George Chamberlin's Money in the Morning

July 28, 2014

Fear, not greed, moved investors last week. The decision to step away from stocks Friday was driven by concerns that the global tensions could escalate over the weekend and traders decided it was better to be safe than sorry. The Dow industrials dropped 123 points and finished the week with a loss of 0.8 percent. Most of the decline in the Dow was the result of a sharp sell-off in shares of Visa. The stock dropped $9.87 to $212.87 after reporting good numbers for Q2 but a cautious outlook for future sales. The Dow is what is called a price-weighted index, so the decline in Visa resulted in 63 of the 123 points lost Friday.

*****

Fear, not greed, moved investors last week. The decision to step away from stocks Friday was driven by concerns that the global tensions could escalate over the weekend and traders decided it was better to be safe than sorry.

You never know when a stock is going to get hot. Last Friday, El Pollo Loco held its IPO at $15 a share and closed the day at $24, a gain of 60 percent. Well, the stock continues en fuego again today, topping $30 a share, double its offering price. Go figure.

*****

MarketWatch.com is back to its old self. The lead headline today screams, "Stock trader who called three crashes sees 20 percent collapse." It is not worth mentioning the "trader" -- nor investor -- who is trying to stir up a decline to make his bear trades successful. However, the author of the article includes one very important sentence: "Unfortunately, (name of trader) can't say when this vulnerable market will crack." What use is a prediction of the end of the world if you can't say when it will happen? One thing about being a bear, you will ultimately be right as there is always be a major correction sometime in the future. It could be 10 days away or 10 years. You gotta love these guys.

*****

Where the markets go in the next week will be determined by an avalanche of economic news this week. First and foremost, the Fed's open market committee meets tomorrow and Wednesday. While it is unlikely members of the Yellen gang will show their hand on rates and inflation, especially with the midterm elections just a few months away, there may be some clarification on when a major policy adjustment could occur.

*****

The big news this week will focus on employment. Starting Wednesday, we will get the ADP report on civilian payrolls in July, followed by the weekly report on unemployment claims Thursday (last week, claims fell to the lowest level since 2006) and then Friday brings the Department of Labor report on payrolls in July. I'm betting we are going to get very positive news on the job market in each of the reports. But the report the Fed will be watching the closest will be Thursday's release of the employment cost index for Q2. Look for this report to again show there is no inflationary pressure pushing up wages.

*****

We will also get the first snapshot of the U.S. economy in the second quarter with the release of the GDP report. Remember, the GDP fell in the first three months of the year by 2.9 percent, mostly because of the severe winter that zapped much of the country in January and February. It is logical to expect things to have snapped back as spring and summer arrived.

*****

The National Association of Realtors is reporting pending homes sales -- contracts in the escrow process -- dipped in June after rising in the three previous months. Tight inventory continues to weigh on the market and impact sales. "With rents rising 4 percent annually, potential buyers are less likely to experience sticker shock and can make smart decisions on whether or not it makes sense to buy or continue renting," said chief economist Lawrence Yun.

*****

Speaking of real estate, it's a Merger Monday on Wall Street. As expected, two online real estate information services are getting together as Zillow will pay $3.5 billion for Trulia. The two companies will continue to operate as separate entities.

*****

And, a couple of dollar stores are tying the knot. Dollar Tree, which operates more than 5,000 stores across the country -- including 18 here in San Diego County -- will pay $8.5 billion to purchase its biggest rival, Family Dollar, which has 8,200 stores, five locally.

*****

Bernard Langer's victory in the Senior Open Championship in Wales was more than impressive. He ran away from the field over the weekend, finishing 13 strokes ahead of runner-up Colin Montgomerie. Langer has dominated the senior tour for many years and this win was certainly his most impressive of the four majors he has won on the tour.

*****

Talking about impressive wins, Jeff Gordon drove a perfect race, winning the Brickyard 400 at the Indianapolis Motor Speedway yesterday. Gordon won the first Nascar race at the legendary track 20 years ago and this was his fifth win there, making it one out of every four times he has picked up the trophy. Jeff's my favorite NASCAR driver and winning at the Indy obviously is something special for him.

More George Chamberlin Columns

Stocks little changed on mergers, data before Fed

Financial markets were little changed Monday as investors await a key series of economic reports and merger activity and optimism over corporate earnings offset concern over crises abroad.

George Chamberlin's Money in the Morning

Fear, not greed, moved investors last week. The decision to step away from stocks Friday was driven by concerns that the global tensions could escalate over the weekend and traders decided it was better to be safe than sorry.

Airlines beginning to see revenue take off

The 45,000 employees of Southwest Airlines, including hundreds here in San Diego, got a pleasant surprise in their paychecks last week: a $200 bonus for helping the carrier achieve some difficult financial goals.

George Chamberlin's Money in the Morning

Who let the bears out? The week is ending with investors reacting to some disappointing earnings reports -- actually, disappointing forecasts -- by some bellwether companies.

Weekly Updates

George Chamberlin on the Markets

July 28, 2014 -- Executive Editor George Chamberlin recaps last week's financial events and looks at the week's upcoming announcements.

San Diego Stock Exchange

U.S. Markets

Index Value Change
{{name}} {{value}} {{daychange}}
Updated: -/-/---- -:-- --

San Diego Stock Exchange

Best Performers

Company $ Chg % Chg
{{companysymbol}} {{changefrom}} {{percentchange}}

Worst Performers

Company $ Chg % Chg
{{companysymbol}} {{changefrom}} {{percentchange}}
Updated: -/-/---- -:-- --

Video Interviews

Leslie Kilpatrick, Donald Coleman on the real estate market

June 26, 2104 -- George Chamberlin speaks with Leslie Kilpatrick, president of the Greater San Diego Association of Realtors, and Donald Coleman, vice president of real estate member experience for USE Credit Union, about what's happening in the residential real estate market and the role a credit union can play in buying a home.

Subscribe Today!