Succinct Summation of Week’s Events 4.28.17

Time of the week again for the succinct summation, including the disappointing report that real GDP grew by well under 1 percent in Q1, disappointing since Q4 had been over 2 percent.  Rather than providing still another Sunday reading list, I thought I'd take the weekend off so there's no bonus material this time.  Hope you were all able to stay dry.  I guess there's two more days of this rain in the forecast.

10 Weekend Reads

It's time for the weekend reading list.  Among the gems this Saturday eve are an analysis from Bloomberg of Trump's first 100 days, an Atlantic Monthly essay on the downside of online shopping, the Murdoch family plan for overhauling Fox, and a critique of "Angel" investing.  Hope everyone's enjoying this wet weekend.

Wall Street slips on weak GDP data, but indexes rise in April

Today’s report that Q1 grew at only half the rate of Q4 sent the Dow down 40 points, which is the weakest growth in three years.  The weak report raised continued concerns that Trump will be able to deliver on his promises which, at the very least, now appear headed for a delay.  But Q1 earnings continue great guns with the S&P profit projections raised once again, today to 13.6 percent.  Volume was a little above average at 6.9 billion.  At least Trump got his wish that the government will not shut down tomorrow on his 100^th day in office.  The Congress today passed a one week reprieve.

Earnings lift Nasdaq to record; Amazon, Alphabet up after hours

It was another relatively flat day for both the Dow and the S&P with the Dow closing up a very modest 6 points while the Nasdaq hit another record high which will likely extend into tomorrow with after the bell stellar earnings reported by Amazon and Alphabet.  The proposed Trump tax cuts are already considered built into prices with future upward movement expected from earnings which continue to go well.  Q1 profit projections for the S&P are now to be up 12.4%, up from 11.4% Tuesday.  Volume continues above average at 7.2 billion shares.

Wall Street ticks lower as Trump tax priorities unveiled

After two enormous consecutive 3-digit rallies Monday and Tuesday fueled by the expectations of today’s tax proposals, the market really didn’t have much of a place to go and zigzagged through the day relatively flat to end 20 points down.  Though the new proposal was welcome as reflected in the last two days performance, the usual lack of specifics and skepticism about getting the tax cuts through the Congress left investors hesitant about the wisdom of continuing bets.  Q1 continues to go well so the good news is that, with or without tax reform, earnings growth is considered enough to support current levels.  Volume was again above average at 7.3 billion.

Nasdaq tops 6,000 as earnings boost Wall St; U.S. tax code eyed

Tue, 4-25-17

Today’s equity curve looked almost identical to yesterday’s with the Dow up well over 200 points right out the gate and pretty much staying there the entire session to close 232 up.  A day of really good Q1 reporting is what set things off with major players Caterpillar and McDonald’s beating estimates soundly. Nasdaq reached a record high with good results coming from other heavyweights Apple and Microsoft.  Expectations of good tax news from Trump tomorrow kept the rally going, with the Wall Street Journal reporting Trump’s proposals would include a reduction in some business taxes from 39% to 15%.  7.3 billion shares traded had volume well above average. 

French election results catapult Wall Street higher; Nasdaq sets record

This morning it was a straight shot up – 175 points on the Dow – right out the gate and it pretty much stayed that way all day long closing 216 up.  It seems that yesterday’s 2^nd place showing in France for Marine Le Pen was enough to satisfy the market that the right-wing candidate would not win in May’s run off and that centrist policies would prevail in France.  That and the continuing good news about Q1 set investors ablaze.  By the end of this week, half of the S&P is expected to have reported and the reports are expected to be good.  At 6.8 billion, volume continues to inch up above recent depressed averages and closer to the norm.

Succinct Summation of Week’s Events 4.21.17 (plus best books on investing)

Below lies the traditional succinct weekly summation though this was really an uneventful week compared to what's coming up next week what with the infamous "100 Days" landmark combined with the notorious threat of another government shutdown as the scenario next Friday of the Congress failing to pass a federal budget looms as a distinct possibility.  So this coming week will be fascinating.  Beyond that, you may consider tonight's blog to be another fortunate circumstance worthy of a bookmark since in the last few days I stumbled onto Barry Ritholtz's list from 2016 of what he considers to be the 12 best books ever written about investing.  The link to the article is directly below the summary.  Enjoy, and hope everyone had a great weekend.

Spot the Logical Fallacies, Phil Gramm Edition - The Big Picture

It's the weekend and time to explore all the wonderful reading lists that are out there.  Barry Ritholtz's Friday column "Spot the Logical Fallacies" comes as close as anything I've found lately as a really good short primer on investment basics, particularly how to avoid the bias traps.  It's a fairly quick read that I hope you'll find of value.  Enjoy the nice weather.

Wall Street dips before French election, but up for week

A relatively quiet day as days go in this environment with the Dow slipping a modest 30 points as investors remain on the sidelines awaiting more Q1 and the outcome of several impending geopolitical events including the upcoming French election this weekend and Trump’s promised tax announcements next week.  Q1 continues to go well with 75% of the nearly 20% reporting exceeding forecasts.  Q1 is expected to be the best since 2011.  At 6.4 billion, volume continues to edge slightly up above recent averages but recent averages have been below average.

Wall St rallies on earnings; Nasdaq hits record

For the past two sessions the market has suffered 3-digit losses when one or two bellwether companies turned in disappointing Q1 reports.  Today several companies turned in stellar earnings reports and that sent the index soaring over 220 points before settling in at a 174 point rise at close.  Investors are looking to a solid Q1 in order to keep the bulls running and so far it looks like it’s going to happen.  But geopolitical uncertainties continue to keep a lot of cash on the sidelines.  Volume was 6.6 billion, a little above the 4-week average of 6.3, keeping in mind that recent averages have been below average to begin with.

IBM sends S&P 500, Dow lower; Nasdaq advances

An almost exact repeat of yesterday with yet another 3 digit drop in the Dow due to one more company, this time IBM, turning in a disappointing Q1 report and thus plunging the index 118 points.  Since big names like IBM are taken as bellwethers, it takes only bad report to turn investor sentiment sour.  It also didn’t help matters that we continue to have bigger than expected gasoline inventories and smaller than expected declines in crude stocks.  But consider this:  only about ten percent of the S&P has reported so far and, so far, 75 percent are beating expectations, four percent more than last year.  Is this yet another case of irrational skepticism?  Volume was up to 6.6 billion, just a bit above the four-week average, but the four-week average has itself been below average.

Goldman Sachs, J&J pull Wall Street lower

A second consecutive day of a 3-digit sell off and a fourth consecutive down day, even though it started out much worse with the Dow plunging 175 points right out the gate but recovering in the latter half to close 114 down.  Even though Q1 has been going quite well and is expected to continue doing well, all it took was for today’s two companies to turn in disappointing reports to shake the market’s confidence.  Then there are the other usual suspects on the geopolitical scene that continue to suppress this overvalued environment, but today it took only two companies out of 500 to turn optimism into skepticism and send the index down 3 digits.  Volume remains below average at 6.1 billion.

Wall Street rallies in low volume led by banks, tech

For once, volatility was not the order of the day as the Dow took on a straight up trajectory the entire day to end a big 183 points up.  The astoundingly light volume of only 5.3 billion says a lot of traders remain on holiday but those at work saw today as a buying opportunity, especially on those sectors that did so poorly last week.  This is being characterized as the “unwinding” of last week’s defensiveness.  Optimism remains intact for Q1 where the rather robust expectations are for a more than ten percent increase in earnings.  More results due in later this week. 

Succinct Summations of Week’s Events 4.14.17 (plus the end of WaPo)

Hope everyone had a very happy Easter weekend and though it was an unusual week in the markets given the low participation since many were on vacation, below is the usual Sunday night succinct weekly summary.  The bonus this weekend is an unfortunate announcement from Barry Ritholtz that, after seven years of contributing financial advice to the Washington Post (aka WaPo), the Post has made a management decision to curtail its investment section so Ritholtz's column will no longer appear in that newspaper.  It's their loss but we will continue to benefit from his considerable experience and wisdom through his daily "The Big Picture" blog.

Guggenheim's Minerd Muscles Think-Slow Strategy to $260 Billion

I’m afraid I erred a bit in my fact checking yesterday when I looked up why April 16^th was a holiday (being observed this year on Monday the 17^th) and thus our tax deadline this year is the 18^th rather than today as it usually is.  I only saw that the 16^th was some obscure holiday called District of Columbia Emancipation Day and recalled from news in years past that there was considerable controversy surrounding the fact that D.C., not being a state, had always been denied representation in the Congress.  I wrongly assumed that had been corrected and that the holiday celebrated that correction. 

Reminder: You Are Hardly Overtaxed in America!

 Good Friday and the beginning of the Easter holiday makes this a three-day weekend.  It might have been four days since technically Monday is also a federal holiday, District of Columbia Emancipation Day if you believe that.  Goodness it seems like they’re always looking for any excuse for a holiday though, truth be told, it always did strike me as being distinctly un-American that D.C. residents, living in the very seat of our democracy, had always been disenfranchised from that same democracy.  So the government is taking Monday off (which is why taxes aren’t due until the 18^th this year) but the markets aren’t.  So here’s wishing everyone a happy Easter holiday while we have it.

Treasury yields down, stocks fall on global risks

Yesterday’s remarks from Trump regarding the strength of the dollar sent the market spiraling downward, then up again, then down again.  Today, just as happened a few weeks ago, investors once again lost patience with all the DC uncertainty and especially in regards to the dollar with a massive sell off of U.S. Treasuries which snowballed into all the other markets driving the Dow down 138 points.  The good news is there are few experts who do not view this as an overreaction and that the dollar is now oversold and due for a quick comeback.  Meanwhile those pesky global concerns continue to haunt keeping volume below average, today at 6.2 billion, at which it’s been running most of the week due to the holiday.

Wall Street ends lower; Trump comments dampen sentiment late

Another choppy up and down day in a 100 point range that was mostly downward and ended with the Dow minus 59.  Today Trump made a statement that the dollar was too strong.  Ordinarily, a strong dollar is a good thing.  It means it is a valued currency, its strength coming from the fact people around the world have so much faith in its stability that they are buying it more than any other currency.  But this works against us when so many of our companies do so much business overseas and thus a strong dollar makes it harder to sell our products and make a profit.  This has been ongoing for some time.  What changed today is an American president saying out loud it’s a problem.  More uncertainty, more nerves.  Other than that, more of the same, problems from North Korea to Russia (not to mention DC) to keep things on edge.  Volume continues below average at 6.2 billion but this is typical for a holiday week.

Wall Street ends down; geopolitical risks weigh ahead of earnings

Another day of rock ‘n roll as the Dow first dove 150 points, then soared 150 points, then a little more back and forth before closing 6 points down, hardly a flat day even though that’s how it appears on the surface.  As the reasons for the up and down are almost an echo chamber of yesterday, I’ll just refer everyone to yesterday’s summary.  And like yesterday, volume was low though, at 6.4 billion, not as low.  This is a short holiday week so volumes will be low.

Wall Street ends choppy session up slightly; energy helps

Choppy indeed with the Dow zooming a hundred points in the morning, then plummeting 135 soon after, only to rise and fall again and finally close 2 points up.  Once again, this is indicative of a lot of anxiety as the rallies are attributed to optimism over Q1 while the sell offs to nervousness over Syria, Russia, and North Korea.  Most investors are taking a wait-and-see posture as is reflected in the very light volume of 5.5 billion, also impacted by the short holiday week as many traders are vacationing.  That probably means there will be more volatility this week but,  because of the sparse participation, volatility that can be ignored. 

Succinct Summation of Week’s Events for 4.7.17 (plus Building Modern Portfolios)

It's that time of week again for the succinct summation, though I'm still having a hard time reconciling the #1 under Positives with the #1 under Negatives.  How can employment by way up at the same that payrolls are way down?  One clue to this mystery was offered by our friends at Heritage Capital Research who reported that the payroll count may have been severely compromised by the fact that it was done in atrociously bad weather and thus many of the people in the survey were never contacted.  You'd think in that case they would simply not publish the incomplete numbers -- or at least extrapolate.  My guess is we'll see a much brighter recount next month.

How Do You Outperform?

I believe it is useful from time to time to review the basics and, this weekend, I offer a nice little two-part primer courtesy of our friends at Heritage Capital Research.  Part 1, which is below, discusses strategies for consistently outperforming benchmarks and it begins its thesis with a discussion of exactly how we should be defining a benchmark.  It's his contention that if you are claiming to outperform by simply choosing a benchmark that is way below what you expect to do, then you are cheating and misleading the investor.  It is his argument that a benchmark should be defined against other similar investment strategies, not just the easy ones, and if you do so will discover how very difficult it is to consistently outperform.

Wall Street down after weak jobs, Fed comments, Syria airstrikes

The closing numbers appear to be flat but nothing could be further from the truth.  ‘Twas another wild day with the Dow first diving 60 then shooting up 120 before closing 7 points down, still another indicator of investor anxiety as they try to figure out Trump’s ability to proceed.  There is much confusion including the Syrian air strike, an employment number that came in more than 80,000 below forecast and the Fed trying to spruce up its balance sheet.  The market will be watching to see if Syria will help or hurt the President’s progress on his programs so, for today anyway, there is less action rather than more  as volume remains low at under 6 billion.  And can someone explain how Wednesday’s report showed 263,000 new jobs while today’s was only 98,000?

Wall Street posts slight gain, investors anxious on Trump-Xi meet

Another tumultuous day as the Dow zoomed up a hundred points before again falling late in the session to a mere plus 14.  The swing represents more uncertainty as big bets are placed on a successful meeting between Trump and China’s president but these bets are not accompanied by much confidence.  The meeting will be seen as a litmus test for things to come, especially in light of our need for China’s help in dealing with North Korea.  What is obviously not factored into today’s numbers is this evening’s attack on Syria which will very likely trigger a strong market reaction tomorrow, that and how well today’s meeting went.  Volume remains below average at 6.4 billion.  It’s a good bet that Friday’s story will be quite different.

Wall Street falls as Fed minutes reverse earlier rally

The wild swings continue with the Dow soaring 200 points right out the gate, then crashing down 250 in the afternoon to close down 41.  The supercharged a.m. rally came on the heels of a sparkling jobs report that added a whopping 71,000 more jobs than expected and a Fed report that had the economy doing a soft shoe.  The p.m. crash came as investors considered that the great a.m. news might mean (a) a bubble is coming and/or (b) more rate hikes might be coming.  One person’s art is another’s pornography.  Or is the market just schizophrenic?  For once, volume was above average at 7.6 billion.

Wall St. flat as investors await China meeting, earnings season

Down 50, then up a hundred to finally close 40 points up, the Dow’s performance today was yet another affirmation of the difficulty investors are experiencing trying to figure out Trump and whether he has the ability to deliver.  All eyes are on Q1 since Trump’s promised tax cuts have already been priced in to earnings.  If they don’t materialize, the markets will have even more reason to conclude that stocks are overvalued and continue to step back.  As today’s expert said, “The elephant in the room is Washington.  Right now it’s all about politics.”  Volume remains below average at 6.2 billion.

Wall Street down on weak auto sales, doubts about Trump agenda

Investor uncertainty with regards to the effectiveness of the Trump administration continues as a string of bad news this morning crashed the Dow down nearly 200 points.  This included poor results from the auto companies, U.S. states challenging Trump’s energy standards, the effort to filibuster the Gorsuch nomination, the terrorist attack in St. Petersburg, and today still another problem coming from North Korea.  But today was also a continuing affirmation of this market’s resilience as it all came back to almost even being just 13 points down at close.  Investors have been given little reasons everyday to step back, and stepping back a little bit is what they’ve been doing, the new sentiment being anxiety over Trump’s promises and a possible need to discount some benefits that may never happen.  Volume was about average at 6.8 billion.

Succinct Summation of Week’s Events 3.31.17 (plus Random Walk Theory)

It's been quite a week again and the succinct summation is supplied below.  This week also our friend Burton Malkiel, Princeton professor and author of the classic "A Random Walk Down Wall Street" is back in the media this time as Barry Ritholtz's guest on the "Masters In Business" podcast with a 90 minute discussion on the state of everything.  This 90 minute recording is probably the equivalent of taking his class at Princeton so it's a good investment in time.  I read the book back in grad school and it is excellent.

Examining How Rumors Spread Through Social Media During Crisis Events

Not intended as an April Fool's joke.  Not an April Fool's joke: