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Equities

The stock market recorded its third straight day of losses as speculation ramped up that the Federal Reserve could begin tapering down its quantitative easing program as early as next week : November’s employment numbers from both the Labor Department and the ADP suggested economic improvement. However, the number of people seeking unemployment benefits saw an uptick while consumer spending was limited heading into the holiday shopping season.

 Also, investors are becoming more selective as the markets continue to get more expensive. According to Marty Leclerc, chief investment officer and portfolio manager at Barrack Yard Advisors, indices have risen 50 percent over the past couple of years, while earnings are up only 12 percent, so a significant correction would not be unusual.

Currencies

  • U.S. Dollar

    The U.S. dollar index slid for much of this week despite a positive jobs market number and improvement of economic data, although strength should resume when the Fed brings transparency to their forward guidance.

  • Dollar/Yen

    The Dollar/Yen experienced some volatility mid-week as industry heavyweights within the Japanese markets dragged its feet due to uncertainty regarding the future of the Fed’s QE program. However, Thursday’s price action saw a boost in the currency pair due to speculation from retail investors.

  • Euro/Dollar

    Euro/Dollar flirted with the 138 level, reaching a five year peak with the Yen. The lift was primarily a result of higher short term market rates and year-end repatriation by European banks shoring up balance sheets.

Winners & Losers

The winner for this week is Northstar Realty Finance Corp., ticker symbol NRF :

  • Shares gapped up over 20% mid-week after an announcement that the company will split off its asset management business to form an individual publicly listed entity.
  • However, the popular financial media outlet, “The Street,” reports that the growth in the company’s net income is unimpressive, with the most recent quarterly statement showing a net profit margin of -71.54%.

The loser for this week is Genie Energy Ltd., ticker symbol GNE :

  • Shares are down over 41% since last week after Genie Energy reported that one of its subsidiaries would acquire two other companies, sparking fears of over-extension.
  • Investors should also continue monitoring their financial statements, which indicate tremendous volatility in both top-line revenue as well as within their cost control mechanisms.

Precious Metals

  • Precious metals took another hit today after posting strong gains earlier in the week. According to Frank McGhee, Head Precious Metals Trader of Integrated Brokerage Services, sentiment for bullion has declined dramatically in the face of the Fed’s potential monetary tightening as well as the likelihood that the U.S. government will not engage in a nasty gridlock over the budget debate later this month. Gold closed down to $1,228 and silver finished the session at $19.51.

(video hyperlink to a different opinion about gold … http://finance.yahoo.com/video/forget-taper-heres-whats-really-183250833.html )

Palladium was one of the worst hit metals, losing over 2% of valuation from prior session. However, according to Kitco News, palladium is the only metal to post a gain so far this year, and supply deficit issues as well as demand from the automotive sector should drive prices higher in 2014.

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