STTG Market Recap March 12, 2014

Stocks opened sharply lower to begin Wednesday but fought back to put in a mild session of gains; the S&P 500 added 0.03% and the NASDAQ 0.37%.  While stocks are doing ok, we have seen some serious selling in the commodities market since China’s bad exports numbers came out Monday – more on that later.  We have monthly retail sales on tap for tomorrow morning so we’ll see if this causes any reaction.

Here are the longer term charts for the two indexes:

spx

nasdaq

Copper has had a horrid few days as it has now fallen to 4 year lows.  Copper is often used as a proxy for global growth since it is a commodity used in so many manufactured products, but the past 5-10 years it probably has become more of a play on China than the global economy as a whole.

copper

Oil also has had a very few rough days.

wtic

In equities, shares of controversial name Herbalife (HLF) declined as the Federal Trade Commission opened a formal probe into the seller of nutritional supplements.

hlf

You may remember Fannie Mae and Freddie Mac – they were taken over by the government at the height of the crisis.  They continue to operate and fulfill a huge proportion of mortgage loans in the country but often we were told eventually they’d go away (liquidate) and be replaced by something new.  However some don’t believe that, so they been buying the stock.  Yesterday was some news of a bill that has been proposed that would begin a path to their elimination and their recent massive rally took a big hit; here is Fannie Mae (FNMA)  for example.

Common shares of Fannie Mae and Freddie Mac experienced their biggest intraday drop in 10 months after leaders of the Senate Banking Committee announced plans to eliminate the companies in a new bill.  Fannie Mae shares tumbled as a bipartisan measure, drafted with input from President Barack Obama’s administration, would replace the U.S.-owned mortgage financiers with government bond insurance that would kick in only after private capital suffered losses of at least 10 percent, Senate Banking Committee Chairman Tim Johnson and Senator Mike Crapo said in a statement today. The bill would require most borrowers to make down payments of at least 5 percent.

fnm

If you are a Warren Buffet fan, USAToday has 25 must read quotes from his annual letter.

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