Stocks took a pretty major blow in the final hour of trading Tuesday, when Stat News, which is focused on health-related material, reported that Moderna's phase one trial of a COVID-19 vaccine was thin on critical data according to experts, in contrast to the glow that permeated Wall Street Monday over the same trial.
When that story crossed the wires, it wiped out - in a matter of minutes just before 3:00 pm ET - all of the sparse gains on the day for the NASDAQ and S&P, and sent the Dow Industrials tumbling in a textbook case of how stock-trading algorithms distort and disrupt what used to be markets run by human beings.
Moderna (MRNA) dropped nearly 10.5% on the day, after gaining 20% on Monday, wiping out most of that one-day wonderfulness. Moderna closed Friday at 66.68, rose to close at 80.00 on Monday and finished up Tuesday at 71.67.
Easy come, easy go.
The Dow, which was in the red almost all day, dropped more than 200 points in 10 minutes. Gains on other exchanges were wiped out in one fell swoop. Such is the fickle nature of equity markets in the days of fake news and extreme momentum chasing and yield seeking.
Elsewhere, Home Depot (HD) took a $640 million after-tax hit due to its response to the pandemic, which included expanded paid time off for hourly employees, weekly bonuses, and extended dependent-care benefits. Earnings per share for the first quarter came in at $2.08, down from $2.27 in the prior-year period and $0.18 below analyst expectations. Home Depot was down 7.25, a loss of nearly three percent on the day.
Walmart blew everything away in its quarterly, reporting adjusted earnings per share of $1.18, up from $1.13 in the prior-year period. Total sales for the big box giant jumped 8.6% to $134.6 billion, handily beating analyst estimates by $3.7 billion. Comparable-store sales in the U.S. soared 10%, driven by strong demand for food, consumables, and health and wellness products.
Even those blockbuster numbers couldn't stop investors from unloading Walmart stock, which finished the day down 2.71 (-2.12%). The stock made a 52-week high less than a month ago.
Housing starts were down 30.2% in April. Building Permits down 20.8% for the most recent month.
Other than all that, there wasn't much excitement on Wall Street, which thrives on gains, no matter where they're sourced.
The major issue facing stocks and the overall economy is how well the Federal Reserve can keep up with the rolling knock-on effects from the coronavirus and government response to it. With the national lockdown winding into a roving re-opening phase, some areas are seeing business and communities getting back to some semblance of normalcy, which is now a moving target. Schools remain closed almost nationwide, while rural communities have fared much better in terms of case incidence and economic slowdown than urban areas.
Having just passed the midway point of the second quarter, there's little doubt anywhere that the blow to GDP will be tremendous. The latest estimates for second quarter GDP range from -42% to -20% and those guesses may be overly optimistic. Being that just about everything was shut down for the entire month of April and most cities - where economic activity is paramount - just beginning to open up to vehicle and foot traffic, there's a very real possibility that the current quarter could collapse by more than 50 percent. Much is dependent on the consumer mindset, which is currently a mixed one.
Having already received bailout currency from the federal government and generous additions to unemployment insurance, lawmakers in Washington are slow-footing the follow-up. House Democrats launched a $3 trillion second stimulus measure on Friday, but Republicans in the Senate are calling the bill dead on arrival, preferring to take time to assess the result from round one before committing to more fun money for small business and individuals.
One unmistakable aspect of the government's bailout efforts is the unexpected consequences from giving people who were laid off or furloughed in the early days of the lockdown movement an additional $600 a week in unemployment compensation. As it turns out, a very large percentage (up to 70% according to some estimates) of workers are making more now sitting at home collecting benefits than they were when they were gainfully employed and many of them are refusing to go back to their old jobs. Would anybody have suspected that hard-working Americans would rather stay home and cash checks from the government rather than grind out a 9-to-5 existence?
It shows, yet again, that government is always the problem and never the solution. Welcome to socialism 101 and a test run of Universal Basic Income (UBI). Alongside Modern Monetary Theory (MMT), now in live alpha testing by the Federal Reserve, the federal government and its central bank have slingshot the American public into a brave new world of radical economics, the long-term effects known by exactly nobody, though skeptics believe it will eventually result in either a worldwide depression, neo-feudalism (Max Keiser and others easily figured that one out), hyper-inflation, and a growing divide between haves and have-nots, already a chasm-sized gap.
Best bet is to be ready for all of the above by investing in hard assets, growing a garden, learning as much as possible about animal husbandry (at least chickens), and obtaining skills necessary to eek out a meager existence without the benefit of a central authority. Younger people will increasingly find such advice tiresome and boring, but the jobs and careers they were engaged in before the crisis occurred will almost certainly be greatly affected, with an emphasis on the negative.
Along those lines, unless local governments begin the process of trimming their robust budgets, cities and towns face imminent crises, the bigger ones looking at enormous needs that neither the federal government nor the Federal Reserve can fulfill.
Life will gradually return to a dystopian almost-normal in coming months. Thankfully, Summer is on the horizon, along with warmer weather and outdoor activities which should provide relief from the mask-wearing, social distancing, and fear mongering so prevalent in the current environment. On the other hand, things are heating up pretty quickly on all fronts. Expecting more disruption, displeasure, discontent, disparate government actions, fraud, fakery, and general dysfunction would be a solid frame of reference for anyone wishing to come out on the other side of this - circa 2022 - somewhat sane and intact.
At the Close, Tuesday, May 19, 2020:
Dow: 24,206.86, -390.51 (-1.59%)
NASDAQ: 9,185.10, -49.72 (-0.54%)
S&P 500: 2,922.94, -30.97 (-1.05%)
NYSE: 11,248.97, -153.26 (-1.34%)
Showing posts with label building permits. Show all posts
Showing posts with label building permits. Show all posts
Thursday, May 21, 2020
Tuesday, June 18, 2013
When Three Strikes Is a Home Run
In the game of baseball, there are rules, immutable and unchanging. Three outs per inning. A caught fly ball is an out. Three strikes and you're out.
The world of high finance, as demonstrated daily on the trading platforms, carries no such rules, other than simple casino-style paradigms. Make the right bet, at the right time, and you're a winner, after the various parties to the trade take their respective cuts, of course. The broker gets theirs, the government, another. It's more about timing and luck, especially these days, when nothing much matters other than the directionality of the various computer algos plying and playing the indices.
So it is that in stocks, you have situations like today, wherein three strikes equates to hitting a home run. Prior to the opening bell, three different sets of economic data were presented, and, against expectations, all were swings and misses, except maybe the seasonally-adjusted building permits, which could be weighed as a foul tip into the catcher's mitt, a strike by any other name.
First came the May CPI, up 0.1%, on expectation of a rise of 0.2%, well short of the Fed's annualized two percent inflation target. Strike one. Next up, housing starts, which banked 914K, well below expectations of 950K. Strike two. As mentioned above, building permits, which mean nothing other than somebody is planning to do something, like put up a fence or remodel a bathroom, were just under the expected annualized rate of 975K - at 974K. Strike three.
The market response was as expected, with deference and possibly blissful ignorance toward the headline numbers, straight up all day, a veritable home run, even as auto sales in Europe reached 20-year lows and an agent of our very own secret police, the NSA (No Such Agency, to wise guys) testified to congress that the wholly unconstitutional massive spying program that filters every American's phone calls, emails and internet activity, prevented the bombing of the NY Stock Exchange by some nefarious, insidious suspect known only as "the doctor" in 2008. The NSA says more than 50 terrorist plots were uncovered by their spy programs since 9/11/2001. Not even the best Hollywood script writers could have come up with a better narrative to deprive citizens of their fourth amendment rights. Those NSA guys hire only the best, you know.
Thus stocks ended the day close to all-time highs once again. The Dow Industrials are within spitting distance - less than 100 points - of the May 28 closing high of 15,409.39 as the Fed ponders what to do next, wrapping up their two-day FOMC meeting on Wednesday. A policy decision is due out at 2:00 pm EDT, followed by a reading of the statement and press conference, by everybody's favorite "doctor," the dis-honorable Ben Bernanke, balding, bearded, wizened Chairman of the Federal Reserve.
With recent jawboning efforts pointing toward some tightening of Fed policy, the markets seem to be expecting no change in course for the every-easy Fed, and, while there's some nervousness over the wording of the statement, one might suspect that an even more important date - expiry of June options contracts on Friday - may be what's really driving the markets higher this week.
With baited breath we await the words offearless leader the Chairman. Can't wait.
Dow 15,318.23, +138.38 (0.91%)
NASDAQ 3,482.18, +30.05 (0.87%)
S&P 500 1,651.81, +12.77 (0.78%)
NYSE Composite 9,399.63, +61.74 (0.66%)
NASDAQ Volume 1,593,283,375
NYSE Volume 3,392,735,750
Combined NYSE & NASDAQ Advance - Decline: 4430-2051
Combined NYSE & NASDAQ New highs - New lows: 327-76
WTI crude oil: 98.44, +0.67
Gold: 1,366.90, -16.20
Silver: 21.68, -0.081
The world of high finance, as demonstrated daily on the trading platforms, carries no such rules, other than simple casino-style paradigms. Make the right bet, at the right time, and you're a winner, after the various parties to the trade take their respective cuts, of course. The broker gets theirs, the government, another. It's more about timing and luck, especially these days, when nothing much matters other than the directionality of the various computer algos plying and playing the indices.
So it is that in stocks, you have situations like today, wherein three strikes equates to hitting a home run. Prior to the opening bell, three different sets of economic data were presented, and, against expectations, all were swings and misses, except maybe the seasonally-adjusted building permits, which could be weighed as a foul tip into the catcher's mitt, a strike by any other name.
First came the May CPI, up 0.1%, on expectation of a rise of 0.2%, well short of the Fed's annualized two percent inflation target. Strike one. Next up, housing starts, which banked 914K, well below expectations of 950K. Strike two. As mentioned above, building permits, which mean nothing other than somebody is planning to do something, like put up a fence or remodel a bathroom, were just under the expected annualized rate of 975K - at 974K. Strike three.
The market response was as expected, with deference and possibly blissful ignorance toward the headline numbers, straight up all day, a veritable home run, even as auto sales in Europe reached 20-year lows and an agent of our very own secret police, the NSA (No Such Agency, to wise guys) testified to congress that the wholly unconstitutional massive spying program that filters every American's phone calls, emails and internet activity, prevented the bombing of the NY Stock Exchange by some nefarious, insidious suspect known only as "the doctor" in 2008. The NSA says more than 50 terrorist plots were uncovered by their spy programs since 9/11/2001. Not even the best Hollywood script writers could have come up with a better narrative to deprive citizens of their fourth amendment rights. Those NSA guys hire only the best, you know.
Thus stocks ended the day close to all-time highs once again. The Dow Industrials are within spitting distance - less than 100 points - of the May 28 closing high of 15,409.39 as the Fed ponders what to do next, wrapping up their two-day FOMC meeting on Wednesday. A policy decision is due out at 2:00 pm EDT, followed by a reading of the statement and press conference, by everybody's favorite "doctor," the dis-honorable Ben Bernanke, balding, bearded, wizened Chairman of the Federal Reserve.
With recent jawboning efforts pointing toward some tightening of Fed policy, the markets seem to be expecting no change in course for the every-easy Fed, and, while there's some nervousness over the wording of the statement, one might suspect that an even more important date - expiry of June options contracts on Friday - may be what's really driving the markets higher this week.
With baited breath we await the words of
Dow 15,318.23, +138.38 (0.91%)
NASDAQ 3,482.18, +30.05 (0.87%)
S&P 500 1,651.81, +12.77 (0.78%)
NYSE Composite 9,399.63, +61.74 (0.66%)
NASDAQ Volume 1,593,283,375
NYSE Volume 3,392,735,750
Combined NYSE & NASDAQ Advance - Decline: 4430-2051
Combined NYSE & NASDAQ New highs - New lows: 327-76
WTI crude oil: 98.44, +0.67
Gold: 1,366.90, -16.20
Silver: 21.68, -0.081
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