With the FOMC decision Wednesday to reduced the federal funds overnight lending rate another 25 basis points, to a range of 1.50-1.75%, stocks took a the rest of decision day and Thursday to digest the news, then ramped stocks on Friday, sending the NASDAQ and S&P 500 to record closings and the Dow Jones Industrials and NYSE Composite near all-time highs.
While the third consecutive rate cut was able to reawaken some of Wall Street's animal spirits, it may be the last one for a while. Changing the wording in some parts of their statement, the Fed took on a more hawkish stance concerning rates going forward. Fed policy will remain data dependent, but not necessarily active. That didn't bother stock traders, who saw the opportunity to ignite what may extend into a holiday rally, and ran with it.
Wall Street's enthusiasm came a day after the US House of Representatives voted along strict party lines to make their impeachment inquiry against President Trump just a little more public than it has been up to this point, wherein Democrats, led by Chairman of the Permanent Select Committee on Intelligence, Adam Schiff, held secret, closed door depositions and heard hearsay testimony from various witnesses in connection with a phone call the president made to Ukraine President Volodymyr Zelensky back in July.
The charges the Democrats have alleged against Mr. Trump may be scurrilous at worst and inconsequential at best, but that hasn't prevented the Democrats to continue to spread stories to their friends in the corrupt mainstream media to smear the president in the run-up to the 2020 election. Not a single Republican voted in favor of the resolution which formally enshrined the inquiry and expanded it to other committees.
Washington being thus rendered impotent as it wastes the taxpayer dime on ridiculous accusations and pointless investigations - along the same lines as the 2+ years of the infamous Mueller probe - it does give Wall Street some relief, understanding that the government will be introducing no new laws or regulations that might impede the current, long-standing bull run.
Elsewhere, outside the United States, the world is burning, either through popular strife in countries and places as diverse as Chile, Hong Kong, and Spain (Catalonia), or by economic policy, especially the brunt instrumentality of negative interest rates, in many European countries.
China's economic slowdown became an issue this week as well, demonstrating that the Chinese hard-line stance on trade negotiations with the United States is a charade. The Chinese government knows full well that it needs cooperation with its main trading partner, but insists on slow-walking any formal agreement. President Trump is well aware of China's condition and has maintained his equally-tough positions through whatever negotiations have been made or planned. China is eventually going to lose its grip and be forced to come to terms with the United States or risk popular uprisings of its own people.
Ignoring the background noise of geopolitics, companies continued to roll out third quarter earnings reports which were modest, but nowhere near disastrous. Additionally, US GDP came in at a stronger-than-expected 1.9% in the first estimate, and October job growth was muted, but well beyond expectations, delivering a non-farm payroll report that saw job gains of 128,000, following an upwardly revised 180,000 increase in September, easily beating market expectations of 89,000. Even though the BLS report is a damaged documentary on true economic growth, the trading community saw this as a positive one and responded accordingly.
Bonds rallied. The yield curve, having un-inverted in early August, continued to steepen, with the 10-year note at 1.69% on Thursday before closing out the week at 1.73%. The longer-duration, 30-year bond, which had fallen under two percent in July, and was being sold off until this week, rallied sharply, with yields falling from 2.34% on Monday to 2.17% on Thursday, settling on Friday at 2.21%.
Gold and silver were also bid, gold regaining the $1500 per ounce level and silver shooting beyond $18 per ounce.
The week ahead features more madness from Washington, a slew of earnings reports, including some popular names like Shake Shack, Uber, UnderArmor, Sprint, Hertz, Groupon, Mariott (Monday), Chesapeake Energy and Newmont Mining (Tuesday), Roku, CVS Health, Square, Humana, Qualcom (Wednesday), Teva, Planet Fitness, AMC Entertainment, Cardinal Health, Stamps.com (Thursday), and Duke Energy and US Concrete (Friday). The Walt Disney Company (DIS), a Dow component, reports Thursday.
Barring any unforeseen negative developments like bank runs (China), riots and street killings (Hong Kong), or desultory commentary on negative interest rates (Denmark), all appears to be smooth sailing through Black Friday, which approaches rapidly, just 19 trading days hence.
Happy Holidays? Too soon?
At the Close, Friday, November 1, 2019:
Dow Jones Industrial Average: 27,347.36, +301.13 (+1.11%)
NASDAQ: 8,386.40, +94.04 (+1.13%)
S&P 500: 3,066.91, +29.35 (+0.97%)
NYSE Composite: 13,300.27, +128.46 (+0.98%)
For the Week:
Dow: +389.30 (+1.44%)
NASDAQ: +143.28 (+1.74%)
S&P 500: +29.35 (+0.97%)
NYSE Composite: +154.03 (+1.17%)
The following is dedicated to California Rep. Adam Schiff:
Showing posts with label Uber. Show all posts
Showing posts with label Uber. Show all posts
Sunday, November 3, 2019
Thursday, August 30, 2018
Stocks Take A Breather As Tariff Talk Toughens; Underground Economy, Self-Employment Rising Rapidly
This was not completely unexpected.
Markets have been absolutely on fire the past two weeks, and a pullback was inevitable. The culprit, as usual, will be Donald Trump, and his threat to slap tariffs on $200 billion of Chinese imports.
While the additional revenue will no doubt aid the fiscal formula of the federal government, the merger impact will be in the form of higher prices, though the effect will be spread out among America's 325 million populace.
Another way of looking at it is that $200 billion worth of Chinese goods spread among roughly 200 million adult Americans comes to $1000 per person. If you whack the goods another 25% with tariffs, it's another $250 per person. Over the course of six months or a year, it's not much, say five to 10 bucks a week.
Chump change... or maybe, Trump change.
An article that caught the eye today focused on the burgeoning self-employment movement in the United States, which has been growing at three times the rate of regular employment over the past three years.
Credit American ingenuity. Work is changing and more than a few people are trading in the nine-to-five grind for making their own hours, especially among Millennials and older, healthy retirees or semi-retired folks. With the burden of Obamacare taken off the backs of Americans, the workforce is free to follow the money, be it as a Uber driver, seller of goods on eBay, pushing online services, or a myriad of other self-employment opportunities, many of which are unregulated, untaxed, and unreported.
The so-called "underground economy" which the US government gave up trying to track in the mid-seventies, is enormous. Its presence and size puts to shame all the government employment statistics, especially the low "persons in the labor force" numbers that plagued the Obama years. Americans come in all stripes and flavors, from welfare recipients who do side jobs, to baby boomers who mow lawns for cash. Most of all, Americans are resourceful and many of them are overtaxed and seeking ways to increase their incomes without notifying the IRS or state governments.
It's working, and the money generated goes all through the economic powerhouse that is the US domestic economy. Governments - local, state, and federal - are all too big and they all waste people's time and money. The US population moved on years ago. Only now, it's getting to be so large that it's hard not to notice.
There probably aren't too many people who remember the years of Prohibition (1920-1933), when government over-reached, outlawing the sale and distribution of alcoholic beverages. By the mid 1920s, the "underground economy" of the day had exceeded the "official" government-tracked economy. We're on the same path today. People want more control of their lives and their money, and they're taking both back, with a vengeance.
No pension? No problem. Little league umpires make $30-60 per game and most of it is paid in cash. That's just one example.
Dow Jones Industrial Average August Scorecard:
At the Close, Thursday, August 30, 2018:
Dow Jones Industrial Average: 25,986.92, -137.65 (-0.53%)
NASDAQ: 8,088.36, -21.32 (-0.26%)
S&P 500: 2,901.13, -12.91 (-0.44%)
NYSE Composite: 13,039.93, -92.23 (-0.70%)
Markets have been absolutely on fire the past two weeks, and a pullback was inevitable. The culprit, as usual, will be Donald Trump, and his threat to slap tariffs on $200 billion of Chinese imports.
While the additional revenue will no doubt aid the fiscal formula of the federal government, the merger impact will be in the form of higher prices, though the effect will be spread out among America's 325 million populace.
Another way of looking at it is that $200 billion worth of Chinese goods spread among roughly 200 million adult Americans comes to $1000 per person. If you whack the goods another 25% with tariffs, it's another $250 per person. Over the course of six months or a year, it's not much, say five to 10 bucks a week.
Chump change... or maybe, Trump change.
An article that caught the eye today focused on the burgeoning self-employment movement in the United States, which has been growing at three times the rate of regular employment over the past three years.
Credit American ingenuity. Work is changing and more than a few people are trading in the nine-to-five grind for making their own hours, especially among Millennials and older, healthy retirees or semi-retired folks. With the burden of Obamacare taken off the backs of Americans, the workforce is free to follow the money, be it as a Uber driver, seller of goods on eBay, pushing online services, or a myriad of other self-employment opportunities, many of which are unregulated, untaxed, and unreported.
The so-called "underground economy" which the US government gave up trying to track in the mid-seventies, is enormous. Its presence and size puts to shame all the government employment statistics, especially the low "persons in the labor force" numbers that plagued the Obama years. Americans come in all stripes and flavors, from welfare recipients who do side jobs, to baby boomers who mow lawns for cash. Most of all, Americans are resourceful and many of them are overtaxed and seeking ways to increase their incomes without notifying the IRS or state governments.
It's working, and the money generated goes all through the economic powerhouse that is the US domestic economy. Governments - local, state, and federal - are all too big and they all waste people's time and money. The US population moved on years ago. Only now, it's getting to be so large that it's hard not to notice.
There probably aren't too many people who remember the years of Prohibition (1920-1933), when government over-reached, outlawing the sale and distribution of alcoholic beverages. By the mid 1920s, the "underground economy" of the day had exceeded the "official" government-tracked economy. We're on the same path today. People want more control of their lives and their money, and they're taking both back, with a vengeance.
No pension? No problem. Little league umpires make $30-60 per game and most of it is paid in cash. That's just one example.
Dow Jones Industrial Average August Scorecard:
| Date | Close | Gain/Loss | Cum. G/L |
| 8/1/18 | 25,333.82 | -81.37 | -81.37 |
| 8/2/18 | 25,326.16 | -7.66 | -89.03 |
| 8/3/18 | 25,462.58 | +136.42 | +55.05 |
| 8/6/18 | 25,502.18 | +39.60 | +94.65 |
| 8/7/18 | 25,628.91 | +126.73 | +221.38 |
| 8/8/18 | 25,583.75 | -45.16 | +176.22 |
| 8/9/18 | 25,509.23 | -74.52 | +101.70 |
| 8/10/18 | 25,313.14 | -196.09 | -94.39 |
| 8/13/18 | 25,187.70 | -125.44 | -219.83 |
| 8/14/18 | 25,299.92 | +112.22 | -107.61 |
| 8/15/18 | 25,162.41 | -137.51 | -245.12 |
| 8/16/18 | 25,558.73 | +396.32 | +151.20 |
| 8/17/18 | 25,669.32 | +110.59 | +261.79 |
| 8/20/18 | 25,758.69 | +89.37 | +351.16 |
| 8/21/18 | 25,822.29 | +63.60 | +414.76 |
| 8/22/18 | 25,733.60 | -88.69 | +326.07 |
| 8/23/18 | 25,656.98 | -76.62 | +249.45 |
| 8/24/18 | 25,790.35 | +133.37 | +382.82 |
| 8/27/18 | 26,049.64 | +259.29 | +642.11 |
| 8/28/18 | 26,064.02 | +14.38 | +656.49 |
| 8/29/18 | 26,124.57 | +60.55 | +717.04 |
| 8/30/18 | 25,986.92 | -137.65 | +579.39 |
At the Close, Thursday, August 30, 2018:
Dow Jones Industrial Average: 25,986.92, -137.65 (-0.53%)
NASDAQ: 8,088.36, -21.32 (-0.26%)
S&P 500: 2,901.13, -12.91 (-0.44%)
NYSE Composite: 13,039.93, -92.23 (-0.70%)
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