Centara Capital

Week of June 10th – June 14th

kluke — Sat, 15 Jun 2013 00:01:20 +0000

Stocks See Red in a Volatile Week…

U.S. equity markets closed in the red on Monday, Tuesday and Wednesday. The first three-day losing streak of 2013 finally ended on Thursday with solid gains across the board. The S&P 500 moved higher by 1.5% for the day. The rally did not last long, however, and stocks fell back again on Friday, making it four down days for the week. Soft economic data and monetary policy concerns were enough to push equity markets lower over the past five days. Adding to the increased volatility over the past month has been the uncertainty regarding the future of global stimulus programs. Both stocks and bonds have sold off recently, making investors nervous about the near-term market direction. For the week, the Dow Jones Industrial Average fell 1.2%, the S&P 500 dropped 1.0% and the Nasdaq declined 1.3%.

Oil prices rose once again. A barrel of crude oil finished trading on Friday at $97.86, up 1.7% from a week ago. Gold moved slightly higher as well. An ounce of gold traded hands at $1,390.29 on Friday, leaving it with a gain of 0.8% for the week. Bond prices recovered a little from the recent sell-off. The yield on the 10-year Treasury slipped to 2.13%, down 2.3% for the week as prices moved marginally higher.

Wholesale inventories rose 0.2% month-over-month in April, matching economist’s expectations. The MBA Mortgage Application Index rose 5.0% last week. The Refinance Index gained 5.0% while the Purchase Index increased by 4.7%. Advance retail sales rose 0.6% month-over-month in May versus the estimate for a 0.4% increase. Weekly initial jobless claims dropped by 12,000 to 334,000 last week, beating expectations for 346,000 claims. The four-week moving average fell by 7,250 to 345,250 while continuing claims rose by 2,000 to 2,973,000. The Import Price Index slipped 0.6% month-over-month in May compared to the flat reading expected. Year-over-year, import prices were lower by 1.9% in May versus the 1.4% decrease expected. The Producer Price Index (PPI) showed prices at the wholesale level were up 0.5% month-over-month in May compared to the 0.1% gain expected by economists. April’s decline of 0.7% was unrevised. The core rate, which excludes food and energy, was 0.1% higher month-over-month in May, coming in line with expectations. April’s 0.1% rise was unadjusted. On a year-over-year basis, headline producer prices were 1.7% higher versus projections of a 1.4% increase, while the core rate was up 1.7%, as expected. April’s year-over-year figures showed gains of 0.6% and 1.7% on the headline and core levels, respectively. The preliminary University of Michigan Consumer Sentiment Index showed consumers’ psyches unexpectedly declined, decreasing to 82.7 in June, from 84.5 in May, where economists had expected it to remain. Industrial production in May came in flat month-over-month versus the 0.2% increase that was forecast. April’s figure was revised higher to a 0.4% decline from a previously reported decrease of 0.5%. Capacity utilization dipped to 77.6% versus the downwardly revised 77.7% in April, below the 77.8% that was anticipated. Utilization is 2.6% below its long-run average.

On Monday, Standard & Poor’s Rating Services upgraded its outlook for long-term U.S. government debt. The rating agency increased its outlook to “stable” from “negative,” meaning there is less of a chance of a downgrade of U.S. debt in the near future. S&P downgraded U.S. government long-term debt in 2011. On Tuesday, the Bank of Japan offered no new stimulus efforts during a discussion on its monetary policy. This disappointed global equity markets, as additional stimulus was expected. Japan’s 1Q Gross Domestic Product was upwardly revised to a 4.1% annualized rate of growth versus the 3.5% pace previously reported. On Thursday, Japan’s Nikkei 225 tumbled 6.4%, leaving it 21% below its high on May 23. Italy’s Gross Domestic Product was revised to a larger quarter-over-quarter contraction.

The Federal Reserve Open Market Committee will conclude its two-day meeting next Wednesday. Few expect any changes to monetary policy at this time. However, all eyes will be on the statement released on Wednesday. Investors will be looking for more hints on when the Fed is looking to pare back on its asset purchase program. In economic news, there will be several reports related to the housing market released next week, along with the Consumer Price Index numbers. The Fed meeting will most likely be what moves the market, but stocks and bonds seem vulnerable to international news as well, making for a tricky landscape in the near-term.

Disclosures & Disclaimers
Securities offered through Registered Representatives of Centara Capital Securities, Inc., Member FINRA/SIPC, and Centara Insurance Services. CA Insurance Lic. #0F30702. Investment advisory and financial planning services offered through Centara Capital Management Group, Inc., a Registered Investment Advisor. CA Insurance Lic. #0D85861. Legal services provided by Centara Legal Group, APC, David J. Gebhardt, Principal. None of the information presented is to be construed as investment advice. See a prospectus before investing.

This commentary is provided for educational purposes only. The information, analysis and opinions expressed herein reflect our judgment as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources are believed to be reliable but not guaranteed. Past performance is not indicative of future results.

Week of June 3rd – June 7th

kluke — Fri, 07 Jun 2013 23:40:43 +0000

When Bad Is Good…

Weak payroll and ISM Manufacturing numbers actually helped push stocks higher this week as investors took the bad news to mean the Fed will not cut back on its bond buying program at its June meeting. After falling to start the week, with the Dow Jones Industrial Average closing below 15,000 on Wednesday, equities staged rallies on Thursday and Friday to end the week in positive territory. Volatility picked up a fair amount with the S&P 500 up and down over 1% in intra-day trading each day of the week. In the end, it was optimism over continued easy money policies that provided the support for equity prices. For the week, the Dow Jones Industrial Average advanced 0.9%, the S&P 500 gained 0.8%, and the Nasdaq rose 0.4%.

A weak dollar provided a strong boost to oil prices this week. A barrel of crude oil rose a hefty 4.9% over the past five trading days to close at $96.19 on Friday. The same can’t be said for gold prices. A loss of $34.00 an ounce on Friday pushed gold into negative territory for the week. An ounce of gold changed hands at $1,379.25 on Friday, leaving it 0.5% lower than a week ago. Bond prices continue to slide as investors worry about the Fed’s monetary policy. The yield on the 10-year Treasury rose to 2.18%, leaving it with a gain of 2.4% for the week.

The ISM Manufacturing Index fell to 49.0 in May from 50.7 in April, compared to the 51.0 reading expected. This was the first time the index hit contraction territory (less than 50.0) in the past six months. It was also the largest monthly drop since June 2009. Construction spending rose 0.4% month-over-month in April, versus the 0.9% increase expected. The trade balance increased to $40.3 billion in April, versus the $41.1 billion deficit expected by economists. March’s deficit of $38.8 billion was downwardly revised to $37.1 billion. Imports rose 2.4% month-over-month to $227.7 billion, while exports rose 1.2% month-over-month to $187.4 billion. The ISM Non-Manufacturing Index rose to 53.7 in May, from 53.1 in April. Expectations were for a reading of 53.5. The ADP Employment Change Report showed that private sector payrolls rose by 135,000 jobs in May, compared to the 165,000 expected. April’s gain of 119,000 jobs was revised lower to 113,000. Weekly initial jobless claims dropped by 11,000 to 346,000 last week, coming in slightly above the 345,000 claims expected. The four-week moving average rose by 4,500 to 352,500, while continuing claims dropped by 52,000 to 2,952,000. Factory orders rose 1.0% month-over-month in April, versus the 1.5% gain expected. The MBA Mortgage Application Index dropped 11.5% last week. The Refinance Index fell 15.0%, while the Purchase Index decreased by 1.6%. Nonfarm payrolls rose by 175,000 jobs month-over-month in May, versus the estimate for 163,000 jobs. April’s gain was downwardly revised by 16,000 to 149,000 jobs. Private sector payrolls increased by 178,000 month-over-month in May, beating the estimate for 175,000 jobs. The unemployment rate rose to 7.6% in May from 7.5% in April. Expectations were for the rate to remain unchanged.

Over the weekend, Mario Draghi, head of the European Central Bank (ECB) said, “The eurozone economy is on track for a recovery driven by the ECB’s loose monetary policy and demand from abroad.” He went on to say the ECB is ready to act again if needed, however inflation rose slightly in April, which could stall any further easing. On Thursday, the Bank of England (BoE) and ECB both kept benchmark interest rates unchanged at 0.50%.

Next week, economic reports will center on inflation news. The recent job numbers provided no reason for the Federal Reserve to cut back on its accommodative monetary policy. Inflation is the other half of the equation, and few believe there is any reason for numbers to pick up here anytime soon. As a result, the Fed will likely not change its stance on the bond buying program when they meet later this month. This should give further support to stock prices. However, volatility could continue as the issue is debated over the next few weeks.

Centara Tactical ETF Monthly Program: May 2013

kluke — Fri, 07 Jun 2013 20:56:16 +0000

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S&P® Case-Shiller Index® Write-Up March 2013 Data

kluke — Sat, 01 Jun 2013 00:34:27 +0000

S&P® Case-Shiller Index ® Write-Up March 2013 Data

Ten Percent Spike in U.S. Home Prices

U.S. home prices increased 10% over March 2012, as reported by S&P Dow Jones Indices, the S&P / Case-Shiller Home Price Indices. The National Index grew 1.15% in Q1 2013 and is up 10.17% since Q1 2012. Both composite indices increased 1.38% in March. The composite-20 index reported annual growth of 10.87%, with the composite-10 index slightly slower at 10.26%.

Phoenix continues to lead the individual metros, reporting 22.48% annual growth and ranking ninth (+1.71%) for the month. San Francisco topped March with growth of 3.85% and ranked second (+22.23%) for the past 12 months. New York continues to trail the pack with annual growth of 2.62% and the second-lowest rate for the month at -0.38%.

The Southern California metros showed respectable growth, with Los Angeles and San Diego placing in the top half of the rankings. Los Angeles reported 16.63% growth for the past 12 months and 2.34% growth for March, ranking sixth for the year and seventh for the month amongst the metros. San Diego was eighth for the year and ninth for the month, growing 2.19% in March and 12.13% for the year.

(Click here to enlarge image)

“Standard & Poor’s®” and “S&P®” are registered trademarks of Standard & Poor’s, a division of The McGraw‐Hill Companies, Inc. Case‐Shiller® and Case‐Shiller Indexes® are trademarks of CoreLogic and have been licensed for use by Standard and Poor’s.