Equities
The equities market got another shot of testosterone as the Dow Jones and the benchmark S&P 500 flexed their record-breaking muscle once more following Fed chair nominee Janet Yellen’s confirmation. The Dow Jones Industrial Average broke another all-time record, closing at 15,876 points. Not to be outdone, the S&P 500 closed at 1,790, exceeding its prior day’s record by nearly half-a-percent. Both are now set to take out new psychological thresholds : 16,000 for the Dow, and 1,800 for the S&P. The NASDAQ composite index is within 30 points of reaching 4,000, a level not seen in over a decade.
The Fed
Of course, much of this euphoria is a direct result of the Federal Reserve, which initiated quantitative easing as a response to the liquidity crisis posed by the financial meltdown of 2008. Fed chair nominee Janet Yellen reiterated the Fed’s loose monetary policy, stating in her confirmation hearing that tapering would be kept off the table for the foreseeable future, and that Fed policy will remain accommodative when the inevitable tapering does occur.
Not everyone is happy with the Fed’s direction : Senator Rand Paul is a vocal critic and has vowed to delay Yellen’s confirmation process. Also, Euro Pacific Capital’s Peter Schiff went on record as stating that Yellen’s nomination will lead to economic collapse.
Currencies
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U.S. Dollar
The US-Dollar index closed up the day’s session barely above the 81 level in what has been a choppy week of market action. The confirmation hearing of Janet Yellen, combined with international market developments, have brought in some measure of confidence in the greenback following last month’s lows.
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Dollar/Yen
The Dollar-Yen pair hit a milestone today after cracking the 100 mark, a level not seen for two months. A resurgent move in the Japanese stock market as well as improved sentiment in the Asian sector are positive fundamentals that align perfectly with the Bank of Japan’s own monetary experiments.
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Euro
The Euro was trapped in whippy conditions this week, but still maintained an overall positive trajectory, based on strong moves in European equity markets, particularly in Germany where the DAX (pronounced “dacks”) closed at an all-time record high of 9,149 points.
Winners & Losers
The winner this week is Jack in the Box, ticker symbol (JACK):
- Shares are up nearly 5% this week based on investor speculation towards the company’s forward guidance.
- It’s a sentiment shared by Oppenheimer Funds, which last week issued a statement suggesting that shares will move higher based on retail comps, new business drivers, and more favorable cost margins.
The loser this week is Genco Shipping & Trading, ticker symbol (GNK):
- Despite 3rd quarter earnings exceeding the prior reporting period by 30%, annual revenue for fiscal year 2013 is likely to come in 11% below 2012.
- However, what’s really scaring off Genco’s investors is the debt load, where liquid assets can only cover 7.5% of current liabilities and with top-line revenue under serious pressure, Genco is unlikely to have a workable solution.
Precious Metals
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Gold Bullion
Gold was again hit hard by the bears, following last week’s volatile market action. The bulls did stage a modest recovery, putting the close at $1,286 dollars per troy ounce.
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Silver Bullion
Silver also took a beating, with the current spot price 25 cents shy of the $21 dollar level, which it lost on Tuesday, when an across-the-board sell-off negatively affected the commodities market.
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Palladium Bullion
Finally, palladium did manage to pull within 4% of last week’s high, but it too was affected by the downturn in the precious metals sector, despite bullish fundamentals of labor market disputes potentially squeezing supply.