Feb 23-27: And the award goes to...

DJIA 18068 // S&P 2103 // NASDAQ 4439 // 10-YR TRE 2.09% //

EURO 1.133 // OIL 49.14 // GOLD 1198 // BIT 236

Applicants at a recent job fair. The US economy has added 3.2 million jobs in the past year, helping to drop the unemployment rate to 5.7%.

283,000

Applications last week for unemployment aid. A drop in applications for aid is a positive sign that the economy is absorbing job seekers. Although more and more Americans are finding jobs, economists are arguing about the indicator's significance for the health of the overall economy.

Applications for US unemployment aid plummet to 283,000, AP via Yahoo Finance

Weekly applications for unemployment aid dropped by 21,000 last week to their lowest level since last October. The drop could be attributed in part to the economy adding 3.2 million jobs in the past year, helping to lower unemployment to 5.7% in January from 6.6% twelve months before. Number of people quitting jobs increased by 2.1, generally seen as a strong sign of job alternatives.

Walmart Raises Wages as Market Gets Tighter, WSJ

Following the lead of Gap and others, Walmart announced last Wednesday that it would raise associates' salary to $9 by this April and $10 by next year. The market responded by pushing WMT shares lower amid wage expense concerns. Investors are taking this as a sign that employment, at least at the lower end of the market, is tightening noticeably in recent weeks.

Economy's Supply Side Splutters, WSJ

Complicating bullishness associated with recent rates of employment is the fact that, at 3.6%, job vacancies in December were at their highest rate since 2001--well before the recession. Analysts are taking this as a sign that many employees are not well matched to the jobs currently available. Productivity has grown at just 1.3% per year since 2007, the slowest rate of increase since 1970.

Lenders Step Up Financing to Subprime Borrowers, WSJ

Almost four out of every 10 loans for cars, credit cards, and personal borrowing in the first 11 months of 2014 went to borrowers with FICO credit scores of 650 or less, or "subprime borrowers." These loans carry higher returns for investors, but also a greater chance of default. Autos, as opposed to credit cards or personal loans, are easier to cover because vehicles can be repossessed by lenders.

Fed Tiptoes into Rate Hike Debate, WSJ
The debate about when the Fed will raise interest rates continues, as Janet Yellen and her advisors remain extremely cagey about changing the wording used in FOMC minutes to give indications to markets either way--about a nearer-term or longer-term increase. One thing is clear--despite strong growth in jobs numbers, inflation is not yet at a level that the Fed would like it to be.

Vocabulary:

• Unemployment rate
• FOMC
• Labor productivity
• Janet Yellen

Economic Calendar:

• Mn Feb 23: Existing home sales, Dallas Fed Mfg survey; CHGG, HSBC, SF
• Tu Feb 24: Case-Shiller HPI, Consumer confidence; ; SAM, FSLR, FLTX, HD, ODP
• We Feb 25: New home sales, Janet Yellen speaks; CVC, CPB, DLTR, LOW, PLKI, TGT
• Th Feb 26: CPI, Durable goods, Jobless claims; BUD, GPS, JCP, LYV, RBS, SRE
• Fr Feb 27: GDP, Chicago PMI, Pending home sales

Predictions from last week: 2 / 3   All-Time: 12 / 18

• Chinese yuan weakens: WRONG
• Dow, S&P continue record highs :CORRECT
• Manufacturing expands: CORRECT

Weekly Predictions:

1. Yellen keeps "patient" wording in FOMC dialogue
2. CPI less food and energy at 0.0%, below consensus
3. GDP on Friday indicates annualized rate of over 3.5% economic growth

Participants: J. O'Brien, K. Meenan

Jan 26-30: Gyros and bits

DJIA 17560 // S&P 2041 // NASDAQ 4267 // 10-YR TRE 1.814% //

EURO 1.1270 // OIL 47.51 // GOLD 1286 // BIT 301.61

Global leaders from industry and government gathered this week in Davos,  Switzerland to discuss policy, problems, and possible solutions. Reports note a special focus on topics like "shared value," "creative capitalism," and "compassionate capitalism," perhaps suggesting CEOs' desire to improve the negative image of business around the world.

$43.50

Reported price of a hot dog at Davos (WSJ). Looks like the de-peg is already reaping some unintended consequences.

Oxfam presses Davos forum with wealth inequality claim, FT

Oxfam, the UK-based anti-poverty non-profit, issued a report last week noting that the richest 1% in the world will soon own more wealth than the rest of the world put together. Conversely, the report noted the "more than 1 billion people" living in absolute poverty with income of less than $1.25 a day.

Greece chooses anti-austerity party in major shift, NYT

The Greek people rejected austerity measures being imposed by the EU on Sunday by electing the leftist Syriza party into power, ousting the centrist New Democracy party. Syriza party leader Alexis Tsipras declared in Athens that "Greece will now move ahead with hope and reach out to Europe, and Europe is going to change." Populist movements on the left and right in France, Spain, and Italy are also expected to gain ground in coming weeks.

Swiss miss, Economist

When the Swiss National Bank (SNB) unpegged the currency from the euro last week, the market looked about as "wrong-footed" as it did in responding to the franc's original peg to the euro back in 2011. Retail brokerages--where mom-and-pop traders speculate on currencies expected to move in price by small fractions of a percent and where only tiny amounts of collateral were previously required--were devastated by the move, as clients trading on margin were forced to call in accounts.

Google wireless services aims to switch between carriers, WSJ

Google is shaking up another industry in aiming to give subscribers choice across a variety of wireless carriers and wifi signals in routing calls to one another. This challenges the current paradigm where contracts are signed between subscribers and service providers who provide reception through their network alone. The program is expected to be rolled out later this year throughout the US.

As commodities fall, some investors see reasons to buy, WSJ

After years of falling markets, some investors are betting we are presently at a price bottom across a variety of commodities markets. Despite record supplies resulting from decreased demand across Europe and developing world, among other reasons, investors perceive an opportunity particularly in agricultural commodities, which can respond faster to supply-demand changes as farmers manage crops on a season to season basis.

Vocabulary:
Contango http://www.investopedia.com/terms/c/contango.asp
Backwardation http://www.investopedia.com/terms/b/backwardation.asp
Bitcoin http://www.investopedia.com/terms/b/bitcoin.asp

Calendar, Jan 26-30: (Nasdaq Economic Calendar)

• Jan 26: MSFT
• Jan 27: Durable goods orders, new home sales, consumer confidence; AAPL, YHOO, MMM, AAL, T, CAT, PFE, PG
• Jan 28: EIA petroleum status report, FOMC meeting announcement; BA, FB
• Jan 29: Jobless claims, pending new home sales index; BABA, AMZN, DOW, F, GOOG, JBLU, TWC
• Jan 30: GDP, PMI, consumer sentiment; CVX, LLY, MAT, XRX

Predictions from last week: 1.5/3 All-Time: 4/6

• NFLX beats: CORRECT
• LUV and UAL beat: CORRECT / WRONG
• ECB doesn't deviate: WRONG

Predictions Jan 26-30:

• AAL will beat estimates and adjust guidance upward based on peer performance
• CVX misses estimates on falling oil prices, declining investment
• Bitcoin price rises on news coverage and extra liquidity from Coinbase

Participants: J. O'Brien, K. Meenan, J. Ayat

Jan 20-23: Global woes and "whoa!"s

DJIA 17516 // S&P 2024 // NASDAQ 4162 // 10-YR TRE 1.815% //

EURO $1.1589 // OIL $47.59 // GOLD 1290

The newly-minted skyline of Shanghai's Pudong central district. China GDP growth of 7.4% beat analyst estimates but represents the country's slowest annual growth rate since 1990.

17 months

Amount of time it took for the Shanghai stock market to reach the volume of margin lending amassed by the NYSE after 13 years of trading (CNBC)

China's Economic Growth is Slowest in Decades, WSJ
China's economic growth slowed to 7.4% in 2014, beating estimates of 7.3% but touching on growth levels not seen since 1990. Beijing notes that 7% growth is the minimum necessary to create jobs given China's population. Slower growth is in-line with Communist leaders aiming for shifting the economy towards a model based on domestic consumption and services industries.

Swiss franc soars, stocks tank as Euro peg scrapped, CNBC
The Swiss National Bank (SNB) shocked the investing world on Thursday by removing its 3-year old peg of 1.20 Swiss francs per euro. The Swiss franc drastically appreciated against global currencies in the span of several hours. Implications of the depegging include a slowdown in the Swiss economy as a result of expensive exports, and problems for currency traders and anyone with bets on stable rates.

QE is coming, but on German terms, Economist
When the European Central Bank (ECB) meets this Thursday January 22, is will have a momentous decision on its hands. Mario Draghi, the ECB's president, seems determined to pursue QE in some form. Whether or not the ECB buys sovereign debt in the weighted fashion economic size it has employed in the past, or if it focuses solely on the debt of ailing nations' economies, is yet to be seen.

Report says richest 1% will control most wealth by 2016, USA Today
According to Oxfam, a British charity dedicated to fighting poverty, the world's richest 1% will control over 50% of the world's wealth by 2016. The 80 richest people in the will own $1.9 trillion in wealth. In 2014, the richest The report was published in advance of this week's World Economic Forum to provoke discussion and change among world leaders.

Vocabulary:
Currency peg http://www.investopedia.com/terms/c/currency-peg.asp
Sovereign debt http://www.investopedia.com/terms/s/sovereign-debt.asp
Covered bonds http://www.investopedia.com/terms/c/coveredbond.asp
Bundesbank http://www.investopedia.com/terms/b/bundesbank.asp
Oxfam http://en.wikipedia.org/wiki/Oxfam

Calendar, Jan 20-23 (Nasdaq Economic Calendar)

• Jan 20: Housing market index; US State of the Union; earnings from JNJ, HAL, NFLX, MS
• Jan 21: Housing starts; AXP, EBAY, KMI, URI
• Jan 22: ECB meeting; PMI Manufacturing index; CP, LUV, SBUX, UAL
• Jan 23: Existing home sales; GE, KMB

Predictions from last week: 2/3 All-Time: 2/3

• Dollar strengthens: CORRECT
• Crude drops: WRONG
• Alcoa beats: CORRECT

Predictions Jan 20-23:

• NFLX beats estimates on strength of picking up Friends catalog
• LUV and UAL beat estimates following strong earnings from DAL
• ECB not deviating from weighted bond-buying approach

Participants: S. Ballantyne, K. Meenan