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Equites opened strong on earnings only to close lower. The NASDAQ fell about 0.85% as momentum monies exited drug stocks. The Dow was only lower by 0.25%.
Many are getting decimated as sector after sector is imploding, a decimation the result of HFTs and ETF liquidations.
Where will these monies gravitate? Yesterday there were several significant rallies in individual bond offerings, the result of possible bond repurchases by the companies. Many times I have commented about the illiquidity of the bond market, the result of regulatory change via Dodd Frank.
Will other companies follow suit, repurchasing debt instead of shares given the sharp decline in debt prices? Will some of the monies exiting momentum names gravitate to the bonds of companies that offer considerable value and little event risk?
Today the earnings parade continues. Results have generally exceeded expectations. Weekly jobless claims are also released. Will claims continue broaching the lowest levels in almost 40 years?
Last night the foreign markets were mixed. London was down 0.13%, Paris up 0.16%, and Frankfurt up 0.10%. China was up 1.45%, Japan down 0.64% and Hang Sang down 0.63%
The Dow should open moderately higher as various companies have exceeded profits. The 10-year is off 1/32 to yield 2.04%.

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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.