The credit cycle sure looks like it’s headed off a cliff in U.S., China
With U.S. stock markets closed today for Presidents’ Day, credit market news has an opening to move higher on the Investor Worry Bandstand. (The kids give it an 65, as they used to say on American Bandstand. But I think its moving up fast. The American Bandstand...Markets talk themselves out of belief in brutal retail numbers
Overall retail sales fell 1.2% in December from November, according to the Commerce Department. That’s the worst drop in nine years. Economists surveyed by Bloomberg had projected a 0.1% gain in retail sales. Out of the gate stocks fell today on the news with...
President Trump to sign spending bill to avoid shutdown but will declare national emergency to secure funding for The Wall
At 3:26 p.m. Washington time Senate Majority Leader Mitch McConnell interrupted a speech by Iowa Senate Chuck Grassley on biofuels to announce that President Donald Trump would sign the deal worked out by the House and Senate to fund nine departments of the federal...
Core CPI inflation up 2.2% year over year
For January, headline Consumer Price Index (CPI) inflation was unchanged, thanks to falling oil prices-the energy component of the index was down 3.1% for the month. The Core CPI, which excludes more volatile food and energy prices and is closer to the PCE inflation...
Forget about 6% earnings growth for 2019–how about 1%?
Over the weekend on my subscription JubakAM.com site I wrote about the possibility of an earnings recession in 2019. And I noted that the Wall Street analyst consensus for the year was pointing toward 6% growth in earnings for the companies in the Standard &...
Earnings season draws to a close–with another (slight) warning
As of this morning, more than 75% of the companies in the Standard & Poor’s 500 stock index have reported fourth quarter earnings. As per usual, the bulk of companies have beaten Wall Street earnings estimates. (This is just a game that Wall Street and CEOs...
China trade talks outcome uncertain–but market reaction even more difficult to read
Today, a day when the U.S. financial markets seem to be in a mood to worry about China, is a good time to look at the likeliest outcomes of the U.S.-China trade talks and the likely market reaction to those outcomes. The clock is ticking on the Trump...
China when? worries financial markets
President Donald Trump has made it clear–repeatedly–that there won’t be an agreement to end the U.S.-China trade war until he has met with China’s President Xi Jinping. And that’s got the market worried. Because the Trump...
Forget recession worries–the big danger now is in the credit cycle
The Federal Reserve and the world’s other central banks face an impossible choice. On the one hand, they could have tighten the money supply by raising interest rates or other means. That would have risked sending economies near recession into...
Half way to an earnings recession?
The latest compilation of analyst earnings projections by FactSet shows that Wall Street is expecting earnings for the companies in the Standard & Poor’s 500 to drop by 0.8% year over year in the first quarter of 2019. That’s down from late January...
Don’t fight the Fed…and the Bank of Japan, and the People’s Bank, and the European Central Bank
Once upon a time–as late as 2018–the consensus thinking in financial markets was that the Federal Reserve was but the first central bank to raise interest rates. Other central banks, most notably the European Central Bank, (but not the Bank of Japan, which...
Jobs report today adds to Fed puzzle
Last week the Federal Reserve signaled a huge policy change–no (or at most one) interest rate increase in 2019 and flexibility on continuing/ending the $50 billion a month program to reduce the size of the Fed’s balance sheet. Markets cheered the shift on...
Market goes all in on “No interest rate increase for 2019”
The market has priced in just about a zero percent change of an interest rate increase from the Federal Reserve in 2019. In fact, looking out through all of 2019 and into 2020, the financial markets believe there’s more chance of an interest rate cut than of a...
So how long before markets react to the dark side of today’s Fed decision?
Today the financial markets are in love with the idea that the Federal Reserve will raise rates no more than once in 2019–and more likely zero. And that the central bank will re-examine its policy of letting its balance sheet run off to the tune of $50 billion a...
The Fed capitulated today, the market believes: Did the Fed intend to send that message?
It’s hard for me to see the Federal Reserve’s statement today after the meeting of the Open Market Committee, and then Fed chair Jerome Powell’s presentation at the most-meeting press conference, as anything other than capitulation to the financial...
Stock market heard what it wanted to hear from the Fed
Today the Federal Reserve’s Open Market Committee said it will The Federal Reserve said it will be “patient” on any future interest-rate increases. moves. And it will be flexible and “prepared to adjust any of the details for completing balance sheet...
Indictment of China’s Huawei Technologies comes just days before next round in U.S.-China trade talks
The U.S. Department of Justice filed criminal charges Monday against Huawei Technologies, China’s biggest technology company. The charges include an allegation that the company stole trade secrets from TMobile and that Huawei committed bank fraud by violating...
Apple meeting lowered earnings, revenue expectations–and then guides lower for next quarter
Goes to show you that if you lower expectations enough, you can beat them when you actually report earnings. Even if the earnings report itself is bad news. After the close of the New York market today, Apple (AAPL) reported December quarter earnings of $4.18 a share...
Show me” oil market still getting no evidence of rebalance of supply/demand
Yesterday the American Petroleum Institute reported a surprise increase in U.S. crude oil inventories with a build of 6.55 million barrels for the week ending January 18. Oil analysts had expected a small draw down in crude oil inventories of 42,000 barrels. Today the...
Great day for chip stocks–and then Intel misses
Today’s regular session was great for chip stocks. The Vance Vectors Semiconductor ETF (SMH) was up nearly 6% on the day powered by earnings beats for the quarter from Texas Instruments (TXN) up 6.5%; Xilinx (XLNX) up 17.5%; and Lam Research (LRCX) up 14.8%. And...Today it’s a battle between positive earnings and negative China trade sentiment
And, as of 12:30 p.m. New York time, negative trade sentiment was winning. The day started off with positive earnings reports–earnings beats and positive guidance–from IBM (IBM), Procter & Gamble (PG), and United Technologies (UTX). In premarket...
Why I can’t put away my bear market worries #2: Financials to tech earnings transition
The big banks have delivered to start off earnings season. And the financial sector has been a key source of strength for the uptrend in stocks since January 3. Over the last month, the Financial Select Sector SPDR ETF (XLF) is up 5.4% as of the close on January 17....
Why I can’t put away my bear market worries: #1 Hong Kong overnight
Did you see what happened in Hong Kong overnight? The major Hong Kong Index, the Hang Seng was down slightly, dropping 0.54% on the session. But a smaller group of stocks in the Hong Kong market got slaughtered. Jiayuan International Group, Sunshine 100 China Holdings...
Trump administration economists double estimates of shutdown costs
Yesterday, President Donald Trump’ economic advisers more than doubled their estimate of the damage to the U.S. economy by the shutdown of parts of the U.S. government affecting some 800,000 federal workers. The Council of Economic Advisers now calculates the...
China promises to cut taxes, increase spending to stimulate economy
China will cut taxes by $300 billion (or about 1.2% of GDP according to JPMorgan) in an effort to increase growth in a slowing economy, deputy central bank governor Zhu Hexin, assistant finance minister Xu Hongcai, and Lian Weiliang, vice chairman of the National...
China data nudge to global growth fears
Overnight, China reported as larger than expected December trade surplus ($57.06 billion against an expected $51.53 billion) but a December year over year 7.6% drop in imports that argued for a slowdown in China’s domestic economy. Economists had expected a 5%...
Bad retail sales results from Macy’s fail to dent stocks
Big-box retailer Macy’s (M) cuts its guidance for comparable store sales, earnings, and revenue for fiscal 2019 on weaker than expected holiday sales. Kohl’s (KSS) reported a 1.2% increase in holiday comparable store sales. The company said that fiscal...
Testing, testing: Bounce, rally, or retreat?
U.S. stocks moved toward a key test today with the Standard & Poor’s 500 approaching the 2550 to 2600 level that signals the top of the recent volatility range and likely technical resistance. If the index breaks above this level, the market could run...
How good is Fed chair Jerome Powell at herding cats?
It’s an extraordinarily busy week for the Federal Reserve–verbiage wise. Saturday, January 5, John Williams, head of the New York Federal Reserve Bank, Raphael Bostic of the Atlanta Fed, and Mary Daly of the San Francisco Red all spoke. Today, January 7,...Jim’s Daily Email Alerts:
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