10 Weekend Reads (& Happy Halloween!)

Happy Halloween everyone (and my 62nd birthday!)  Since everyone's busy partying tonight, I will keep it simple and just offer up Ritholtz's standard weekend reading list, with some particularly interesting looking articles about Apple (which has been particularly big in the news this week) and articles about tax avoidance and how to stop ISIS from the venerable Atlantic Monthly.  Enjoy your weekend.

Stocks slip but post best month in four years

The market took a second consecutive day today to take inventory of status following its best month in four years and a series of new reports, both good and bad, but enough bad to send the Dow down 92 points in the final two hours of trading.  The good:  Chevron, Exxon, Abb Vie, LinkedIn, and Expedia all turned in good Q3 results.  Also the CBOE volatility index fell about 40%, its largest decline ever.  The bad: CVS and Genworth Financial turned in disappointing reports.  Valeant Pharmaceuticals continued to get stomped, today alone losing more than another 15% putting it at a 15 month low.  For the month the Dow is up an amazing 8.5%.  Today's slightly above recent averages volume was 7.4 billion shares.  Eyes now are on next Friday's employment numbers.

Wall St. slips on tech results, chances of Fed hike

Wall Street took a breather today to digest the fabulous week (fabulous month really) that we've been having with a modest dip of 23 points (though the trading range today was over 100 points).  Sixty percent of S&P companies have now reported Q3 with mostly positive results.  The dire predictions of a nearly 5% loss that was widely accepted in September has been downgraded on at least a weekly basis since and today stands at a 1.7% forecast.  My guess is that it will be down to zero and perhaps even in positive territory very soon.    Our friends at Valeant Pharmaceuticals are back in the spotlight when it dropped almost 5% before the bell and then more than another 11% after the bell.  Valeant is caught up in the drug price gouging scandal and this is one firm that could be in real trouble.  Volume was about average at 7 billion.  GDP was supposed to reported today but I do not yet see the data.  Stay tuned.

Wall Street jumps as Fed keeps Dec rate hike in play

The expected rally that was triggered by yesterday's after-the-bell stellar Q3 report from Apple happened right on schedule as the Dow shot up nearly 200 points.  The market also got its expected high-five from the Fed when they decided to hold off on a hike this month but made it pretty clear that a hike may very well come in December, just as they've been saying all along.  Curiously, the market actually found some solace in this in that the Fed was validating the improving economy so, instead of rushing to sell as the threat of a hike would ordinarily do, instead investors optimistically kept buying.  And Apple's numbers were indeed fabulous triggering just over a 4% gain in their price with the news that they sold 48 million iPhones in Q3 and nearly doubled its revenue from China, quite the reverse of what had been so widely feared.  The best news is that this 200 point jump was based on very heavy volume of 8.5 billion shares, way above the last month's average of 7.2 billion.

Stocks retreat ahead of Apple, Fed; oil drop continues

The first of the 2-day October Fed meeting yielded no decision on interest rates and the anxiously awaited Apple Q3 report did not come until after close.  So it was yet another quiet day as everyone stays on the sidelines awaiting tomorrow's news, with a modest daily decline of 41 points due to more selling of Apple against expectations of a bad report and further news of excess inventories in the nation's oil supply, bringing the price of crude down still again.  The odds makers give it a 7% chance that the Fed will announce an interest rate hike.  However, if they're wrong -- and the Fed has consistently stated that there probably will be a rate hike by December -- then it will be a game changer.

Dow, S&P 500 end down slightly as Apple, energy weigh

It was a quiet day on The Street as investors sit on the sidelines awaiting more Q3 results and tomorrow's start to the October Fed meeting.  The only real hit today was from Apple which, due to its close ties to China and its Q3 due tomorrow, everyone sold off today in anticipation of a bad report.  (I hope Steve's ghost surprises everyone again, at least does better than the movie did this weekend!)  But with 35% of Q3 reports now in, the pessimism is dying off.  Whereas a month ago the widely held forecast was for a nearly 5% decline in Q3 profits, an estimate that has been adjusted weekly all this month last week being revised to 3.3% and today to 2.8%.  It would be no surprise if it's down to 2% next week and in positive numbers by December.  At 6.1 billion, trading was light as could be expected on the eve of major news.

Succinct Summation of Week’s Events 10.23.15 (+ 2 bonuses)

One of the most telling comments that our guy from NorAm made at the AAII seminar yesterday was a comment I've heard from virtually every financial adviser and broker I've ever known and one that sums up the biggest challenge in investing.  It's also a not too truism that I learned very early in my MBA career when I studied and worked in market research.  Market research -- it's the magic bullet of business.  It goes something like this -- find out what the customers want and then give it to them.  It's the foolproof paradigm for success.  How can it miss?

10 Weekend Reads ( + AAII seminar and Lowry's Research)

This morning I attended an AAII seminar that promised to teach us how to efficiently and effectively read market signals so as to get out before a slump to avoid the disastrous draw downs, but also to get back in when the market is rising so as not to forego profits.  The speaker had come to Detroit all the way from Dallas and despite having a disorganized 3-hour long presentation (which is the way most of these seminars tend to go) which resulted in his being unable to articulate his final conclusions before time was up, he still stated a number of worthwhile concepts.  Since his PowerPoint presentation was so tiny it was next to impossible to read, I really hope he makes good on his promise to send the slides on email to anyone who requests them.  I will be quite anxious to study this in much more detail.

Techs lead Wall St. higher; S&P 500 erases 2015 loss

The Alphabet rush continued in earnest today as fallout from yesterday's massive rally and a continuing stream of strong Q3 reports neutralized investors inhibitions and gave fuel to even weaker stocks like Facebook and Twitter, shooting the Dow up still another very impressive 157 points.  Today the S&P has now erased all of its losses for the year.  And another rate cut from China added to the positive mood.  Each of the three major indices have jumped between 2 and 3 percent this week.  Volume was above average at 7.6 billion shares.

S&P 500 ends at highest in two months; Alphabet up after hours

A whopper of a day with all kinds of terrific Q3 reports coming in, the market no longer so entrenched in expectations of a horrible Q3 so the Dow zoomed up an amazing 320 points.  Among the winners turning in great results were Google (now Alphabet), Microsoft, Amazon, McDonald's, and Dow Chemical.  It was only a couple weeks ago that Q3 profits were prognosticated to be down 5% over 2014.  Last week that forecast was upped to 4% and today once again revised to 3.3%.  It would not be any surprise at all if we were into positive territory on Q3 by December.  Other good news was unemployment below forecast and existing home sales above.  Volume was brisk at 8 billion.

Wall St. declines; Valeant, healthcare weigh

More scandal's 'a brewin' in the pharmaceutical industry today which sent the stock of the alleged offender Valeant Pharmaceuticals crashing down along with the rest of the healthcare sector.  Crude oil also took another dive sending the entire energy sector down yet another percentage point today, again mostly due to grossly excess inventories.  The tumult caused big chaos again with the Dow swinging in a 160 point range throughout the session but ending 48 points down.  The good news came from General Motors, Boeing, and eBay all reporting better than expected results for Q3.  Volume was modestly below average at 6.8 billion.

Wall Street ends down with healthcare, IBM; United Tech rises

If you'd read the financial media today you'd think it had been boring, not much happening because the Dow closed almost flat.  Do these reporters ever bother looking at the intraday trading, which tells a very different and very marked tale of the continued nervousness that has been characteristic of Wall Street for quite some time now?  Maybe things ended up close to even, but there were triple digit swings throughout the session.  The day started with the index down a hundred points right out the gate, then rose another 120 by mid-morning only to then begin a descent that ended with a mere 13 point loss.  So lots of nerves there triggered by almost equal amounts of good and bad news.

Wall St flat; energy shares, Morgan Stanley results weigh

Morgan Stanley had a bad report today and that sent the whole market reeling with investors swiftly returning to the previous conviction that all of Q3 is going to be baaaaddddd!!!  But there was some good news and this good news helped keep the Dow into positive territory if only to the very modest tune of 14 points.  Homebuilder sentiment improved and Weight Watchers skyrocketed to more than double its previous value when Oprah Winfrey purchased a major interest.  There was even some good news from China which, though it reported a slowdown in their growth to the tune of 6.9%, that was still better than the expected 6.8%.  Q3 reports from such giants as Caterpillar, Boeing and Coca-Cola are due in the next few days.  Volume was below average at 6 billion shares.

Succinct Summation of Week’s Events 10/16/15 (& 2 bonuses)

For this Sunday again a rather comprehensive list of bullet points summarizing the week's events in finance.  This week's Sunday reading list is offered as bonus #1.  The articles that caught my eye were (a) a topic we discuss frequently, "Challenging Private Equity Fees Tucked in Footnotes," (b) from the Harvard Business Review, "Nine Things Successful People Do Differently," and (c) "Most Gun Owners Don't Belong to the NRA - and they don't agree with it either."  And for a switch to the lighter side of the news, for bouns #2 this week I offer a clip from last night's Saturday Night Live's satirical take on the Dem debate.  Hope you all had a great weekend!

MiB: Wharton Professor Jeremy Siegel

This week's Saturday offering from Barry Ritholtz is a "hot off the presses" podcast from esteemed Professor Jeremy Siegel of the famed University of Pennsylvania Wharton School of Business talking about his 2014 highly praised book about successful long-term investment strategies.  These podcasts are usually an hour long.  Listen to it if you wish; or not.  My main purpose here today is to inform all of you about the book, which has been praised by The Washington Post as "one of the ten best investment books of all time" and can be had on Amazon for about $20 dollars.  Looks like it's well worth a read.

Wall St. closes up, registers third week of gains

It wasn't too many weeks ago that a very bad day for GE brought the whole market down, just as this week the same happened with Wal-Mart.  And just as yesterday the Wal-Mart debacle was more than compensated for by Citigroup, today a very good report from GE shot the Dow up 74 points, GE now being the 2nd giant enterprise to turn in good solid Q3 results.  This created so much optimism on Wall Street that traders virtually ignored Mattel's bad sales report, in fact rewarding the toy giant with a 6% boost.  The same logic blew out the window though for Honeywell which was penalized 1.5% even though it also turned in a glowing Q3 report.  Go figure.  There is enough good reporting now that the previous forecast for a nearly 5% loss in Q3 earnings has already, after just one week, been revised to a forecast of just under a 4% loss.  A 20% shift in perception in just the first week, that's quite significant.  Other very good news included U of M's consumer sentiment index rebounding strongly in the last two weeks suggesting the recovery remains very much on track.  Today's trading was a little below recent averages at 6.6 billion shares.  More drama I'm sure next week.

Wall Street jumps to eight-week high on financials, healthcare

Yesterday Wal-Mart's misfortune became Wall Street's misfortune.  And as has so often been the case during the past several years, today Citigroup's fortunes became Wall Street's fortune as the financial giant turned in a glowing Q3 report that gave the Dow a big 217 point bounce.  This was despite the fact that several other companies turned in not so great reports.  It just goes to show that the environment is still a very nervous one and quite prone to knee-jerk reactions -- big sell offs at the slightest hint of bad news, big rallies at the slightest hint of good.  Or as today's expert stated, "There's a lot of cash on the sidelines, and we did break through to a new high since the August decline."  It wasn't just Citigroup; the entire financial sector jumped 2.3% despite JP Morgan's decline and there was also other good news.  Consumer prices had their biggest drop in eight months, inflation appears to be firming up, and the labor market continues to strengthen.  All in all, it was a day for optimism with investors anxiously awaiting any companies that show good Q3 earnings.  Volume was just a little below recent averages at 7 billion.

Wall St. falls after Wal-Mart's weak forecast; Netflix down after the bell

Wal-Mart lost $22 billion dollars today, its biggest one-day decline in years.  And Wal-Mart's bad day turned into Wall Street's bad day when the Dow plunged 157 points, portending this news as a harbinger of more bad news to come.  We didn't need any Q3 reports today.  We didn't even need it from Wal-Mart.  All that was needed to send everyone to click the "sell" buttons was this single company forecasting its own poor year-end performance.  It also didn't help when JP Morgan, Wells Fargo and B of A all followed through with the expected anemic Q3 results.  And the season is just barely started.  However, investors need not be concerned if the analysts' predictions of a much better Q4 comes to fruition, as it likely will.  There should be a much better indication of this in the next few weeks.  Volume was closer to recent averages today at 6.9 billion.

Wall St. declines on China fears, weak profit expectations

Yesterday it was reported that today would be the beginning of Q3 reporting so I was a little surprised when this did not happen, instead now saying it's coming later in the week.  Until those reports start coming, we're not going to have a barometer for Q4.  So the Dow went nuts again today as everyone is still skittish about the expected 5% drop in profits.  The index fell a hundred points right out the gate, then zoomed up 140 points by noon only to drop again to close at a more modest 50 point loss.  That's a lot of nervousness.  Yes, Q3 is weighing.  And China continues to weigh, not helped at all today by their report of a whopping 20% drop in imports last month.  But at 6.1 billion, trading was still considerably lighter than average as most investor await the first Q3 reports coming in the next few days -- and of course the very soon upcoming October Fed meeting.

Wall St. ends up slightly as focus turns to earnings

With Columbus Day all financial and government institutions except Wall Street itself are closed.  So despite still another one-day 5% decline in oil and despite analysts still sticking to their guns that Q3 2015 will see nearly a 5% loss in profits over Q3 2014, the worst in six years, the Dow was still up a modest 47 points at close.  This was mostly due to the fact that there is still considerable sentiment out there that the bull market is far from over, evidenced by the absence of a sell off after last week's big rally, and most analysts are still saying that the markets will be up 10% by year-end, obviously banking that most of this will be in Q4.  But with a very anemic volume of only 5.1 billion, I believe that what's really going on is a whole lot of fence sitting awaiting Q3 reports, which will begin flowing in abundance starting tomorrow.  So the real action starts in the morning.  Sit back and enjoy the show.

Succinct Summation of Week’s Events 10.9.15 (+ Friday's reading list)

It's time for the weekly summary again, quite an insightful one this time as it was called the biggest week of the year for the Dow.  How the world can change in just one week, since last week was called the worst week of the year.  And since Friday's reading list was a lot more interesting than today's, I'm inserting that below for anyone who cares to browse it.  That first article on the banks should be of particular interest.  Hope everyone had a great weekend!

Understanding Exchange-Traded Funds

Posted on Ritholtz's blog this morning, here is a 21 page mini-course on ETFs (30 if you count the charts).  We spend a lot of time talking about ETFs but are they really as simple as they look?  My guess is not.  But instead of spending many hours studying books on the subject, this may be a better place to start.

Understanding Exchange-Traded Funds: How ETFs Work | The Big Picture

Wall Street ekes out small gain to cap strongest week of year

Fri, 10-9-15

Every once in a great while I'm unable to get this out before midnight so it's going to be dated Saturday on the blog.  It's just as well as the Friday report is rather uneventful with the Dow up a modest 34 points mainly because everyone is now in wait-and-see mode for earnings season, waiting to see if and how China will impact U.S. earnings in Q3.  So far not so good with Yum! Brands yesterday reporting a big dip in revenues and Alcoa today also disappointing.  Still, though last week was characterized as the worst of the year, this week is being hailed as the best of the year with the Dow up nearly 4% and the Nasdaq more than 2.5%.  Do recall that, despite the drubbing the markets took in September and early October, most Wall Street analysts expect the Dow to end up 10% by year-end.  Judging from this week, we're already well on the way.  Of course, two companies do not a picture make but there will be many more reporting starting next week.  And there will also be the Fed next week.  Volume was a little below average at 6.8 billion.

Wall Street rises after release of 'dovish' Fed minutes

It seems some bright young man decided to actually read the minutes from last month's Fed meeting and discovered language indicating the central bank was not nearly as ready to raise interest rates as they had led the markets to believe.  Following yet another day of rampant swings, this time in the range of 220 points, there was a late afternoon rally triggered by these minutes that shot the Dow up almost 140 points, investors now more optimistic than ever that there will be no hike in 2015.  It's always interesting that investors would prefer to bank on these "interpretations" rather than take the Fed at its word on their very specific statements.  It certainly has happened a lot these past several months.  The late rally was also helped by oil shooting to a 3 month high and the healthcare sector enjoying its third consecutive day of gains.  The volume of 7.3 billion was right in line with recent averages.

S&P 500 reaches three-week high as health stocks rally ( + a gem from Heritage Capital)

Another bumpy but upwardly mobile ride today as the Dow swung back and forth in a 200 point range.  But due to another healthy bounce in the healthcare sector, the index ended up a nice 122 points.  I guess investors decided today that the coming drug pricing scandal is not really going to have its impact for awhile so it was okay to pick up bargains again.  The markets were also helped by a bump in gold and silver.  But Q3 got its first hint of ugliness today when Yum! Brands, which does one-half of its business in China, reported weak sales due to China and its stock sunk nearly 20%.  But the comeback in commodities is providing some reassurance that perhaps the worst of the China impact is behind us.  (Hmm ... it may be a bit premature to say that on the basis of a one-day bounce.)  Anyway, the S&P is now down just 3% for the year, and the Dow just 5%, which means the markets overall are still a very long way from correction territory.  Trading was quite healthy at 8.3 billion.

Wall Street dips as third-quarter earnings season kicks off

Everyone took a bit of a beating today with the Dow ending just barely positive after several wild swings in the 120 point range, helped only by the fact that DuPont had a very good day due to the announcement of its embattled CEO stepping down.  But neither the S&P nor Nasdaq fared as well.  After the best 5-day run in four years, investors today decided to brace for what they expect to be a terrible Q3, in fact the worst quarter in six years.  And all this without even the first company reporting in as yet.  The prophecy is becoming self-fulfilling and was helped along by today's 2.3% decline in the S&P health index and 3.7 % decline in the Nasdaq biotech sector, all the result of the coming scrutiny over the 1,000+% recent surge in some drug prices.

Wall Street rises as investors eye rate hike delay, oil up

Another whopper of a rally on Wall Street today as the Dow bolted 304 points, all because investors are becoming increasingly confident that recent bad news means there will no rate hike this year.  Why so many feel this way is a mystery to me as the Fed has already stated quite clearly that all these blips we've been experiencing are just so much "noise" and will not impact the Fed's decision, a decision that will be based on economic factors that are currently very much on target.  They've all but issued a notarized promissory note that there will be a rate hike.  But no one says there's anything rational going on here and Friday's lousy payroll report now has everyone breathing easier, but probably falsely so.  Energy got a 3% boost today which probably helped this rally a lot, but then energy has been depressed and was due for a bump.  Everyone is also still very much expecting a lousy Q3, which is also irrational since they also expected both Q1 and Q2 to be miserable and it didn't happen.  If anything, economic factors are now stronger than earlier in the year so this strong expectation makes even less sense.  Anyway, the day was characterized by what has now become the common catchphrase "irrational exuberance" and this was validated by the above average volume of 7.8 billion shares.

Succinct Summations of Week’s Events 10.02.15 ( + free options book & other reading)

In addition to the standard weekly summation, this Sunday's bonus is an e-book on options trading that comes from the Rockwell Trading web site. I personally find options to be very mysterious and risky, though those who use them swear by them and insist that, when done correctly, they are actually one of easiest, safest, and most profitable investments out there. I'm hoping this e-book makes them more understandable and happily share it with my readers.

A Country Is Not a Company (and other pearls of wisdom)

In keeping with my tradition of using these weekend postings to offer longer reads on important topics, today from Barry Ritholtz's blog I submit three fascinating essays.  Actually, though these are longer reads than my usual one paragraph/one minute summation of the day's events in the market, these are not really long reads considering the importance of what they cover.  In the space of a few thousand words, these articles more accurately serve as mini versions of college courses that may be required of business majors.

Wall Street ends higher in sharp turnaround

The craziness continues.  The good news everyone was hoping for today did not happen.  The federal jobs report came in very poorly to the tune of a whopping 61,000 jobs below forecast.  How did the market takes this?  With absolute elation as the Dow soared 200 points, after initially dropping more than 250 points right out the gate.  As I said, craziness.  That's a 450 point swing we had today.  Plus investors are bracing for the worst Q3 in six years when earnings season begins next week.  Gee, where have I heard this before?  Oh yeah, Q1 and Q2!  In the face of all this bad news, why such a huge rally, basically wiping out all the losses of the last two weeks?  Simply that the bad news is a great harbinger of yet another hopeful delay in the Fed rate hike.  This is getting to be a very old song.  Wall Street really does have to decide whether it wants a recovery or not.  We continue this irrational environment where bad news becomes good news and vice versa.  But the objective bottom line is that the S&P now trades at 15.1 times earnings which, just slightly below the long-term median, means we're pretty much exactly where we should be.  With 8.3 billion shares, trading was considerably above the four week average.

Wall Street ends up slightly, investors await jobs data, earnings

Another wild and woolly day with the Dow down more than 200 points at mid-day before rebounding to a modest 12 point loss by close.  Bad news from China again along with slowing U.S. factory activity but, in the end, investors are waiting for Friday's federal jobs report which is widely expected to be more good news, giving further assurance on the economy and further reassurance that the Fed will raise rates by December, possibly even at the October  17th meeting.  Oil went down, believe it or not, because the hurricane is no longer expected to damage east coast oil facilities, which would have caused a price boost. Hoping to profit from disaster, don't you just love it?  Volume was in line with recent averages at 7.5 billion.