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Equities

The stock market had a mixed performance on Thursday, with the S&P 500 and the NASDAQ pulling back slightly from Wednesday’s euphoric rise after the Federal Reserve finally announced a taper to their controversial quantitative easing program. In contrast, the Dow Jones inched forward, closing up at a record 16,179 points. The Dow was led by Chevron, which benefited from a recent rise in crude oil prices, followed by Disney and IBM, the latter of which is posting a recovery after being a laggard over the last 30 days.

The question now is, how will the Fed taper affect the market’s performance moving forward? According to CNBC, many fund managers are still long the equities, including Doug Cote, U.S. chief market strategist at ING Investment Management (video hyperlink : http://finance.yahoo.com/blogs/breakout/embrace-the-taper-and-buy-stocks-at-all-time-highs-173606196.html), who stated, “The taper is a good thing for the market. It’s based on good economic data and the Fed acknowledged that.” However, it’s important to note that while the front-end of monetary policy did change in the form of a taper, the back-end of zero interest rates stayed the same. Also, it’s likely that the short-term fed fund rates will remain low for the foreseeable future to avoid upsetting a delicate balance in the economy.  

Winners & Losers

The winner for this week is Callaway Golf Company, ticker symbol ELY :  

  • Shares gapped up over 7% and has been performing strongly this week based on a much anticipated product line-up for 2014, as well as optimistic forward guidance that expects fiscal year 2013 to be the first since 2008 where positive annual earnings are posted.
  • A change of leadership occurred in March 2012 when former Adams Golf executive Chip Brewer took over as CEO, and so far, the investment community has readily embraced the new vision and resolve at Callaway.

The loser for this week is Winnebago Industries, Inc., ticker symbol WGO :

  • Shares dropped over 13-and-a-half percent after their conference call revealed that strong earnings were based off of less-than-expected revenue performance.
  • CEO Randy Potts declared that Winnebago was focused on keeping costs low while continuing to grow their business ; however, this company is closely monitored by Wall Street analysts as a real-time indicator of big-ticket discretionary purchases and their sharp decline on Thursday sent a contradictory note against bullish enthusiasm in the underlying equities market.

Precious Metals

  • Gold Bullion

    Precious metals took a devastating hit as gold dropped below the $1,200 dollar mark and with it, reached a 3-year low. Confidence in the stock market, as well as leading economic indicators trending up in recent months suggest a lack of desire for investors to seek safe-haven assets.

  • Silver Bullion

    Silver took the sharpest hit on a percentage basis, down -2.68%. Unlike gold, silver did not hit a multi-year low, and on a trough-to-trough basis, has been trending up since July, a possible indication of its industrial demand kicking in. 

Finally, palladium avoided the bearish tsunami that affected the precious metals complex, with Thursday’s session ending at parity with the prior day’s trade. Strong industrial demand particularly from the automotive sector has kept palladium afloat and is easily the best performing precious metal of 2013.

 

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