Saturday, November 18, 2017
North Korea has not fired a missile in two months. Military minds are wondering what is happening inside the hermit kingdom. Is NoKo rethinking their aggressive approach against the world? Is Kim Jong-un ill? Is the tin-pot dictator plotting a major event? Secretary of Defense Mattis says diplomatic talks with North Korea can occur if they stop developing nuclear weapons and place the program on hold a slight softening in US rhetoric. Chinese diplomats are in Pyongyang, North Korea, for discussions on trade, sanctions and to provide a briefing on the People’s Congress decisions to its little communist brother.
SPX 2579. INDU 23358. COMPQ 6783 (all-time high last week). NDX 6315 (all-time high last week). RUT 1493. NIKK 22397. ASX200 5957. KOSPI 2534. SSEC 3382. HSI 29199. DAX 12994. CAC 5319. FTSE 7381. MIB 22093. IBEX 10010. PSI 5259.
Thousands take to the streets in Zimbabwe calling for the ousting of President Mugabe. The military has taken control over Zimbabwe over the last few days with a bloodless coup. The military holds 93-year old Mugabe under house arrest ‘coaxing’ him to step down. Mugabe wants his wife that is 40 years younger to lead the country and this power grab forced the military to seize control. The Zimbabwe people want change.
The new moon peaks at 6:42 AM EST. Equities typically trade lower 65% of the time moving through the new moon each month. Earthquake activity may increase since the Earth and Moon are at a gravitational inflection point. Military forces with superior night vision technology will conduct covert raids against enemies taking advantage of the darkest time of the month.
Treasury Secretary Mnuchin and his wife visit the Treasury and pose for pictures with a fresh sheet of $1 bills coming off the printing presses. It is a mistake. The money-worshipping photos go viral over the internet and show how President Trump and his henchmen are just as much a part of the Washington, DC, swamp as everyone else. The photos reinforce the stereotype of the wealthy class and elite Washington, DC, insiders greedily lusting for money. The photos distract attention from the tax cut bill.
Shamefully, nearly 60% of Puerto Rico remains without electrical power after the hurricane devastation. Authorities promise that 75% of Puerto Rico will have electric service by January. Drinking water is in short supply. 160K people have fled Puerto Rico landing in Florida.
210K gallons of oil leak from the Keystone pipeline in South Dakota owned by TransCanada. TRP sold off -1% in the Friday session. 75 workers descend on the pipeline repairing the leak and beginning a cleanup operation. Western states are hit with heavy snow. Winter is here.
Friday, November 17, 2017
FRIDAY 11/17/17; FBI Special Counsel Subpoenas Trump Campaign; Moody’s Upgrades India; Bitcoin Prints Record High at 7998; ECB President Draghi Speaks; Housing Starts; Yield Curve Flattens; 2-10 Yield Spread Narrows to 61 Bips
US futures are flat. S&P flat. Dow +8. Nasdaq +8. Aussie and Asia markets begin trading higher piggy-backing on the US market joy. The NIKK pops +1.6%. Topix +1%. Tech stocks rally. ASX 200 +0.3%. Healthcare stocks lead higher. KOSPI +1%. SK Hynix pops +0.6%. New Zealand’s stock market index is up +0.5%.
Treasury yields are; 2-year 1.71%, 5-year 2.06%, 10-year 2.37%, 30-year 2.82%. The 2-10 spread is 65.2 bips. Japan 10-year yield 0.032%.
In the States, the Trump campaign has been subpoenaed last month by FBI Special Counsel Mueller. The probe into Russia involvement in the November 2016 election continues and the investigators are requesting more documents and emails from those involved with the Trump campaign.
Euro 1.1786. Dollar/yen 112.93. Pound 1.3206. Aussie dollar 0.7586. Indian rupee 65.3213. Dollar/yuan 6.6303.
OPEC wants to extend the oil production cuts. WTIC oil 55.22. Brent oil 61.36. Natural gas 3.08. Gold 1280. Silver 17.09. Copper 3.078. Platinum 934.
The long-end Treasury yields drop a couple basis points and the US dollar index trails lower after the news of the FBI Special Counsel subpoenaing the Trump campaign. The probe is advancing closer to the Whitehouse.
Treasury yields are; 2-year 1.71%, 5-year 2.05%, 10-year 2.35%, 30-year 2.80%. The 2-10 spread is 64.1 bips. The USD drops from near 94.0 down to 93.5. The lower dollar sends the yen higher. Dollar/yen 112.55. The stronger yen sends the Nikkei Index lower with Japanese stocks giving up the early gains. NIKK +0.8%. Topix +0.3%.
Chinese stocks trade mixed with the mainland SSEC lower while Hong Kong’s HSI floats higher. In Taiwan, Bizlink, the electrical wire harness maker, pops +5.1% and Hota, the auto parts maker, bounces +3.5% after Tesla CEO Musk unveils the new electric truck and roadster vehicles. Subaru is smacked -0.3% lower after the automaker says it will incur charges due to the inspection scandal in Japan.
India stocks are in a happy mood after Moody’s upgrades the country’s credit rating for the first time in 14 years. This places India on par with countries such as Philippines and Italy. The Nifty is up 102 points, +1%, to 10317. The BSE Sensex gains 333 points, +1%, to 33440. State Bank of India bounces +1.9% on an analyst upgrade. Chinese investors are throwing money at India. The BSE prints a historic record high at 33866 eight days ago.
S&P -2. Dow -9. Nasdaq +2. European futures point to a flat open.
Euro 1.1803. Dollar/yen 12.54. Pound 1.3237. Aussie dollar 0.7561. Dollar/yuan 6.6312. Indian rupee 64.91.
WTIC oil 55.35. Brent 61.35. Natty 3.07. Gold 1282. Silver 17.07. Copper 3.08.
The NIKK ends the session up +0.2% to 22397. The ASX 200 finishes up +0.2% to 5957. The KOSPI ends flat at 2534. The SSEC drops -0.5% to 3382. The HSI gains +0.6% to 29199.
For the week, Japan’s Nikkei Index drops -1.3%. Australia’s ASX 200 loses -1.2% this week. South Korea’s KOSPI loses -0.3%. China’s Shanghai Index is slapped -1.5% lower this week. Hong Kong’s Hang Seng Index ekes out a +0.2% gain. Global investors love South Korea and Hong Kong.
S&P -2. Dow -5. Nasdaq +5. Russell -2. WTIC oil is up +0.6% to 55.46. Brent oil 61.45.
Euro 1.1790. Euro/yen 132.63. Dollar/yen 112.50. Pound 1.3242. Euro/pound 0.8902. Mexican peso 19.0729. Canadian dollar 1.2748. The peso and loonie strengthen slightly overnight as the US dollar index drops. Dollar/yuan 6.6336. Indian rupee 64.90. Aussie dollar 0.756. The US dollar index bounces off the overnight lows moving from 93.5 to 93.71.
Bitcoin rallies large over the last few days after a -30% crash off the prior record high. Bitcoin prints a new record high above 7998.40 a whisker from the 8K level. The roller coaster ride continues as bitcoin then drops to 7536 and now trades at 7781.
At 3 AM EST (8 AM London; 9 AM Central Europe), European indexes begin trading flat. DAX +0.1%. CAC flat. FTSE is down -0.2% to 7371 below the 7.4K level. IBEX is down -0.1% to 10077 holding on to the 10K level. Basic materials and insurers are leading higher. Utilities, retail stocks, banks and consumer discretionary stocks lead lower.
Daily Mail +2.1%. Saipem +1.9%. Sky +1.666%. H&M -3%. Vivendi -2.2%. Shire -2.1%. HSBC -0.7%. Nestle -0.2%. Two companies warn of decreasing profits. Carillion crashes -59%. Ellior crashes -15%.
German Chancellor Merkel struggles with forming a coalition government. She must bring parties together concerning migration, the economy and the climate.
Turkey PM Erdogan says the United States is not honoring its promises in Syria. The Turkish lira weakens further with the currency pair at 3.8875.
ECB President Mario Draghi begins speaking at the European Banking Congress with an upbeat assessment on the economy. Draghi says, “There is increasing confidence that the recovery is robust.” He says, “The QE asset purchase program is working.” Euro 1.1798. Draghi believes he is correct to continue QE through next September and perhaps beyond.
Draghi says economic growth is “stellar” but the ECB must maintain a patient and persistent approach going forward. He wants it both ways bragging about how great the economy is but at the same time plans to continue QE monthly purchases through September 2018 and perhaps beyond. The central bankers are well skilled at goosing the global stock markets higher over the last nine years with non-stop dovish talk. The central bankers are the market.
Draghi proclaims, “We are in the midst of a solid economic expansion.” Draghi says, “The ECB needs to be patient when normalizing monetary policy.”
Draghi says, “We are not yet at the point where inflation can be maintained.” Draghi believes that wages will increase driving inflation higher (the Federal Reserve has been repeating this mantra for the last two years but wage growth, and inflation, are Godot). ECB’s Nowotny proclaims that inflation will pick up next year. Euro 1.1792. Pound 1.3239.
S&P -4. Dow -25. Nasdaq +2. Russell -4.
DAX -0.1%. CAC -0.3%. FTSE -0.4%. MIB -0.4%. IBEX -0.4%. PSI -0.3%. SMI +0.1%. OMX -0.6%. German bund 0.39%.
WTIC oil is up +0.6% to 55.49. Brent oil is up +0.2% to 61.46. Natty 3.10. Gold 1282. Silver 17.07. Copper 3.08.
Euro 1.1790. Dollar/yen 112.59. Pound 1.3249. Mexican peso 19.1085. Canadian dollar 1.2764. Aussie dollar 0.7544. USD 93.71. Bitcoin 7875.
At 4:30 AM EST, US futures and European stock indexes are negative across the board. S&P -4. Dow -30. Nasdaq -1. Russell -4. DAX -0.2%. CAC -0.2%. FTSE -0.3%.
At 5:42 AM EST, S&P -5. Dow -40. Nasdaq -2. Russell -3.
After last evening’s earnings releases, WSM is bludgeoned -11%. GPS +6.3%. AMAT +2.5%. TSLA is up +1.5% in early trading as investors buy into Elon Musk’s song and dance at the electric truck unveiling last evening. The media and telecom sector deal chatter continues so FOXA, CMCSA and VZ will trade actively today.
Lipper reports that US high-yield funds experience outflows of $4.4 billion for the last week of data. HYG and JNK receive a lot of attention after the one-month collapse then recovery of one-half the losses.
The new moon peaks tomorrow at 6:42 AM EST. Equities are typically weak moving through the new moon each month. Earthquake activity may increase since the Earth and Moon are at a gravitational inflection point. Covert military forces with superior night vision technology will step up raids over the coming days taking advantage of the pitch black overnight darkness.
Oil is well bid. WTIC rallies +1.7% to 56.09. Brent oil gains +1.2% to 62.14. OPEC will likely extend the production cuts. Bitcoin 7872.
S&P -2. Dow -20. Nasdaq +5. Russell -2. VIX 11.77. DAX, CAC and FTSE are each up +0.1%.
The Nifty finishes the session up 69 points, +0.666%, to 10284. The BSE Sensex gains 236 points, +0.7%, to 33343. On the week, the BSE ekes out a tiny +0.1% gain. Global investors continue throwing money at India.
At 8:30 AM, Housing Starts are up a huge +13.7% at 1.29 million units blowing away the 1.19 million expected and prior revised-higher 1.13 million units. Permits are up +5.9% to 1.30 million units above the 1.25 million expected and prior 1.22 million units. Multi-family unit construction jumps sharply.
S&P -1. Dow -34. Nasdaq +4. Russell -3. VIX 11.62. Euro 1.1788. Dollar/yen 112.65. Pound 1.3188. USD 93.81.
Treasury yields are bumping a touch higher on the econ data; 2-year 1.72%, 5-year 2.07%, 10-year 2.37%, 30-year 2.82%. The 2-10 spread is 64.5 basis points; a 64-handle!
Fed’s Williams says a December rate hike is “perfectly reasonable” and he expects another three hikes next year. Williams is touting the Federal Reserve’s game plan going forward. Fed Chair Yellen walks around all day with her fingers crossed that wages will rise and inflation will appear.
Retail stocks are receiving strong boosts in the pre-market on short-covering rallies. FL leaps +26%. WSM, however, crashes -11% after last evening’s earnings report. TSLA is up +4.1% so investors are buying into the Elon Musk hype and Ringling Brothers-style showmanship last evening. FOXA jumps +7.4% on continuing deal chatter in the media and telecom space.
Treasury Secretary Mnuchin guarantees that the tax-cut bill will make it through Congress by the end of the year. Humorously, Mnuchin previously promised that the bill would pass by Labor Day but that goal was missed. He promises that the tax bill will allow companies to spend more money on capital equipment and hire workers. No it won’t.
In a meeting on Capitol Hill this week with many CEO’s in attendance, National Economic Advisor Gary Cohn asks for a show of hands of the companies that would spend more on capital equipment and hire more workers due to the proposed corporate tax cut. Only two CEO’s raised their hands although Trump supporters at the meeting proclaim there were many more than two.
President Trump is in error to think that the lower tax rate will boost corporate spending and accelerate hiring and the straw vote at the meeting clearly verifies this outcome. The United States is in its ninth year of unprecedented global central banker stimulus. If US companies have not bought more capital equipment and hired workers under these ultra-loose and accommodative monetary policies, why on earth would they start when a tax cut is handed out?
The companies will simply take the tax cut savings and buy back more shares or offer more dividends which will further enrich the wealthy elite class in America via higher stock market prices. Even more misguided, proponents of the tax bill say companies will use the tax savings to raise worker wages which in turn will greatly boost the economy. Pause for laughter.
The greedy corporations have not raised wages during the entire nine-year Keynesian monetary policy orgy so only a complete dolt would expect them to pay workers more money from proposed tax savings. Over the last few years, with the help of the central bankers, companies are reporting huge profits and sales with stock prices at historic record highs. And yet there are no wage increases. A tax cut for corporations is not going to boost wages.
Lawmakers in the wealthy states such as Connecticut, New York and California are not happy with the proposal to eliminate the SALT (state and local tax) deductions on Federal tax forms. Congress is part of the privileged elite class in America and will protect their wealthy brethren. Common Americans realize that any tax bill that is passed by Congress will simply benefit the wealthy privileged class.
The tax bill still has a long row to hoe with only six weeks remaining in the year. The House bill passed. The Senate expects to vote on its version of the tax bill over the next couple weeks. Then both sides must iron out the differences in the two bills to provide one unified tax cut plan. Mnuchin guarantees this will occur by the end of the year with only 20 working days remaining in the Congressional schedule.
There are also several other important matters requiring political attention such as passing another bill to fund the US government. The holiday season is upon us. Turkey day is only five days away. Washington, DC, drama and Wall Street theatrics will ramp up significantly starting now into 2018.
At 9:30 AM EST, US stocks begin trading flat to negative. SPX 2582. INDU 23414. COMPQ 6793. RUT 1482. VIX 11.67.
Retail stocks jump higher sans Williams Sonoma. GPS +7%. ANF +26%. SCVL +18.2%. FL +26%. ROST +10.3%. WSM -13.7%. XRT +2.1%. XLY +0.2%. XLE +0.2%. SOX +0.1%. XLF -0.2%. XLV -0.2%. XLK -0.3%.
GE +0.9%. General Electric CEO Flannery buys 60K shares of GE to show his loyalty and boost investor confidence. The purchase is worth about $1 million not exactly a big move for someone with his money but the stock rallies.
NKE +3.1%. CSCO +0.6%. Media stocks are active. FOXA +6%. CMCSA -2.6%. VZ +0.6%. VIAB +5.4%. TMUS is down -0.4% but after a huge up day yesterday. DISCA +2.3%. SNI +0.6%.
The Stich Fix IPO comes to market and SFIX jumps +15% on its debut. The pop is sold off with price trending lower into the afternoon towards the 15.00 offer price. Stich Fix is a service that sends you clothes based on your responses to an algorithm questionnaire. The SAIL IPO, a security company, rallies +8.3% on its debut.
At 11 AM, Kansas City Fed Mfg Index is 16 below the prior and expected 23. New Orders are down but remain robust.
At 11:30 AM EST, European indexes end the day lower. The DAX sinks -0.4% to 12994. The CAC loses -0.3% to 5319. The FTSE slips -0.1% to 7381. The MIB loses -0.5% to 22093. The IBEX finishes the day down-0.8% to 10010. The PSI loses -0.3% to 5259.
Exporters trade lower in Europe. Euro 1.1791. Construction company Carillion crumbles -46.4%. Altice -12%. Ellior -18%.
For the week, Germany’s DAX loses -1%. France’s CAC -1.1%. London’s FTSE drops -0.7% this week below the 20-week MA at 7414 but above the 50-week MA support at 7344. The footsie will be in serious trouble if the 7344 fails. The low on the week is 7356.
Italy’s MIB is booted -2.1% lower this week using the 20-week MA at 22028 as support. Spain’s IBEX loses -0.9% below its 200-week MA at 10022. The IBEX will bounce or die from this 10018-10022 level next week and then trend in that direction going forward. Portugal’s PSI loses -0.8% this week. Portugal is down for five consecutive weeks. European indexes are in retreat the last couple weeks despite ECB President Draghi’s enduring dovish talk.
SPX 2582. INDU 23374. COMPQ 6789. RUT 1491. The small caps are bid higher. VIX 11.25. VIX is testing its 200-day MA at 11.14. Market bears win if VIX remains above 11.14 while bulls win below.
Euro 1.1792. Euro/yen 132.11. Dolalr/yen 112.04. Pound 1.3217. Euro/pound 0.8922. Indian rupee 65.015. Mexican peso 18.9708. Canadian dollar 1.2795. Dollar/yuan 6.6268.
WTIC 56.36. Brent 62.48. Natty gas 3.10. VIX 11.21. Gold is up 10 bucks to 1289. Silver 17.11. Copper 2.085. Platinum gains +1.5% to 946.
Treasury yields are; 2-year 1.72%, 5-year 2.05%, 10-year 2.34%, 30-year 2.78%. The 2-10 spread is at 61.7 bips; a 61-handle!! The yield curve continues flattening.
At 1 PM, the BHGE Oil Rig count is flat for the US this week although natural gas rigs increase by 8. Canada brings 1 oil rig on line this week and 4 gas rigs. Oil slips on the data. WTIC 56.62. Brent oil 62.67.
Goldman Sachs analyst Charles Himmelberg proclaims blue skies and rainbows ahead for the US economy and markets during a CNBC business television interview. Himmelberg says, “2017 is shaping up to be the first year of the expansion in which growth surprises to the upside” and “we expect 2018 to deliver more of the same.” GS calls for US growth at +4% next year.
4% growth is a rosy scenario considering top manufacturers and employers like General Electric and Cummins are crashing. CEO Blankfein proclaims, “There is economic anxiety in the US but no specific reason for it.” In other words, buy stocks and do not worry. The bullish pundits continue to roll across television screens telling viewers to ‘buy, buy, buy’. The bears have given-up and left town. Bears realize it is hopeless to fight the powerful global central bankers that collude daily to maintain low volatility and elevated stock indexes.
WTIC 56.48. Brent 62.77. Gold is up 17 dollars, +1.3%, to 1296. Silver gains +1.5% to 17.33. Copper 3.0925. Platinum 952.
Treasury yields are; 2-year 1.72%, 5-year 2.05%, 10-year 2.34%, 30-year 2.78%. The 2-10 spread is at 61.9 bips.
Retail stocks catapult higher in a mother of all short-covering rallies. The short-sellers in the retail arena are running for their lives. FL jumps more than +28%. Short-sellers in Foot Locker are taken off the trading floor in stretchers. ROST +10%. GPS +7%. TGT +5.5%. NKE +3.4%. MAT +2.5%.
WMT -2.2%. Big box retailer Wal-Mart announces plans to raise prices on some online items. The management team expects the higher prices online will send shoppers to the lower prices at the stores creating more foot traffic during the holiday season. Economics 101 says the more people in the store the greater the sales. The idea appears flawed, however. If someone sees the high price for the item online, they will likely search Amazon and other sites and order the product online anyway.
Also, the price changes and differences may create customer distrust. Does Wal-Mart provide “everyday low prices” as their jingle proclaims or not? Traders are taking profits in WMT after yesterday’s big gap-up move.
Media stocks are active. VIAB +10.4%. FOXA +6.2%. CMCSA -2.5%. VZ +1.5%. DISCA +4.7%. T flat. CHTR +0.3%.
SFIX is up only +1% on its debut of trading losing its initial joy. NTES +13%. TEVA +8.2%. BHGE +2.5%.
CMI drops -4.6%. Industrial giant Cummins sinks into the ooze joining General Electric in misery. CMI has crashed from 181 to 158, -13%, in the last 13 days. Analysts continue to tout a great economy as industrial stalwarts sink. Cummins diesel engines are used in bulldozers and other heavy equipment so CAT is down -0.3%.
INTC -2.2%. KO -1.8%. UTX -1.2%. V -1.1%. PCAR -4.3%. CTSH -3.1%. KLAC -3%. AMAT -2.5%. EA -2.5%. BAX -1.7%.
SPX 2581. INDU 23373. COMPQ 6786. RUT 1492. VIX 11.56. US dollar index 93.65.
Treasury yields are; 2-year 1.73%, 5-year 2.06%, 10-year 2.35%, 30-year 2.79%.
WTIC 56.60. Brent 62.76. Natty 3.11. Gold 1295. Silver 17.29. Copper 3.069.
At 4 PM EST, US stocks finish the session mixed with the S&P 500, Dow Jones Industrials and Nasdaq Composite lower but the Russell 2000 higher. The SPX finishes down 7 points, -0.3%, to 2579 parked on the 20-day MA at 2578. Price will bounce or die from here on Monday. INDU, or DJI, finishes down 100 points on the dot, -0.4%, to 23358. The Dow fails at the 20-day MA at 23429. HOD 23434.
The COMPQ loses 11 points, -0.2%, to 6783. The NDX finishes down 25 points, -0.4%, to 6315 the high-flying tech stocks, such as the FAANG’s, are hit proportionally worse than the broad market. FB -0.3%. AAPL -0.6%. AMZN -0.7%. NFLX -1.2%. GOOGL -1.2%.
The RUT gains 6 points, +0.4%, to 1493 above its 20 and 50-day MA’s. In the last two days, the Russell 2000 bounces from 1454 to today’s HOD at 1497 a +3% pop. Traders are buying small caps with both hands. NYA finishes flat. TRAN sinks -1.2%.
For the week, the S&P 500 loses -0.1% call it flat. The Dow loses -0.3%. The Nasdaq Composite gains +0.5% this week printing an all-time high at 6806.67. The Nazzy 100 finishes the week eking out a +0.1% gain printing an all-time high at 6352.47. The Russell 2000 gains +1.2% this week. NYA -0.2%.
The trannies finish the week lower with TRAN down -0.2% at 9483. The bears successfully back kiss the 20-week MA at 9560 during the week. TRAN 50-week MA support is at 9360. The Dow Jones Transports have been down for four straight weeks and are no longer confirming the upside stock market rally from a Dow Theory perspective. In fact, the Dow Jones Industrials, INDU or DJI, may begin confirming the lower lows and lower highs in the trannies signaling bearish action in the stock market ahead.
The sectors finish mixed on the week. Retail stocks are the standout winners with epic short squeezes occurring in many names as evidenced by today’s price action. XRT +3.9%. RTH rocket launches +2.1% at record highs with price going parabolic. Regional banks jump higher despite the yield curve preferring a flattening bias. The Fed wants to see banking regulations relaxed on the regional banks creating the joy. KRE +3.1%.
ITB, the home construction ETF, is up +2.1% this week with price going parabolic. XHB constructs a +1.7% gain. XLY is up +1.3% this week at record highs. Consumer discretionary is joyous since the wealthy, that have become filthy rich over the last few years courtesy of the Federal Reserve and other global central bankers, have plenty of money to spend on jewelry, diamonds, furs, leather bags, expensive cars and other luxury items. XLP +0.9%. XLU +0.5%. XLB +0.3%. XLF +0.3%. SOX +0.3%. XLV +0.1%
As discussed above, the trannies are weak this week. IYT -0.1%. Tech, biotech, real estate and industrials are soggy. XLK -0.2%. IBB -0.3%. XLRE -0.7%. XLI -0.8%. Energy stocks collapse. XLE tanks -3.2%.
The 21 stocks that have led the broad stock market higher over the last few years finish the week mixed. AAPL -2.6%. AMZN +0.4%. AVGO +2.6%. BA +0.5%. CELG +1.7%. CRM +2.2%. FB +0.3%. GE crashes -11.1%. GOOGL -0.8%. HD +2.2%. MA -0.4%. MSFT -1.3%. NFLX +0.6%. NKE +5.5%. NVDA -2.2%. PCLN +2.9%. RTN -1.1%. SBUX +0.3%. ULTA +7.1%. UAA +4.5%. V -1.666%.
Apple is bitten this week as the parts suppliers and assemblers in Taiwan and other locations trade lower. There are further small delays in the iPhone X shipments. Apple is addressing software issues with the phone and may be blaming production problems as a cover story as their engineers feverishly work on updates and fixes. Chip darling AVGO rises but favorite flavor NVIDIA drops.
General Electric continues to slice off the hands of anyone daring to catch this falling knife. Analysts and television pundits are fools recommending GE stock as a buy this year at 30, then at 28, 26, 23, 21, then at 20. GE ends the week at 18.21 with a low print at 17.46. General Electric has crashed -44% this year losing nearly one-half its value. If the global recovery was strong, GE should be going like gangbusters instead the industrial giant is crashing.
Home Depot constructs a gain tying into the home construction and home building positive theme. The credit card companies MasterCard and Visa print a negative week. Nike is a standout winner as investors are programmed to buy the dips in any beaten down stocks. This strategy has not worked out well with GE, CELG, ULTA and UAA.
WTIC oil finishes the week flat at 56.71 recovering from the low during the week at 54.81. Brent oil drops -1.4% to 62.72 with price sitting directly on the 200-week MA at 62.73. Brent will bounce or die from here next week. Natural gas, NATGAS, sinks -3.6% to 3.10 losing its 200-week MA at 3.12 and 50-week MA at 3.11.
Gold gains +1.8% to 1297 this week. Silver finishes up +3% to 17.37 above its 20, 50 and 200-week MA’s. Copper loses -0.3% this week to 3.07.
The 10-year Treasury yield, TNX, finishes the week at 2.35% after moving through the 2.32%-2.41% range. The 30-year Treasury yield, TYX, finishes at 2.79% after moving through the 2.77%-2.88% range.
The USD is at 93.57. The US dollar index moves through the 93.31-94.54 range this week finishing at the lower side testing the 20-week MA and 200-week MA support at 93.31-93.41. The dollar will bounce or die from this 93.31-93.41 level. The euro is at 1.1792 after bouncing off its 200-week MA at 1.1653 this week.
News reports say Jared Kushner, President Trump’s son-in-law and confidant, may have withheld information on Russia meetings and emails. The FBI Special Counsel’s secretive investigation creeps ever closer to the Whitehouse.
Sexual misconduct allegations and charges are dominating news coverage in the United States. Celebrities and politicians are called to account for any past indiscretions. Several sick lawmakers are accused of groping females including underage victims. Many Washington, DC, politicians and other big shots are accused of sex scandals, sexual harassment, sexual assault and even rape for acts performed over the last three decades. Humans are corrupt.
Thursday, November 16, 2017
THURSDAY 11/16/17; US 2-10 Yield Spread Narrows to 63 Bips; Yield Curve Flattens; BBY; VIAB; WMT; NTAP; RH; Philly Fed Business Outlook Survey; Fed Speak; Import and Export Prices; Industrial Production; House Approves Tax-Cut Plan; US Stocks Rally; COMPQ (Nasdaq Composite) and NDX (Nasdaq 100) Print All-Time Highs; GPS; WSM; ROST; AMAT
Treasury yields are; 2-year 1.69%, 5-year 2.04%, 10-year 2.33%, 30-year 2.77%. The 2-10 spread is 64.3 bips narrowing more than the low from last week. The US yield curve is flattening. Interestingly, Wall Street strategists continue touting banks as the greatest thing since sliced bread but a flatter curve squeezes profits. As the yield curve flattens and potentially inverts, the United States approaches recession.
S&P +3. Dow +16. Nasdaq +9. Euro 1.1778. Dollar/yen 112.99. Pound 1.3168. Aussie dollar 0.7597. Indian rupee 65.21. Dollar/yuan 6.624. The Zimbabwe coup continues.
The 2017 Baidu World Conference is underway in Beijing displaying state-of-the-art technology including artificial intelligence software and products. Baidu is China’s largest web provider.
Aussie and Asia markets begin trading mixed with Japan and South Korea higher and Australia lower. NIKK +0.6%. Topix +0.3%. Nintendo rises +4%. Japan Steel +6.66%. Sojitz +3.8%. KOSPI +0.5%. Samsung Electronics +0.9%.
ASX 200 -0.1%. Australia full time employment rises creating lift in the Aussie dollar to 0.7609. The Aussie energy sector rises nearly +2%. Santos +13%. BHP Billiton plans to divest its shale and nickel units over the next couple years.
Tencent is up +2.2% after reporting stellar earnings which creates optimism and positivity in the Pacific theater overnight. Hong Kong’s HSI jumps +0.5%. The SEC is flat. The IPO market remains hot in Asia. Yixin comes to market and catapults +32% higher in its debut with traders throwing money at the online car retailer.
The China 10-year bond yield is at 3.94% pulling back from the 4% level that was breached on Tuesday and yesterday for the first time in three years.
India stocks trade +0.8% higher. Nifty 10196. BSE 33034.
S&P +8. Dow +64. Nasdaq +25. European index futures point to a strong open. DAX +0.6%. CAC +0.6%. FTSE +0.4%.
Euro 1.1779. Dollar/yen 113.25. Pound 1.3149. Indian rupee 65.3138. Dollar/yuan 6.6349. Aussie dollar 0.7584.
WTIC oil 55.39. Brent oil 62.06. Natty gas 3.09. Gold 1277. Silver 16.94. Copper 3.049.
The NIKK ends the session up 323 points, +1.5%, to 22351 recovering from yesterday’s drubbing. Topix gains +1% only recovering one-half of yesterday’s beating. The SPASX200 is up +0.2% to 5944. The KOSPI gains +0.666% to 2535. The HSI is up +0.6% to 29019. The Shanghai Index loses -0.1% to 3400.
At 3 AM EST (8 AM London; 9 AM Central Europe), European indexes begin trading higher as the futures indicate. DAX +0.5%. CAC +0.5%. FTSE +0.1%. IBEX +0.%. Utilities, basic materials, industrials and tech stocks lead higher at the opening bell. Energy and real estate stocks sink lower.
Royal Mail +3.9%. 3i Group +3%. Altice +2.7%. Bouygues +1.9%. Electrolux -3.2%. Imperial Brands -1.5%. Sodexo -1.1%. M&S -1.1%. Royal Dutch Shell -0.8%. GKN crashes -7% on news the CEO-designate is sent packing.
Euro 1.779. Euro/yen 133.30. Dollar/yen 113.15. Pound 1.3157. Euro/pound 0.8955. Mexican peso 19.2074. Canadian dollar 1.2766. Dollar/yuan 6.6355. Indian rupee 65.2725. Aussie dollar 0.7590.
Treasury yields are; 2-year 1.70%, 5-year 2.06%, 10-year 2.35%, 30-year 2.79%. The 2-10 spread id 64.4 bips. UK gilt 1.29%. German bund 0.39%.
S&P +7. Dow +45. Nasdaq +21. Russell +5. VIX 12.47. India’s Nifty is up 71 points, +0.7, at 10189.
Global stocks recover from yesterday’s softness. Tencent earnings and the Baidu conference create joy in Asia. The majority of market participants say that inflation will eventually tip the economy into recession and cause a prolonged selloff in stocks but believe this is far in the future. Since inflation is not occurring, no one is worried. Complacency rules. Investors believe a recession is nowhere in sight and a market selloff is a long way off.
Traders are tripping over each other to buy the smallest dip in equities. Interestingly, investors, traders, analysts and strategists scoff at the idea of disinflation and deflation and view this scenario as completely unlikely. When the boat is fully loaded to one side, it is typically the less thought of direction that markets move.
Former Federal Reserve Chairman Bernanke started QE1 in March 2009 a devious Keynesian scheme endorsed by his lieutenants Yellen and Evans. Instead of allowing markets to correct in 2009 as capitalism dictates, the Fed stepped in to save the stock market to protect the privileged elite class that own large stock portfolios. The stock market immediately bottomed and took off higher into the recent all-time record highs 8-1/2 years later. Free markets are a joke and obviously capitalism is spit upon. Companies such as AIG and GM were saved from bankruptcy by the US government; humorously, this is the complete opposite of capitalism.
The central bankers are extremely powerful modern-day money God’s in charge of the monetary Temple. The central bankers are the market maintaining their jack boots on the throat of volatility to guarantee ever higher stock prices. Since Mr Deflation was cheated in 2009 by the Fed, it may want to raise its ugly head over the next couple years and extract the pound of market and economic flesh it was entitled to in 2009. Global central bankers collude daily to keep the stock market party alive. Prices in all asset classes ratchet to nosebleed levels.
The concepts of free markets and capitalism are a joke in the US. The United States is not a free country it is simply more free than most other nations thereby an advantageous place to live. America is best described as a ‘pseudo free market crony capitalism system’ that benefits 20 million people at the expense of the 300 million minions below. The gap between rich and poor is the widest in 50 years created by the Federal Reserve and other global central bankers. The United States is in a Gilded Age a la the 1920’s and those excesses by the wealthy elite class did not end well.
In European trading, banks, basis materials and insurers lead lower. Construction, auto and parts, healthcare and food and beverage stocks lead higher. Most of the gainers are dividend-heavy stocks so investors are leaning more defensive in the up tape.
DAX +0.4%. CAC +0.3%. FTSE +0.1%.
At 4:20 AM EST (9:20 AM London), DAX +0.6%. CAC +0.6%. FTSE +0.1%. MIB -0.1%. IBEX +0.666%. PSI +1.1%.
S&P +8. Dow +56. Nasdaq +22. Russell +6. VIX 12.37. Volatility slips lower so futures sneak higher. The Nifty is up 92 points to 10210 above 10.2K.
WTIC 55.38. Brent oil slips under 62 to 61.96. Gold 1277. Silver 17.03. Copper 3.055.
Treasury yields are; 2-year 1.71%, 5-year 2.07%, 10-year 2.36%, 30-year 2.80%. The 2-10 spread is 64.7 bips. The 2-year yield is above 1.70%. German bund 0.39%. Japan 10-year yield 0.04%. UK gilt 1.295%. France 10-year yield 0.75%.
UK October Retail Sales rise +0.3% month-on-month and are up +0.9% for the August-October period. October Retail Sales ex fuel are up +0.1 % month-on-month and down -0.3% year-on-year. The retail sales data is the weakest since 2013. Pound 1.31666. Euro/pound 0.8944.
At 5:17 AM, US futures are joyful. S&P +11. Dow +73. Nasdaq +30. Russell +6.66. VIX 12.23. The Nifty is up 97 points, +1%, to 10215.
DAX +0.666%. CAC +0.8%. FTSE +0.2%. MIB +0.5%. Spain’s IBEX is up +1.4% to 10153. Portugal’s PSI gains +1.4% to 5331. The western European peninsula is celebrating as the Catalonia drama dissipates. SMI +0.5%. OMX +0.2%.
Oil prices turn negative. WTIC 55.21. Brent oil 61.64. Natty 3.08. Gold 1277.
Euro 1.177. Euro/yen 133.35. Dollar/yen 113.29. Pound 1.3176. Euro/pound 0.8933. Mexican peso 19.1738. Canadian dollar 1.2762. Dollar/yuan 6.6305. Indian rupee 65.22. Aussie dollar 0.7590. USD 93.93.
Treasury yields are; 2-year 1.71%, 5-year 2.07%, 10-year 2.36%, 30-year 2.80%. The 2-10 spread is 65 basis points.
India’s Nifty finishes the session up 97 points, +1%, to 10215. The BSE Sensex finishes 346 points higher, +1.1%, to 33107.
DAX +0.4%. CAC +0.5%. FTSE flat. MIB +0.3%. IBEX +1.2%. PSI +1.2%.
Norway’s $1 trillion fund plans to divest its oil and gas stocks going forward. Royal Dutch Shell drops -2.5%. XOM -0.2%. Oil producer Norway is heavily invested in the integrated oils. WTIC oil 55.12. Brent oil drops -0.666% to 61.47.
WMT reports earnings and pops +4.5% creating further lift and positivity in US futures. BBY sinks -2.3% on earnings. Quick, run out and start your Christmas shopping by buying electronics at Best Buy to help them out. HP +2.4%. VIAB -4%. NTAP +13%. RH catapults +20% on strong earnings and guidance. BIDU +0.8%.
CSCO jumps +6.8% in the pre-market after last evening’s earnings creating joy in the tech sector. SJM +5.2%. P pops +5% on a BMO Capital upgrade which is music to the Pandora shareholders’ ears. DG trades higher on a DB upgrade. Regional bank RF jumps +1.4% after GS adds Regions Financial to the conviction buy list. Stocks pop when Goldman Sachs provides its holy blessing. WMT +5.5%.
At 8:30 AM, Jobless Claims are up 10K to 249K a big 13K more than expected. The hurricane impact is not causing the jump.
The Philly Fed Business Outlook Survey is 22.7 missing th 25.0 expected and below the prior 27.9.
Import Prices are up +0.2% month-on-month less than the +0.4% expected and below the prior +0.8%. Year-on-year is up +2.5% versus the prior +2.7%. Export Prices are 0.0% month-on-month below the +0.1% expectation and prior +0.7%. Year-on-year is up +2.7% below the prior +2.8%.
S&P +9. Dow +87. Nasdaq +29. Russell +7. VIX 12.31. WMT +6%. DAX +0.6%. CAC +08%. FTSE +0.1%.
Euro 1.1774. Dollar/yen 113.07. Pound 1.32. WTIC oil 55.13. Brent 61.58. Gold 1280. Silver 17.08. Copper 3.064.
Treasury yields are; 2-year 1.71%, 5-year 2.07%, 10-year 2.36%, 30-year 2.80%. The 2-10 spread is 64 basis points printing a 63-handle for an instant. The yield curve continues narrowing and the 2-10 spread, YC2YR, flattens threatening to eventually invert.
Three Fed members are pontificating today including Mester, Kaplan and Brainard. Mester, a hawk, speaks this morning and comments about the aging US population and the future negative impact on the economy. She says lower employment and growth rates would be expected in the years forward due to demographics. Japan suffers through an aging demographic problem that is exacerbated by their tight and strict immigration policies. The US does not want to go down this road.
Industrial Production is up +0.9% month-on-month versus the +0.5% expected and prior +0.4%. Manufacturing is up +1.3% month-on-month versus the +0.3% expected and prior +0.4%. Capacity Utilization Rate is 77.0% versus the 76.3% expected and prior 76.4%.
S&P +9. Dow +90. Nasdaq +30. Russell +6. VIX 12.34.
Oppenheimer strategist Ari Wald is uber bullish proclaiming, “We see a bullish set up for equities.” Wald proclaims that the stock market is only in mid-cylce with plenty more stock market highs ahead. The pundits continue parading across television screens yelling, “Buy, buy, buy.” Even analysts that wax worry and opine about a coming selloff in the stock market continue buying and holding stocks.
Deutsche Bank strategist Binky Chadha remains a raging bull on the stock market. Chadha predicts the SPX at 2850 next year. Chadha proclaims, “The pullback everyone is looking for may not happen for a while.” Chadha also upgrades European stocks. The pundits say stocks will continue higher on strong earnings with a recession nowhere in sight.
At 9:30 AM EST, US stocks begin trading strongly higher the mirror image of yesterday’s action. The SPX is up 10 points to 2575. The Dow gains 122 points to 23398. The COMPQ is up 38 points to 6745. The RUT small caps begin 6 points higher to 1470. VIX 12.11.
XLF +0.3%. KRE +0.1%. XRT +0.6%. XLK +0.9%. SOX +0.8%. XLB and XLI are each up +0.4%. XLU -0.2%. Retail leads higher on the Wal-Mart earnings. WMT is adding about 40 positive points to the Dow Jones Industrials Index. WMT gains +6.1% and prints anew all-time record high at 95.47. Tech stocks are strong as Cisco jumps higher. CSCO +6.1%.
PG +1.4%. ROK +6%. RF +0.8%. HP +0.3%. VIAB crashes -8.5%. Electronics king BBY plummets -4%.
Euro 1.1776. Dollar/yen 112.90. Pound 1.3191. USD 93.87.
Treasury yields are; 2-year 1.70%, 5-year 2.06%, 10-year 2.35%, 30-year 2.79%. The 2-10 spread is 64.1 basis points.
SPX 2576. The 20-day MA is 2578 so price is deciding to bounce or die. INDU 23400. The 20-day MA resistance is 23425. COMPQ 6753. RUT 1475. VIX 12.04.
At 10 AM, the NAHB Housing Market Index is 70 versus the 67 expected and prior 68. Homebuilders are optimistic but they always are.
WMT +7.1%. XRT +0.9%. CSCO +7.3%. XLK +1%. SOX +1.1%. ROK +4.5%. XLI +0.6%. PYPL +3.2%. SYF +3%.
The S&P 500 is up 16 huge points, +0.6%, to 2581. The Dow gains 160 points, +0.7%, to 23432. The Nasdaq Comp gains 64 points, +0.9%, to 6769. The Russell 2000 gains 16 points, +1.1%, to 1480. The RUT is back kissing the 50-day MA at 1480 s price will bounce or die from here and take the broad stock market in the same direction.
VIX 11.68. The VIX 200-day MA is at 11.14 so the market bears will continue to rule the markets, despite the up tape today, as long as the VIX remains above 11.14. WMT +8.3%. RH +21.2%.
DAX +0.5%. CAC +0.8%. FTSE +0.2%. French stocks have been leading in Europe the last couple days. Engineering giant Siemens announces plans to lay off 6.9K employees. That is a lot of pink slips. 6.1K jobs will be axed in the power and gas unit. These are high-paying jobs. Some of these poor souls will likely be flipping burgers a year from now. It is a bad sign for the global economy for such an engineering stalwart to be slashing payrolls.
Euro 1.1768. Dollar/yen 112.88. Pound 1.3194. USD 93.83.
WTIC oil 55.31. Brent oil 61.78. Natural gas is up +0.3% at 3.09 with inventory data minutes away. Gold 1279. Silver 17.08. Copper 3.049.
Treasury yields are; 2-year 1.71%, 5-year 2.06%, 10-year 2.35%, 30-year 2.79%. The 2-10 spread is 64.0 basis points.
EIA Natural Gas Inventories are down 18 BCF. Natural gas trades flat on the session at 3.08. The winter heating season is underway.
Equities are at the highs. SPX 2582. INDU 23441. COMPQ 6779. RUT 1481. VIX 11.54. The Russell 2000 is trying to sneak above its 50-day MA support/resistance at 1480. The RUT 1480 level and the VIX 11.14 level are two key market metrics that will dictate broad stock market direction going forward.
Raymond James strategist Jeff Saut says a pull back in the stock market is likely very near but he remains a raging bull for the years ahead. Saut says stocks are in a “secular bull” pattern that will last another 10 years. He says the pullback in stocks should be bought since indexes will make new record highs again. Saut laughs at “people (that are) still worried about a crash in the equities markets.”
SPX 2585. INDU 23460. COMPQ 6789. The RUT is up 23 huge points, +1.5%, to 1487. VIX 11.56.
At 11:30 AM EST, European indexes end the day higher. Spain and Portugal led the parade but both fizzled as the session played out. The DAX rallies +0.6% to 13047. France’s CAC finishes up +0.666% to 5336. The FTSE gains +0.2% to 7387. The MIB gains +0.2% to 22207. The IBEX bounces +0.8% to 10089. The PSI finishes up +0.2% to 5272 far off the intraday high.
Genmab +6.8%. Close Brothers Group +5.3%. 3i Group +2%. British Land +3.5%. GKN -4.8%. Sodexo -2%.
The SPX gains 23 points, +0.9%, to 2587. INDU rallies 197 points, +0.9%, to 23469. The RUT is up 26 points, +1.8%, to 1490.
The COMPQ rallies 92 points, +1.4%, to 6798 at all-time record levels. HOD 6805.58. The Nasdaq Composite prints above 6.8K for the first time in history. The NDX is up 84 points, +1.4%, to 6343 with a HOD at 6349.07 a new all-time high. The FAANG stocks are joyous and remain at or near all-time record highs. FB +0.9%. AAPL +1.5%. AMZN +0.9%. NFLX +2.2%. GOOGL +1.2%.
TRAN rallies +1.5% to 9578. NYA launches +0.8% to 12313 above its 50-day MA at 12266.
At 1 PM, the 10-Year TIPS Auction goes off at 0.512% with middling investor demand. Fed’s Kaplan is speaking in Houston.
Equities are melting up happy that the tax bill will likely pass the House in the hours ahead. SPX 2588. The Dow is up 204 points to 23475. Strike up the band. The bulls are unstoppable. Yesterday’s negative stock market action was a bear trap. The Nazzy Comp is up 100 big ones, +1.5%, to 6805 a record high. The RUT gains 27 points, a huge +1.8% rally, to 1491. Traders are throwing money at the small caps. VIX remains steady at 11.58.
Euro 1.1773. Euro/yen 132.94. Dollar/yen 112.92. Pound 1.3191. Euro/pound 0.8923. Indian rupee 65.3213. Mexican peso 19.0744. Canadian dollar 1.2741. Dollar/yuan 6.6303.
WTIC 55.24. Brent 61.51. Natty gas 3.07. Gold 1280. Silver 17.10. Copper 3.0495.
Treasury yields are; 2-year 1.71%, 5-year 2.06%, 10-year 2.36%, 30-year 2.80%. The 2-10 spread is 64.4 bips.
At 1:47 PM, the House passes their version of the tax-cut plant. President Trump will be happy. Congress is in session for only 20 more days this year and President Trump’s goals are lofty. The Whitehouse promised a tax reform package by August. Then it was by Labor Day. Then it was by the end of the year. The bill is watered down to a tax-cut plan rather than full-blown tax reform.
Stocks are joyous that the tax-cut plan is making its way through Congress and may see passage by the end of the year.
SPX INDU 23470. COMPQ 6802. RUT 1489. VIX 11.68. Interestingly, the VIX is not moving lower as equities print new record highs both intraday and over the last month.
At 2:15 PM EST, the SPX tags 2590 up +1% on the day. At 2:18 PM, the Dow Industrials are up +1% on the day to 23492. The COMPQ prints 6806.67 the highest number in stock market history. The NDX prints 6352.47 the highest number in history.
WMT catapults +10.1% higher creating over 70 positive points on the Dow Jones Industrials. NTAP +14.5%. SJM +10%. CSCO+6.4%. DWDP +2.2%. CAT +1.8%. IBM +1.5%. PDCO +5%. NTES +7.8%. TMUS +5.1%. PYPL +4.6%. SHPG +4.2%. ROK +3.6%. ESRX +4.1%. AMAT +3.7%. AVGO +3.1%. NCR +2.7%.
VIAB -4.1%. BBY -4%. NCLH cruises -1.8% lower. AAP -1.8%. TRV -1.7%. XOM -0.9%. CVX -0.7%. NBR -1.2%. BHGE -0.7%. GE -0.4%. HIG -1.1%.
ABC is up +3.4%, ESRX +4.1%, GPS +3.6% and JBHT +1.4% after the tax bill passage through the House. Amerisource, Express Scripts, Gap and trucker JB Hunt pay a lot in taxes.
Fed’s Brainard, a dove, speaks about consumer privacy and security in the banking industry. She does not comment directly on monetary policy.
Tesla plans to unveil an electric semi-truck later this afternoon. CEO Elon Musk brags on Twitter that the truck will “blow your mind.” Naysayers scoff at the short range of the vehicle that may only be 300 miles where a typical diesel-powered truck can travel 1,000 miles. Market participants and analysts are asking why MUSK is not more focused on the Model 3 electric car production.
Musk moans about shortsellers in the TSLA stock saying, “They’re jerks who want us to die.” Elon should realize that capitalism would not exist without shortsellers. TSLA trades up +0.4%.
The bulls win the day bidding stocks higher with the passage of the tax cut bill through the House. The Senate plans a vote on their version of a tax bill. Then the lawmakers will try to find common ground in the bill and pass it through Congress by the end of the year. Republicans realize that they need to pass the tax cut bill otherwise they will lose the mid-term elections only 51 weeks away in November 2018.
At 4 PM EST, US stocks finish the session with a big rally. Tech stocks and small caps catapult higher. Yesterday’s minor market weakness is long forgotten. Traders are tripping over each other to buy stocks.
The SPX gains 21 points, +0.8%, to 2586. HOD 2590.09. INDU gains 187 points, +0.8%, to 23458. NYA +0.7%.
The COMPQ leaps 87 points, +1.3%, to 6793.29 a new all-time closing high and 6806.67 a new all-time high. Tech stocks are joyous led by Cisco and the FAANG stocks. The NDX jumps 81 points, +1.3%, to 6339. The Nazzy 100 prints a new all-time high at 6352.47 but needs another 6 points for an all-time closing high.
The RUT small caps jump 23 points, +1.6%, to 1487. The RUT 20-day MA resistance is at 1490, price is at 1487 and the 50-day MA support (that was resistance this morning) is at 1480. Thus, the Russell 2000 is battling at this 1480-1490 and will make a major market direction decision. The small caps will lead the broad indexes. Market bulls win big if RUT moves above 1490, while bears will throw confetti if price is smacked lower under 1480.
VIX 11.76. LOD 11.38. Despite the huge up day in the stock market, volatility staggers sideways and did not drop below the critical 200-day MA at 11.14 which is an important short-term bull-bear market signal. The bears smile as long as the VIX remains above 11.14.
After the closing bell, retailer GPS jumps +9% on earnings. WSM crashes -9% on earnings. Pottery Barn comps are down -0.3% when a rise was expected. Williams Sonoma guidance is weaker which is the kiss of death. ROST +7.3%. AMAT -0.2%.
In Venezuela, the ISDA (International Swaps and Derivatives Association) declares the PDVSA (Petroleum of Venezuela; the state-owned oil and natural gas company) bonds in default. The payment failure of Venezuela’s PDVSA is a credit event. Venezuela is in economic and political collapse since the entire socialism government was supported by oil prices. As oil prices collapse over the last couple years, so does Venezuela.
The business news media says Comcast is in discussions with Fox concerning a potential deal. FOXA jumps +8.4%. CMCSA +0.8%. VZ also expresses interest.
Tesla CEO Musk unveils a truck that has a 500-mile range. Musk is a showman. The production problems continue with the Model 3 electric car so Musk distracts investors telling them to look at the shiny new truck object. Musk says he will “redefine trucking.”
Musk continues the hype by unveiling a new Roadster vehicle that can accelerate from zero to 60 MPH (97 KPH) in only 1.9 seconds proclaiming it as “the fastest production car ever made, period.” The torque in the electric motors allows the quick acceleration so the claims are not surprising and simply a fact of science. Internal combustion motors in cars provide a larger range than electric vehicles and of course there is a gasoline station on every corner in the US.
FBI Special Counsel Mueller investigating Russia involvement in the November 2016 election has subpoenaed the Trump campaign last month for more documents and emails.