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Equities

The U.S. equities sector bounced up following Wednesday’s soft performance, but overall, the markets were buoyed by a positive trending earnings season and continued speculation that the Federal Reserve will keep the QE-taper off the table for the foreseeable future.

The elephant in the room, however, continues to be the poor jobs growth curve : earlier this week, the Labor Department released the September non-farm payroll report, which revealed that only 148,000 jobs were created, well below the Street’s expectations. While this has fueled the “non-taper” speculation, the fact that the markets are only moving based on the promise of artificial liquidity creates a dangerous situation when the real performance of the economy is so fragile.

Currencies

FOREX markets continued their overall trajectory from last week :

  • U.S. Dollar

    The U.S. dollar index struggled to find footing, never hitting past the 80 level and today’s price action took it down to 79.20, a nine-month low.

  • Dollar/Yen

    The Dollar/Yen pair also struggled due to a weaker dollar pushing up Yen valuation : this has capped upside momentum of the Nikkei 225 index. 

  • Euro/Dollar

    The Euro/Dollar continued its surge from last week, acting as a safe-haven currency : it managed to hit a 2-year high, although recent trading activity suggests that momentum is waning.

Winners & Losers

The winner for this week is Royal Gold Inc., ticker symbol RGLD :

  • Share prices are up nearly 4% against prior week as a resurgent gold market is fueling a rally in the miners.
  • While the percentage increase in share valuation is not nearly as impressive as some of the hot gainers of the week, Royal Gold will benefit from fundamental tailwinds ; it also is one of the strongest companies within the Basic Materials sub-category, posting net margins in excess of 250% of sector averages.

The loser for this week is ParkerVision, Inc., ticker symbol PRKR :

  • Shares dropped over 59% against the prior session after a damages award in their suit against Qualcomm came in much lower than expected. 
  • The impact that this judgment has could be severe, as ParkerVision has been running net income figures into the red on both an annualized and quarterly basis. Furthermore, the company has a very poor cash to liabilities ratio.

Precious Metals

  • Gold & Silver Bullion

    The precious metals continued their impressive recovery that began late last week, with gold sitting on top of a key technical level at $1,350 dollars per troy ounce, while spot-silver is about a percent away from securing the $23 dollar mark. Both metals should continue on a positive trend as the Fed is incentivized to sustain its inflationary policies based on a weak economy and lack of confidence in Washington.

  • Palladium Bullion

    Palladium traded over the $740 mark for most of this week, buoyed by a weaker dollar and higher demand from the automotive industry, which represents the greatest industrial usage for the metal. As the automotive sector continues to be one of the bright spots in the domestic economy, we can expect palladium to move higher, along with the other precious metals.

 

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