Monday, July 17, 2017
TUESDAY 7/18/17; US Health Insurance Bill (Trumpcare) Fails in Senate; USD Drops to 94.28; Euro Pops Above 1.15; Pound Above 1.31; RBA Minutes; China Housing Data; UK CPI; BAC; GS; AMTD; HOG; JNJ; LMT; NVS; US Import/Export Prices; SPX (S&P 500) and COMPQ (Nasdaq Composite) Print All-Time Record Highs; CSX; IBM; UAL
Euro 1.1478. Euro/yen 129.30. Dollar/yen 112.66. Sterling 1.3055. Euro/pound 0.8791. Mexican peso 17.5809. Canadian dollar 1.27. Dollar/yuan 6.77. Indian rupee 64.355. Aussie dollar 0.7796. USD 95.15.
US futures are flat. S&P +1. Dow +5. Nasdaq +2. Japan returns to trading after yesterday’s holiday. Nikkei Index futures are down -0.4%. Aussie ASX 200 Index futures are down -0.2%.
WTIC oil 46.02. Brent oil 48.42. Natural gas 3.02. Gold 1234. Silver 16.10. Copper 2.724.
Treasury yields are; 2-year 1.36%, 5-year 1.86%, 10-year 2.31%, 30-year 2.90%. The 2-10 spread is at 95 bips retreating from over 100 bips last week (yield curve slightly flattens).
Senate Leader McConnell cancels the proposed vote for the new Trumpcare healthcare bill called the Better Care Act. Two additional senators did not like the plan so it would not pass if put to vote. McConnell changes the strategy and will now seek a repeal vote for the Affordable Care Act (Obamacare). A repeal, if approved, will allow two years to come up with a replacement healthcare plan for the ACA.
McConnell previously and unequivocally stated that he would not back a repeal bill. President Trump loses credibility since he bragged for the last year that the repeal and replacement of Obamacare would be easy and occur on day one of his presidency. Trump’s approval rating will slip lower in the polls.
The republicans blew it by boasting for eight years that they had a great healthcare insurance bill ready to go that would replace Obamacare. That was a lie. They had no plan ready. Trump either blindly cheerleaded the new healthcare bill without ever understanding that there was no republican plan, or, he chose to lie about it to get elected. The president loses face. The demopublicans and republocrats are proficient at one task; lying.
The US dollar index drops like a rock from 95.2 to 94.7 sending the euro currency basket higher. The euro moves above 1.15. The USD is down -8.2% from the top in early January. The Senate is not out of the woods since a repeal bill for the ACA may not have enough votes to pass. Obamacare may remain in place forever.
Aussie and Asia stocks begin trading on the negative side. The NIKK is down -0.4% and the Topix drops -0.3%. Japanese banks and carmakers are sold off. The dollar/yen pair moves from 113 to 112.25 reflecting a stronger yen which sends Japanese stocks lower. ASX 200 -0.5%. KOSPI -0.1%. The lower US dollar will create lackluster performance in the emerging markets. The pound currency pair touches 1.31.
New Zealand inflation numbers are lower than expected. The planet remains mired in a disinflationary and deflationary funk despite the universal Wall Street consensus and central bankers touting rising inflation each day.
The RBA Minutes are released painting a brighter picture for the economy. A potential future rate hike is coming closer into view. The Reserve Bank of Australia says economic growth is stronger reflected by a drop in the unemployment rate and better economic conditions. The Aussie dollar rallies to a two-year high at 0.7913. Housing stocks rally.
China home prices surge +10.2% higher rising in 60 of 70 cities better than the prior month’s 56 of 70 cities. House prices in smaller Chinese cities are jumping higher. China’s housing market is overheating.
The Beijing communist leaders tell banks to lower the returns on wealth products. Concern increases that many of the wealth management products are far too risky placing average citizens at much greater risk than they realize. China’s debt problems are becoming more serious. Companies such as Wanda, Sunac and LeEco are under scrutiny since these firms have been investing in each other. If the boat sinks for one company it may pull the others under water.
Cracks are forming in China’s financial system. Wanda is buying up foreign companies typically the behavior seen when a company is becoming overextended. Accounting gimmicks and financial games are ongoing in the commie nation. A light is starting to shine on the closed financial system in China. Sunac crashes -13% and then recovers to down -7%. The large drop of more than -4% in the tech-heavy Shenzhen Composite index yesterday is creating angst in Asia.
The Aussie financial sector sinks -1.7%. Aussie miners are flat. Rio Tinto lowers its iron ore forecast and sinks -1.5%. In South Korea, Samsung Electronics rises +0.4% on news of a partnership with PayPal. Gold 1238. WTIC oil 45.89. Brent oil 48.31.
The NIKK ends the session down -0.6% to 20K on the dot. The stronger yen sinks Japanese exporters and manufacturers. The ASX 200 tanks -1.2% to 5687 on the rising Aussie dollar. The KOSPI ekes out a tiny gain at 2426. The SSEC gains +0.3% to 3187. The HSI finishes +0.2% higher to 26525. The Hang Seng Index is at two-year highs. The PBOC is likely providing support to Chinese stocks.
The trading session continues in India with the Nifty down 66 points, -0.666%, to 9847.
The UAE says the Qatar sanctions and embargo may continue for many weeks and months. Qatar remains defiant and does not want to meet the guidelines imposed by Saudi Arabia, UAE and other Arab states that seek to stop the rampant terrorist activity originating from Qatar.
At 3:00 AM EST (8 AM London; 9 AM Frankfurt), European indexes begin trading lower. AX -0.6%. CAC -0.5%. FTSE -0.4%. The SMI rises +0.2% so Switzerland is happy. The Nordic stocks sink with the OMX smacked -1%.
The euro is above 1.15 to 1.1516 after the US healthcare bill fails in the Senate. The US dollar index drops which pops the euro higher. Euro/yen 129.29. Dollar/yen 112.27. The pound is above 1.31 to 1.3101. Euro/pound 0.8791. Mexican peso 17.556. Canadian dollar 1.2646. Dollar/yuan 6.76. Indian rupee 64.35. Aussie dollar 0.7913.
S&P -3. Dow -7. Nasdaq -5. Russell -3. VIX 9.86.
WTIC oil 45.91. Brent oil 48.34. Natty 3.03. Gold 1236. Silver 16.09. Copper 2.7185.
Treasury yields are; 2-year 1.36%, 5-year 1.85%, 10-year 2.31%, 30-year 2.90%. The 2-10 spread is 95 bips.
PricewaterhouseCoopers says the UK housing market will underperform going forward. Ericsson crashes -10.3% on earnings. Lufthansa drops -2% after reporting rising costs. German retailer Zalando collapses -6.1%. Fertilizer company Yara Intl stinks up the joint dropping -5%. Equipment maker Husqvarna drops -3%. Novartis rallies +2% after beating on EPS.
At 3:53 AM EST (8:53 AM London), DAX -0.6%. CAC -0.6%. FTSE -0.5%. S&P -3. Dow -8. Nasdaq -4. Russell -3. VIX 9.87. Euro 1.1524. Dollar/yen 112.26. Pound 1.3110.
Treasury yields are; 2-year 1.36%, 5-year 1.85%, 10-year 2.31%, 30-year 2.89%.
At 4:30 AM EST, S&P futures are flat. Dow +7. Nasdaq +2. Russell -1. VIX 9.79. DAX -0.4%. CAC -0.2%.
UK June CPI is +2.6% below the +2.9% expected. The lower inflation rate weakens the case for a BOE rate hike. The pound slips to 1.3041 in a heartbeat and then leaks slowly lower. UK June Factory Output falls -0.4% month-on-month but is up +9.9% year-on-year.
German July ZEW Investor Expectations are 17.5 down from the prior 18.6 and missing the 18.0 expected. Investors are losing confidence in the German economic engine. Chancellor Merkel faces an election in two months which may be creating angst.
At 5:30 AM EST, DAX -0.6%. CAC -0.2%. FTSE flat. The Nifty is down 91 points, -0.9%, to 9826 heading towards the closing bell.
Euro 1.1543. Euro/yen 129.61. Dollar/yen 112.28. Pound 1.3030. Euro/pound 0.8859. Mexican peso 17.5814. Canadian dollar 1.2623. Dollar/yuan 6.752. Indian rupee 64.34. Aussie dollar 0.7934.
WTIC oil 46.19. Brent oil 48.63. Natural gas 3.04. Gold 1237. Silver 16.11. Copper 2.72.
Treasury yields are; 2-year 1.36%, 5-year 1.85%, 10-year 2.30%, 30-year 2.89%. The 2-10 spread is down to 94 bips reflecting a flattening yield curve well off the 100-plus bips last week.
This morning’s important earnings releases begin with Johnson & Johnson. JNJ rises +1.7% after Johnny John beats on EPS but misses on the top line. Netflix is the big winner in early trading with NFLX up +10.4% after last evening’s earnings release. Netflix reports a huge jump in subscribers and guides higher so traders ignore the unexciting inline earnings and are buying the stock with both hands.
The bank earnings are in full swing this morning with heavy-hitters Bank of America and Goldman Sachs on tap. BAC is the favorite of the banking bulls. BAC has a reputation for releasing confusing earnings statements. Bank of America trading revenue is a hair higher than expected. As usual, the bank’s earnings release is a confusing mess. BAC trades +0.1% higher as analysts decipher the information. EPS is 46 cents beating estimates by 3 pennies. The top line is $22.8 billion versus the $21.8 billion expected. Net interest margins are lower. BAC drops -0.7% so investors are disappointed. GS is up +0.8% with its earnings release due out at 7:30 AM EST.
At 7:05 AM, S&P -1. Dow +7. Nasdaq -1. Russell -3. VIX 9.80. The Nifty ends the session down 89 points, -0.9%, to 9827. The BSE Sensex tanks -1.1% to 31711 losing the 32K level. Indian rupee 64.34.
DAX -0.9%. CAC -0.666%. FTSE -0.1%. MIB -0.2%. IBEX -0.3%. PSI +0.2%. SMI +0.3%. OMX -1.3%. Nordic stocks are hammered. Portugal and Switzerland are positive.
Euro 1.1557. Euro/yen 129.54. Dollar/yen 112.09. Pound 1.3024. Sterling is far off the earlier highs above 1.31. The weaker than expected UK inflation numbers sink the pound. Euro/pound 0.8875. Mexican peso 17.545. Pound 1.2607. Dollar/yuan 6.75. Aussie dollar 0.7928. USD 94.64.
WTIC oil is up +0.6% at 46.29. Brent oil rises +0.666% to 48.75. Gold gains 4 dollars to 1238. Silver 16.14. Copper is steady at 2.72.
Treasury yields are; 2-year 1.35%, 5-year 1.84%, 10-year 2.29%, 30-year 2.88%. German bund 0.56%. Japan 10-year yield 0.07%. UK gilt 1.22%. France 10-year yield 0.82%.
The pre-market trading is active. NFLX catapults +10.7% higher. UNH -0.7%. AMD -4%. JNJ +1%. NVS is up +3% on earnings released earlier in Europe. LMT gains +1% on earnings. Lockheed announced a Sikorsky helicopter deal last evening. AMTD rallies +1.7% on earnings. Insurer PGR loses -0.3%. HOG rides off into the weeds and hits a tree crashing -8.666% after reporting earnings.
BAC sinks -1.2% in the pre-market. GS is up +0.1% slipping one percent off its highs a few minutes ago. The insider traders that receive information not available to the public must have been told the Goldman results ahead of time.
The Goldman Sachs earnings release is a few minutes late. GS beats on EPS and the top line. The important FICC sales and trading revenue, however, is below estimates the weakest since 2008. GS drops -1.2%. Obviously, the insider traders were told the results ahead of time which is standard practice on corrupt Wall Street. Banks sink. BAC -0.666%. GS -0.8%. JPM -0.4%. WFC -0.7%. Regional bank Comerica beats on earnings but CMA drops -2.666%.
S&P -2. Dow -4. Nasdaq -8. Russell -4. VIX 9.91. Oil is catching a strong bid. WTIC is up +1.5% to 46.72. Brent oil is up +1.6% at 49.19. Natty 3.06. Gold 1239.
DAX -1.1%. CAC -0.8%. USD 94.666. Euro 1.1552. Dollar/yen 112.16. Pound 1.3016 threatening a 1.29 handle. Aussie dollar 0.7929.
At 8:44 AM, S&P -6. Dow -40. Nasdaq -16. Russell -7. VIX 10.01. NFLX -9.2%. GS -0.9%. BAC -0.5%. JNJ loses the earlier gains now bleeding -0.4%. Fortunately, Johnny John has plenty of bandages and Band-Aids to dress its wound.
DAX -1.4%. CAC -09%. FTSE -0.1%. OMX -1.666%. Euro 1.1564. Euro/yen 129.29. Dollar/yen 111.80. Pound 1.3021.
WTIC oil is up +1.666% to46.79. Brent oil 49.18. Natty is up +2.2% to 3.09. Natural gas demand should increase in the hot and humid summer months. Gold is up 8 dollars, +0.6%, to 1242. Silver 16.22. Copper 2.72.
Treasury yields are; 2-year 1.34%, 5-year 1.82%, 10-year 2.27%, 30-year 2.87%. The 2-10 spread is 93 bips. USD 94.61.
US Import/Export Prices indicate lackluster inflation verifying the CPI data yesterday. Import Prices are down -0.2% month-on-month matching the expectation below the prior revised-higher -0.1%. Year-on-year is up +1.5% versus the prior +2.3%. Export Prices are down -0.2% below the 0% expected but above the prior -0.5%. Year-on-year is up +0.6% compared to the prior +1.5%.
MS strategist Mike Wilson reiterates his SPX 2700 price target for this years the biggest bull on Wall Street. The traders, pundits, analysts and money managers remain optimistic on the stock market.
S&P -7. Dow -65. Nasdaq -20. Russell -6. VIX 9.98.
At 9:30 AM EST, US stocks begin trading lower as the futures indicate. The S&P 500 drops 4 points to 2454. The Dow loses 54 points to 21577. The Nasdaq Composite drops 11 points to 6303 so the Netflix joy is not helping. The Russell 2000 loses 3 points to 1428. All four major indexes are down -0.2% so the trading robots are in full control of markets as the day begins.
DAX -1.6%. CAC -1.3%. Euro 1.1573. Dollar/yen 111.91. Pound 1.3022. USD is down -0.6% at 94.53.
The banks are in retreat. XLF -0.6%. GS -1%. BAC -0.9%. C -0.8%. MS -1.1%. WFC -0.5%. KRE -0.666%. CMA -1.2%. ZION -0.9%. RF -1.1%.
NFLX +9%. Netflix prints a record high in the regular session at 177.48. AAPL -0.2%. AMZN -0.3%. GOOGL -0.3%. FB +0.1%.
JNJ -0.666%. LMT +0.9%. AMTD +2.8%. PBYI catapults +13% higher. HOG crashes -10%. IBM is down -0.3% ahead of earnings after the bell.
Healthcare-associated stocks are on the move. THC +0.8%. CYH +0.4%. UNH -0.8%. ATHN +0.5%. CI -0.2%. HUM -1.4%. MDT +0.2%.
Tech, especially chip stocks, sink lower weighing on the Nazzy indexes. XLK -0.6%. SOX -0.6%. Homebuilders are in retreat. XHB -0.4. The retail sector is weak. XRT -0.4%. The REIT VNO crashes -19.5%. SPG -0.5%.
SPX 2453. INDU 21563. COMPQ is at 6296 under the 6.3K level. RUT 1426. VIX 10.26. The Saudi’s are jawboning more production cuts. WTIC oil 46.69. Brent oil 49.17.
Treasury yields are; 2-year 1.35%, 5-year 1.83%, 10-year 2.28%, 30-year 2.87%. German bund 0.56%. The US-German 10-year spread is 172 bips the smallest difference in 9 months. US dollar index 95.42. Euro 1.1577.
SPX 2456. INDU 21577. COMPQ 6312. RUT 1428. VIX 9.99. The market bears will be slapped around again if the VIX remains under 10.
At 10 AM, the NAHB Housing Market Index is 64 missing the 68 expected and below the prior 67 the lowest number in 9 months. Homebuilders are concerned over the higher cost of materials. President Trump’s trade policies such as tariffs on Canadian lumber are hurting the homebuilders. Buyer traffic decreases. This is a big miss on homebuilder sentiment. XHB -0.4%. USD 94.49.
Senate Leader McConnell speaks on the floor saying that Washington, DC, must push forward on fixing the failing Obamacare health insurance plan. The politicians are long on rhetoric but short on action.
European indexes end the session lower sans Portugal. The DAX collapses 157 points, -1.3%, to 12430. The CAC sinks -1.1% to 5173. The FTSE is slapped -0.2% lower to 7390. The MIB drops -0.6% to 21358. The IBEX collapses -1.2% to 10525. The PSI gains +0.3% to 5308. The SMI drops -0.666%. The OMX is punished -2%. Daimler recalls 3 million vehicles in Europe due to emissions problems.
SPX 2457. INDU loses 84 points to 21456. COMPQ is in the green up 10 points to 6325. The RUT is down 7 points at 1425.
Oil is up +0.7%. WTIC 46.35. Brent oil 48.78. API Oil Inventories are on tap after the bell and EIA Oil Inventories hit at 10:30 AM EST tomorrow morning. Natty rallies +2.2% to 3.098 as the air conditioners are humming allowing humans to escape the heat and humidity.
Gold is up 8 bucks, +0.666%, to 1242. Silver 16.26. Copper 2.73.
Euro 1.1574. Euro/yen 129.56. Dollar/yen 111.94. Pound 1.3027. Euro/pound 0.8884. Indian rupee 64.33. Mexican peso 17.5063. Canadian dollar 1.2629. Dollar/yuan 6.7466.
Treasury yields are; 2-year 1.35%, 5-year 1.82%, 10-year 2.26%, 30-year 2.85%.
JNJ is jumpy today now up +1.4% first rallying on earnings then trading negative now up again. NFLX explodes +14% higher. BA -0.3%. Trannies sink lower. TRAN -0.5%.
Banks are sold off. JPM -0.8%. GS -2.4%. BAC -1.5%. C -0.1%. MS -1.3%. XLF -0.6%.
At 2:26 PM, SPX 2457. INDU 21556. COMPQ 6334. RUT 1426. VIX 9.89.
Euro 1.1563. Euro/yen 129.49. Dollar/yen 111.99. Pound 1.3049. Euro/pound 0.8861. Mexican peso 17.4978. Canadian dollar 1.2629. Dollar/yuan 6.7466.
WTIC oil 46.44. Brent oil 48.85. Natty 3.08. Gold 1243. Silver 16.27. Copper 2.73.
Treasury yields are; 2-year 1.35%, 5-year 1.82%, 10-year 2.26%, 30-year 2.85%.
The winners in the Dow Industrials are JNJ up +1.7%, PG +1.2%, DIS +0.9%, V +0.8% and IBM +0.6%. Losers are GS -2.6%, HD -1.1%, CAT -0.9%, MCD -0.8% and DD -0.8%.
NFLX +13.6%. WYNN +2.8%. PYPL +2.4%. VRTX +2.3%. JD +3.3%. TSLA +2.7%. AABA +1.7%. AMZN +1.4%. Solar stocks shine. JKS +7.7%. SPWR +7%. VSLR +6%.
HOG lays the bike down on the asphalt receiving road rash crashing -6%. CMG -4.3%. JEC -4%. APC -3.2%. NFX -2.6%. MYL -1.7%. Trucker JBHT drives into a ditch losing -1.6%. AAL -1.3%. DISCA -1.3%. CA -1.3%. AMD -2.3%. CAH -1.4%. LVLT -1.4%. T -1.1%.
At 3:29 PM, the COMPQ prints above 6342 at a new all-time high. Traders high-five each other praising the Netflix rally and the Power and Glory of the Federal Reserve and other central bankers. Life is great if you are wealthy and own a large stock portfolio; not so much if you are a peasant part of the huddled masses. The wealthy elite class including the politicians, corporate executives, investment bankers and central bankers laugh at the stupid poor and disadvantaged that do not understand how the Wall Street game is played.
President Trump is trying to deflect blame for the failed healthcare bill towards the democrats. Trump says, “We will just let Obamacare fail.” That will not go over well with Americans since he was elected to fix things not throw up his arms and say there is nothing that can be done. The president thinks that once the ACA fails, people will complain about high premiums and rising costs and then the democrats and republicans will work together to fix the mess. Good luck with that plan. Trump was not proactive in handling the new healthcare plan so if he did not believe in it neither did anyone else.
NFLX gains +13.5% to 183.60. HOD 185.00. Netflix gapped up this morning after last evening’s earnings and never looked back. FB and AMZN also print new record highs.
CMG crashes -4.3% on news of another food scare at a Virginia store. Eight patrons are ill with a Norovirus-style sickness that usually occurs on cruise ships. The local health department is investigating. Chipotle is in trouble since it never fully recovered from the last health scare. Customers will be hesitant to step into a restaurant because they do not want to spend the next day driving the porcelain bus in the bathroom after eating a rancid burrito.
Venezuela continues its economic and political collapse. The socialist state has collapsed after oil prices began falling in 2014. Venezuela’s government and financial system is entirely dependent on oil production and pricing. President Maduro plans to carry out a vote that will install him as a dictator. President Trump threatens Venezuela with sanctions if the government moves towards a Maduro dictatorship. Protests continue with 100 people dead over the last 100 days. The troubled nation may end up as a failed state like Cuba. The average Venezuelan has lost 20 pounds over the last year. Food, water and medical supplies remain scarce. Venezuela is in chaos and collapse.
US stocks finish the session mixed which is becoming routine for both European and stateside stock indexes over the last few weeks. The SPX gains 1 point to 2460.61 which is enough for a new all-time closing high. The Dow sinks 55 points, -0.3%, to 21575. GS loses -2.6% and creates over 40 negative points in the Dow Jones Industrials (as a rule of thumb, multiply any point move by a Dow component by 7 to gauge the effect on the index; for example, Goldman Sachs loses 6 points today and contributes about 42 negative points to the Dow Industrials).
The Nasdaq Composite rallies 30 points, +0.5%, to 6344.31 a new all-time closing high and 6344.55 a new all-time high. The COMPQ is up for eight consecutive days the longest streak in over two years. The NDX gains +0.7% to 5880. It is interesting that the Nazzy 100 does not print all-time highs but the Nazzy Comp does.
The RUT loses 4 points, -0.3%, to 1428. The NYA drops -0.1% to 11877. TRAN sinks -0.666% to 9633. Of the seven major US stock indexes SPX (or GSPC), INDU (or DJI), COMPQ (or IXIC), RUT, NDX, NYA and TRAN (or DJT), the S&P 500 and Nasdaq Composite print new record highs. All the indexes have printed record highs since last Friday except for the NDX. Interestingly, the Nasdaq 100 Index is impacted by the FAANG stocks (FB, AAPL, AMZN, NFLX, GOOGL) but the Netflix joy was not enough to boost the NDX to a new record high.
The VIX finishes at 9.89 under 10. The low volatility allows the market bulls to laugh and dab their cigar ashes in the bear’s faces. The USD is at 94.40 with a LOD at 94.28 the lowest number since last summer.
After the closing bell, railroad CSX jumps over +1% on earnings but after time passes and guidance is lowered, the stock derails -3.6%. IBKR reports EPS matching expectations. IBM loses -2.5% on earnings. UAL bats on earnings but nosedives -3.3%. Other airlines trade lower in sympathy. DAL and AAL are down -1.5%. LUV is not feeling any love losing -1.4%.
VRTX rallies over +26% on strong results for its cystic fibrosis drug treatment. Vertex is a top performer in the stock market this year up a phenomenal +80%.
The TIC (Treasury International Capital) data reports that China raises its holdings in US debt for the fourth consecutive months. Japan, the largest holder of US Treasuries, increases its holdings slightly. China is the second largest holder of US Treasuries. Foreign buying of Treasuries is picking up.
The API Oil Inventories are a surprising 1.6 million barrel build when a 3.0 million barrel drawdown was expected. Gasoline and Distillates inventories are draw downs. WTIC oil drops from 46.40 to 46.25 in electronic trading.