Ron is away today. See you Tuesday!
August 15, 2019
Trying to predict daily stock price movements lately has become a lot like herding overly caffeinated cats.
Earlier this morning the Dow futures went from triples digits highs to triple digits lows on an announcement of tariff retaliation from China. Within the past hour, China reportedly stated that they are hoping for a compromise on the new tariffs. The futures immediately bounced back in to the green.
Solidly in the green this morning this morning are shares of Walmart. $1.27 in quarterly profit came in a nickel ahead of estimates on better than expected sales and 37 percent growth in their online business. In spite of the Chinese trade uncertainly, Walmart raised full-year guidance and shares are more than 6 percent higher pre-market. In China, Alibaba also reported better than expected results.
Over in marijuana world, Canopy Growth missed the sales mark and shares are about 15 percent lower. Thatâ€™s after Tilray shares lost 15 percent yesterday.
By the way, for yield curve fans out there, the 2 versus 10-year curve is no longer inverted this morning. A small inversion set off warnings of gloom from many financial reporters yesterday. The 30-year yield, however, is below 2 percent.
Jobless Claims, July Retail Sales and Business Productivity Reports come later this morning. In the meantime, the cats have decided to claw their way higher.
At this point, adjusted for fair value, the S&P 500 futures are higher by about 12 points, the Dow futures are up 124, and the NASDAQ futures, in spite of downbeat guidance from Cisco Systems,are about 19 points above fair value.
August 14, 2019
Lately, each day has been a different market. Today, each hour has seemed like a different market, and at this point, itâ€™s a market thatâ€™s headed lower.
The main factor that has the trading algorithms freaking out this morning is the inversion of the Treasury yield curve. In simple terms, longer-dated bonds should provide a yield thatâ€™s higher than short term bonds. When that relationship flips, investors have an incentive to hold on to their cash, not spend or invest for the future, and possibly throw the economy into recession.
An inverted 2 to 10-year curve, which we see this morning, is not an infallible indicator of recession, and it usually takes a year to two to happen if it does. However, this morningâ€™s less than 1.6 percent yield on the 10 year is not a good sign. While the Federal Reserve could ride to the rescue with a sharp short-term rate cut, their next regularly scheduled meeting in more than a month from now.
Piling on to the bad news is word that Chinese industrial growth and retail sales were below expectations in July. In Germany, the economy actually contracted in the 2nd quarter. And in earnings news, Macyâ€™s shares are 12 percent lower on a big earnings miss announced just minutes ago.
Add it all up, and weâ€™re in for a rough ride at 9:30.
At this point, adjusted for fair value, the S&P 500 futures are lower by about 38 points, the Dow futures are down 322, and the NASDAQ futures are about 118 points below fair value.
August 13, 2019
There are multiple areas of economic concern around the world that have the trading algorithms on edge this morning. Hereâ€™s a quick review â€“ thereâ€™s a political crisis building in Italy, weak economic data in Germany, another day of protests in Hong Kong, bond yields approaching all time lows and no apparent progress in the Chinese trade talks. Take your pick, but thereâ€™s precious little good news to be found.
Speaking of which, Advance Auto Parts reported adjusted quarterly earnings of two bucks per share, 22 cents short of estimates and lowered full-year guidance. Advance shares are about 8 percent lower pre-market.
Earnings are on the way later today from JD.com and cannabis firm Tilray.
Weâ€™ll also get find out if declining interest rates are awakening an inflation rate that has been over-sleeping for years. Expect the year-over-year headline rate to be up only 1.8 percent, with the core July rate rising 2.1 percent.
European stocks are lower after the ZEW economic sentiment survey in Germany came in at a negative 44.1, 16 points worse than expected. Thatâ€™s the worst reading in almost 8 years.
Japanese stocks returned from yesterdayâ€™s holiday by finishing about one percent lower.
Our futures dipped lower over the past hour. At this point, adjusted for fair value, the S&P 500 futures are lower by about 10 points, the Dow futures are down 83, and the NASDAQ futures are about 28 points below fair value.
August 12, 2019
As if a slowdown in manufacturing and the Chinese trade war werenâ€™t enough to be nervous about, tensions in Hong Kong escalated over the weekend. That has shut down the Hong Kong International Airport and is leading to worries about Chinaâ€™s next in a series of moves designed to chip away at Hong Kongâ€™s social and economic way of life.
It will be a big week of earnings reports for companies with a January 31st fiscal year end, and that encompasses all the major retailers, including Walmart and Macyâ€™s.
Speaking of retail, liquidation sales at 26 soon-to-be closed Sears stores begin this week, including Michigan locations in Postage and Saginaw.
In what looks like the first step in a diversification of its business, investment firm Blackrock, a huge provider of index funds and ETFs is reportedly taking a controlling stake in Authentic Brands, which is the parent of Nine West, Aeropostale and Sports Illustrated.
The Nikkei in Japan was closed for a holiday overnight. Stocks in Hong Kong fell, but mainland China was higher.
Our futures are well off earlier lows, but itâ€™s still looking like a rough open for Wall Street. At this point, adjusted for fair value, the S&P 500 futures are lower by about 15 points, the Dow futures are down 142, and the NASDAQ futures are about 43 points below fair value.
August 8, 2019
Yesterday gave us another wild ride in the market, with the Dow Jones Industrials at one point lower by almost 600 points, only to rally into the close to finish at very little change.
This morning, the 10-year Treasury bond yield has apparently stabilized at a slightly higher level of 1.727 percent. Overnight, the Chinese Central Bank set the yuan peg at just over 7 to the dollar, which is the lowest since 2008, but will hopefully hold for a while.
IAC may not be holding onto subsidiaries Match and Angieâ€™s List much longer, as they investigate spinoff possibilities.
Reporting better than expected results since last night were Viacom, Norwegian Cruise Lines, Cardinal Health, Cronos, Lyft and Roku. Lyft shares are about 8 percent higher pre-market, and Roku is about 17 percent higher.
Shares of Symantec are about 13 percent higher on a report that Broadcom is close to buying their Enterprise division.
Weekly Jobless Claims come at 8:30.
Most overseas markets are a bit higher this morning, after yesterdayâ€™s drama. Our futures have been bouncing around quite a bit. As we head toward 9:30, adjusted for fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are up 64, and the NASDAQ futures are about 29 points abovefair value.
August 7, 2019
As investors here ponder the future of domestic interest rate policy, three more central banks, namely New Zealand, India and Thailand cut their short-term rate targets overnight. Our yield curve is getting very close to inverting once again, as the yield on the 10-year Treasury is at 1.625 percent this morning, thatâ€™s a three-year low, sharply lower than just yesterday and just barely more than the two-year note. Those diving rates have put a shiver into stock futures during the past hour.
Thereâ€™s a little flood of earnings news to consider. Last night, Disneyâ€™s earnings fell well short of expectations. They blamed the cost of integrating the Fox acquisition. Disney shares are about 4 percent lower this morning.
Better than expected results came from CVS, Wendyâ€™s, Cyberark Software, Ionis Pharmaceuticals, Hertz and Teva Pharmaceuticals.
Shares of Walgreenâ€™s Boots Alliance are a little higher after announcing a store closing plan. Match shares are about 18 percent higher on second quarter results and strong third quarter sales.
The miss of the morning may be Lumber Liquidators, with shares lower by almost 10 percent.
Our stock futures have reversed early gains and are currently suggesting a lower open at 9:30. Adjusted for fair value, the S&P 500 futures are lower by 18 points, the Dow futures are down 202, butthe NASDAQ futures are about 45 points below fair value.
August 6, 2019
Hereâ€™s always something interesting going on with stock prices. Itâ€™s just that some days are more interesting than others. Yesterdayâ€™s apparent use of currency manipulation as a negotiating tool by the Chinese Government sent worldwide stock prices lower. Overnight, after the United States moved to label China as a â€ścurrency manipulatorâ€ť the yuan magically bounced well above the 7 to 1 level against the dollar. This morning, the Chinese Central Bank stated that the yuan will NOT keep falling and our stock futures are indicating a partial bounce-back in the early going.
Not bouncing back this morning is privately owned high-end fashion shop Barneys. The company filed for Chapter 11 protection yesterday and will close more than half of its locations.
Shares of Shake Shack are more than 4 percent higher on an earnings beat and raised guidance. Discovery is more than 7 percent higher after reporting.
Later this morning, the Bureau of Labor Statistics will issue its July JOLTS report. Expect to hear about 7.3 million job openings in the U.S. at the end of June. That would be unchanged from the end of May number.
Asian markets fell overnight on the trade worries, but Europe has bounced back this morning.
Adjusted for fair value, the S&P 500 futures are higher by about 12 points, the Dow futures are up 137, and the NASDAQ futures are about 47 points above fair value.
August 5, 2019
Weâ€™re coming off the worst week of the year for the Standard & Poorâ€™s 500 Index, as President Trumpâ€™s latest Chinese tariff threat reminded traders that the trade skirmish is likely a long, long way from resolution.
Overnight, the Chinese yuan dipped below 7 to 1 against the dollar, an apparent sign that the Chinese Government is looking to use currency devaluation as a tool to offset increasing tariffs. Itâ€™s a slippery slope weâ€™re on and without any apparent sign of dĂ©tente. That move in the yuan has overseas markets sharply lower.
Put all that together with civil unrest in Hong Kong and today should be an interesting day.
Earnings news is on the way today from Marriott, Tyson Foods and Take Two Interactive.
Itâ€™s an ugly picture for cinema operator IPic Entertainment. Shares are lower by at least 40 percent pre-market after a bankruptcy filing.
Weâ€™ll get the Institute for Supply Managements non-manufacturing index for July. Expect that the services industries continued to do well, with a reading of 55.5, up from Juneâ€™s 55.1.
Our futures have improved a little bit, but that doesnâ€™t mean theyâ€™re good. Adjusted for fair value, S&P futures are lower by about 39, Dow futures are down 328 and the NASDAQ futures are about 139 points below fair value.
August 1, 2019
The Federal Reserve did exactly what everyone expected yesterday, and Chairman Powell explained their action is a realistic way. Unfortunately, calling the quarter-point rate cut a â€śmid-cycle adjustmentâ€ť rather than the first of a series of cuts put trading algorithms in â€śsellâ€ť mode, from which weâ€™ll only partially recover in the early going this morning.
Some individual stocks will NOT be in recovery mode. Itâ€™s been a tough week for shares of Beyond Meat, the company whose shares have risen beyond belief since coming public. Beyondâ€™s recently announced secondary offering will price at 160 dollars per share, and another 9 percent drop in todayâ€™s pre-market has the already public shares 25 percent lower since Monday.
Fitbit shares are about 17 percent lower this morning on lousy results and lowered guidance. Royal Dutch Shell and Qualcomm are both lower by about 5 or 6 percent. Gaining ground pre-market are shares of Verizon, Archer Daniels Midland and Shopify. General Motors shares are about 1Â˝ percent higher after reporting $1.64 of quarterly profit, 20 cents better than expected. Full year guidance, however, was not changed.
The July Manufacturing PMI report is due at 9:45 this morning and is expected to show slight expansion.
Asia followed us lower overnight, but Europe is slightly in the green.
Adjusted for fair value, the S&P 500 futures are higher by about 2 points, the Dow futures are up 47, and the NASDAQ futures are about 12 points above fair value.