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Market Recap 9.7.2012

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The biggest movers today were on earnings; Lululemon Athletica Inc. and Smith & Wesson Holdings Corp. Both beat analysts projections and gained over 10% on their stock prices.

Lululemon (LULU) reported a net revenue increase of 33% to $282.6 million from $212.3 million in the second quarter fiscal 2011. Gross profit for the quarter increased 28% to 155.8 million and made up 55.1% of net revenue.

Pandora (P) stock was crushed today on an announcement from Apple, Inc. (AAPL), stating plans to develop a competing internet radio product. Apple has been aggressively competing with other companies who have their service on Apple products, like Google Maps. P was down over 16% today ending at $10.47.

Monday, the Bureau of Economic Analysis (BEA) will release its monthly report on international trade. The current global marketplace has been weak; Some of the stronger european economies have begun to struggle and China’s manufacturing has been shrinking for months now. The report on monday is composed of goods and services that are exported and imported into the US, calculating the balance between the two values. The report will primarily affect currencies.

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Market Recap 8.31.2012

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Metals and energy rallied on Bernanke’s announcement that though no action will be taken now, the Fed will be ready to act should economic conditions worsen.  His comments are reminiscent of remarks he made in 2010 from Jackson Hole where he strongly hinted at the possibility of QE2.  Crude moved up $1.73 closing at $96.35.  Natural gas rallied nearly 2% closing at $2.801.  Gold surged higher closing up $36.60 closing at 1691.40.  Silver moved up 4.18% closing at 31.72.

Volatility was down today with the VIX falling a little over two percent closing at 17.47.    

The story of the day was the Bernanke speech.  Although he made no explicit statement about what action they would take if the economy deteriorates, the consensus is that it will almost certainly be another round of asset purchasing.  Markets rallied after the implementation of the first two rounds of easing but markets are concerned over the effectiveness of further easing.  Analysts expect that there the likelihood of easing is now very high and that we won’t hear another announcement of significance until around the election. 

James Ramelli University of Illinois graduate in finance Email: james@keeneonthemarket.com, Follow @Jim_KOTM

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Metals Update 8.24.2012

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South Africa accounts for 75% of the world’s platinum supply, with this standoff threatening 40% of the world’s production of the precious metal as workers are protesting wages.

As you can see from the chart below, the platinum/gold ratio is at a historical bottom. I would not hesitate to go long this ratio for various reasons, including platinum’s industrial applications. Platinum is a more rare metal than gold, and I think that it would be a quality investment as investors are flocking from fiat currency investments.
Platinum

Platinum Monthly


David Cornes holds a degree in economics from the University of Montana.

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