Sunday, July 16, 2017

MONDAY 7/17/17; KOSPI (South Korea) Above 2430 at Record High; China GDP; BSE (India) Record High; BLK; Empire State Mfg Survey; RUT (Russell 2000) All-Time Record High; NFLX Launches +11% on Earnings

The bitcoin and ethereum cybercurrencies are slapped in the face. Ethereum crashes -22% to 130.26 over the last day but do not feel bad for the digital currency since it is up +1800% this year. Ethereum is trading at 160 down -62% from the 420 top in June. Bitcoin retreats -12% to 1800 but then recovers to 1930.

US futures are flat. S&P +2. Dow +9. Nasdaq +8. Russell flat. WTIC oil 46.66. Brent oil 49.02. Natural gas 2.99. Gold 1231. Silver 15.98. Copper 2.69.

Euro 1.1467. Euro/yen 129.06. Dollar/yen 112.55. Pound 1.3101. Euro/pound 0.8754. Mexican peso 17.5871. Canadian dollar 1.265. Dollar/yuan 6.7753. Indian rupee 64.45. Aussie dollar 0.7821.

Aussie and Asia stocks begin trading flat to higher ahead of the China economic data dump. The KOSPI bounces higher to 2434 another new record high. Traders are throwing money at South Korea with reckless abandon. Japan markets are closed today.

China Q2 GDP (Gross Domestic Product) is +6.9% beating the +6.8% expected. Of course it does. The Beijing communists pencil-in the numbers that will calm markets. Q1 GDP was also +6.9%. China is targeting a GDP of +6.5% for this year. The communists will likely report a couple lower numbers for Q3 and Q4 and end up magically at a +6.5% to +6.7% growth rate to end the year. This is how the game is played. China learns deceitful financial practices from the United States. If the data was not fudged, China GDP is more realistically in the +3% to +4% range year-on-year.

China Industrial Output is up +7.6% versus +5.5%. Factory activity rebounds. Retail Sales are up +11.0% year-on-year beating the +10.6% expected. Fixed Asset Investment is up +8.6% year-on-year beating estimates. The Shanghai Index began the session lower and recovers but has difficulty moving above the flat line. SSEC -0.9%. The Shenzhen Composite is down -2.3% but off the lows. Chinese tech companies are reporting lackluster earnings which create negativity despite the positive data.

In addition, President Xi attends the National Business Conference on the mainland and stresses the need to reduce risk in the economy and markets. Lending practices may be further curbed. Credit growth will likely decrease in the back of the year so traders prefer to focus on the potential slowing economy ahead rather than the happy data reported a few minutes ago.

In South Korea, Hyundai sinks -2.3% on news that the unionized workers are voting to go on strike for higher wages. South Korea is considering raising the minimum wage for all workers in the country.

The gaming stocks roll snake eyes. Melco crashes -6%. Wynn Macau retreats -5.2%. ATM’s in Macau are beginning to use facial recognition systems which is spooking many gamblers from the tables.

Singapore reports strong GDP at +8.2% year-on-year doubling the expected +4.1%. Electronic sales and shipments are greatly increasing. Australia’s telecom Telstra sinks -1.9% creating a drag on the ASX 200.
The USD is stabilizing and trying to hold the 95 level at 95.24. Aussie dollar 0.7808.  WTIC oil 46.71. Brent oil 49.11.

The SPASX200 finishes down -0.2% to 5755 unimpressed by the strong China data. The KOSPI ends up +0.4% to 2425. The SSEC finishes down -1.4% to 3176 despite the positive economic data. Perhaps more global market participants realize China simply provides the data they think investors want to see. The Shenzhen mini-crashes -4.3%. Hong Kong’s Hang Seng gains +0.3% to 26473. India trading continues with the Nifty up 21 points at 9907 printing above the 9.9K level.

At 3:00 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading flat to higher. DAX +0.2%. CAC +0.2%. MIB +0.2%. FTSE +0.5%. The footsie is outperforming with Weir Group launching +7%. Norwegian telecom Telenor +6.8%. AstraZeneca +2%. Publicis +1.6%. Anglo American +1.9%. Antofagasta +1.45. Swedish medical technology company Getinge sinks -5%. German equipment company GEA Group is whacked -4.4%. Metro Bank -1.4%.

EasyJet CEO Carolyn McCall resigns after seven years and takes a job at ITV in the broadcasting sector. A search for a new CEO for the low-budget airline is underway. EasyJet -0.8%. ITV +1.4%.

The basic resources sector is up +1.1%. Telecoms are up +0.4%. Technology stocks gain +0.4%. Oil and gas +0.3%. Financials are the worst performer down -0.1%. Banks and utilities are flat.

The second round of Brexit talks begins in Brussels. European citizens’ rights in the UK are a major topic of discussion. The Brexit negotiations will continue for at least 20 more months.

S&P +3. Dow +19. Nasdaq +12. Russell flat. VIX 9.51.

WTIC oil is up +0.5% to 46.76. Brent oil gains +0.5% to 49.14. Natty gas 2.99. Gold 1231. Silver 16.02. Copper gains +0.9% to 2.7155 after the China data. The market bulls are pumping oil and copper higher which supports the futures and stock markets.

Euro 1.1456. Euro/yen 128.97. Dollar/yen 112.57. Pound 1.3092. Euro/pound 0.8751. Mexican peso 17.5678. Canadian dollar 1.2655. The peso and loonie continue to strengthen as the US dollar index leaks lower. Dollar/yuan 6.7724. Indian rupee 64.3562. Aussie dollar 0.7814. USD 95.21.

The US dollar index is trying to hold the 95 level. The shorts against the dollar are at a three-year high which indicates that the dollar may actually receive a bounce (the boat is fully loaded to the downside). There is only a 42% chance for a Fed rate hike in December. The ECB rate decision is on tap for Thursday so if President Draghi speaks more dovishly that will drive the euro lower sending USD higher.

Treasury yields are; 2-year 1.35%, 5-year 1.86%, 10-year 2.32%, 30-year 2.91%. The 2-10 spread is 97 bips.

At 3:31 AM EST (8:31 AM London), DAX +0.1%. CAC +0.1%. FTSE +0.4%. S&P +2. Dow +16. Nasdaq +7. Russell -1. VIX 9.79.

Treasury yields are; 2-year 1.35%, 5-year 1.85%, 10-year 2.32%, 30-year 2.90%.

At 5 AM EST, European indexes and US futures leak lower as oil prices turn negative. S&P -1. Dow -6. Nasdaq -1. Russell -3. VIX 9.94. India’s Nifty is up 30 points, +0.3%, to 9917.

DAX -0.6%. CAC -0.3%. FTSE +0.2%. MIB +0.2%. IBEX -0.2%. PSI -0.3%. SMI -0.3%. OMX -0.6%. London and Italy lead higher. German and Nordic stocks lead lower.

Euro 1.1452. Dollar/yen 112.56. Pound 1.3074. Aussie dollar 0.7810. USD 95.27.

WTIC oil is down -0.2% to 46.43. Brent oil is down -0.2% to 48.82. Natural gas is up +1.1% at 3.01 above the 3.0 threshold. Gold is steady at 1231. Ditto silver sticky at 16. Copper is up +1% to 2.7170 which will support markets today despite the slight weakness in oil.

Treasury yields are; 2-year 1.34%, 5-year 1.84%, 10-year 2.31%, 30-year 2.90%.

At 6:18 AM, S&P +2. Dow +22. Nasdaq +9. Russsell -1. VIX 9.82. Market bears do not have any hope with the VIX under 10. DAX -0.2%. CAC +0.1%. FTSE +0.6%. OMX -0.666%.

The India trading session ends with the Nifty up 30 points, +0.3% at 9916. The BSE Sensex gains +0.2% to 32075 a new record high maintaining the 32K level breached last week.

Euro 1.1456. Dollar/yen 112.47. Pound 1.3062. Aussie dollar 0.8771. Oil recovers so US futures and Europeans stocks recover. WTIC is up +0.3% to 46.69. Brent oil is up +0.4% to 49.11. Natural gas gains +1.5% at 3.02.

Treasury yields are; 2-year 1.35%, 5-year 1.85%, 10-year 2.31%, 30-year 2.90%. The 2-10 spread is narrowing to 96 basis points (flatter yield curve) after the widening to above 100 bips last week (steepening yield curve).

The financial earnings continue with BlackRock on tap to begin the week. BLK drops -0.3% on an earnings miss. BlackRock stresses that the inflows into its funds are far outpacing expectations; investors are throwing money at the financial management company money despite the EPS shortfall hoping to see further big gains in the stock price. BLK is up +30% since the November election.

Chinese President Xi says the nation continues to need to find and make good foreign investments. China says there are plans to lower tariffs on some consumer and electronic goods. Sure they do. The communists are great at providing lip service and no action. Xi is likely unhappy with the selloff in the Shangha Index, and especially the Shenzhen, despite the robust economic data this morning, so he is massaging the message.

The Chinese internet sensors blacklist the children’s favorite cartoon show “Winnie the Pooh.” The short pudgy and honey-loving bear is compared to President Xi and he obviously does not like the comparison; the communist does not have a sense of humor. The sensors block out the side-by-side funny pictures of Xi and Winnie the Pooh. The Party Congress will convene in three months and Xi must look strong, in control and confident moving into that critical event. Therefore, the communist slaps the cartoon bear with the back of his hand stripping Winnie the Pooh from the internet.

At 8:30 AM, the Empire State Mfg Survey is 9.8 missing the 15.0 expected and well under the prior 19.8. New Orders are strong. The Empire data is positive but disappointing.

S&P +1. Dow +9. Nasdaq +6. Russell -3. VIX 9.86. The trading day begins with the major stock indexes at record highs. Over the last week, AAPL is up +2.5%, GOOGL +3%, MSFT +4% and FB +4.3%.
DAX -0.3%. CAC flat. FTSE +0.4%. MIB +0.2%. IBEX -0.2%. PSI +0.1%.

Euro 1.1469. Dollar/yen 112.47. Pound 1.3074. Aussie dollar 0.7828. USD 95.15.

Citigroup lowers its oil forecast the last major house to buckle. C cuts the oil target to sub 60. WTIC oil 46.41. Brent oil 48.87. Natty 3.01. Gold is up 5 dollars to 1233. Silver gains +1% to 16.09. Copper gains +1.4% to 2.73. The precious metals run higher as the USD leaks lower and copper rallies on this morning’s China economic data.

Treasury yields are; 2-year 1.35%, 5-year 1.85%, 10-year 2.32%, 30-year 2.91%.

At 9:30 AM EST, US stocks begin trading flat. SPX 2459. INDU 21630. COMPQ 6319. RUT 1428. VIX 9.90.

DAX -0.4%. CAC -0.1%. FTSE +0.3%. Euro 1.1464. Dollar/yen 112.45. Pound 1.3072. USD 95.17.

NVDA rallies +1.5%. NVIDIA remains the favorite flavor of bullish traders since it provides chips and software for digital currencies, autonomous cars, gaming, data support and cloud applications (all the hot industries). AMD sinks -1% since it provides support for the cybercurrencies but bitcon and etherum were whacked from yesterday to today.

S drops -2.1%. TMUS -0.5%. Consumer discretionary stocks rally helping to send the retail sector higher. The morning is quiet with stocks bumping along sideways near the flat line.

European indexes end the session lower sans the UK. The DAX loses -0.4% to 12587. The CAC drops -0.1% at 5230. The FTSE gains +0.4% to 7404. The MIB ends down a hair at 21485. The IBEX loses a smidge to 10651. The PSI loses -0.2% to 5293.

The SPX is flat at 2460. The Dow is flat at 21636. The Nasdaq Composite is flat at 6312. The RUT is up 5 points, +0.3%, at 1433 on track for new all-time highs. VIX 9.84. A low VIX guarantees stock market gains day after day.

Euro 1.1480. Euro/yen 129.25. Dollar/yen 112.59. Pound 1.3056. Euro/pound 0.8793. Indian rupee 64.355. Mexican peso 17.583. Canadian dollar 1.2688. Dollar/yuan 6.77.

Oil trades soggy as the day proceeds. WTIC oil is down -1% at 46.07. Brent oil is down -0.9% to 48.46. Natty 3.01. Gold 1235. Silver is up +1.1% to 16.11. Copper 2.73.

Treasury yields are; 2-year 1.36%, 5-year 1.85%, 10-year 2.31%, 30-year 2.89%. The 2-10 spread drifts slowly lower to 95 bips. European 10-year yields are. German bund 0.58%, Italy 2.24%, Spain 1.60%, UK gilt 1.28%.

AAPL +0.4%. AMZN +0.5%. VMW gains +3% on news that VMware is teaming up with Amazon to improve the data centers. MDT is down -2.9% after lowering guidance due to a computer system crash that lost data. APRN crashes -10.2%; quick, call and order a meal from Blue Apron to help the failed IPO out. NFLX trades flat ahead of earnings after the bell.

For the Dow Jones Industrials components, MSFT leads higher up +0.8%. HD +0.7%. PG +0.5%. JPM loses -0.9%. IBM -0.8%. MRK -0.7%. PFE -0.5%. INTC -0.6%.

The retail sector is strong. XRT +0.9%. Retailer M +3.1%. KSS +2.7%. TGT +0.9%. Higher retail stocks will sustain the stock market rally. Financials lag. XLF -0.5%. BLK -3%.

FCX +3.2%. When copper pops, Freeport runs higher. EXC +2.7%. RCL +2.4%. AKAM +2.3%. SYMC +1.5%. FISV +1.3%. QVCA +2%. CBS +1%. Trucker JBHT drives +1.8% higher. TSCO +1.5%. WHR +1.7%. ESRX +0.9%.

CCI sinks -4.2%. BLK -3.1%. ULTA -3%. MDT -2.8%. INCY -2.7%. BMRN -4.4%. NTES -2.7%. NBR -3.1%.

TSLA is down -2.5%. Tesla CEO Musk abandons his prior mantra saying the stock may be overvalued and instead says the stock is low if you believe in the future path of the electric car maker. Musk says he always has tamped down expectations when the TSLA stock price is very high but now is stating the case for Tesla to continue higher.

Consumer discretionary and utility stocks lead higher while healthcare leads lower. XLY +0.2%. XLU +0.5%. XLV -0.4%.

President Trump kicks off a “Made in America Week” at the Whitehouse. Machinery is parked in the driveway and lawn of the Whitehouse including Caterpillar front end loader, a utility truck, a boat and forklift. Inside the Whitehouse other made in USA companies display their wares. Trump places a cowboy hat on his head to promote the American manufacturers.

Humorously, Trump practices the ‘do as I say not as I do” philosophy preaching to everyone to buy American but at the same time his own business and his son’s and daughter’s companies all employ overseas labor to produce products. Maybe he should practice what he is preaching.

SPX 2459. INDU 21630. COMPQ 6312. RUT 1431. The Dow Jones transports are down -0.2% to 9771.

FDX sinks -1.4%. FedEx says the recent cyber attack on its computer systems will have a material impact on its Q2 results. FDX is off the earlier lows at -2.3%. UPS loses -0.3% in sympathy. Hamburger joint SHAK drops -1.666% on news that a top chef is planning a rival IPO to compete with Shake Shack.

Much-followed Apple analyst Katy Huberty at MS continues raising price targets for AAPL stock. Huberty stands on a soap box and proclaims that AAPL will hit 182 (Apple sits at 149.56 at the 50-day MA at 149.37 so AAPL will make a bounce or die decision tomorrow).

US stocks finish the session mixed with the blue-chips and broad stock market lower while the tech stocks and small caps are higher. Interestingly, trading volume in the SPY ETF is the lowest in 11 years.

The SPX finishes a hair lower, call it flat, at 2459. The S&P 500 misses an all-time high by 72 cents and misses an all-time closing high by only 13 pennies.

The Dow loses a smidgeon to 21630. INDU misses a new all-time high by less than 20 points and misses a new all-time closing high by only 8 points. The Nasdaq Composite is up 2 points, call it flat, at 6314. COMPQ misses a new record high by 11 points and misses an all-time closing high by 7 points.

The Russell 2000 small caps are up 3 points, +0.2%, to 1431.60 a new all-time closing high and 1434.45 a new all-time high. The NDX finishes flat at 5840. The NYA loses a smidgeon to 11891 missing a new all-time high by 7 points and missing a new all-time closing high by 6 points.

Trannies finish lower. TRAN ends down 45 points, -0.5%, to 9698. The RUT small caps is the only major index printing a new record high. Investors may be sniffing out a recover in the US dollar index which would boost small caps. VIX 9.82. Market bears do not have a chance with the low volatility.

After the closing bell, Netflix reports a 1 cent miss on EPS and the top line is only in line. NFLX launches +9% to a new all-time high at 176.55 as traders choose to latch on to the higher guidance and the robust subscription increases. Netflix adds 5.2 million users versus 3.2 million expected. 4.1 million new subscribers are added internationally versus the 2.6 million expected. Domestically, 1.1 million subscribers are added compared to the 631K expected.

Netflix should create joy in the tech and FAANG stock tomorrow. The NFLX monthly chart was setting up for a potential long-term multi-year top (negative divergence across all indicators) so tonight’s joy may extend the topping process a few extra weeks. NFLX is up +9.666%. Loyal subscribers like the new content.

At 4:53 PM EST, traders are throwing money at Netflix in the afterhours. NFLX jumps over +10.6% higher to 178.78. The stock is on fire with investors buying with total disregard for price. The Netflix subscription numbers have sent investors into a tizzy willing to buy at any price. A conference call begins in about one hour. The main question is will the subscriber growth continue?

NFLX is up +11% to 179.37. The Netflix EPS miss and inline top line is completely ignored during the evening as analysts and television pundits tout the subscriber growth. The bulls are guaranteeing higher NFLX stock prices ahead.

Puma announces great results for its breast cancer drug. PBYI launches +10.3%. SCSS is down -4% collapsing onto a mattress after missing on earnings. Defense contractor LMT rises +1% on a Sikorsky helicopter order. ETH trades down -4.4% after lowering guidance. Disappointing results with Ethan Allen hints that the housing market may weaken. NFLX is up +10.6% to 178.80 as the Netflix conference call begins.

Two more polls are released that indicate a 39% approval rating for President Trump with a 54% disapproval rating.

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