COMING UP ALUMINUM

It's spring and besides the expected flowers aluminum demand may be soon be spouting if one can believe the earnings report today from Alcoa (AA).

Earnings for Alcoa rose 3.5% to nearly $13/share, $12.97 to be exact, the company reported. The news carried some significance since Alcoa is the first in the S&P 500 to report.

The company also forecast rising demand for the light metal that's used in a variety of manufacturing, saying demand will outstrip production in 2014. On the one hand that might not be saying much since there's been a drastic cutback in production. On the other hand, time will tell.

Alcoa's news boosted other raw materials as they joined health care  companies to rally more than 1.4% to push other equities higher. Biotech was another winner as the Nasdaq Biotech Index spurted 3.6%.

Two big money center banks, JP Morgan and Wells Fargo, are up next when they report this Friday.

REACH FOR YIELD

"Reach for the sky," use to be a popular term in the days all of those old black and white westerns whenever the bad guys were robbing the innocent or unwary.

Today, there's a new term, Reach for the yield, thanks to wayward politicians and bumbling central bankers. But one thing hasn't changed. It's still a holdup.

http://blogs.marketwatch.com/thetell/2014/04/09/greece-returns-to-bond-markets-but-buyer-beware/

SHRINKAGE

Though this is hardly new it's nice to see that others are finally catching on. Someone blogged recently that $120,000 today is not that high of a living standard; in fact, it's pretty average. In the 1980s that same $120,000 income put one near the top 1%.

In case you don't recognize it, that's inflation. And here's another example, Shrinkflation.

http://www.cnbc.com/id/101526290

KING COPPER

Someone once suggested that studying copper was like getting a doctorate in investing, so widely is the industrial metal used in the world economy.

Last month the price of copper hit a three and half year low as worries about a China slowdown captured investor attention. Down nearly 10% so far this year investors keep looking for a bottom.

http://www.marketwatch.com/story/antofagasta-copper-price-may-have-found-a-bottom-2014-04-08?dist=afterbell

ENOUGH SAID

Fred Schwed, a stock broker who was kicked out of Princeton for having a girl in his room, wound up on Wall Street just before the Great Crash of 1929. He later wrote what has become a classic over the years, Where are the Customers' Yachts?

A quote from Schwed's book:
“When there is a stock-market boom, and everyone is scrambling for common stocks, take all of your common stocks and sell them. Take the proceeds and buy conservative bonds. No doubt the stocks you sold will go higher. Pay no attention to this— just wait for the depression which will come sooner or later. When this depression— or panic— becomes a national catastrophe, sell out the bonds (perhaps at a loss) and buy back the stocks. No doubt the stocks will go still lower. Again pay no attention. Wait for the next boom. Continue to repeat this operation as long as you live, and you’ll have the pleasure of dying rich.”

Schwed went on to write a successful children's book about which his publisher wrote:

Fred, Jr. Schwed

Fred Schwed, Jr., was a professional trader who had the good sense to get out after losing a bundle (of mostly his own money) in the 1929 crash. Some years later, Schwed published a children's book titled Wacky, the Small Boy. Wacky became a bestseller, and Schwed went on to draw further on his experience in writing Where Are the Customers' Yachts? His publisher said of him, "Mr. Schwed has attended Lawrenceville and Princeton and has spent the last ten years on Wall Street. As a result, he knows everything there is to know about children."

Enough said.

DOWN DAY

Monday was not a nice day on Wall Street as market takes a tumble with Internet companies leading the downfall. The Nasdaq suffered its worst three-day decline since late 2011. Utilities provided one of the few bright spots by finishing up for the  day.

That utility stocks are now the best performing sector so far this year is troubling indeed. The sector has a long history dating to the 1920s of front-running volatile periods and market corrections.

http://www.marketwatch.com/story/what-keeps-bulls-and-bears-up-at-night-2014-04-07?link=MW_TD_latest

ASIAN, EUROPE MARKETS DOWN

Asian markets sold off Monday in wake of what happened Friday in US markets.
http://blogs.marketwatch.com/thetell/2014/04/06/asia-markets-live-blog-tech-troubles/

And the story in Europe wasn't any different as several markets there turned down.
http://www.marketwatch.com/story/european-stocks-drop-sharply-bouygues-loses-bidding-fight-2014-04-07?dist=markets

WINNING IN THE MARKET

It's not always about new highs and lows, bond ticks or price-to-earnings ratios. Inverted yield curves, volatility and spreads, to be sure, can be important. But they're not everything.

Sometimes it's the things one comes across outside the world of investing that makes one a better investor. Too many people keep waiting to get that last piece of information before pulling the trigger. Such is a cut from the same cloth as doing almost no homework before jumping into a position.

Who among us has not been guilty of both?

Sometimes more is less and less is more. There are no fast, hard, inviolable rules. With that in mind here is an excellent read and, if memory serves, without one mention of stocks, the market or debt ratios. Soak it in and you just might surprise yourself on your road to becoming a better investor.
http://blogs.hbr.org/2009/05/two-lists-you-should-look-at-e/

CORPORATE EARNINGS REPORTS

When's the last time corporate earnings fell? The last time was Q3 in 2012. Some think that's about to change as worry about meager corporate earnings seems to be cranking up.

 Part of the concern stems from the unusually cold winter many hope is now past. But companies that do business overseas have been hit by unfavorable exchange rates and, according to one source, of the 111 companies that have offered guidance for Q1 most have been less than positive.
http://money.cnn.com/2014/04/06/investing/stock-market-lookahead/index.html?iid=HP_MPM

MARKET TIBITS

If the economy is growing faster than the labor market, does that lead to inflation?

Real wages are stagnant. If they were any more stagnant they'd be pond scum. Toss in slight increase in hiring temps, fewer short-term unemployed and slight uptick in participation rate and you have an inverse relationship here. Sorta like asking do you want more economic freedom and less autocratic rule or the reverse?

If you have not guessed it, we favor the former. And if you look at the chart posted with our Fed Fiasco blog, you'll see another inverse relationship, that between employment or jobs and QE.

Simply put, observers see and read what they want. But as investors one must decide, especially if one's in the market for bonds. We've already shortened our duration. The risk of another global slowdown favors the long end of the curve; it also suggests the Fed would roll out perhaps some more easing. Our bet is the Fed is already behind the curve. But that's what makes for a horse race.*

Ten year T-bonds nearing Death Cross with the 50-day moving average threatening to dip below 200-day MA. We've been here before and it didn't happen. So what does it bode if it happens this time?
http://blogs.marketwatch.com/thetell/2014/04/04/10-year-treasury-yield-death-cross-could-signal-bond-rally/*

For another view on bonds and what to expect if rates rise http://www.marketwatch.com/story/dont-dump-your-bonds-when-interest-rates-rise-2014-04-04

Mid-term elections reportedly are dangerous times for the stock market some believe. Could a sell-off be in the offing? 
http://blogs.stockcharts.com/chartwatchers/2014/04/watching-for-a-spring-top.html *

A blurb in the weekend's WSJ says: "Private Employment Hits a New High, But Government Hiring Lags Behind." Now all we have to do is go out and create a bunch of government jobs. We all know how efficient government workers are. *

If the cure for high prices is high prices, then at some point things become cheap enough to bring out buyers. Think mergers and acquisitions here as two of Europe's cement firms contemplate a $50 billion dollar merger. Cutting overcapacity is akin to cutting home prices when there are too few buyers. The point here is one fine day the market awakens to realize there is no more overcapacity to be cut. The safe bet is the market will awaken long before central bankers. *