George Chamberlin's Money in the Morning

April 20, 2015

A good week on Wall Street turned bad Friday as investors once again had a knee-jerk reaction to global economic tensions and completely ignored good news about what is going on here. The Dow industrials plunged nearly 280 points as tensions between Greece and the European Union flared again. And, concerns about the Chinese economy also were disruptive. But a correction based on geopolitical situations is almost always followed by a sharp rebound and that is what we are seeing this morning. The Dow gained more than 220 points in the first half-hour of trading today and the S&P 500 and Nasdaq have also recovered almost all of last Friday's losses.

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A good week on Wall Street turned bad Friday as investors once again had a knee-jerk reaction to global economic tensions and completely ignored good news about what is going on here. The Dow industrials plunged nearly 280 points as tensions between Greece and the European Union flared again.

The fact financial markets have not been able to extend one- or two-day declines into an actual correction is evidence the bias for the stock market seems to still be upward. "It is my contention that this is the least-believed bull market in the history of our careers, and I believe that in the end, consumers will come around because of the improvements in the job market, their improved net worth and the benefits of lower energy prices," said Bob Doll, chief equity strategist at Nuveen Asset Management.

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Speaking of the job market, San Diego County continues to be a trendsetter for all of California. On Friday, the State's Employment Development Department reported that the local unemployment rate in March fell to 5.1 percent, well below the 7.1 percent rate a year ago. The local economy added 8,000 jobs in March and 40,900 jobs in the past 12 months, well above expectations. Dr. Lynn Reaser, chief economist at PLNU, said, "San Diego is moving toward full employment, which should start to trigger a pickup in wage gains over the coming year."

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It was 50 years ago yesterday that a researcher made a prediction that the number of components on a single computer chip would continue to double every year while costs remained contained. "Integrated circuits will lead to such wonders as home computers, automatic controls for automobiles, and personal portable communications equipment,” wrote Gordon Moore, in the trade magazine Electronics. Moore went on to become a co-founder of Intel and his prediction soon became known as Moore's Law. In fact, his prediction was too modest. In the 10 years following 1965, the number of components on a single silicon chip went from 60 to 65,000. At that time, he changed his forecast to a double every two years instead of one. A news release yesterday from Intel said, "Moore's Law enables much of today's innovation -- wearable technology, genomic sequencing, smart cities -- and is helping industries tackle seemingly intractable problems and turning fantastic ideas into profitable business ventures. What will the next 50 years hold?"

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Target’s website went down for about 20 minutes early yesterday morning and that was a good thing. The retailers, still plagued by the data breach in 2013, actually took the site down itself as shoppers rushed to buy women's apparel from designer Lilly Pulitzer. The clothes are priced well below the expensive line she produces under the Palm Beach label. But not to worry. Most of the people who bought the stuff online or in stores yesterday are reselling it on eBay and other auction sites at three or four times what they paid for it.

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A big announcement this morning from Kraft Foods regarding one of its iconic brands. Starting in January, Original Kraft Macaroni & Cheese, first introduced in 1937, will no longer be made with artificial preservatives and flavors or synthetic colors. "We've met with families in their homes and watched them prepare Mac & Cheese in their kitchens. They told us they want to feel good about the foods they eat and serve their families, including everything from improved nutrition to simpler ingredients. They also told us they won't compromise on the taste of their Mac & Cheese, and neither will we," said Triona Schmelter, vice president of marketing. Good luck.

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The golf world seemed very happy to see Jim Furyk win a tournament. A perennial runner-up, Furyk won the RBC Heritage tournament yesterday in a playoff. He had gone 99 tournaments in a row without a win. Although most players would not want to duplicate his swing, they could learn something from his professional attitude on and off the course and his respect for the game.

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Sure hope you were watching CNBC early this morning. If you did, you heard some "expert" say the long overdue stock market correction begins today. Some dude named Yacine Kanoun, a portfolio manager from the United Kingdom, said, "Definitely the market is going to correct here," and assured viewers that the S&P will begin its slide today. This is wonderful because we rarely get advance notice for either a rally or correction. Thank you, Yacine.

George Chamberlin's Money in the Morning

Stock prices rose for a second day in a row yesterday with the Dow industrials up 76 points and once again trying to build above the 18K level. To be sure, there still is a lack of momentum, one way or the other, for stocks. Perhaps investors are cautiously awaiting reports on first-quarter earnings before jumping into the markets.

Weekly Updates

George Chamberlin on the Markets

April 20, 2015 -- Executive Editor George Chamberlin recaps last week's financial events and looks at the week's upcoming announcements.

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Video Interviews

Gary London on commercial real estate lending

March 30, 2015 -- George Chamberlin and Gary London, president of The London Group, discuss how commercial real estate lending has recovered from the recession and the housing supply in San Diego.

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