The week began on the positive side for investors with markets in the United States advancing for the third week in a row. This was directly the result of the jobs report from last Friday confirming the creation of 242,000 jobs in the month of February of which 230,000 originated in the private sector.
The performance in the markets were also correlated to two other factors which included, rising crude prices and the hope of more stimulus by the ECB (European Central Bank).
Later in the week the ECB delivered. There was an interest rate cut from 0.5% to 0% within the Euro-zone. The deposit rate was lowered further from negative 0.3% to -0.4%. Quantitative and qualitative easing was further enhanced. Corporate bonds with now be included, along with the purchase of sovereign government debt. Total bank purchases will be increased from the equivalent of $65 billion USD (United States dollar) to 87 billion USD.
Statues of the two symbolic beasts of finance, the bear and the bull, in front of the Frankfurt Stock Exchange.
Although the Euro did drop in valuation against USD and other world currencies, as a result of the ECB action, it has since stabilized at $1.11 USD.
This week marks the seven year anniversary for the present United States bull market. It has avoided a 20% decline for more than 84 months now. This bull run is now the third longest on record (the average is 59 months). Since the lows of 2009, the Dow Jones Industrial Average has increased 159%. The Standard & Poor 500 has surged 193% and the NASDAQ a total of 266%.
American priced WTI (West Texas Intermediate) crude moved higher this week after a over 5% spike on Monday. It is now nearing $39.00 USD again, having started the year near the $40.00 USD level. It reached a low of $26.05 USD on February 11th. International priced Brent is approaching the $41.00 USD level at posting today.
Countries by oil production
Some of the biggest global producers of oil both in and outside of OPEC (Organization of the Petroleum Exporting Countries) have announced an upcoming meeting in Russia. The main item to be discussed is a potential output freeze. Although it is creating a spike in crude prices temporarily, it will in reality solidify an oversupply of production in excess of 1 million barrels a day.
In related news, Saudi Arabia is now seeking bank loans valued between $6 to $7 billion USD. It is the first significant borrowing in over a decade. It is likely in response to the record budget deficit in 2015 for the country, which neared $100 billion USD.
Investors once again were interested in new bond offerings made by a number of leading international companies. A total of 5.8 billion USD went into junk bonds alone for the week ending on March 02. It is the largest on record.
Gold is having the best start to a year since 1974.
As equity markets in the United States and elsewhere showed more improvement, there is a rising concern that the American central bank (the Fed) might feel inclined to raise interest rates. It is still somewhat unlikely in that the rest of the world is moving in the opposite direction.
BIS global members
As a warning to central banks everywhere, the Bank of International Settlements (BIS) has stated that the longer interest rates stay at or below zero, the higher the risk that in the end no one will benefit from these unprecedented monetary moves.
The concern is that banks, insurance companies and numerous pension plans will not remain profitable in such an extraordinary financial environment.
As proof of what the BIS is stating as a growing concern, New Zealand unexpectedly cut their central bank interest rate by 25 basis points to 2.25%. It adds to the rising chorus of an oncoming currency war in international markets.
The Chinese government spent the week attempting to reassure bankers and investors that officials there still have enough leeway to maintain reasonable growth. The new estimate for this year is now in the range of 6.5% to 7%. This follows on the heels of the 6.9% reported for 2015, which was the slowest rate of expansion in 25 years.
Cartoon which sometimes accompanied reprints of the People’s Daily commentary published April 21, 2015 touting the Chinese bull market.
There are many doubters including this investment writer, in not only the rate of growth that is being posted by the Chinese government, but also moving forward, their ability to manage the economy.
An ominous sign was the fact that Chinese foreign reserves dropped for the 4th consecutive month in February. The additional decline of $28.75 billion brings their balance sheet down to $3.2 trillion. It is the lowest level since 2011, and seems destined to go far lower this year.
China’s trade performance is also dismal. February data suggest a drop in exports of 25.4% from a year earlier. It was the biggest drop since 2009 during the Great Recession. Correspondingly imports plunged 13.8%. It still leaves the country with a trade surplus of $32.59 billion USD.
The Chinese consumer inflation is increasing, even as producer price increases remain stagnant. The increase of inflation, at the fastest since the summer of 2014, is another sign that the Chinese economy has a number of structural problems.
Japanese longer term bonds declined even further his week setting new market lows. United States Treasuries benefited from this movement, as investors moved out of Japanese equities.
Kim Jong-un
Supreme Leader of North Korea.
Also in Asia, came new security concerns over North Korea. The country’s military has been directed by their leader Kim Jong-Un to take preemptive and offensive posturing, against both South Korea and the United States.
This comes in response to join military drills by the two aforementioned countries and the tough new sanctions initiated by the United Nations, to impede the North Korean nuclear program.
The North Koreans now claim they have the capability to modify the size of nuclear weapons, so they can be mounted on ballistic missiles already part of the Korean military inventory. There is no real way to verify this and a number of experts in the field are skeptical.
In a related security matter, Iran is threatening to abandon the recent nuclear agreement with the major powers of the world. The country has on more than one occasion violated United Nation resolutions concerning the test firing of ballistic missiles.
In European economic news, Germany factory orders fell for a second month in January. Analysts there are taking it as a sign of the increasing deflationary pressures and the slowing global economy. Although as Europe’s largest economy, the near record low unemployment of 4.3% is at a 35 year low and is seen as a positive indication of the overall health of the German economy.
At the same time German industrial production spiked the most in six years in January at 3.3%, after a decline of 0.3% in December. It is seen as a further sign of the strong internal demand, even as world trade continues to diminish.
Syrian and Iraqi immigrants getting off a boat from Turkey on the Greek island of Lesbos.
The refugee issue is continuing to plague European leaders as migrants continue to head towards Europe for both security reasons which is allowed and economic reasons, which according to E.U. (European Union) rules is not.
At the beginning of this week European leaders gathered for a summit with Turkish officials. Since Turkey is the main conduit for refugees coming from the Middle East, a deal with them is paramount in trying to stem the flow of migrants.
Turkey has already received the equivalent of $3.3 billion USD, to help deal with the ongoing crisis.
Turkey is offering in principle to take back all economic migrants from Europe in exchange for an additional $3.3 billion USD, visa waivers for Turkish citizens, and a faster track for Turkey to join the E.U.
On the front lines in the onrush of arrivals from the Middle East, Greece is struggling to manage. It places an additional dimension on the financial bailout of the country by the E.U. The third aid package worth 86 billion Euros ($95.5 billion USD), is deemed to insufficient in the lack of new reforms.
Location of Cyprus (darker and lighter green), indicating Northern Cyprus (lighter green) and the rest of the European Union (light green)
Although the IMF (International Monetary Fund) is not an official participant, the institution is in conflict with the EU in what needs to be done before Greece will receive more help.
In contrast, Cyprus is now the fourth Euro-zone nation to exit the combined EU/IMF bailout programs. The country was forced to turn for outside help in 2013, to the tune of $10 billion Euros (11.2 billion USD).
This action will allow Cyprus to return to the international credit markets. It leaves only Greece remaining in an ongoing financial rescue program.
Local transmission of the Zika virus has now been indicated in 31 countries across the Caribbean and Latin America. The WHO (World Health Organization) shows increasing evidence of sexual transmission of the disease.
In Brazil, the widening corruption probe is fracturing the ruling coalition. It is turning key Congressional lawmakers against President Dilma Rouseff. This situation is increasing the likelihood that she will be impeached later this year. The political crisis is adding to the economic woes, the country is now in. Brazil is experiencing one of the worst recessions on record.
The Investment Newsletter had 2 target fills to report this week, and 3 stocks targets called early.
Angie’s List (ANGI ) was recommended as a short on 02/08/16 for $9.49, with a buy fill on 02/11/16. There was a Long Term Target Fill at $7.90 on 03/10/16. The $1.59 decline in the share price, provided a 20.13% return for investors.
Dollar General (DG ) was recommended long on 06/15/16 for $75.99, with a buy fill on 08/24/15. There was a Short Term Target Fill at $83.59 USD on 03/11/16. The $7.60 increase in the share price, provided a 10.00% return for investors.
Popeyes (PLKI) was recommended as a short on 09/21/15 for $57.99 USD with a buy fill on 10/16/15. It is now suggested that investors sell this stock before reaching the Medium Term Target. At $54.08 USD, the decrease of $3.91 will provide investors a return of 7.23%.
Popeyes (PLKI) was recommended as a short on 09/21/15 for $57.99 USD with a buy fill on 10/16/15. It is now suggested that investors sell this stock before reaching the Long Term Target. At $54.08 USD, the decrease of $3.91 will provide investors a return of 7.23%.
SeaWorld (SEAS) was recommended as a short on 08/17/15 for $18.99 USD with a buy fill on 08/18/15. It is now suggested that investors sell this stock before reaching the Medium & Long Term Targets. At $17.31 USD, the decrease of $1.68 will provide investors a return of 9.71%.
It is recognized that the sale price upon reading the post, may be somewhat different from when the recommendation to sell was actually made. It is up to the investor to determine the ideal time, to close the position.
Stock Fills For The Previous Weeks
Mar 04, 2016 ———1 Target Fill & 2 Early Stock Calls
Feb 26, 2016———- 2 Target Fills
Feb 19, 2016———- 0 Target Fills & 2 Early Stock Calls
Feb 12, 2016 ———05 Target Fills
Feb 05, 2016 ———05 Target Fills & 4 Early Stock Calls
Jan 29, 2016 ———01 Target Fills & 2 Early Stock Calls
Jan 22, 2016——— 08 Target Fills
Jan 15, 2016 ———09 Target Fills
Jan 07, 2016 ——– 10 Target Fills
Dec 31, 2015 ——–1 Target Fill
Dec 24, 2015 ——–0 Target Fills
Dec 18, 2015 ——–4 Target Fills
Dec 11, 2015 ——–2 Target Fills
Dec 04, 2015 ——–4 Target Fills
Nov 27, 2015 ——- 1 Target Fill
Nov 20, 2015 ——- 6 Target Fills
Nov 13, 2015 ——–6 Target Fills
Nov 06, 2015———5 Target Fills
Oct 30, 2015——— 2 Target Fills
Oct 23, 2015 ——– 2 Target Fills
Oct 16, 2015 ——– 2 Target Fills
Oct 09, 2015 ——- 1 Target Fill
Oct 02, 2015 ——–5 Target Fills
Sept 25, 2015 ——-1 Target Fill
Sept 18, 2015 —— 2 Target Fills
Sept 11, 2015 —— 1 Target Fill
Sept 04, 2015—— 2 Target Fills
August 28, 2015 6 Target Fills
August 21, 2015 – 2 Target Fills
August 14, 2015 –-1 Target Fill
August 07,2015 —2 Target Fills
July 31, 2015 ——1 Target Fill
July 24, 2015 ——1 Target Fill
July 17, 2015——-3 Target Fills
July 10, 2015—— 1 Target Fill
July 03, 2015—— 0 Target Fills
June 26, 2015—– 3 Target Fills
June 19, 2015 —- 2 Target Fills
June 12, 2015—–2 Target Fills
June 05, 2015—–4 Target Fills
May 29, 2015 —- 5 Target Fills
May 22, 2015—– 2 Target Fills
May 15, 2015 —–2 Target Fills
May 08, 2015 —–1 Target Fill
May 01, 2015 —- 3 Target Fills
April 24, 2015—- 2 Target Fills
April 17, 2015 —-5 Target Fills
April 10, 2015 —-3 Target Fills
@ 2014 The Day Trading Academy. All rights reserved. This work is based on SEC filings, interviews, corporate press releases, and extensive research done across investment articles, current events, and investment expertise. It may contain errors, and you shouldn’t make any financial decision based solely on what you read here. It’s your money and your responsibility. As with any investment, there is no guarantee against potential loss. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. This publication’s sole intended purpose is to provide investment-related information as well as education and opinions to subscribers and the recommendations and analysis presented to members is for the exclusive use of members.