After three days of losses, stocks bounced back on Wednesday, though they did not recover all of the ground lost.
Since the close Wednesday prior to Thanksgiving, the Dow is down over 500 points, the NASDAQ has shed 140 points, and the S&P 500 is off 40 points. The bounce on Wednesday, December 4, recovered less than half of the recent declines. Though the losses are nothing serious in the larger scheme of things, they are signaling that at least some of the investment community are not convinced the US economy, or US corporations, are in the best of ways. Thus, profits are being taken off the table. Further declines will feed into more year-end profit-taking and further loss prevention.
Recent movement in bonds also suggests that a countertrend is developing, with money shifting from risk assets into the bond market, where returns are low but widely accepted as safer than stocks. When money flows out of dividend-producing equities into treasuries or corporate debt, it's a sure sign that investors are nervous about the future direction. Last December witnessed massive declines, bordering on sending the stock market into bearish conditions, though at decline was stopped short by Treasury Secretary Steven Mnuchin, whose message to the President's Working Group on Financial Markets (AKA the Plunge Protection Team, or PPT) was clearly designed to rescue the stock market from rampant year-end selling.
Actions taken by the Working Group served to stem the tide of sellers and produce robust gains though the better part of 2019. With the year nearing an end, stocks are once again close to all-time highs, though recent data does not support such lofty valuations. From ISM manufacturing coming in below expectations, to Wednesday's ADP private sector jobs report for November, which reported an increase of just 67,000 jobs. The payroll number was well below the expected 150,000, and was the slowest growth since May.
Analysts are warning that the ADP number may be in stark contrast to what the BLS reports in Friday's non-farm payroll data, because the ADP report did not include General Motors workers returning from strike, whereas the BLS data will include those returning workers as "jobs added." The non-farm report for November is expected to show job gains in the range of 180,000 to 187,000 on Friday, up from 128,000 in October.
It makes reading the tea leaves of market sentiment and data just a little more confusing than it already is, given the daily up-and-down movements prompted by the changing signals regarding a US trade deal with China. The trade war has been and will continue to be the main directional driver of the stock market, probably for longer than most people would entertain. The Chinese appear intent on waiting out President Trump until the 2016 election in November, and it also appears that mr. Trump is fine with that.
A non-deal on trade can only cause more consternation for investors wishing to get a real perspective on the macro side of things, though one doesn't have to look far to see that global trade has been and continues to slip and slide away. Overall, global conditions are not suitable to induce a stock market rally, though they are also not severe enough to cause a crash. A slow grind down may be the path of least resistance, with days and weeks of gains and losses speckling the index charts.
At the Close, Wednesday, December 4, 2019:
Dow Jones Industrial Average: 27,649.78, +146.97 (+0.53%)
NASDAQ: 8,566.67, +46.03 (+0.54%)
S&P 500: 3,112.76, +19.56 (+0.63%)
NYSE Composite: 13,457.97, +91.88 (+0.69%)
Thursday, December 5, 2019
Wednesday, December 4, 2019
Stocks Drop for Third Straight Session
For the third straight session, US stocks finished in the red, an occurrence that hasn't befallen US indices since the first week of August. Tuesday's losses were minimized by concerted buying after the indices bottomed out mid-morning. The Dow was down more than 450 points at its nadir.
More concerning than a mild adjustment in the value of stocks was the movement in US treasuries, as the 10-year note yield dropped 11 basis points on the day, falling to 1.72%, the lowest level since October 10. After spending the first seven months of 2019 with a yield in excess of 2.00%, the benchmark bond has steadfastly maintained a "one-handle" in subsequent months. A prolonged stock selloff would likely send yields to year-lows in a rush to safety.
The ten-year note bottomed out at 1.47% in late August, early September, closing at that yield on three separate occasions. That's still a way off, though there are signs that a repeat of last December's deep stock dive could be readying.
At the Close, Tuesday, December 3, 2019:
Dow Jones Industrial Average: 27,502.81, -280.23 (-1.01%)
NASDAQ: 8,520.64, -47.34 (-0.55%)
S&P 500: 3,093.20, -20.67 (-0.66%)
NYSE Composite: 13,366.09, -82.17 (-0.61%)
More concerning than a mild adjustment in the value of stocks was the movement in US treasuries, as the 10-year note yield dropped 11 basis points on the day, falling to 1.72%, the lowest level since October 10. After spending the first seven months of 2019 with a yield in excess of 2.00%, the benchmark bond has steadfastly maintained a "one-handle" in subsequent months. A prolonged stock selloff would likely send yields to year-lows in a rush to safety.
The ten-year note bottomed out at 1.47% in late August, early September, closing at that yield on three separate occasions. That's still a way off, though there are signs that a repeat of last December's deep stock dive could be readying.
At the Close, Tuesday, December 3, 2019:
Dow Jones Industrial Average: 27,502.81, -280.23 (-1.01%)
NASDAQ: 8,520.64, -47.34 (-0.55%)
S&P 500: 3,093.20, -20.67 (-0.66%)
NYSE Composite: 13,366.09, -82.17 (-0.61%)
Tuesday, December 3, 2019
Trade Uncertainty Tempers Markets on First Full Day of Holiday Trading
The first week of the final month of 2019 was a deviation from the general theme of 2019. Stocks were sold with reckless abandon, as were bonds, with the 10-year note bounding back to yield 1.83% - though higher during the day - a level not visited since mid-November.
The bond market felt more like churning than the start of actual long-term selling, but stocks had a different sense about them. Bad news on the US-China trade situation has the financial world in a near-panic as the deadline approaches for added tariffs to be applied on Chinese exports to the US. Additionally, President Trump reimposed tariffs on steel from Argentina and Brazil, citing the two South American countries' recent currency devaluations as reason for slapping on the tariffs "immediately."
While the steel tariffs boosted shares of US steel producers, it only exacerbated the unease surrounding the wider Chinese issue and sent stocks into a day-long tailspin. Selling was the order of the day globally, as bourses from Japan, China, Europe and the Americas all suffered declines with the sourness continuing into Tuesday as trade resumed Tuesday in international markets.
While the focus may currently be on trade and tariffs, there appears to be more to the sudden swing from buying to selling than just the movement of goods around the planet. Recall that Friday (ubiquitously know as Black Friday in the US) also witnessed declines, not the usual euphoria associated with the start of the holiday shopping season. Other concerns are various recent populist uprising in places as diverse as Hong Kong, Iran, Lebanon, India and elsewhere. Besides, it is December, so one can safely assume that any concerted selling is going to be enhanced by year-end profit-taking.
While the mainstream (now nearly completely fake) media will focus on the stock markets' generous advances during the year, they will also conveniently gloss over the dual declines from October and December of 2018, which, taken in such context, renders gains from September 2018 as practically nil.
The Dow Jones Industrial Average, for instance, is up only 1000 points since mid-September of 2018, accounting for a gain of less than a half percent. The NASDAQ has tacked on about 450 points since August of last year, while the S&P 500, at current levels, has added just 183 points over the past 15 months, the point being that stocks, though they've recently made new all-time highs, are really not much further ahead than they were more than a year ago, but the media will remind us only of what's happened in the current calendar year, which might be a tad misleading.
In any case, internationally, stocks are being whacked again Tuesday morning and US futures are looking pretty dismal, with Dow futures down nearly 300 points less than an hour prior to the opening bell.
Corporate profits have been underwhelming, to say the least, for the past few quarters, so some fundamental shift may be underway. If a flight into the safely of bonds develops, that will be a sign that the stock market is going to finish off the year on a negative note, though there's always the possibility of a Sant Calus rally the week between Christmas and New Year to save everybody's bacon.
At the Close, Monday, December 2, 2019:
Dow Jones Industrial Average: 27,783.04, -268.37 (-0.96%)
NASDAQ: 8,567.99, -97.48 (-1.12%)
S&P 500: 3,113.87, -27.11 (-0.86%)
NYSE Composite: 13,448.26, -96.95 (-0.72%)
The bond market felt more like churning than the start of actual long-term selling, but stocks had a different sense about them. Bad news on the US-China trade situation has the financial world in a near-panic as the deadline approaches for added tariffs to be applied on Chinese exports to the US. Additionally, President Trump reimposed tariffs on steel from Argentina and Brazil, citing the two South American countries' recent currency devaluations as reason for slapping on the tariffs "immediately."
While the steel tariffs boosted shares of US steel producers, it only exacerbated the unease surrounding the wider Chinese issue and sent stocks into a day-long tailspin. Selling was the order of the day globally, as bourses from Japan, China, Europe and the Americas all suffered declines with the sourness continuing into Tuesday as trade resumed Tuesday in international markets.
While the focus may currently be on trade and tariffs, there appears to be more to the sudden swing from buying to selling than just the movement of goods around the planet. Recall that Friday (ubiquitously know as Black Friday in the US) also witnessed declines, not the usual euphoria associated with the start of the holiday shopping season. Other concerns are various recent populist uprising in places as diverse as Hong Kong, Iran, Lebanon, India and elsewhere. Besides, it is December, so one can safely assume that any concerted selling is going to be enhanced by year-end profit-taking.
While the mainstream (now nearly completely fake) media will focus on the stock markets' generous advances during the year, they will also conveniently gloss over the dual declines from October and December of 2018, which, taken in such context, renders gains from September 2018 as practically nil.
The Dow Jones Industrial Average, for instance, is up only 1000 points since mid-September of 2018, accounting for a gain of less than a half percent. The NASDAQ has tacked on about 450 points since August of last year, while the S&P 500, at current levels, has added just 183 points over the past 15 months, the point being that stocks, though they've recently made new all-time highs, are really not much further ahead than they were more than a year ago, but the media will remind us only of what's happened in the current calendar year, which might be a tad misleading.
In any case, internationally, stocks are being whacked again Tuesday morning and US futures are looking pretty dismal, with Dow futures down nearly 300 points less than an hour prior to the opening bell.
Corporate profits have been underwhelming, to say the least, for the past few quarters, so some fundamental shift may be underway. If a flight into the safely of bonds develops, that will be a sign that the stock market is going to finish off the year on a negative note, though there's always the possibility of a Sant Calus rally the week between Christmas and New Year to save everybody's bacon.
At the Close, Monday, December 2, 2019:
Dow Jones Industrial Average: 27,783.04, -268.37 (-0.96%)
NASDAQ: 8,567.99, -97.48 (-1.12%)
S&P 500: 3,113.87, -27.11 (-0.86%)
NYSE Composite: 13,448.26, -96.95 (-0.72%)
Monday, December 2, 2019
On Black Friday, Wall Street Saw Red
Stocks finished the week with gains, even though the shortened session on Friday saw widespread declines.
While shoppers were out at retail locales seeking the big deals, Wall Street types were squaring their books in an attempt to get out ahead of what looks to be disconcerting news on the US-China trade front. Issues in the ongoing trade and tariff tete-a-tete have expanded beyond economics, spilling over into the political realm as Washington passed - and the president signed - resolutions in support of the Hong Kong protestors and human rights, roiling top Chinese officials who issued sharp rebukes on Thanksgiving Thursday.
Hong Kong's reliance upon and distancing from the Chinese political apparatus has served as a launching board for US rhetoric on freedom and rights, the interjection of which can only make what were already-tense negotiations even more complicated. US-China relations now overshadows all other conceptual and practical conditions and Wall Street has taken notice.
Shoppers snapped up $7.4 billion worth of online holiday goodies on Black Friday and are poised to spend another $9.4 billion on Cyber Monday. The numbers for online spending were records. Including Thanksgiving Day sales, online retailing grossed $11.6 billion.
Figures for brick and mortar retailers were not readily available, and may be somewhat blurred by innovations such as "buy online, pick up in store," an outreach by physical stores to combine the best of online shopping and foot traffic to stores.
It's shaping up to be a solid holiday shopping season, unsurprising, due to the robust economy, low unemployment, and the rising stock market. Consumers are not only feeling buoyant, the actually have more money in their wallets from the tax cuts made law in 2017 and implemented in 2018 and 2019.
Otherwise, the week of Thanksgiving and Black Friday was notable only for Friday's slide in the stock market. Normally, equity buyers rush in on a wave of enthusiasm. This year, however, the trade situation with China has cast a long shadow on any enthusiasm.
That dour mood may turn out to be misplaced. While the Chinese continue to foot-drag and seek rollbacks of existing tariffs before signing onto any phase one deal, American negotiators stick with the hard line established early on by President Trump. His contentions that China needs our dollars more than we need their goods, and that China has taken advantage of weaknesses by his predecessors for decades continue to guide trade policy. At the end of any deal, there has to be appreciation for not necessarily an even playing field, but one which is not slanted East. The president has made it clear that he will not acquiesce to Chinese demands or bullying and that steadfastness has kept the two countries from reaching even the most rudimentary agreements.
The likelihood of the trade war continuing through the Democrat party primaries and into the general election season are strong. China appears to be playing the long game, believing that Trump may not win re-election and that they will get a better shake from an incoming Democrat president.
Whistling in the wind is what trade negotiators are calling China's hopeful stand-offishness. Even while impeachment is being bandied about the House of Representatives, the White House sees it as no real threat since Republicans in the Senate would be highly unlikely to find Trump guilty in an impeachment trial, even if the House gins up watered-down articles of impeachment.
The entire impeachment fiasco has been nothing more than an annoyance for the White House and President Trump. Meanwhile, public sentiment for removal from office has peaked and is falling. The latest polls find fewer people engaged on the impeachment issue as the numbers in favor of impeachment have begun to slide.
In the House this week there will be more grandstanding by Democrats, whining by Republicans, and less interest by te American people, whose approval of congress is so low it hardly registers a positive number. Americans would like their government to actually do something constructive on anything outside of politics, health care being the most-often cited issue that warrants attention, along with immigration.
Flailing about and waving hands about "high crimes and misdemeanors" isn't cutting it for huge swaths of the American electorate, especially when the "evidence" produced by the anti-Trump forces consists largely of hearsay, innuendo, third party opinions, and actions that aren't even considered criminal.
Insistence by Democrats to pursue impeachment of Mr. Trump may turn out to be one of the worst political strategies ever devised, by some of the most disingenuous politicians ever to have disgraced the halls of congress.
At the Close, Friday, November 29, 2019:
Dow Jones Industrial Average: 28,051.41, -112.59 (-0.40%)
NASDAQ: 8,665.47, -39.70 (-0.46%)
S&P 500: 3,140.98, -12.65 (-0.40%)
NYSE Composite: 13,545.21, -62.39 (-0.46%)
For the Week:
Dow: +175.79 (+0.63%)
NASDAQ: +145.59 (+1.71%)
S&P 500: +30.69 (+0.99%)
NYSE Composite: +104.26 (+0.78%)
While shoppers were out at retail locales seeking the big deals, Wall Street types were squaring their books in an attempt to get out ahead of what looks to be disconcerting news on the US-China trade front. Issues in the ongoing trade and tariff tete-a-tete have expanded beyond economics, spilling over into the political realm as Washington passed - and the president signed - resolutions in support of the Hong Kong protestors and human rights, roiling top Chinese officials who issued sharp rebukes on Thanksgiving Thursday.
Hong Kong's reliance upon and distancing from the Chinese political apparatus has served as a launching board for US rhetoric on freedom and rights, the interjection of which can only make what were already-tense negotiations even more complicated. US-China relations now overshadows all other conceptual and practical conditions and Wall Street has taken notice.
Shoppers snapped up $7.4 billion worth of online holiday goodies on Black Friday and are poised to spend another $9.4 billion on Cyber Monday. The numbers for online spending were records. Including Thanksgiving Day sales, online retailing grossed $11.6 billion.
Figures for brick and mortar retailers were not readily available, and may be somewhat blurred by innovations such as "buy online, pick up in store," an outreach by physical stores to combine the best of online shopping and foot traffic to stores.
It's shaping up to be a solid holiday shopping season, unsurprising, due to the robust economy, low unemployment, and the rising stock market. Consumers are not only feeling buoyant, the actually have more money in their wallets from the tax cuts made law in 2017 and implemented in 2018 and 2019.
Otherwise, the week of Thanksgiving and Black Friday was notable only for Friday's slide in the stock market. Normally, equity buyers rush in on a wave of enthusiasm. This year, however, the trade situation with China has cast a long shadow on any enthusiasm.
That dour mood may turn out to be misplaced. While the Chinese continue to foot-drag and seek rollbacks of existing tariffs before signing onto any phase one deal, American negotiators stick with the hard line established early on by President Trump. His contentions that China needs our dollars more than we need their goods, and that China has taken advantage of weaknesses by his predecessors for decades continue to guide trade policy. At the end of any deal, there has to be appreciation for not necessarily an even playing field, but one which is not slanted East. The president has made it clear that he will not acquiesce to Chinese demands or bullying and that steadfastness has kept the two countries from reaching even the most rudimentary agreements.
The likelihood of the trade war continuing through the Democrat party primaries and into the general election season are strong. China appears to be playing the long game, believing that Trump may not win re-election and that they will get a better shake from an incoming Democrat president.
Whistling in the wind is what trade negotiators are calling China's hopeful stand-offishness. Even while impeachment is being bandied about the House of Representatives, the White House sees it as no real threat since Republicans in the Senate would be highly unlikely to find Trump guilty in an impeachment trial, even if the House gins up watered-down articles of impeachment.
The entire impeachment fiasco has been nothing more than an annoyance for the White House and President Trump. Meanwhile, public sentiment for removal from office has peaked and is falling. The latest polls find fewer people engaged on the impeachment issue as the numbers in favor of impeachment have begun to slide.
In the House this week there will be more grandstanding by Democrats, whining by Republicans, and less interest by te American people, whose approval of congress is so low it hardly registers a positive number. Americans would like their government to actually do something constructive on anything outside of politics, health care being the most-often cited issue that warrants attention, along with immigration.
Flailing about and waving hands about "high crimes and misdemeanors" isn't cutting it for huge swaths of the American electorate, especially when the "evidence" produced by the anti-Trump forces consists largely of hearsay, innuendo, third party opinions, and actions that aren't even considered criminal.
Insistence by Democrats to pursue impeachment of Mr. Trump may turn out to be one of the worst political strategies ever devised, by some of the most disingenuous politicians ever to have disgraced the halls of congress.
At the Close, Friday, November 29, 2019:
Dow Jones Industrial Average: 28,051.41, -112.59 (-0.40%)
NASDAQ: 8,665.47, -39.70 (-0.46%)
S&P 500: 3,140.98, -12.65 (-0.40%)
NYSE Composite: 13,545.21, -62.39 (-0.46%)
For the Week:
Dow: +175.79 (+0.63%)
NASDAQ: +145.59 (+1.71%)
S&P 500: +30.69 (+0.99%)
NYSE Composite: +104.26 (+0.78%)
Friday, November 29, 2019
China Balks At US Legislation; Consumers Gear Up for Black Friday, Holiday Shopping
Wednesday saw new all-time highs all around, except the lagging NYSE Composite, which finished the day just 30 points below its record close of 13,637.02, marked on January 26, 2018.
Undeterred by potential blowback on trade negotiations due to President Trump's signing of two bills passed almost unanimously by both houses of congress, investors held steady. The bills were aimed at China's leadership, citing US support for the protesters in Hong Kong and making reference to "human rights."
China's official reaction was slow at first, but escalated on Thursday, when the US ambassador was summoned to lodge official protest by China's government and throngs of protesters took to the streets of Hong Kong to give thanks to the United States.
Since US markets were closed on Thursday for the Thanksgiving Day holiday, China's sharp rebuke will be felt on Friday's trading. Futures point to a modestly lower open as the bumpy ride toward ending the trade war between China and the US continues.
Friday's session will be shorted, with markets closing at 1:00 pm ET.
Meanwhile, shoppers have been snapping up deals online and at various retailers who sought to get the jump on Black Friday by offering deals on popular electronics, toys, and clothing as early as Wednesday. Stores may be under pressure to log high sales volumes on Black Friday and Cyber Monday (next week) since the calendar this year has allowed for the shortest possible holiday shopping season, a mere 26 days.
Since the first of November was a Friday, and Thanksgiving is always the fourth Thursday of November, this year's shopping season will be much shorter than last year's, when Thanksgiving was at its earliest possible date, the 22nd of November. A full six days shorter, this holiday shopping spree may make same store sales on a year over year basis are likely to fall short of targets for many retailers unless door-busting deals and heavy advertising can draw shoppers into stores.
Complicating matters further is Christmas falling on a Wednesday, making the last two shopping days a Monday and Tuesday, normally working days for most Americans.
With the economy in excellent shape, the short shopping season may not be much of an issue for adroit retailers, as spending per consumer is expected to be higher than last year. It remains to be seen whether consumers, the bulwark of the US economy, will respond with record-setting spending or whether relentless talk of a coming recession or the pending impeachment of President Trump will have a negative effect.
One thing is certain: Americans love to shop. It's practically the national pastime.
At the Close, Wednesday, November 27, 2019:
Dow Jones Industrial Average: 28,164.00, +42.32 (+0.15%)
NASDAQ: 8,705.17, +57.24 (+0.66%)
S&P 500: 3,153.63, +13.11 (+0.42%)
NYSE Composite: 13,607.62, +47.91 (+0.35%)
Undeterred by potential blowback on trade negotiations due to President Trump's signing of two bills passed almost unanimously by both houses of congress, investors held steady. The bills were aimed at China's leadership, citing US support for the protesters in Hong Kong and making reference to "human rights."
China's official reaction was slow at first, but escalated on Thursday, when the US ambassador was summoned to lodge official protest by China's government and throngs of protesters took to the streets of Hong Kong to give thanks to the United States.
Since US markets were closed on Thursday for the Thanksgiving Day holiday, China's sharp rebuke will be felt on Friday's trading. Futures point to a modestly lower open as the bumpy ride toward ending the trade war between China and the US continues.
Friday's session will be shorted, with markets closing at 1:00 pm ET.
Meanwhile, shoppers have been snapping up deals online and at various retailers who sought to get the jump on Black Friday by offering deals on popular electronics, toys, and clothing as early as Wednesday. Stores may be under pressure to log high sales volumes on Black Friday and Cyber Monday (next week) since the calendar this year has allowed for the shortest possible holiday shopping season, a mere 26 days.
Since the first of November was a Friday, and Thanksgiving is always the fourth Thursday of November, this year's shopping season will be much shorter than last year's, when Thanksgiving was at its earliest possible date, the 22nd of November. A full six days shorter, this holiday shopping spree may make same store sales on a year over year basis are likely to fall short of targets for many retailers unless door-busting deals and heavy advertising can draw shoppers into stores.
Complicating matters further is Christmas falling on a Wednesday, making the last two shopping days a Monday and Tuesday, normally working days for most Americans.
With the economy in excellent shape, the short shopping season may not be much of an issue for adroit retailers, as spending per consumer is expected to be higher than last year. It remains to be seen whether consumers, the bulwark of the US economy, will respond with record-setting spending or whether relentless talk of a coming recession or the pending impeachment of President Trump will have a negative effect.
One thing is certain: Americans love to shop. It's practically the national pastime.
At the Close, Wednesday, November 27, 2019:
Dow Jones Industrial Average: 28,164.00, +42.32 (+0.15%)
NASDAQ: 8,705.17, +57.24 (+0.66%)
S&P 500: 3,153.63, +13.11 (+0.42%)
NYSE Composite: 13,607.62, +47.91 (+0.35%)
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