manufacturing for June started the week with a strong number that was slightly less than expected. U.S. ISM manufacturing index slipped to 55.3 in June from May's 55.4, contradicting market expectations for an small increase. However, the expansion has been accelerating since February, so the modest slowdown is not surprising and the index is still the second highest going back to December. The internals were decent as well. The employment component was unchanged at 52.8. New orders rose to 58.9 from 56.9. New export orders fell to 54.5 from 56.5. Production declined to 60.0 from 61.0. Prices paid fell to 58.0 from 60.0.

    U.S. ISM services index dipped to 56.0 in June from 56.3 in May, in line with market estimates. The business activity index declined to 57.5 from 62.1. Employment component improved to 54.4 from 52.4, the best since January. New orders edged up to 61.2 from 60.5, the highest since January 2011. Export orders climbed to 55.0 from 53.0. The expansion in prices paid slowed slightly as the index slipped to 61.2 from 61.4.

    On the private employment front, the ADP reported private payrolls surged 281 in May after the disappointing 179k gain in May. Gains were broad-based but paced by a 231k rise in the service sector. The goods producing sector added 51k workers. There was a 36k gain in construction workers. Manufacturing jobs were up 12k. Financial activities added 11k jobs, with professional and business employment rising climbing 77k and trade/transportation up 50k.

    The week culminated with a strong jobs report from the Labor Department. According to the Department of Labor, U.S. nonfarm payrolls, surged 288k in June from 224k in May and 304k in April. The unemployment rate fell to 6.1% from 6.3% previously. The labor force rose 81k, while household employment increased 407k. Average hourly earnings increased 0.2% following a 0.2% May gain. Private payrolls climbed 262k, consistent with the ADP number, with the goods producing sector expanding 26k, while construction rose 6k, with manufacturing up 16k. The service sector expanded 236k. Government added 26k. Treasury rates are skyrocketing higher.

    The workweek sustained the bounce since March to 34.5 from a weather-depressed 34.3 in February, versus a 34.6 cycle-high in March of 2013. Hours worked increased by 0.2% in June, following gains of 0.2% in May, 0.3% in April and 0.7% in March.

    Earning season for the second quarter will begin in earnest in the coming weeks. With a strong macro backdrop now driving stocks, investors will see if earnings expansion can take over the reins and push stocks even higher

    Jul 07 8:42 AM | Link | Comment!
  • Proprietary Trading Weekly Market Recap For Friday, June 27, 2014

    Volatility Returns but S&P 500 Only Dips 0.10%

    Data throughout the past week was mixed, with second quarter housing number reflecting relatively strength, while Q1 GDP was much softer than expected. Volatility increased as the second quarter approached a close, as investors prepare for a deluge of data next week. Proprietary trading opportunities under pressure for most of the week, while yields edged slightly higher. For the week the S&P 500 was down only 0.10%.

    U.S. new home sales surged 18.6% to a 504k annual rate in May versus 425k in April. March's 407k reading was nudged up to 410k, which was the highest reading since May 2008. Sales were up in all four regions of the country, with strength mostly from the West and Northeast. The months' supply of homes dropped to 4.5 from 5.3. There were 189k homes on the market, the same as in April. The median sales price rose 4.6% to $282,000 in May from $269,700 which was up 6.9% y/y versus -3.4% previously.

    Despite better than expected Q2 data, investors needed to grapple with a revision to first quarter growth. U.S. Q1 GDP growth was revised sharply lower to a -2.9% rate from -1.0% previously in the second report, and a 2.6% Q4 pace. This number was much worse than even the most pessimistic forecasts. Personal spending growth was revised down to a 1.0% clip from the prior 3.1% pace and a 3.3% rate in Q4. Fixed investment was revised up a bit to a 1.8% decline versus -2.3% in the second report, with nonresidential spending -1.2% versus -1.6% previously, and residential spending -4.2% versus the prior -5.0%. Government spending was unrevised at -0.8%.

    On the employment front the 2k U.S. initial claims drop to a lean 312k in the third week of June extended the 4k drop to 314k in the BLS survey week, as the figures sit closer to the 298k cycle-low from early-May than the 345k recent-high at the end of April. The tightening in claims since April implies upside risk to our 205k June non-farm payroll forecast. Claims are averaging 315k thus far in June, following prior averages of 312k in May, 322k in April 320k in March, and 337k in February. The 314k BLS survey week reading undershot recent BLS figures of 327k in May 323k in March and 334k in February.

    U.S. May personal income rose 0.4% with spending up 0.2%. The 0.3% April income gain was unrevised while the 0.1% dip in consumption was bumped up to unchanged. However, March's 1.0% gain was nudged down to 0.8%. Wages and salaries were up 0.4% last month after a 0.3% April increase Disposable income rose 0.4% too versus 0.4% in April (revised from 0.3%). The savings rate rose to 4.8% from 4.5%. The chain price index and the core rate were each unchanged at 0.2%.

    In Fed speak, the Fed's Bullard said it's getting harder to justify the low interest rate policy in a speech titled "Income Inequality and Monetary Policy: A framework with Answers to Three Questions." Bullard, though more dovish in recent years, is an inflation hawk and has been suggesting normalization is clearly in the cards as some inflation indicators are on the rise.

    Jun 30 1:07 PM | Link | Comment!
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