Sunday, July 9, 2017

MONDAY 7/10/17; G20 Aftermath; Japan Machinery Orders; China Inflation Data; TRAN (Dow Transports) Print All-Time High; CUDA; WDFC

World leaders are busy patting each other on the back at how great a job they did at the G20 Summit. Russia and the United States agree on a ceasefire in southern Syria that is holding for now. The US remains friendly with China despite President Xi dragging his feet with the North Korea situation.

President Trump remains skeptical concerning climate change which clashes with German Chancellor Merkel’s pro-renewable energy strategy. If the Germans want to pay twice as much and more for their electricity more power to them but the US is best advised to not follow their lead.

As would be expected, the democratic and liberal press in the US such as cable news outlets CNN, MSNBC, Bloomberg, and the broadcast television channels such as ABC, CBS and NBC, denigrate President Trump’s performance at the G20 Summit. These progressive media outlets say the president was schooled on trade, did not attain progress on the North Korea situation and was shunned by other leaders due to his stance on climate change. The left-leaning media calls the summit the G19 saying it is as if the United States was not there. This type of negative baby talk is very damaging for the country.

The republican media such as Fox News, Drudge Report, Breitbart and Rush Limbaugh, tout the president as a statesman for the United States. The conservative outlets say President Trump’s trip started positively in Poland and only got better through the G20 weekend as he held his own against other world leaders.

The one fly in the ointment for President Trump is that he bone-headedly agreed to potentially develop a joint cyber warfare task force with Russia to fight computer hacking. Russia and the United States are spying on each other 24/7 so a joint task force to address cyber warfare is an extremely stupid idea. The appropriate response if computer hacking and nefarious behavior is discovered, verified and proven is to retaliate against that country through sanctions and other stronger means to stop the behavior.

S&P +1. Dow -3. Nasdaq +5. Russell -2. Australia’s ASX 200 Index futures and Japan’s Nikkei Index futures are pointing to a higher open when the new week of trading begins shortly.

Euro 1.1399. Euro/yen 129.98. Dollar/yen 114.03. Pound 1.2886. Euro/pound 0.8846. Mexican peso 18.0836. Canadian dollar 1.2879. Dollar/yuan 6.8057. Indian rupee 64.595. Aussie dollar 0.76.

WTIC oil 44.55. Brent oil 46.94. Natural gas 2.98. Gold 1224. Silver 15.58. Copper 2.6525.

Treasury yields are; 2-year 1.40%, 5-year 1.95%, 10-year 2.39%, 30-year 2.93%. The 2-10 spread is 99 bips.

Aussie and Asia stocks begin trading higher in the early going. Thailand exchanges are closed for a holiday.

Japan’s May Core Machinery Orders miss by a mile down -3.6% month-on-month versus the +1.7% forecast. However, weak economic data is good news since the BOJ will keep providing easy money which pumps the stock market higher making the wealthy wealthier.

The dollar/yen pair moves from 113.90 to 114.21 representing a weaker yen (anticipating more BOJ stimulus) which sends Japanese exporters and manufacturers higher and the Nikkei Index higher. The NIKK is up +0.5%. The central bankers are the market. On Friday, the Bank of Japan increased its bond-buying program to prevent the JGB 10-year yield from exceeding +0.10%.

Japan Prime Minister Abe’s approval rating slumps to a record low. The Japanese people say there is a ‘lack of trust in Abe as a person’. Ouch. The huddled masses realize more each day how the privileged elite class, that play by a different set of rules, has sold them down the river over the last four decades.

China’s June inflation data is in line with expectations with the consumer price index missing by a smidgeon. China PPI (Producer Price Index) is up +5.5% year-on-year matching the +5.5% expected. CPI (Consumer Price Index) is up +1.5% month-on-month below the +1.6% expected. Robust demand continues in China. Restrictions placed on financial companies and the implementation of new building construction limits will weigh on the Chinese economy in H2. Aussie dollar 0.7609.

In Hong Kong, Orient Oveseas Intl catapults +20% higher on a takeover bid from Cosco Shipping Holdings. Cosco trades down -0.3% in Hong Kong but humorously, Cosco shares remain halted from trading on the Chinese mainland for the last couple months. Wanda Hotel jumps +50% on news of selling off assets.

WTIC oil 44.37. Brent oil 46.87. USD 96.04.

Aussie and Asia markets remain positive on the session sans China. The NIKK ends the session up +0.8% to 20081. The ASX 200 gains +0.4% to 5724. The KOSPI ekes out a +0.1% gain to 2382. The SSEC loses -0.2% to 3212. Hong Kong’s Hang Seng Index finishes up +0.6% to 25.5K on the dot. India trading continues with the Nifty up 70 points, +0.7%, to 9735.

In Mosul, the Iraqi army, supported by the United States and coalition forces, retakes the city of Mosul, Iraq, defeating the ISIS Islamic radicals after nearly one year of hard fighting. The Islamic State, a group of Muslim militants that follow the Quran that instructs believers to seek and kill all infidels (Jews, Christians and anyone not willing to live by strict Sharia law), came to power under former President Obama’s watch. ISIS took Mosul in 2014 laughing at Obama’s weak and feckless foreign policy.

President Obama said the ISIS Muslim radicals were not a serious threat and only a JV team (the JV, or jayvee, is the junior varsity team that is made up of second and third string athletes not good enough to play varsity sports). Obama could not be more wrong and his decision to not address the ISIS threat was major failure of his presidency. ISIS continues to conduct terrorist acts around the world. The only stronghold remaining for ISIS is in Raqqa, Syria, and coalition forces have pierced the city walls ready to flush out the remaining Islamic nutcases.

At 3:00 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading higher. DAX +0.5%. CAC +0.2%. FTSE +0.2%. Stada Arzneimittel rallies +1.3%. Avena +4.2%. Air France soars +3% higher on strong passenger numbers.

Euro 1.1401. Euro/yen is above 130 to 130.26 which reflects the weaker yen. Dollar/yen 114.25. Pound 1.2886. Euro/pound 0.8848. Mexican peso 17.9214. The peso is strengthening reflected by the Mexican peso currency pair dropping from an 18-handle to a 17-handle. Canadian dollar 1.2896. The Ban k of Canada provides its rate decision on Wednesday. Dollar/yuan 6.8037. Indian rupee 64.5562. Aussie dollar 0.7602.

WTIC oil is down -0.1% to 44.21. OPEC says it may ask Libya and Nigeria to pare back production but the comment smacks more of desperation rather than control over the oil supply. Oil prices remain negative so traders are not buying what OPEC is selling. Brent oil is down -0.1% at 46.68. Natty gas 2.89. Gold is down 6 dollars, -0.5%, to 1207. Silver slips -1.1% to 15.26. Copper is marginally lower at 2.6430.

S&P +4. Dow +7. Nasdaq +22. Russell +1. VIX 11.27. Both US futures and volatility are higher so one of them is wrong. Either US futures and stocks will weaken today as volatility rises, or, the VIX will begin trending lower sending futures and stocks higher.

Treasury yields are; 2-year 1.40%, 5-year 1.94%, 10-year 2.38%, 30-year 2.93%. The 2-10 spread is 98 bips.

At 5 AM EST (10 AM London), DAX +0.666%. CAC +0.2%. FTSE +0.3%. MIB +0.7%. IBEX -0.2%. PSI +0.1%. SMI +0.666%. OMX +0.5%. Spain is the skunk at the garden party.

The Nifty gains 113 points, +1.2%, to 9779. There is a party going on in India as the indexes move into the last hour of trading.

Euro 1.1395. Euro/yen 130.07. Dollar/yen 114.14. Sterling 1.2865. Euro/pound 0.8858. Mexican peso 17.954. Canadian dollar 1.2908. Dollar/yuan 6.8030. Indian rupee 64.55. Aussie dollar 0.7595. USD 96.06.

Oil slips -0.3% so OPEC better start twisting arms more forcibly. WTIC is at 44.09 teasing a 43-handle. Brent oil 46.56. Natty 2.90. Gold 1208. Silver 15.27. Copper 2.6435.

Treasury yields are; 2-year 1.39%, 5-year 1.93%, 10-year 2.37%, 30-year 2.92%. The 2-10 spread is 98 bips.

S&P +2. Dow -4. Nasdaq +17. Russell -1. VIX 11.31.

The wildfires continue burning in the western United States. A record heat wave exacerbates the danger. Tens of thousands of residents in California and other states are evacuated for their safety. Business and commerce will be hampered for the coming days and weeks as firefighters try to contain nearly 40 different major fires across 11 states.

At 6 AM EST (12 noon Central Europe), DAX +0.4%. CAC +0.3%. FTSE +0.3%. S&P futures +3. Copper 2.6375.

Euro 1.1386. Dollar/yen 114.20. Pound 1.2865. Mexican peso 17.997. Canadian dollar 1.2918. Aussie dollar 0.7590. US dollar index 96.17.

BNP Paribas cuts its oil price forecast. WTIC oil loses -0.8% to 43.88. Brent oil drops -0.9% to 46.31.

At 7 AM, markets are quiet. DAX +0.4%. CAC +0.3%. FTSE +0.1%. Euro 1.1391. Dollar/yen 114.21. Pound 1.2883. Canadian dollar 1.2926. Aussie dollar 0.7591.

S&P +2. Dow -8. Nasdaq +19. Russell -1. VIX 11.30. Oil sinks -1.2%. WTIC 43.73. Brent 46.21. Gold 1208. Silver 15.24. Copper 2.6395. The Nifty finishes 105 points higher, +1.1%, to 9771.

Wall Street analysts and strategists are raising S&P 500 price targets for this year. Canaccord bullish forecaster Tony Dwyer, who says a recession is two or three years away, raises his SPX price target from 2470 to 2510 for this year. As others hike targets, the current mean target for the S&P 500 this year is 2439 about where the index currently sits. BMO strategist Brian Belski remains bullish on the stock market and on the banks saying the financials will rally higher for the next three to five years.

HELE is trading up +0.4% on earnings. Retailer ANF crashes -13.2% after a potential takeover deal appears dead.

NVDA jumps +2% on an upgrade. Investors are tripping over each other to buy the popular chip maker. NVIDIA has tentacles in all the hot industries providing chips for gaming applications, autonomous cars, bitcoin technology and data center support. NVIDIA is the most popular girl at the Wall Street dance. Jefferies downgrades Intel. INTC drops -0.666%.

WTIC oil 43.92. Brent 46.434. Gold 1210. Silver 15.28. Copper 2.637.

S&P -2. Dow -37. Nasdaq +1. Russell -5. VIX 11.69. DAX +0.3%. CAC +0.2%. FTSE flat. SMI +0.666%.

Euro 1.1394. Euro/yen 130.04. Dollar/yen 114.14. Pound 1.2873. Euro/pound 0.8851. Mexican peso 17.9868. Canadian dollar 1.2904. Dollar/yuan 6.8046. Indian rupee 64.434. Aussie dollar 0.7595.

Treasury yields are; 2-year 1.39%, 5-year 1.93%, 10-year 2.37%, 30-year 2.92%. The 2-10 spread is 98 bips.

The US Congress returns from the July 4th Independence Day recess. Stocks usually have a negative bias when the politicians are in session in Washington, DC, and typically have a positive bias when the lawmakers are not in session. Fed Chair Yellen provides her semiannual testimony on Capitol Hill this week Wednesday in front of the House and Thursday the Senate.

At 9:30 AM EST, US stocks begin trading marginally lower. The S&P 500 loses 1 point to 2423. The Dow slips 38 points to 21375. The Nasdaq Composite is down 1 point at 6151. The RUT loses 4 points, -0.3%, to 1411 with small caps leading lower. The VIX spikes to 11.70 but then quickly retreats so stocks float slightly higher as volatility back pedals.

ANF -12.3%. BBY -4.5%. AMZN +0.6%. PEP +0.2%. DAL -0.5%. JPM -0.5%. WFC -0.5%. APRN +5.5%.

Euro 1.1388. Dollar/yen 114.18. Pound 1.2876.USD 96.15.

WTIC oil 43.99. Brent oil 46.50. Natty 2.93. VIX 11.40.

DAX +0.4%. CAC +0.3%. FTSE +0.2%.

Treasury yields are; 2-year 1.39%, 5-year 1.94%, 10-year 2.38%, 30-year 2.93%. The 2-10 spread is 99 bips.

SPX 2425. INDU 21390. COMPQ 6166. VIX 11.31. The morning is quiet.

TSLA drives -1.2% lower as CEO Musk rolls out the first Model 3 off the assembly line. $8 billion in market cap has been wiped off Tesla stock over the last week. TSLA is due for a dead-cat bounce. The glorified golf cart maker’s stock price has gapped lower for two out of the last four days.

European indexes end the session higher. The DAX gains +0.5% to 12446. The CAC gains +0.4% to 5166. The FTSE finishes up +0.3% to 7370. Italy’s MIB gains +0.8% to 21191. The IBEX ends up +0.2% to 10510. The PSI gains +0.3% to 5171. In Europe, basis resources, food and beverage and tech stocks lead higher in the session.

SPX 2428. INDU 21421. COMPQ 6165. RUT 1409. VIX 11.08. Volatility is lower so stocks are higher sans the small caps.

AMZN trades up +1.8% to 996 teasing back towards the +1000 level as Amazon shoppers prepare for the big deals on tap for Amazon Prime Day tomorrow. Deals are already starting and will begin hitting high gear in about six hours. The hype and expectations are high for a blockbuster Amazon Prime Day.

Best Buy is beaten in the back room behind the television sets as traders worry that Amazon will continue stealing market share. BBY crashes -6.3% its worse day in over one year.

Fertilizer companies smell sweet. CF +6.66%. MOS +4.6%. POT +4.5%. AGU +4.7%. The green’s are on fire to the upside today. Wheat gains +3%. Corn is up +2%. Soybeans +2.3%. Wheat and corn are providing robust crop yields.

Oil catches a bid up +1.1%. WTIC 44.71. Brent 47.19.

Treasury yields are; 2-year 1.38%, 5-year 1.92%, 10-year 2.37%, 30-year 2.92%. The 2-10 spread is 99 bips.

The VIX slips under 11 to 10.76 so stocks pop higher. The SPX gains 5 points to 2430. INDU 21435. COMPQ is up 21 points to 6179. The RUT is dead flat at 1416.

Consumer staples are weak. XLP -0.7%. HRL gags on spam dropping -1.666%. WMT is beaten with a broom handle losing -2.8%. A clean-up is needed in aisle three. The food providers are choking today. KR -2.4%. COST -2%. SVU -3.6%. TGT -1.7%. DLTR -2.3%. GIS -0.4%. PG -0.6%. ANF crashes -20%. SNAP is down -1.1% under 17 its IPO price.

Euro 1.1405. Euro/yen 130.11. Dollar/yen 114.08. Pound 1.2888. Euro/pound 0.885. Indian rupee 64.534. Mexican peso 17.9943. Canadian dollar 1.2876. Dollar/yuan 6.8036.

WTIC 44.46. Brent 46.93. Natty 2.93. Gold 1214. Silver 15.67. Copper 2.65.

At 2:20 PM, TRAN prints a new all-time high at 9716.81. The highs in the transports confirm the highs in the industrials from a Dow Theory perspective.

Interestingly, the top five stocks that millennial hold in their portfolios are AAPL, FB, AMZN, TSLA and NFLX. This behavior by the under 30 year old crowd rhymes with the market zeitgeist occurring during the dotcom bubble.

Nike, Visa, Caterpillar, Boeing and Mr Softy lead the Dow Jones Industrials Index higher while Walmart, Travelers, Johnny John, JP Morgan and Home Depot lead the Dow lower. NKE +1.3%. V +1.2%. CAT 0.9%. BA +0.8%. MSFT +0.7%. WMT -2.8%. TRV -1.1%. JNJ -0.7%. JPM -0.7%. HD -0.7%.

FCX +5.2%. APA +4.4%. JD +3.1%.  Macy’s is whipped with a leather belt that is not selling. M crashes -7.1%. GPS falls into the gap down -6.3%. BBY -6.3%. KSS -4.2%. ROST -2.4%. AN -3.5%. ULTA is looking ugly down -2.9%. SHPG -2.5%. TEVA -1.2%. BLUE -5.8%. KITE -4.3%. ONVO -3.3%. JUNO -3.3%. ZIOP -4.4%. GRMN -1.8%.

At 3 PM, Consumer Credit is at $18.4 billion more than the $14.3 billion expected. Consumers are using credit cards more. Credit card purchases are tracked as revolving credit which rose $7.4 billion way above the prior $1.2 billion. Americans love to buy junk and garbage that they do not need but will have to pay for many months afterwards.

SOX +1.1. XLNX +2.8%. AMD +3.4%. WDC +2.7%. HPQ +3%. NVDA is up nearly +5% with traders buying with total disregard for price. Everybody and his brother are upgrading NVIDIA which is the favorite flavor in the tech and chip space. The cab driver said he bought NVDA stock with his last three paychecks; he delayed buying a new pair of shoes for his daughter because he says the stock is on fire and he will be able to buy her three pairs of shoes by next month.

US stocks finish the session mixed with the SPX and COMPQ higher while INDU and RUT are lower. The S&P 500 finishes up 2 points to 2427. The Dow Industrials drop 6 paltry points to 21409. The Nasdaq Composite gains 23 points, +0.4%, to 6176. Traders are buying tech stocks and chips with both hands. The Russell 2000 small caps lose 7 points, -0.5%, to 1408.

Trannies dance higher earlier in the day with TRAN printing a new all-time record high at 9716.81 but then the bottom fell out with the Dow Jones Transports ending the day down -0.2% to 9674. The new record highs in the trannies verify the new record highs in the industrials from a Dow Theory perspective which is a big feather in the bull’s cap. VIX 11.11.

After the closing bell, cybersecurity company CUDA drowns -5% after barracuda Networks beats on earnings but reports lower margins. WDFC slips marginally -0.3% after reporting earnings.

ARNA catapults +47% on good news with its hypertension drug. Arena may create joy in the biotech and pharma space tomorrow. CTXS is smacked -4% lower on news that CEO Tatarinov is leaving Citirx.

Euro 1.14. Euro/yen 130.00. Dollar/yen 114.04. Pound 1.288. Euro/pound 0.8849. Mexican peso 17.9523. Canadian dollar 1.2889. Dollar/yuan 6.8036. Indian rupee 64.5338. Aussie dollar 0.7606. USD 96.06.

WTIC oil 44.55. Brent oil 47.01. Natural gas 2.92. Gold 1215. Silver 15.63. Copper 2.6525. VIX 11.11.
Treasury yields are; 2-year 1.38%, 5-year 1.93%, 10-year 2.37%, 30-year 2.93%.

President Trump nominates Randal Quarles for the board at the Federal Reserve. Quarles will oversee the national banking system filling the shoes of Dan Tarullo that resigned three months ago.

Information is released that shows Donald Trump, Jr, the son of the president, met with a representative of the Russia government during the election campaign. The female representative says she is not connected to the Kremlin and was actually promoting her cause for Russian adoptions. She lured Donald Trump, Jr, to a meeting under the guise that she had damaging information about Hillary Clinton that would be useful to Donald Trump’s campaign. There is nothing illegal about meeting with foreign representatives.

The confusing story does not rise to the level of something illegal, at this time, but the democratic-leaning press is providing wall to wall coverage saying Donald Trump, Jr, is now twisted up in the Russia collusion narrative. Although there continues to not be any proof that the president or his son did anything wrong, it is disturbing that information about Russia meetings are purposely or otherwise not reported on mandatory forms. Trump, Jr, should have reported that the meeting took place on government forms but instead he conveniently forgot.

At 9 PM EST, the shopping deals begin for the annual Amazon Prime day which continues through tomorrow. 

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