Monday, April 21, 2014

Daily Bullets…..For April 21, 2014


·         Nasdaq a little toppy?....There is some discussion in the financial press, notably Barron’s, that Nasdaq may be in the process of a correction. The Nasdaq is up 27% in the past year compared to 19% for the S&P500. There has been notable speculative froth in certain pockets of the market, namely social media, biotech and IPOs, most of which is centered on the Nasdaq. A “cooling off” of the Nasdaq “froth” should be viewed as healthy, but we note a full-blown correction in the Nasdaq could result in heightened market volatility in other sectors of the market. Link: http://online.barrons.com/news/articles/SB50001424053111904703704579501592502883378

 
·         Conference Board survey up again….Conference Board economist survey shows its leading indicators for the economy rose a healthy 0.8% in March. Survey indicates both hiring and consumer confidence improved. This is more in a string of recent data showing the U.S. economy is accelerating following the weather-induced slowdown in the first quarter. Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140421&id=17539650

 
·         Some concern over earnings…….There is buzz in financial media this morning that some investors are concerned about pace of first quarter earnings. With only 15-20 companies having reported so far, it is way too few to be statistically significant. While Q1 earnings may have been impacted by the winter weather, we think accelerating economy should support stronger earnings later this year, which is positive for stocks. Link: http://money.msn.com/top-stocks/post--take-the-long-view-in-weak-earnings-season

 
·         Margin pressure? ……..National Association of Business Economics survey out this morning with report that businesses are seeing some increased pressure on material costs and labor input costs. The increase does not appear to be dramatic. It would be normal to see some upward pressure in these costs as the economic recovery matures. We are not overly concerned about margin pressures as we believe big companies still have multiple options for controlling costs, particularly technology investments and overseas sourcing. So far this cycle, increases in labor input costs have been mild, running around 1%. Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140421&id=17538461

 

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