Monday, February 27, 2017
TUESDAY 2/28/17; EOM (End-of-Month); TGT; AZO; DDD; DPZ; GLNG; IPI; NRG; SEAS; Q4 GDP (Gross Domestic Product); Chicago PMI; Consumer Confidence; Fed Speak; CBI; ETSY; PANW; SDRL; TASR; UHS; WTW; President Trump Addresses Congress
Australia and Asia stocks begin trading
For the month,
At 3 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading
DDD….. Earnings…..AZO, LNG, DPZ, ENDP, GLNG, IPI, NRG, SEAS, TGT,
At 8:30 AM, Q4 GDP is 2.x% versus the 2.1% expected and prior 1.9%.
International Trade reports a trade balance at …. Exports…Imports
The S&P Case-Shiller House Price Index is
At 9:30 AM EST (2:30 PM London), US stocks begin trading
15 minutes into trading, the Chicago PMI is
At 10 AM, Consumer Confidence, a key monthly indicator, is
The Richmond Fed Mfg Index is
European indexes end the day …. The DAX
For the month of February,
Fed’s George says
At 3 PM, Farm Prices are
Fed’s Williams says
US stocks end the session …. The SPX
For the month,
After the closing bell, CBI, ETSY, HALO, PANW, SDRL, TASR, UHS, WTW,
API Oil Inventories are……Inventories are very important this week as traders continue to determine if the OPEC nations, Russia and other producers are abiding by the oil production agreement, or not. Last week, this API data was a surprise drawdown but the EIA data, that is always reported on Wednesday’s, was a build. The EIA data at 10:30 AM EST tomorrow will impact markets.
Fed’s Bullard says
Sunday, February 26, 2017
MONDAY 2/27/17; AMT; BID; Durable Goods; SPX (S&P 500) and INDU (Dow Jones Industrials) All-Time Record Highs; EOG; RAIL; HTZ; PRGO; PLCN; THC; WNR; WDAY
US futures are higher Sunday evening in the States. S&P +3. Dow +29. Nasdaq +6. WTIC oil 54.03. Brent oil 56.05.
Euro 1.0560. Euro/yen 118.56. Dollar/yen 112.27. Pound 1.2434. Euro/pound 0.8493. Mexican peso 19.8589. Canadian dollar 1.3104. Dollar/yuan 6.8691. Indian rupee 66.825. Aussie dollar 0.7674.
Treasury yields are; 2-year 1.14%, 5-year 1.80%, 10-year 2.31%, 30-year 2.95%. The 2-10 spread is 117 bips. German bund 0.18%. Japan 10-year yield 0.06%. UK gilt 1.08%. France 10-year yield 0.93%. The France-German 10-year yield spread is 75 basis points.
The bullish cheerleading for stock markets continue. Speaking in Singapore, PineBridge Multi-Asset strategist Michael Kelly proclaims multiple years of upside ahead for stocks. There are no bears remaining in the markets. Traders and investors are buying stocks with both hands on the long side believing that inflation and better economic times are ahead.
Federal Reserve members are out in force this week to spin the news ahead of the two-day rate decision meeting on 3/14/17 and 3/15/17. At least eight Fed members are speaking this week starting with Kaplan in a few hours. The Beige Book is released on Wednesday afternoon. Preliminary scuttlebutt says US businesses leaders expect growth but do not plan to hire employees until the growth is confirmed. So far, the optimistic happy talk from corporate CEO’s is only bluster and not backed up by firm sustainable action such as increased capital equipment spending.
The Fed Funds futures indicate a 40% chance for a March rate hike. The chances for a rate hike occurring in 16 days has increased about eight percentage-points since Friday which is interesting since note and bond yields are retreating. Typically, a 75% or 80% chance would seal the deal for a rate hike. The chance for a May hike are 65%, June 73%, July 77%, September 85% and November 87%. The bond traders expect, say, a June hike, and are projecting two hikes for this year versus the Federal Reserve’s forecast of three rate hikes. The 3/15/17 Fed rate decision will be an epic day for markets.
Australia and Asia stocks are trading lower to start the week. Taiwan trading is closed for a holiday. ASX 200 -0.3%. Aussie dollar 0.7669. Energy and materials stocks lead the land down under lower. Australia’s Materials Index -0.6%. QBE Insurance jumps +5% on news of a buyback. Stock repurchase programs, fueled by central banker easy money, rewards the wealthy with higher stock prices. Every day is a party if you are rich with a large stock portfolio.
NIKK -0.8%. Dollar/yen 112.21. Japanese exporters trade lower. Softbank -2.4%. Takata trades +1% higher on news that attorney Ken Feinberg, known as the clean-up man after disasters, will oversee claims against the troubled air-bag manufacturer. Feinberg handled the claims after the 9-11 terrorist attacks, the GM disbursements and also the claims from BP’s Deepwater Horizon oil spill disaster seven years ago. Feinberg is the go-to man to sort out insurance claims in large-scale class action lawsuits against the US government and major corporations.
KOSPI flat. Samsung Electronics -0.5%. Samsung plans to release the next generation smartphones, the Galaxy S8, on Wednesday 3/29/17. Delta Airlines, DAL, is in talks with Korean Airlines for supplying airplanes and forming a deeper alliance.
S&P +2. Dow +20. Nasdaq +6. Euro 1.0566. Dollar/yen 112.17. Pound 1.2420. Dollar/yuan 6.8691. WTIC 54.00. Brent 56.04. Natural gas drops -3.1% to 2.70. Gold 1256. Silver 18.39. Copper 2.694.
US futures dip negative. S&P -1. Dow -7. Nasdaq -1. US dollar index 101.09. The pound slips below 1.24 to 1.2388 on news that UK PM May will allow a second referendum for Scottish independence to occur but only after the Brexit drama is sorted out. Scotland voted down a referendum for independence in 2014 by a vote of 55% to 45%. The unknowns around the ongoing Brexit process may soften the UK economic data ahead and create the lower move in sterling.
Oil prices float higher. WTIC oil 54.37. Brent oil 56.47. Aussie and Asia markets end the session negative across the board.
The NIKK finishes down -0.9% to 19107. The SPASX200 is down -0.3% to 5724. The KOSPI sinks -0.4% to 2086. The SSEC dumps -0.8% to 3229. The HSI loses -0.2% to 23925. Hong Kong trading holds up better than the rest of Asia as the Hang Seng Index and its stocks remain the current favorites of global investors. The Nifty is down -0.5% to 8895.
North Korea nutcase Kim Jong un executes five top security officials with anti-aircraft guns over filing false reports. The little dictator is creating instability in the Pacific theater. China needs to redouble their efforts to calm their communist little brother.
At 3 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading dead flat to begin the week. The DAX and FTSE are a hair higher with the CAC a smidge lower. The pound dropped under 1.24 overnight on news of a new Scottish referendum vote likely in the future but is recovering back above.
The London Stock Exchange and Deutsche Boerse $31 billion merger deal is collapsing. Deutsche Boerse loses -3%. Italian bank Intesa Sanpaolo rallies+5% on news that the potential merger deal with Generali is dead. Generali drops -3.5%. Instead of a merger Monday, today is a reverse-merger Monday as deals fall apart.
In the French presidential race, Emmanuel Macron is receiving more endorsements from the political establishment class and is extending a lead over Francois Fillon in the polls. Marine Le Pen is expected to win the election on 4/23/17 but Macron is expected to defeat Le Pen in the second round runoff election on 5/7/17. The polls say Macron will be the next president of France come early May, however, the polls were wrong for Brexit and in the US election.
Perhaps everyone is underestimating Le Pen’s chances. If a terrorist attack occurs in France or other radical Muslim trouble, Le Pen would likely strongly gain in the polls. Interestingly, Russia President Putin would prefer Le Pen to win since he wants to see dissention across Europe. Perhaps Russia inserts fake news into the presidential zeitgeist in the weeks ahead and conducts other nefarious activities to disrupt the French elections.
DAX +0.1%. CAC -0.1%. FTSE +0.2%. Euro-area February Economic Confidence rises from 107.9 to 108.0 but misses the 108.1 expected.
US futures are flat. S&P flat. Dow -4. Nasdaq -6. Russell -1. VIX 11.94. Market bears do not have any hope unless volatility climbs higher.
Euro 1.0586. Euro/yen 118.83. Dollar/yen 112.26. Pound 1.2432. Euro/pound 0.8515. Mexican peso 19.8681. Canadian dollar 1.3117. Dollar/yuan 6.8694. Indian rupee 66.7188. Aussie dollar 0.7678.
Treasury yields are; 2-year 1.16%, 5-year 1.83%, 10-year 2.33%, 30-year 2.96%. German 2-year schatz yield remains at record lows at -0.95%.
The bulls continue to parade across television screens. RBC Capital Markets strategist Golub says the 10-year yield will be at 3.50% in 2018. Golub says inflation is occurring and wages are increasing (wages are actually flat) so the Federal Reserve needs to start hiking rates. Golub says, “Stocks go up as long as you are not in a recession and there is no recession looming.” Golub says stocks will continue higher and higher despite any short-term pull backs. “The backdrop in the economy is getting better.” The bullish strategist says, “The reacceleration in the economy started last summer and will push stocks higher.” Golub advises investors to buy the banks as interest rates move higher. Golub touts a SPX 2500 target for this year.
Buffett doubles down on his uber bullish proclamations from the weekend. Buffett stands on a soapbox with his arms outstretched unequivocally shouting, “The US stock market is not in bubble territory.” Buffett says, “Stocks are on the cheap side” and “are not overpriced at these levels.” Buffett reveals that he has bought over $20 billion in stock so far this year (buying in the SPX 2270 to 2368 range). Buffett says he doubled his holdings in AAPL to $17 billion expecting big upside ahead for Apple. Buffett is often called the smartest investor in the world. Is he?
Perhaps Buffett’s uber off-the-charts bullish proclamations are actually calling a top in the stock market like in 1929 when Irving Fisher proclaimed that “the stock market is at a permanently high plateau.” Time will tell. Many Ma and Pa investors listen to and follow Buffett’s lead. Aunt Mary invests her entire life savings into the stock market especially dividend stocks since Warren Buffett said there are no bubbles in equities and prices will continue higher. Mary’s son, Joe Sixpack, agrees with Mom and decides to scrape together all the money he can to buy stocks like Mr Buffett said. The SPX begins the week at 2367.
State Street strategist Lori Heinel is on the bullish bandwagon like everyone else on Wall Street these days. Heinel says, “Buy US equities.” Heinel says, “Higher rates will be constructive with a growing global economy and make stocks even more attractive.” There are no longer any bears remaining on Wall Street; they are all in hibernation as the major indexes continue printing new all-time record highs.
At 5:30 AM EST, stocks and futures are steady and flat. S&P -1. Dow -8. Nasdaq -7. Russell -2. VIX 11.94. The Nifty is down -0.5% to 8896.
DAX +0.1%. CAC flat. FTSE +0.2%. MIB +0.8%. IBEX flat. PSI -0.4%.
Global markets are flat and uninspired this morning. Stocks and bonds may trade flat waiting on President Trump’s speech before Congress tomorrow evening. The Nifty ends the session down -0.5% at 8897.
At 8 AM, S&P -2. Dow -11. Nasdaq -9. Russell -2. VIX 12.02. Euro 1.0583. Dollar/yen 112.28. Pound 1.2409. Aussie dollar 0.7673. USD 101.07. WTIC oil 54.44. Brent oil 56.52. Gold 1256.
DAX +0.1%. CAC -0.1%. FTSE +0.1%. MIB +0.8%. Italy rides higher on gains with the banks especially Intesa Sanpaolo that likely scuttles the Generali merger deal. IBEX flat. PSI -0.4%. Portugal is the sick man of Europe to begin the week.
Treasury yields are; 2-year 1.16%, 5-year 1.82%, 10-year 2.33%, 30-year 2.96%.
10-year yields are; Mexico 7.24%, Greece 6.91%, India 6.88%, Portugal 3.84%, Australia 2.71%, US 2.33%, Italy 2.14%, Spain 1.64%, UK 1.15%, France 0.91%, Netherlands 0.46%, Germany 0.20%, Japan 0.04%, Switzerland -0.27%.
The earnings parade continues with the following stock moves occurring. AMT +0.1%. JKS -2.2%. KITE +0.8%. BID beats on earnings so Sotheby’s auction business is doing well. AAPL gains +0.3% in early trading on news that Warren Buffett has doubled his stake in Apple in recent weeks. TSLA sputters -3% lower on a GS downgrade. Jefferies says Chevron, CVX, is a very attractive long buy going forward.
Retailer URBN sinks -3.3% on a MKM downgrade. Popular women’s bag seller KATE rallies +1% on continued takeover chatter from KORS and COH. HOG rides -1.3% lower on a negative article in Barron’s on the weekend. SAM also trades lower on a negative Barron’s article; Boston Beer shareholders drink an early morning beer to ease the pain.
C trades marginally higher despite the SEC launching a probe into Citigroup concerning their hiring practices. The investment banks collude with the government so a slap on the wrist is likely already planned as the outcome for the investigation.
Retailer UAA sinks -1.4% on a Nomura downgrade. Knife-catchers trying to call a bottom in Under Armour are continually punished. The “UA” logo is on apparel everywhere a favorite of sports enthusiasts and fans, however, the UAA stock topped out in September 2015 at 55 and is now at 21 a stunning -62% loss in only 17 months.
Joe Retail listening, to the bullish prognostications for Under Armour in late 2015, have had their heads handed to them on a pike. The smart money, that told everyone to buy in 2015 and 2016, was busy distributing their shares to the bag holding suckers, the dumb money, that bought into the television hype. This is the way Wall Street operates. Professional traders use the rookie traders as cannon fodder. Every top in stocks and indexes needs a bag holder.
At 8:30 AM, Durable Goods Orders are a mixed bag. New Orders are up +1.8% month-on-month exactly in line with expectations and above the prior -0.8% that was revised lower. Ex transportation is down -0.2% versus the +0.5% expected and prior revised-higher +0.9% a big miss. Core capital goods are down -0.4% below the prior +1.1%. Capital goods are disappointing reversing a three-month uptrend. Markets are unresponsive to the data. The week is starting off quiet.
S&P -2. Dow -18. Nasdaq -12. Russell -4. VIX 12.03. Euro 1.0584. Dollar/yen 112.38. Pound 1.2415. USD 101.08. European indexes are flat with Italy higher and Portugal lower. WTIC oil gains +1% to 54.51. Brent oil is up +1.1% at 56.61. Natty 2.68. Gold is steady at 1256. Silver 18.39. Copper 2.6965.
Treasury yields are; 2-year 1.16%, 5-year 1.83%, 10-year 2.33%, 30-year 2.97%. The Israeli central bank leaves its benchmark rate steady at 0.10%.
Tomorrow is the last day of the month and typically when a month rallies strongly, like February, it finishes weak. The new moon peaked yesterday and stocks are typically weak about two-thirds of the time moving through the new moon.
At 9:30 AM EST (2:30 PM London), US stocks begin trading marginally lower. The S&P 500 dips 3 points to 2364. The Dow Industrials are down 24 points to 20798 after having printed 11 consecutive record closes. The Nasdaq Composite is down 12 points to 5833. The Russell is down 1 point to 1394. VIX 12.00.
Financials lead higher. XLF +0.3%. KRE +0.1%. The large money-center banks outperform the regionals. Bank of America is the favorite of long traders lately; money managers are buying with both hands. BAC +0.4%. JPM +0.2%. MS +0.2%. Utilities give back some of last week’s big gains. XLU -0.6%.
UAA -1.6%. NKE -0.5%. KATE -2.7%. URBN -2%. JCP launches +4%. NOW -2.9%. NVDA +2.8%. SOX +0.3%. The chip sector is flattish but NVDIA catches a bid from dip-buyers choosing to enter the stock after three weeks of weakness.
Euro 1.0601. Euro/yen 119.01. Dollar/yen 112.26. Pound 1.2424. Euro/pound 0.8533. Indian rupee 66.7075. Mexican peso 19.7701. Canadian dollar 1.3094. Dollar/yuan 6.8710.
WTIC oil 54.48. Brent 56.57. Natty 2.69. Gold 1256. Silver 18.39. Copper 2.675.
Treasury yields are; 2-year 1.16%, 5-year 1.83%, 10-year 2.33%, 30-year 2.96%.
At 10 AM, Pending Home Sales are worst than expected down -2.8% month-on-month missing the +1.1% expected and under last month’s revised lower +0.8%. The index level is 106.4 below the prior 109.5. The up in mortgage rates after the Trump election may be dampening mortgage activity. The data indicates a very weak start to the year. There is a lack of supply and affordability remains difficult; starter families cannot afford homes and do not have proper down payments.
SPX 2366. INDU 20819. COMPQ 5841. RUT 1400. VIX drops to 11.89 creating a recovery in stocks off the lows. USD 101.00.
At 10:16 AM EST, President Trump begins speaking from the Whitehouse as he meets with governors. He says the tax reform package will come after the healthcare reform. Trump says regulatory reform, and all his plans, will be happening quickly. Trump says, “We will give power back to the States.” Trump refers to himself as a “nationalist.”
The president says there is a big announcement on infrastructure spending coming tomorrow evening. He says the budget is focused on “safety and national security.” Trump says, “We will do more with less” which is a favorite tag line of the orange-headed leader. Trump continues making more promises saying, “We will make the government lean and accountable to the people.”
SPX 2366. INDU 20819. COMPQ 5843. RUT 1403. VIX 11.66.
The Dallas Fed Mfg Survey’s Production Index is 16.7 above the prior 11.9. The General Activity Index is 24.5 above the prior 22.1. The data indicates that manufacturing activity in Texas is picking up.
Trump promises “great detail tomorrow night” with his plans. Markets may idle until the major speech tomorrow evening since his words are going to move markets. Trump says there will be a “large reduction in foreign aid spending.” Trump plans more defense spending. He says, “We will repeal and replace Obamacare.” Trump skips around from topic to topic in his signature impromptu style of speaking.
President Trump says, “Healthcare is highly complicated” and “the tax cut will be wonderful” but “healthcare reform has to occur first.” Trump is repeating all his same themes without providing details. There are high expectations that he provides some meat to these bones tomorrow evening as he promises. The president stops speaking at 10:39 AM EST.
The S&P 500 and Dow Industrials print new all-time record highs. President Trump has the magic touch; each time he speaks and promises more goodies the stock market rallies. The SPX is at 2369.03 the highest level in history. INDU tags 20841.82. The screen printers frantically begin turning out more Dow 21K hats. The bulls are unstoppable. Stocks and volatility moves higher so one of them is wrong.
Aircraft and defense companies are higher on promises of more defense spending. Materials and infrastructure companies rally on Trump’s words. BA +1%. GD +0.6%. LMT +1.6%. NOC +1.5%. CAT +2%. MLM +4.5%. FLR +2.1%. JEC +2.3%. VMC +2.4%. EXP +2.7%. CBI +1.7%. GWW +0.666%. AAPL +0.4%.
Health insurance companies meet with President Trump at the Whitehouse. Trump’s orange-head appears on television again disusing healthcare. The president says, “Obamacare is a disaster.” Aetna, Cigna and Anthem CEO’s are attending the meeting. AET +0.3%. CI +0.5%. ANTM +0.8%.
SPX 2367. INDU 20817. COMPQ 5845. RUT 1402. VIX 11.62.
European indexes end the day flat with Italy the big winner and Portugla the loser. The DAX gains +0.2% to 11830. The CAC is up +0.1% to 4850. The FTSE is up +0.2% to 7260. The MIB finishes up +1.7% to 18915. The IBEX gains +0.2% to 9470. Portugal lays a wet blanket on the party with the PSI dropping -0.1% to 4616.
The France 10-year yield drops to 0.90% at a five-week low. Macron is gaining in the French presidential polls and Le Pen slipping. Interestingly, the young people are more in favor of Le Pen despite Macron being the younger candidate. The 20 to 25 year old segment of the population has the highest unemployment rate. Only one in four Macron supporters say they are completely sure that he is the right person for the job which means the door remains open for Le Pen to persuade these folks to join her camp. Global investors appear comfortable that Macron will win the presidency in early May as shown by the drop in yields. The German bund is at 0.20% so the France-German 10-year yield spread retreats slightly to 70 bips. Above 70 indicates angst and nervousness in France while a spread below 70 will indicate calm returning.
Fed’s Kaplan says
The afternoon continues….
A two-page summary statement is released by President Trump outlining the budget proposal that he will present at tomorrow’s prime time address before Congress and the nation. He is cutting funding to the Environmental Protection Agency (EPA) and increasing military spending. The Trump administration is toning down GDP expectations from 3.0% to 2.x%??? Backpedaling on growth targets will not be appreciated by investors.
The budget says…..
US stocks end the session …. The SPX
President Trump decides to not attend the upcoming Whitehouse Correspondent’s dinner. This is an annual event where the Washington, DC, journalists, reporters, news anchors and media big wigs schmooze with the Washington politicians, beltway insiders and lobbyists. The event highlights the media bias that exists in the United States with 70% of the news outlets spewing a liberal and progressive (democrat) narrative for the country and 30% of the media touting the conservative (republican) perspective.
Typically, the president attends the correspondent’s dinner and is the butt of jokes throughout the evening. The president then provides a rebuttal at the end of the evening to dish out his own jokes and insults. The event sounds perfect for President Trump that rose to power by denigrating his opponents into oblivion with insults and pet tag names but he likely does not want to create the narrative that he is in bed with the beltway insiders like everyone else. Also, the president has a thin skin and likely does not want to endure the jokes at his expense.
The new moon peaks at 9:58 AM EST the darkest time of the month. The stock market is usually weak moving through the new moon. An annular solar eclipse is occurring. South America and southern Africa will be able to view the eclipse. The moon is in front of the sun and smaller so a ring of light, or ring of fire, appears around the annulus of the moon. A prenumbral lunar eclipse occurs on 3/23/17.
Euro 1.0559. Dollar/yen 112.18. Pound 1.2465. Canadian dollar 1.3088. USD 101.14. WTIC oil 54.02. Brent oil 55.99. Natural gas 2.80. Gold 1258. Silver 18.25. Copper 2.6685.
Treasury yields are; 2-year 1.15%, 5-year 1.81%, 10-year 2.31%, 30-year 2.95%. The 2-10 spread is 116 bips; the yield curve flattened last week as yields fall. The 30-year is under 3%. The 10-year is 30 basis points below the 2.62% high in December when the majority consensus called for 3.00% and higher to occur early this year.
10-year yields are; Mexico 7.24%, Greece 6.98%, India 6.89%, Portugal 3.88%, Australia 2.73%, US 2.31%, Italy 2.18%, South Korea 2.17%, Spain 1.68%, UK 1.07%, France 0.92%, Netherlands 0.47%, Germany 0.18%, Japan 0.06%, Switzerland -0.28%.
Friday, February 24, 2017
SPX 2367. INDU 20822. COMPQ 5845. RUT 1395. NIKK 19284. SPASX200 5739. KOSPI 2094. SSEC 3253. HSI 23966. BSE 28893. DAX 11804. CAC 4845. FTSE 7244. MIB 18596.66. IBEX 9454. PSI 46.19.
Surprisingly, North Korea criticizes China, their only friend, for “dancing to the tune of the United States.” China is uneasy with North Korea’s obsession with developing nuclear weapons and testing missiles. China is siding with the United Nations concerning sanctions against North Korea. As much as three-fourths of North Korea’s trade is with China including food, energy and weapons. It is shocking to hear the little communist brother criticize their big commie brother biting the hand that feeds them.
China is worried that North Korea is creating instability in the neighborhood. Concern increases after North Korea leader Kim Jong Un likely had his step-brother Kim Jong Nam assassinated in Malaysia with VX, a fatal nerve agent poison.
In the States, a video of an iPhone 7 smoldering goes viral. A teenage girl in Arizona films the iPhone 7 splitting down the side and smoke coming from the smartphone. Apple says it is investigating the incident and does not want a problem like Samsung had with the Galaxy Note 7 overheating battery issue.
A massive data breach occurs at Uber, Fitbit and OkCupid due to a software security flaw so customer information is exposed to criminals. FIT has been beaten down badly in recent months and now has new problems. OkCupid is a dating site so besides hacking all the information of those seeking relationships, the criminals are learning that most people love traveling, hiking, jogging, scuba diving and taking long walks on the beach and their pictures posted on the site are decades old and many pounds ago.
At 8 AM EST in the States, Berkshire Hathaway CEO Warren Buffett releases his annual shareholder letter. BRKA stock hit 255,000 yesterday ahead of the weekend (Buffett does not believe in stock splits so the price is a quarter of a million per share; more affordable BRKB shares are at 170.22). Berkshire stock is up +36% over the last year and up over +19% since the Trump election in early November. This is humorous since Buffett was an active supporter of democrat Hillary Clinton. The 86-year old billionaire is expected to discuss the BNSF railroad, insurance companies, Precision Castparts, Apple, Kraft Heinz, Unilever, the airlines and potentially President Trump.
The letter says continued substantial gains are ahead for Berkshire Hathaway. The Oracle of Omaha proclaims that the substantial profits ahead will fund ongoing acquisition activity. Buffett cheerleads American abundance and the resilient and dynamic economy. Buffett says investors are wasting money paying hedge funds large fees to provide weak performance. Buffett advises the average Joe to invest in index funds. The future is so bright in Buffett’s eyes you have to wear shades.
The Fox News business block of commentators remain bullish on the stock market touting more new highs ahead. Pundits proclaim that XOM, HD, SPHB and NKE will gain from +15% to +20% over the next year. The commentators also tout SJM, VTV, SPY, PRDGX and HIG as great plays for upside gains ahead. SPY is at an all-time high at 237 and the bullish prognosticators keep telling Joe Sixpack and Aunt Harriet to “buy, buy, buy!”
Bullish strategist Ed Yardeni speaks with CNBC business television reiterating his SPX 2400-2500 target for this year. Yardeni says the economy has strengthened and oil prices have recovered. He says equities are on firmer ground and earnings are doing remarkably well. The bullish predictions continue as the stock market prints new all-time highs.
Thursday, February 23, 2017
FRIDAY 2/24/17; German 2-Year Yield Record Low -0.95%; COG; FL; JCP; KBR; RLGY; New Home Sales; Consumer Sentiment; President Trump Speaks; SPX (S&P 500) and INDU (Dow Industrials) All-Time Closing High; Dow Industrials Print 11th Record Closing High
Australia and Asia stocks begin trading on the negative side. NIKK -0.7%. Topix -0.6%. Toshiba gains -9% on news that management is considering a Chapter 11 restructuring for the sick Westinghouse nuclear unit. ASX 200 -0.6%. Copper and other metals trade lower. Commodity companies are in retreat so Rio Tinto and BHP Billiton trade negative.
KOSPI -0.2%. SK Hynix -4.2%. The Samsung group of companies remain mired in the Jay Lee scandal with two executives offering resignations. Samsung Electronics -2.5%. In Tokyo, Japan, unsold apartment units are at the highest level in seven years.
S&P -3. Dow -22. Nasdaq -8. Euro 1.0582. Dollar/yen 112.69. Pound 1.2553. Dollar/yuan 6.8661. Aussie dollar 0.7714. USD 100.98.
WTIC oil 54.35. Brent oil 56.58. Natural gas 2.63. Gold 1249. Silver 18.16. Copper 2.64.
Treasury yields are; 2-year 1.18%, 5-year 1.87%, 10-year 2.38%, 30-year 3.01%. The 2-10 spread is 120 bips. German bund 0.23%. Japan 10-year yield 0.08%. UK gilt 1.15%. France 10-year yield 0.99%. The France-German 10-year yield spread is 76 bips. The US-German 10-year yield spread is 215 bips.
The Shanghai (China) and Hang Seng (Hong Kong) Indexes each sink -0.4% in early trading. All major indexes are lower in the Pacific theater including the Taiex and Straits Times. The ASX 200 is the worst performer down -0.7%. Fortescue -3.4%. Rio Tinto +4.2%.
China has been trying to limit the outflows of money into bitcoin the virtual currency. Bitcoin is surging towards 1200 and the PBOC is adopting the attitude that ‘if you can’t beat ‘em, join ‘em’. China’s central bank says it is exploring offering its own virtual currency but there is no formal start date planned for the new platform. Tech insiders say that China’s crypto currency is currently in beta testing.
United States regulators are about to approve the first bitcoin ETF (exchange-traded fund). The ETF vehicle would permit traders to invest and speculate in bitcoin’s price action without actually buying bitcoin. Bingo. Bitcoin tags the 1200 level.
RBA Governor Lowe testifies before the Australian parliament explaining current monetary policy. Aussie dollar 0.7707. ASX 200 -0.4%. Woodside Petro is up +1% stringing together three upside days. NIKK -0.2%. KOSPI -0.5%.
Euro 1.0574. Dollar/yen 112.85. Pound 1.2544. USD 101.03.
S&P -3. Dow -15. Nasdaq -9. WTIC oil 54.33. Brent oil 56.43. Natty 2.61. Gold 1251. Silver 18.18. Copper catches a bid higher to 2.66. The metals are recovering.
The NIKK ends the session down -0.5% to 19284. The SPASX200 drops -0.8% to 5739. The KOSPI sinks -0.6% to 2094. The SSEC ekes out a tiny gain to 3253. The HSI loses -0.6% to 23966. India trading continues with the Nifty up +0.1% at 8940.
For the week, the Nikkei Index ekes out a +0.2% gain. The ASX 200 loses -1.2% this week. KOSPI gains +0.7%. The Shanghai Index finishes the week up +1.6%. The Hang Seng Index drops -0.3% this week. China and Korea are the big winners while Australia is the big loser. Global investors are losing confidence in the infrastructure trade (the need for raw materials and products such as steel) which hurts Australia.
President Trump may not implement infrastructure spending until 2018; he had promised huge infrastructure spending early in his presidency. The president will have trouble attaining a +3% growth goal if he is back pedaling on spending promises.
At 3 AM EST (8 AM London; 9 AM Frankfurt), the weakness in Asia cascades to the Europe with the major indexes trading on the soft side. Basic resources sink as traders are concerned that global infrastructure spending this year may not be as robust as thought. BASF -3.2%. Saipem -6.2%.
RBS misses on earnings reporting a ninth straight quarterly loss. Litigation costs to handle the bank’s nefarious activity in toxic mortgage products during the 2007-2009 financial crisis are eating away at the bottom line. RBS will likely rally when a settlement with the DOJ is reached in the future. RBS is down -3% and sinking creating gloominess in the morning’s trading.
DAX -0.3%. CAC -0.6%. FTSE -0.3%. SMI -0.3%. OMX -0.5%.
S&P -3. Dow -24. Nasdaq -10. Russell -4. VIX 11.83.
Euro 1.0590. Euro/yen 119.07. Dollar/yen 112.44. Pound 1.2532. Euro/pound 0.8540. Mexican peso 19.7004; the peso is strengthening. Canadian dollar 1.3098. Canada CPI is up +2.1% versus the +1.6% expected. Dollar/yuan 6.8773. Indian rupee 66.825. Aussie dollar 0.7707. Bitcoin is at 1180 retreating off the 1200-plus high a few hours ago.
WTIC oil is down -0.6% to 54.12. Brent 56.19. Natty is up +0.8% to 2.64. Gold gains 6 dollars to 1256. Silver is up +0.9% to 18.35. Copper gains +1% to 2.6845.
Treasury yields are; 2-year 1.18%, 5-year 1.86%, 10-year 2.37%, 30-year 3.01%. The German 2-year schatz yield is down to -0.95% a new record low.
Austrian Chancellor Christian Kern says the UK will be charged 60 billion euros ($63 billion) to leave the EU. The number sends British lawmakers into a tizzy and the rhetoric over Brexit escalates. Former UK cabinet minister Iain Duncan Smith responds to Kern’s demand by saying, “The European Union officials are behaving like children.” Smith says the request for payment is absurd. The Austrian chancellor said “there is no free lunch for Britain.” Humorously, Smith responds to the free lunch comment by saying, “We paid so much into the EU budget over the years, we pretty much bought the damned restaurant.”
The upcoming Brexit negotiations will be difficult. A final vote from the House of Lords is concering Brexit is planned for 3/7/17, only 10 days away, and PM Theresa May may invoke Article 50, which begins the two-year Brexit negotiation process, on 3/9/17. European indexes sink lower as the session continues.
In the States, President Trump and his cabinet are developing a dictatorial style as they settle into their new jobs for the next few years. As the Who would sing, “The new boss is looking a lot like the old boss.” Trump’s right-hand man Steve Bannon speaks for the first time in a public venue; most Americans have never heard his voice. Bannon founded the rightwing news site Breitbart and brags that it is a “platform for the alt-right.” Bannon proclaims that Trump’s “economic nationalist agenda” will be followed to the letter and the president will never back down from any fight. Bannon says the Trump administration is laying out its “new political order.”
The combative Bannon acts as if he is running the show. Bannon says there are three goals of the Trump presidency. First, is national security and sovereignty. Second, is “economic nationalism” which is the reshaping and rethinking of trade arrangements around the world. Third, is the “deconstruction of the administrative state.” Most people scratch their heads and ask what is he talking about? Reducing excessive government regulations is part of the deconstruction goal.
Overnight the Trump administration throws the LBGTQ (lesbian, bisexual, gay, transgender, queer/questioning) people under the bus by rescinding bathroom laws put in place by President Obama. In a surprising flip-flop, President Trump now plans to enforce the Federal laws against the use of marijuana. During the campaign, the president said he was indifferent to the use of pot among the population and he was in favor of medical marijuana.
Trump had promised to be a president for all the people but his campaign promises keep falling by the wayside. He is making a political calculation thinking that most gays and pot smokers are liberals and progressives (democrats) that would never vote for him so he has no allegiance to prior campaign promises for these groups. They are flicked out the car window like a cigarette butt.
President Trump said he would label China as a currency manipulator on day one of his presidency during the campaign but now he has changed his mind. Treasury Secretary Mnuchin said yesterday that the currency manipulation talk was off the table for now. Very oddly, President Trump says overnight that “China is the grand champion of all currency manipulators” which angers the communists. A Chinese spokesman tries to paint the statement positively saying China is a grand champion of improving the economy. Market participants are left scratching their heads since Trump is talking out of both sides of his mouth.
Huge infrastructure spending was promised but now that appears to be taking a slower track forward and may not come to fruition until 2018. Trump likely wants to see the growth effects of the stimulus during 2018-2020 as he then runs for his second term in 2020. This is how corrupt politicians always connive and think. Construction and engineering companies sold off hard in yesterday’s trading as investors become skeptical of the massive spending that Trump promised.
Trump promised a drastic cut in taxes and a simplified tax system but now that is pushed off into August and it is unclear if the goal is to pass the new tax reform plan through Congress by that deadline or to only develop a tax reform package that would then begin moving through Congress later this year into next year. The stock market rallied over the last three months mainly on the promises for lower taxes and the cut to banking regulations. Traders will be disappointed if Trump does not provide details on his tax reform plan over the coming days.
The tax plan is the number one key issue to traders and investors on Wall Street since it will directly factor into future earnings and stock prices. The banking sector has rallied +30% since the Trump election as Trump, and his two Goldman Sachs henchmen, Cohn and Mnuchin, are busy tearing up financial regulations in the back room next to the Oval Office. The banking regulations must be slashed to justify the big up in stock prices.
Trump promised to limit immigration and crack down on illegal aliens and this is a promise he is keeping. The president failed at the initial roll out of the travel ban legislation but is working towards a new immigration ban that addresses all the concerns from the courts. This new travel ban order was to be provided this week but it is now delayed until next week. There is a lot of delays beginning to occur with Trump’s policies.
President Trump is scrapping trade deals such as the Trans-Pacific Partnership (TPP) in favor of bilateral trading relationships but the jury remains out on the specific details of such proposals. Any change to existing trade agreements will cause disruptions and perhaps unintended consequences that the president does not understand or has not yet properly considered.
Trump is working on repealing and replacing the Affordable Care Act (ACA; Obamacare), however, this is moving at a slow pace since the republicans, after complaining for several years about the ACA, do not have a replacement plan available if the health care law is repealed. Democrats and republicans are concerned about repealing the health care law without a replacement plan ready.
During the campaign, Trump promised that the ACA repeal and replace legislation would occur on the same day; the task is appearing more difficult than the orange-headed carnival barker touted. Vice President Pence sternly proclaims that “Obamacare will fall” despite the “liberal activists” that are disrupting town hall meetings and protesting daily in the major cities to save Obamacare. President Trump is realizing that governing is a lot different than campaigning.
S&P -3. Dow -23. Nasdaq -9. Russell -4. VIX 11.83. DAX -0.4%. CAC -0.6%. FTSE -0.3%.
S&P -6. Dow -49. Nasdaq -18. Russell -6. VIX 12.00. Markets are slipping away with money moving from stocks to bonds. DAX -0.8%. CAC -0.9%. FTSE -0.6%.
Treasury yields are; 2-year 1.18%, 5-year 1.85%, 10-year 2.36%, 30-year 3.01%.
At 6:15 AM EST (11:15 AM London; 12:15 PM Frankfurt; 8:15 PM Tokyo), S&P -8. Dow -66. Nasdaq -23. Russell -9. VIX 12.11.
DAX -1%. CAC -1.1%. FTSE -0.5%. MIB -1.1%. Euro 1.0594. Dollar/yen 112.37. Pound 1.2546. Aussie dollar 0.7687. RBS -4.4%. StanChart is down -3.1% after missing on earnings. India’s BSE Sensex finishes up +0.1% to 28893. For the week, the BSE ends up +1.6%.
WTIC oil 54.12. Brent oil 56.21. Natural gas is up +1% at 2.64. Gold is down 7 dollars to 1256. Silver loses -0.8% to 18.33. Copper 2.68.
Treasury yields are; 2-year 1.18%, 5-year 1.86%, 10-year 2.37%, 30-year 3.01%. The 2-10 spread is 119 bips.
10-year yields are; Brazil 10.04%, Mexico 7.21%, Greece 7.01%, India 6.89%, Portugal 3.93%, New Zealand 3.21%, Australia 2.73%, US 2.37%, Singapore 2.31%, Italy 2.21%, South Korea 2.17%, Hong Kong 1.75%, Spain 1.71%, Canada 1.67%, UK 1.12%, France 0.93%, Netherlands 0.51%, Germany 0.21%, Japan 0.06%, Switzerland -0.26%. Investors are seeking perceived safety in German bunds sending prices higher and yields lower.
The US-German 10-year yield spread is 216 basis points. The France-German 10-year yield spread is 72 bips remaining wide above 70. Angst continues in France over the presidential election drama which keeps yields elevated while at the same time German yields are sinking lower. The Portugal-German 10-year yield spread is 372 bips and the Italy-German spread is 200 bips.
The 2-year German schatz yield is -0.94%. Investors are willing to give up 1% of their money for the privilege of parking it somewhere safe. Central bankers are moving out of Spain and Italy debt and into the safer Germany and Luxembourg paper. This is troubling for markets. Contagion may occur when the rats start to leave the sinking ships.
At 7 AM EST, markets continue deteriorating. S&P -11. Dow -87. Nasdaq -29. Russell -11. VIX 12.34.
DAX is collapsing -1.5% to 11767. The CAC is down -1.4% to 4823. Europe develops an ugly mood over the last couple hours. The FTSE drops -0.8% to 7216. Italy’s MIB is down -1.3% to 18581. The IBEX sinks -0.6% to 9439. Portugal’s PSI is down -0.6% to 4605. Germany, France and Italy are taken to the shed out back and beaten severely. RBS -4%. Royal Bank of Scotland lays an egg on European markets. The trading week is developing a soggy finish.
There are a handful of earnings releases on tap led by retailer JC Penney. JCP drops -3% after beating on EPS, missing on the top line and announcing 140 store closures. JCP fell -3% yesterday so obviously insider traders were told the soft results ahead of time. COG drops -1.5% after matching on the bottom line but missing on the top line.
FL runs +3% higher. KBR crashes -10% after missing on the top and bottom lines. To quote the famous band Queen, “another one (construction and infrastructure company) bites the dust, and another one’s gone, another one’s gone, another one bites the dust.”
RLGY +0.3%. GS drops -1.7% on a downgrade from Berenberg. WEN pops +0.8% on a JPM upgrade. HPE sinks -8.2% after last evening’s earnings and downgrades this morning. The wealthy, made richer from their stock portfolios, continue spending money at Nordstrom’s. JWM +2%. BIDU -1.4%. INTU +1.1%. HLF -3%.
HLT gains +1.4% after announcing a buyback. RH catapults +15% on a buyback that will amount to a huge 30% of market cap. Stock repurchase programs send equity prices wildly higher rewarding the wealthy with easy and effortless stock market profits. Common people watch the rich become more filthy rich, courtesy of the Federal Reserve and other global central bankers, while they struggle to find a suitable job for the last few years. The US economy and markets is best described as a ‘pseudo-free market crony capitalism financial system’.
CXW gains +1.4% and GEO gains +0.6% on news that the Trump administration is more favorable to using privately-operated prisons. News services report that GEO is a political donor to Donald Trump. One hand washes the other in today’s world.
Alphabet, parent company of Google, files a lawsuit against Uber for patent violations concerning sensor technology for self-driving cars. Alphabet is developing the Waymo autonomous vehicle. GOOGL is down -0.6% in the pre-market.
US futures sink. S&P -10. Dow -74. Nasdaq -30. Russell -11. VIX 12.40. WTIC oil 53.95. Brent oil 55.98. Gold is up 10 dollars to 1259. Silver 18.41.
Treasury yields are; 2-year 1.16%, 5-year 1.83%, 10-year 2.34%, 30-year 2.99%. The 30-year yield slips under 3%. The 2-10 spread is 118 bips.
The new moon peaks for the month on Sunday at 9:58 AM EST. Stocks are typically weak moving through the new moon each month so a high today may lead to lower numbers on Monday or Tuesday. The gravitational forces between the Earth and moon are at an inflection so earthquakes may occur this weekend and early next week. This is the darkest time of the month so covert raids are occurring by military forces with superior night vision technology over the coming days.
Futures are at the lows heading into the opening bell for the regular session. S&P -12. The Dow futures are down 100 points. Nasdaq -31. Russell -14. VIX 12.58. Volatility may be the big story today. Market bears need far higher volatility with the VIX increasing to 13, 14, 15 and 20 to create significant selling in the stock market.
At 9:30 AM EST (2:30 PM London), US stocks sink like a rock at the opening bell. The SPX is down 10 points, -0.4%, to 2353. INDU drops 67 points, -0.3%, to 20742. The COMPQ loses 33 points, -0.6%, to 5803. The RUT drops 11 points, -0.8%, to 1384. VIX 12.49.
DAX -1.5%. CAC -1.3%. FTSE -0.8%. Euro 1.0574. WTIC oil 54.04. Brent oil 56.04. Natty 2.59. Gold 1257.
Banks are weak. XLF -0.7%. JPM -1.3%. BAC -1.9%. GS -1.5%. DB -2.7%. RBS -6%. C -1.1%. Trannies are weak for three consecutive days. TRAN loses -0.7% and the Dow Theory confirmation signal is fading away.
The SOX is getting knocked out of its socks losing -0.7%. The chips are down. MU -3.1%. NVDA drops -2.1% on downgrades. INTC -0.3%. AMD -1.7%. HPE -8.7%. Tax preparation season is in full swing with INTU up +4.1%.
Treasury yields are; 2-year 1.16%, 5-year 1.82%, 10-year 2.34%, 30-year 2.98%. The 30-year yield is now firmly moving below 3%. The 2-10 spread is 118 bips. German bund 0.20%. The German 2-year schatz yield is -0.95% at record lows and chatter increases that the bond yield will drop to -1.00%.
Traders are joking at the water cooler that today “is the ‘schatz’ heard round the world” (the shot heard round the world started the Revolutionary War in the USA in 1775). One trader says he will be “doing ‘schatz’ of booze” after the markets close today. Market and economics humor is an acquired taste.
At 10 AM, New Home Sales are 555K units versus the 576K expected and prior 536K. The sales number is lower than expected and disappointing since there is an adequate supply of homes available. Consumer Sentiment is 96.3 versus the 96.0 expected and prior 95.7.
At 10:21 AM, President Trump speaks at CPAC, the Conservative Political Action Conference. The crowd is pro-Trump so the orange-headed leader is very well received with cheers and accolades. The president talks about the “dishonest press” and “fake news.” With all the problems in the world and the president’s huge agenda, it is odd to hear him spend more than 10 minutes talking about the unfair media. Trump doubles down on prior inflammatory statements saying, "The media is the enemy of the people."
SPX 2357. INDU 20751. The Dow is printing its first down session after 10 new record all-time days of highs a streak not seen since early 1987. COMPQ 5814. RUT 1389. VIX 12.37. TRAN -0.4%. DAX -1.4%. CAC -1.1%. FTSE -0.6%. WTIC oil 54.15. Brent 56.16.
Treasury yields are; 2-year 1.16%, 5-year 1.82%, 10-year 2.33%, 30-year 2.97%. The yield curve flattens with the 2-10 spread dropping to 117 basis points.
President Trump says the US will be a nation that “will put our own citizens first.” Trump says the border wall construction is going to start very soon way ahead of schedule. Trump says, “Bad trade deals have devastated the United States.” The president says, “Obamacare is a disaster” and “we inherited a failed health care system.” Trump calls out former President Obama’s lies about the ACA such as promising Americans they could keep their health plan and keep their doctor; Obama knew that was not true when he said it.
Current presidents do not typically criticize former presidents but President Obama changed this unspoken tradition by blaming President George W Bush for everything that was wrong. Likewise, President Trump is now blaming President Obama for the problems in America and around the world. Nothing is sacred anymore in America because these are the bread and circus days.
“We inherited a national debt that has doubled” in recent years Trump says. There are several disruptions occurring in the crowd at CPAC as Trump speaks. A detractor yells out, “Liar!” The friendly crowd chants, “USA, USA, USA.” The president says the illegal aliens and drug dealers will be thrown out of the United States. One begins to understand the term “economic nationalism” as the president speaks.
At 10:43 AM, SPX 2359. INDU 20775. COMPQ 5820. RUT 1391. VIX 12.14.
The president says, “We will keep radical Islamic terrorists the Hell out of our country.” Trump receives a standing ovation from the friendly and adoring crowd. The president says, “The security of our people is number one.” Trump promises to take care of veterans, honor the police and law enforcement officials, cut taxes, cut spending, rebuild the inner cities, bring back our jobs and dreams, rebuild the military, fix our trade deals and become tougher on immigration. The orange-headed showman is in campaign form promising a chicken in every pot. The crowd goes wild cheering on every word.
Trump says, “The GOP (Grand Ole Party; republicans) will be the party of the American worker.” SPX 2360. The S&P 500 recovers from 2355 to 2360 as the orange orator speaks. VIX 11.99. Trump says, “We will massively lower middle class taxes.” He is heavy on the lofty talk and proclamations. The president needs to put up some results otherwise the grand promises will be exposed as hollow political lies. President Trump’s speech ends at 11:09 AM. The president is gifted at stirring up a crowd; he is a larger than life showman bigger than PT Barnum himself.
SPX 2361. INDU 20777. COMPQ 5828. RUT 1393. VIX 11.92.
Treasury yields are; 2-year 1.15%, 5-year 1.82%, 10-year 2.33%, 30-year 2.97%. German bund 0.29%. France 10-year yield 0.93%.
Euro 1.0571. Dollar/yen 112.35. Pound 1.2498. The USD is back above 101 to 101.04. Gold 1257. Silver 18.33. Copper 2.6835.
European indexes end the day in the red. The DAX finishes down -1.2% to 11804. The CAC drops -0.9% to 4845. The FTSE loses -0.4% to 7244. The MIB drops -1.2% to 18596.66. IBEX loses -0.4% to 9454. The PSI loses -0.3% to 4619.
For the week, the DAX gains +0.4%. CAC loses -0.4% this week. FTSE -0.8%. MIB -2.2%. IBEX -0.5%. PSI loses -0.4% this week. Germany is the only winner across the pond this week with Italy beaten the worse.
The SPX retreats 4 points after President Trump finishes talking. SPX 2357. INDU 20747. COMPQ 5819. RUT 1390. VIX 11.95.
SPX 2360. INDU 20766. COMPQ 5824. RUT 1392. VIX 11.79. WTIC 54.10. Brent 56.16. Gold 1258. Silver 18.45. Copper 2.695.
Treasury yields are; 2-year 1.15%, 5-year 1.81%, 10-year 2.33%, 30-year 2.97%.
At 1 PM, the BHI Oil Rig Count is up 5 rigs to 600 the sixth week of increases and the first time above six hundo since October 2015. WTIC oil is down -0.7% to 54.05. Brent oil is down -0.8% to 56.15.
President Trump’s economic advisor and Director of the National Economic Council, Gary Cohn, the Goldman Sachs investment banker, says he does not support a border tax. Retailers such as Walmart will be hurt by a border tax since they import a lot of goods and products. Therefore, the retailers explode higher on the news. XRT is up +1.8%. RTH +0.6%. FL +8%. JWN +5.3%. KSS +5%. WMT +1.1%. TGT +2.1%. LB +4.2%.
INTU +6.1%. INCY +7.6%. JBHT +2.6%. DLTR +2.4%. PAYX +2.3%. The prison operators rally. GEO gains +3.1% and is p +104% since the trump election. CXW is up +2.7% and up +146% since early November.
SWN crashes -12%. HPE -6.9%. RRC -4.5%. RIG -3.9%. NFX -2.9%. BIDU -5.1%. SHPG -2.2%. BMRN -2%. GS -1.5%. JPM -0.9%.
The Whitehouse prohibits several news services such as CNN, New York Times and the LA Times (liberal and progressive-leaning news outlets) from participating in a press meeting. The president may not like the news coverage from the democrat-leaning news services but excluding them from updates will not fly. This is an error by the Trump administration. President Trump continues to complain and label the press as “fake news” but the ongoing drama with the media is sounding more like whining each day.
The SPX is down 3 points at 2360 but ramping higher into the closing bell. The Dow is down 38 points at 20772. COMPQ 5829. RUT 1392. The VIX is 11.42 and dropping which is pumping stocks higher.
Euro 1.0562. Euro/yen 118.28. Dollar/yen 112.00. Pound 1.2458. Euro/pound 0.8477. Mexican peso 19.8666. Canadian dollar 1.3105. Dollar/yuan 6.8691. WTIC 54.05. Brent 56.05. Natty 2.63. Gold is p +0.666% to 1258. Silver 18.40. Copper 2.6870.
Treasury yields are; 2-year 1.14%, 5-year 1.80%, 10-year 2.31%, 30-year 2.95%. The 2-10 spread is 117 bips.
Stocks stage a dramatic comeback into the closing bell. US stocks end the session mixed recovering from the negative trading for much of the day. The SPX gains 4 points closing at the high at 2367.34 a new all-time closing high. The LOD is 2352. The Dow prints the eleventh record high a record not seen since 1987. INDU is up 11 points to 20821.76 a new all-time closing high. The HOD is 20822 short of a new all-time high.
The COMPQ gains 10 points to 5845. The RUT finishes a smidgeon lower at 1395. The NDX gains 11 points to 5343. The NYA drops 15 points to 11541. TRAN recovers off the intraday lows gaining +0.9% to 9422. VIX finishes at 11.47 the low volatility slaps the bears in the face day after day. Slap, slap.
For the week, the SPX gains +0.7%. INDU, or DJI, gains +1% this week. COMPQ is up +0.1% a tiny gain. RUT loses -0.4% this week. NDX +0.4%. NYA +0.3%. TRAN, or DJT, drops -0.8% this week.
Sectors are a mixed bag with utilities jumping to highs not seen since last summer. XLU gains +4.1% this week. Telecom stocks are up +2% and more. Consumer staples are a winner. XLP +1.5%. Healthcare is healthy. XLV +1.5%. Homebuilders are strong with XHB up +1.2% this week. XLK +0.8%. XLB +0.3%. XLI flat. Banks are slapped but do not shed any tears since they are up +30% and more over the last three months. XLF -0.2%. SOX -0.3%. KRE -0.4%. XLE -1.4%. Biotech is beaten and having trouble getting up off the mat after basing over the last year. IBB -1.5%.
Traders run to the perceived safety of utilities, consumer staples, telecom and real estate stocks. Investors pat each other on the back proclaiming that these sectors are a safe and defensive place to park money while receiving a dividend. Comically, they are only covering themselves with a fig leaf. When the markets break south, which may occur at anytime in the weeks ahead, all sectors and asset classes will be hit hard; nothing will be spared.
The central bankers have pumped all asset classes into bubbles over the last eight years so normal business and economic cycles have been distorted and damaged due to faux price discovery over many years. Decades ago, a move into utes and defensive stocks was standard practice depending on the economic cycle and did provide some protection while collecting a divvy. Not anymore.
What good is owning a stock with a 3% dividend when it loses -20% or -30% of its value which may occur in the year or two ahead? These are not your grandfather’s markets. Those investors chasing into the blue chip dividend stocks today would likely be better off to simply place that money into cash and forget about it for a few months. Take your significant other to dinner instead.
The AGMANHASFUN (“A G-Man Has Fun”) high-flying stocks are all higher except for Under Armour that continues to languish. GOOGL (Alphabet) +0.2%. GE +0.2%. MSFT flat. AAPL +0.7%. NFLX +0.7%. HD +2.1%. AMZN flat. SBUX +0.2%. FB +1.4%. UAA -0.3%. NKE +2%. Under Armour’s losses are Nike’s gains. Home Depot is the big hero this week after reporting earnings. Home Depot, Facebook, Nike and Apple are the four big winners that lead the broad indexes higher this week.
WTIC oil is up a marginal +0.4% to 53.99. WTIC oil is moving through a tight 51-54 range since December and now testing the upper channel limit for a potential breakout. Brent oil gains +1.1% this week to 56.33. Brent is moving through a tight 54-57 range since December. Oil volatility, OVX, is at a two-year low! Sure, volatility can remain low for a while but it is likely very prudent to ditch any long oil plays.
Natural gas loses -1.7% this week to 2.79 sitting directly on its 50-week MA at 2.79. Natty will make a bounce or die decision from this level next week. The low during the week is 2.64. Gold gains +1.6% to 1258 this week punching up through the 200-week MA at 1242 and now testing the 50-week MA resistance at 1261.
Silver gains +2.1% to 18.41 bouncing from its 200-week MA at 18.03. Copper drifts lower during the week down -0.4% to 2.70 unable to move above its 200-week MA at 2.72 for the last five weeks.