Wall Street rises, limps across the finish line of a turbulent year

The good news for the final day of 2018 is that there was no point during the trading session that the Dow was not up though there was still considerable volatility with the index swinging back and forth in a 200+ point range.  The really good news is that it closed in the upper part of that range 265 points up.  A good summary of the year came from today’s expert who stated that due to trade concerns and interest rates, “people started repositioning and that started the cascade.”  And though the year ended with roughly a 2,000 point loss from last January, it should be noted that it was mostly a positive year and almost all the losses came in Q4, mostly due to trade concerns and interest rates.  It should also be noted that the market was considered to be way overvalued at the beginning of Q4 so it could be argued that we are actually ending the year where we should have been all along.  And a big part of the slump came from the energy sector which fell 20 percent this year due to the chronic problem we’ve had for a long time as to the oversupply of crude, which alone plummeted nearly 40 percent.  Today’s Reuter’s report provides a pretty good list of bullet points of all the issues plaguing investors – China trade, the Fed path to rate hikes, slowing corporate growth, and the Brexit.  So 2019 will be interesting.  Volume was “light” at just under 7.5 billion but, again for perspective, under any other conditions, this would be considered brisk.  Happy New Year! 

Succinct Summation of Week’s Events 12.28.18 (plus EXCLUSIVE 2019 U.S. OUTLOOK)

Below is the final weekly summation for the year.  The positives as we are well aware now is that the market jumped big bringing the indexes back from the brink of bear and behind correction territory again.  The negative is the government shutdown and a modest decline in consumer confidence.  The bonus for this final weekend is a link to the December 13th episode of the PBS series "WealthTrack" by Consuelo Mack in which she interviews two gurus about the prospects for the coming year.  As you might guess, their forecasts are not nearly as negative as the general current market sentiment.  They do not believe we are on the verge of recession, now or anytime soon.  A very good analysis.  Enjoy your New Year's Eve. 

Fear Not | Above the Market

As we head into the final few days of 2018 and especially in view of the market this month, I didn't think anything was more appropriate than this article from "Above the Market" that presents an excellent (if long at 3300 words) defense of all the many logical reasons why we need not be fearful in today's climate.  The market, though volatile, remains strong and long term prospects are as good as they've ever been.  This is a very worthy read.  Hunker down with a glass of leftover Christmas eggnog and enjoy the rest of the weekend. 

Wall Street rally pauses, but stocks mint weekly gain

‘Twas another volatile session with the Dow swinging back and forth between positive and negative territory in a 400 point range all day, finally at its height up over 200 points at 3 pm, then plunging again to close 76 down.  The bottom line – simple nervousness as investors look to another short uncertain week coming up.   But the good news remains – “The market does seem to be forming a tradeable bottom.”  The gains from the last couple of sessions have changed the landscape from the worst December since the Great Depression to merely being the worst since 2009.  All are agreed that there a lot of great bargains out there right now and this week alone investors transferred $5.2 billion dollars from bonds back into stocks.  There will be some major new reports next week and all will be watching.  As it has been, volume was very strong at 8 billion shares traded.  

Wall Street roars back late to keep rally going

Almost all day it looked like the so-called Santa Claus rally was already dead in the water after just one day as the Dow had plunged almost 600 points by 2 p.m.  Then in the final half hour it started soaring and not only made up the entire day’s losses but closed up 260.  So as of 4 pm today, the indexes were not only no longer in bear territory but even broke out of correction territory, down now just 9 percent for December.  This was quite the comeback from Monday’s rout.  In fact, the algos kicked into gear right around 2:30 when the S&P broke through the key level of 2,400 and then surged nearly 4 percent for its highest close in a week.  But the best news is the consensus remaining that “selling has been exhausted in the near term” and “bargains are attracting buyers.” “For the second day, despite the very rough ride until 2:30, the sentiment is that we’ve seen the bottom.  Volume was in line with recent elevated averages at 9 billion.  Will Friday produce a “three times the charm” deal? 

Dow notches record point surge in dramatic rebound

The so-called “Santa Claus rally” arrived exactly on time helped for a change by a good headline, this time that holiday sales have been the strongest in years.  In a single day, the indexes went from just this side of bear territory to mere correction territory.  It was also helpful that the White House backpedaled on the rumor of firing Powell and actually announced “Trump is happy with his Treasury secretary.”  But likely the major reasons for today’s huge rally were the technical indicators that told investors that the S&P was its most oversold in years.  The market also decided today to interpret Powell’s previous remarks as being good news rather than bad, something that should have happened in the first place but it’s been a very emotional market.  But the best news was a statement from today’s expert Christopher Smart opining that valuations are clearly very attractive and, better yet, “it’s hard to see a lot more downside from here.”  Have we hit the bottom?   Probably more on that tomorrow.  Will we avoid recession?  More on that this weekend.  Volume was brisk at 9.5 billion. 

25 Wonderful Facts About It’s a Wonderful Life

I guess the best Christmas present any of us receive this year is that the market is closed for the holiday so at least there's no further bad news to report.  And it's for the best to take the day to take a breath, appreciate what we have, and  hope that tomorrow brings the traditional "Santa Claus" rally that they say happens every year.  But for the moment, let's focus on brighter topics and, in that spirit, I present this article that made Barry Ritholtz's Christmas Reading List today.  "It's a Wonderful Life," like it is with so many others, happens to be one of my very favorite films of all time and I was privileged to be able to see it in the theater again on Sunday night courtesy of MJR's Flashback Cinema. 

It was the first time I'd seen it on the big screen since my second year in Los Angeles in 1979.  I took my cousin to see it with me at the then one of two retro theaters in L.A. -- the NuArt -- in Santa Monica.  It was her first time and I still remember the first thing she said after the lights came up, "I would pay a lot of money to see that film again."  And at the MJR Sunday, I feared I would not be hearing such adulation as the public has become so very familiar with the film these past few decades with its constant exposure on television.  And I was right.  But there was one comment that I heard over and over Sunday, "It sure was a completely different experience than seeing it on television."  And that it definitely was.  Anyway, here is a laundry list of things that most people probably don't know about the film. 

It is a film that should be of interest to any one in finance since it is very much about the banking industry.  But most of these things I did not know about either.  I did know that it was initially a flop and only became hugely popular when the public rediscovered it when it went into the public domain in the late 1970s.  I did not know that the FBI had investigated the film for "pro-communist leanings" simply because big banker Lionel Barrymore was the villain.  It didn't seem to matter to the FBI that hero James Stewart was also a banker.  The investigation must have been a big blow to director Frank Capra who was intensely patriotic, had just finished serving as a decorated Army officer in World War II before making the film, and was a staunchly proud and staunchly anti-communist lifelong Republican.  So it goes.  I submit the list for your lighthearted holiday reading pleasure.  Merry Christmas! 


12-25-18 Big Pic: 25 Wonderful Facts About It’s a Wonderful Life | Mental Floss

12-25-18 BigPic: 10 Christmas Day Reads - The Big Picture

Wall Street selloff worsens on Mnuchin move, Washington drama

It was another total bath today though for much of the session the Dow was only down about a hundred points until news got out that Treasury Secretary Mnuchin was calling a meeting of financial regulators in order to take preventative measures to ensure “normal market operations.”  This should have been taken as goods news, a move to protect bank liquidity. And we should remember they did exactly the same thing in the immediate wake of 9/11 to prevent a market panic.  Then it worked great.  Today it was taken as just another nail in the coffin to be added to government shutdown, trade wars, and the possible firing of Powell.  It was just another nail that said that D.C. is in a state of disarray. 

Succinct Summation of Week’s Events 12.21.18

Below is the usual weekly summation, the positives being that the fundamentals like profits, home sales and durable goods orders are all quite solid.  The negative goes without saying.  We've had the worst week since 2008, we've lost Mattis and we're having a government shutdown.  What a Christmas!  And speaking of Christmas, since you'll all be reading this on Christmas Eve, I'm sure everyone has better things to do than reading bonus material on Christmas Eve so I'm skipping it this time.  Also, I wasn't really able to find anything that was all that interesting.  Hope you've all finished your shopping and let's see how trading goes on Christmas Eve. 

This Week's Views on Recession (plus Income Distribution By Age Group)

This time last week, when things were about as bad as everyone thought they could get, all the gurus were talking about December woes and giving their takes on whether we're heading for recession.  As we now know, things got even worse this week.  So I'm offering two articles tonight, one published December 14th by Investment News via Bloomberg about why this correction we've had may not be such bad news (and why it might indeed be bad news) and then a second article courtesy of our friends at Heritage Capital Research which accounted for the first half of this past week.  Both do a pretty fair job of delineating both the pro and con views of why we may or may not be heading for recession.

Nasdaq confirms bear market; economic worries sink Wall Street

Like so many other days that have preceded it, this was yet another day when the market got started with a bang – the Dow up 400 points in the morning, only then to get barraged by negative headlines that once again sent everyone to the exits with the Dow dropping 800 points through the session to close down 414, most of these losses in the final hour.  The final hour of panic was triggered by White House comments that a China deal may not be reached after all.  But there were other panic inducing headlines including Trump making it clear there would be a government shutdown at midnight AND that it would probably last a long time. 

Wall St. slides on Fed plans; Nasdaq flirts with bear territory

It was another very volatile day with the Dow dropping nearly 700 points by 2 p.m., then up and down and up and down and up again to close 464 down.  The Reuters report today attributes the wild ride to a second day of panic as investors continue to digest yesterday’s Fed report.  But the mainstream press attributes most of the drop to the bipartisan outrage triggered over Secretary of Defense James Mattis’ sudden resignation over Trump’s Syrian policy.  And there is the third monkey wrench that, after hinting yesterday that he would sign a stop gap bill to keep the government open, today the president did another 180 and said he would not sign, thereby virtually assuring a shutdown on Friday.  All in all, there was a lot of bad news to absorb which left all three major indexes in very bad shape, the Nasdaq closing just a hair above bear territory and all fund markets experiencing the worst month of withdrawals on record with $34.6 billion being pulled from the stock market this week alone.  As one observer noted quite astutely, “The market is just upset about the whole aspect of balance sheet normalization.”  Normalization should be considered a desirable but this market absolutely does not want it. Volume was just over 12 billion, the second highest for the year and way over the nearly 8.4 billion 4-week average, which alone is quite vigorous. 

Wall St. tumbles as investors fret over Fed policy update

It was another day when things were going really great in the morning, the Dow up nearly 400 points by 2 p.m.  Then what the Fed had to say may have been what the market needed to hear, but it certainly wasn’t what it wanted to hear.  Instead of the desired dovish statement, what Chairman Powell had to say was that the U.S. economy was on the right track so the central bank saw no need for any change in policy direction.  Even though 2019 rate hikes were cut from three to two, it wasn’t good enough and everyone was again running for the exits, the Dow falling almost 900 points in the next hour, followed by a brief rally to close 351 down.  Though the Fed message was positive one, all everyone saw was a coming tighter stock market and weaker growth.  The Dow is now at its lowest in two years, the S&P down today more than 14 percent from the September high.  More than 2,000 stocks hit 52-week lows.  All the FAANG stocks lost and FedEx, long considered a bellwether for the U.S. economy as a whole, fell over 12 percent.  Volume was huge at 10.8 billion. 

S&P flat as government shutdown threat, Fed decision loom

After rising nearly 350 points by 1 pm, a series of negative news including fears of a government shutdown after Democrats rejected the Republicans spending proposal and crude again dropping more than 7 percent, again because of reports of oversupply, and the Dow dropped over 400 points by 3 pm to rally again in the final hour and close 82 up.  So volatility was again the theme for the day’s trading.  But as before, the conclusion of the two-day Fed meeting on Wednesday will either calm or rile the markets depending on whether or not it brings clarity.  The VIX is up again, today its highest in ten months.  Volume was again very rigorous at nearly 9.2 billion shares traded. 

S&P 500 hits 14-month low on economic jitters ahead of Fed meeting

After a slightly less than 500 point drop Friday, Wall Street did an encore with a slightly more than 500 point drop today.  The Dow is now down more than 12 percent from its October high, the S&P down more than 13 percent from its September high.  The Russell, down more than 20 percent from its August high, is now in bear territory.  But the day didn’t start that way.  Though the Dow dropped 114 points at open, it recovered almost completely by noon.  Then one of our great prognosticators said that U.S. stocks were now in a bear market and that one statement sent everyone flying for the exits.  It didn’t matter that the economic data – Friday’s robust U.S. retail sales – was positive.  All it took was that solitary announcement to send the market tumbling.  Investors are skittish and any hint of bad news will trigger a selling spree.  The good news: everyone is looking to this week’s Fed meeting for some clarity about rate hikes and, if they get it, it could calm things down.  Keep in mind too that though the VIX went up nearly 3 points today, it is still well below 30 and that is the “no worry” zone.  But let’s see what happens with the Fed Tuesday and Wednesday.  Volume was again huge at 9.4 billion shares traded. 

Succinct Summation of Week’s Events 12.14.18 (plus Fun With Forecasting)

Below please find the customary weekly summation, the positives being that job openings and industrial production rose, the opposite of the prior week when they both fell, the main negative that retail sales rose much less than expected.  This list may have been published too soon on Friday to include the market's big dip at week end.  It's also curious that all the investor anxiety over the so-called bond inverse yield curve is not mentioned here at all.  I mentioned in last night's post that tonight I would include Barry Ritholtz's latest column about market prognosticators and how they're almost always wrong, just to give some perspective on the news this week of so many prominent economists predicting a coming recession.  I've found another article giving the other point of view on an impending recession but perhaps it's best to see how the market fares in the coming week before ruining everyone's holiday.  Temps in the 40s again later this week.  Let's enjoy them while we have them. 

An Updated Look at the Yield Curve and Stock Market Volatility

Friday the market once again plunged big time.  One thing I neglected to mention in last night's update is that both the Dow and the S&P entered the official 10 percent correction on Friday, the Dow having lost 10 percent from its high October 3rd, the S&P having lost 11.3 percent from its high in September.  And this week the notorious inversion yield curve has been all over the financial news, that is the point at which the 2-Year T-Bill pays more than the 10-Year T-Bill, something economists say has called every recession of the last 50 years.  This is being taken with sufficient seriousness that another major story on Friday was that 40 percent of economists surveyed by Reuters are now calling for a recession in 2020.  Tomorrow, I will include an article published by Barry Ritholtz today where he demonstrates how historically the prognosticators warning of recession have almost always been wrong.  Tonight, it's more appropriate to include yet another article explaining this yield curve, this time courtesy of AAII.  Enjoy your weekend.  Temps won't be in the 40's much longer.

Wall St. tumbles on global growth worries, J&J decline

Amid continuing worries about a global slowdown, the Dow melted down 200 points right out the gate and just kept going south all day long to close down almost 500.  Today’s report of weakening retails sales and industrial output out of China and disappointing euro data likely triggered the sell off.  But it was also a second day for investors to digest the Reuters poll of economists of which 40 percent now predict a slowdown in 2019 and a U.S. recession in 2020.  J&J is also in hot water over that their baby powder contained deadly asbestos which they covered up for decades.  It’s too bad J&J did not follow the excellent standard they set during the 1982 Tylenol cyanide crisis.  When will they learn?  The good news today of strong U.S. retail sales and Beijing’s tariff suspensions had little impact.  Solid fundamental data has been overshadowed by fear of a coming slowdown.  Does that make it a good time to buy?  Or to sell?  Most analysts would say it’s “buy” time.  Volume remained quite vigorous at 7.9 billion and was just shy of the 4-week average of 7.97 billion. 

Wall Street ends flat as nervous investors flock to defensive shares

It was another very volatile session with the Dow zooming up over 200 points by 10 a.m. but once again started an immediate decline with many peaks and valleys along the route, dropping over 250 points by 2 pm but then recovering in the final hour to close up 70.  Investors are very nervous on a variety of issues including rate hikes, the flattening yield curve, the China trade talks, Brexit, and EU monetary policy.  That’s quite a varied menu of potential worries.  As one expert stated, the trend of late has been that “investors get excited in the morning and then their fears come back.” And today a Reuters poll showed that experts expect the yield curve to invert in 2019 and for a recession to follow in 2020.  The problem, of course, with such opinions is that recessions almost always come out of nowhere; if the “experts” really could predict them, we could avoid them.  The one thing that really does seem to be a prelude to recession is when the fundamentals go suddenly very wrong and it is on this issue that the market has been taking solace all year.  At 7.5 billion shares traded, volume was just a little under the 4-week average. 

Wall Street closes up, investors optimistic on China trade

Like yesterday, the market started off on the roof this morning up over 450 points by 1 pm only to start sliding around 2 pm and then sliding a lot in the last half hour to end the day 157 up.  Even though part of yesterday’s slide was the expectation of a “no confidence” vote against Theresa May, investors still didn’t seem much reassured when she won that vote today with not a lot of confidence that she can still sell her deal to parliament.  But the market does seem to like Trump’s relentless pounding on China. There seems to be confidence that China’s going to fold. But whether that happens or not, there seems little confidence that there will be a deal until the very end of the 90 days so the sorry predictions are that this volatility will continue at least until then.  Since most of the selling took place in the last 20 minutes, it is expected that there will be more selling tomorrow.  But the bottom line is per today’s expert, “There’s a lot of political issues that are going to keep pressure on the market from now to the end of February.”  Volume remains strong at 8.1 billion. 

S&P 500, Dow edge lower as U.S. shutdown threat, China trade in focus

Today was almost an exact mirror image of yesterday where instead of the market plunging drastically and then recovering to a modest gain, today it rose dramatically only to plunge again and close at a modest loss.  The Dow actually opened up over 350 points this morning then started an immediate decline to be down nearly 600 by 2 pm then up and down again to close down 53.  What was going on all this time was good news followed by bad news followed by good news all day long so, as one expert said today, “Traders don’t know what to do.”  Part of the bad was the expected vote of no confidence against British PM Theresa May on the Brexit.  Part of the good was Trump calling the China trade talks “very productive,” then more bad with Trump threatening a government shutdown.  But all in all, computer algos got the blame from analysts for most of the chaos.  As another expert said, “We can’t control the headlines but the thing that we can lean on is that the underlying fundamentals remain solid.”  Such was life on Wall Street today.  Volume remains brisk at 8 billion shares traded. 

Wall St. ends choppy day higher; tech helps, Brexit weighs

It was another day that the Dow ended near even but only after taking a huge 500 point dive earlier in the session and then recovering to a modest 34 point gain.  Strategists today seemed to be attributing trading algorithms to the uneven pace and the reversal, the conclusion being – no worries, it’s just a machine making these decisions, it’s very short term.  (Let’s hope so.)  The Brexit continues to add to global uncertainty with May’s deal heading for almost certain rejection by the British parliament.  Banks took another 1.4 percent hit today as investors fret over slowing global growth and interest rates.  Volume was above the 4-week average at 8.4 billion. 

Succinct Summation of Week’s Events 12.7.18 (plus that pesky yield inversion curve)

The usual weekly summation is below with the only significant positive being that weak labor and housing data might be signaling slower Fed rate hikes.  The negative of course goes without saying -- it was a week of being trounced with all the indexes down at least 4.5 percent.  Need I say more?  The bonus this Sunday night is a primer on bonds that includes something that the market has been looking at very closely this week - the T-Bill yield inversion curve.  As a reminder, this is where the curve for the 10 year note crosses below the 2 year note, something this week they are saying has happened before every recession of the past 50 years.  They haven't crossed yet but this week they got closer.  How many investors had even heard of the bond inversion curve before this week?  So I thought I'd include this brief tutorial from the web site "babypips.com" to help lend some clarity.  Hope everyone had a great weekend.  Stay warm.

Dow plunges nearly 800 points: Here are nine reasons why

For this weekend's read, I thought it was appropriate to have a closer look at the forces behind the big sell offs this week.  This article is from Tuesday and that's why it says 800 points.  But the 9 reasons cited are applicable even for Friday's slide and this strikes me as a particularly concise summary of what's going on in the market and the economy.  It was published by Investment News on Wednesday but apparently they lifted it from Bloomberg.  It's a quick read and a good snap shot.  Try to stay warm. 

Wall Street tumbles, indexes post biggest weekly losses since March

It was another bloodbath today with the Dow plunging nearly 750 points before a modest rally in the final hour brought the losses up to 558.  There was much tension today, still mainly revolving around the trade wars. White House comments affirming there would be new tariffs after the 90 days did not help at all.  And there remains the continued focus on bond yields and the much feared yield inversion curve on the T-bills, not to mention that today the S&P fell below the 200-day moving average, a crisis point referred to as the “death cross” signaling a coming bear market.  Total loss on the Dow this week was over 1400 points or 4.5 percent, the S&P losing all of last week’s gains down 4.6 percent, the Nasdaq down 4.9 percent.  There were also reports today of both job growth and wage growth slowing, suggesting that 2019 will see a more moderating economy.  So there really was no good news today unless you can accept as good news the likelihood that the market was substantially over-valued so this week’s tumult brought a readjustment back to a healthier norm.  It depends on one’s point of view.  Volume was once again vigorous at 8.7 billion shares traded. 

S&P 500, Dow slip on trade worries, but end off of lows

I predicted yesterday that due to Wednesday’s panic selling overseas that there would either be more panic selling today, or bargain hunting.  It turns out to be both.  There was another precipitous 800 point drop by 11 a.m. but then enter the bargain hunters with investors figuring out that the market was way oversold combined with the good news that the Fed was once again signaling a possible pause in rate hikes.  Everyone is still paying close attention to that inversion yield curve on the bonds with the 10-year hitting a three month low today.  But it wasn’t enough to stave off the clearance sale on cheap valuations to push the Dow back up to recover all but 79 points by close.  But all major indexes still stand at a 3 percent loss from Tuesday so maybe the rally will continue on the morrow.  Volume was huge at 10.5 billion.

Stocks battered by Wall Street, fears of U.S. slowdown

George W. Bush gave a most moving eulogy at his dad’s funeral today.  Had he been this eloquent in 2000, he probably would have won the election easily.  Of course, they said the same thing about Gore after his concession, so who knows?  Maybe this is really all about just being yourself.  In other news …

Wall Street tumbles, spooked by growth and trade worries

Yesterday’s so-called “relief rally” which had everyone at least mildly skeptical lasted all but one day as mild skepticism turned into all-out fear today with an all-day sell off that brought the Dow crashing down huge 799 points.  It wasn’t just Trump’s remarks about loving tariffs that sent everyone to the exits but also unwanted clarity from the Fed that more rate hikes were likely coming and further uncertainty about the Brexit.  Perhaps the biggest threat though came from the bond yields where the spread between the 10-year and the 2-year T-Bill shrank to its lowest in over ten years, the so-called “yield curve inversion,” which has signaled every recession of the last 50 years.  The good news is that it is not yet a complete inversion but investors are on alert.  It is now obvious that Monday’s ebullience over trade and investor optimism over a resolution to the tariff war faded into the dust today as the market realized yesterday’s celebration was based “more on the headline than on the substance.”  Volume was furious at 9 billion.  Tomorrow the market closes to mourn President Bush and maybe the day off will give everyone a chance to breathe a bit. 

Relief rally boosts Wall Street on U.S.-China trade truce

I commented over the weekend that today would be the day we find out how the market reacts to the trade agreements reached between Trump and China in Buenos Aires on Saturday.  Was it as great as it looked or was something being overlooked?  At first glance, it would appear the reaction was very positive, but a closer look reveals a somewhat different story.  If the market really believed that this agreement was going to fly, the expectation was that the Dow would have gone up a good deal more than 300 points since the trade war has been the primary wet blanket on the market for months.  If you look at the intraday chart, you’ll see that the index went up over 440 points right out the gate.  That represented all the pent-up energy the market gathered since Saturday.  Then by noon most of those gains were lost with the index diving over 300 points, then started gathering steam again to close up the 287 at the end.  What does all this mean? 

Succinct Summation of Week’s Events 11.30.18 (plus Framing Nature)

Below is the usual weekly summation but the biggest positive (which might still turn out to be a negative, maybe tomorrow will tell) is the new agreement reached with China in Buenos Aires Saturday which happened after this list went to press on Friday.  Of the positives that did make the list are a higher than expected increase in retail and wholesale inventories which is probably because of the gearing up for what is expected to be one of the best holiday seasons ever, evidenced from store sales increases being up over 20 percent from last week.  The big negative is a roughly 5 percent increase in jobless claims over last week. 

China agree trade war ceasefire after Trump, Xi summit

The market has been sitting on needles and pins awaiting today's trade meeting between Trump and China in Buenos Aires.  There was nothing on the news tonight but, about an hour ago, this story was posted on Reuters that apparently sings the praises of the meeting and declares an end to the trade war.  It is quite a lengthy article so I am supplying only the link, but Monday will tell whether investors agree with the good news here or instead we learn that unexpected and unwanted concessions were made.  But the news as presented here certainly does look hopeful.  Stay warm and dry on this cold and rainy weekend.