S&P 500's best month since 2015 ends on a high note

The market opened 175 points in the red and struggled all day long to get back to even, the Dow closing 15 points down.  Today’s reporting does not make clear what caused the big crash in the a.m. but does attribute the comeback to a number of major companies beating Q4 estimates.  These would include Facebook, GE, and Charter.  Despite the day ending even, it is the strongest monthly performance for the S&P since 2015 and the strongest January since 1987.  42 percent of the S&P has now reported with 71 percent beating estimates.  Investors are now waiting for the conclusion of the China talks that began Wednesday and hoping for an end to the trade war.  Volume was considerably above average at 9.5 billion. 

Big thumbs-up from Wall Street after Fed signals patience on rates

Yesterday the prediction was for a jump Wednesday morning due to Apple’s after-close positive Q4 report suggesting that the China situation may not be as dire as thought.  That’s exactly what happened this morning with the Dow jolting up 250 points right out the gate.  Then it just kept going all day long with the Fed telling investors exactly what they wanted to hear – no rate hike this month and possibly not for quite a long while.  Apple jumped nearly 7 percent and our other China-sensitive stock – Boeing – jumped over 6 percent.  The latest China talks started Wednesday and Facebook and Microsoft, reporting after the close, rose in expectations of good news.  About one-third of the S&P has now reported with 73 percent topping forecasts.  Put it all together and the Dow closed 434 points up.  Volume was a little above average at 7.9 billion. 

Wall Street wavers as tech gives ground and industrials rebound

There was quite a lot of volatility again today with the Dow swinging back and forth in a 170 point range triggered by mixed reactions between tech dipping and industrials rebounding. There wasn’t a lot of news today that anyone could hang their hat on so it became a day of indecision with the Dow up as much as 150 a couple of times during the session but finally closing up 51 points.  But the big trigger was Apple rebounding with a positive Q4 report following its dire warning earlier this month that its sales were flagging due to China.  Now their latest results suggest that business with China may not be so soft after all and that caused a surge in extended trading suggesting there could be a jump on Wednesday morning.  Volume remains below average at 6.9 billion. 

Caterpillar and Nvidia warnings send Wall Street tumbling

The Chinese slowdown took center stage again when Caterpillar and Nvidia reported big profit losses due to softening demand from China, a warning that brought the Dow down 208 points and sent the overall tech sector down.  There are still hopes that a deal can be reached at trade talks later this week and also hopes that Q4 will continue to beat Wall Street expectations.  So far 72 percent of reporting companies have beaten estimates.  The good news is that Q4 earnings growth is still pegged at 14 percent; the bad is that 2019 earnings growth has fallen to under 6 percent.  Volume was just a little below average at 7.3 billion. 

Succinct Summation of Week’s Events 1.25.19 (plus GDP 2008-19)

Below is the weekly summation, the big positive being the end of the government shutdown - for 3 weeks anyway, the big negative being all the grounded flights due to lack of air traffic controllers on account of the government shutdown.  The bonus this Sunday is a graphic showing the 11 year history of U.S. GDP from the beginning of the Great Recession to present.  The lingering question is:  does this chart suggest we're about to have another crash?  (I would suggest the chart says not.  Look at all the times since 2009 that GDP has been lower than it is now, and there's been no crash.)  We're about to enter a week of record-breaking cold, so bundle up and stay warm.  Better yet, don't bundle up and just stay inside!  Hope you all had a great weekend.

Jack Bogle Part III: "Enhanced" Index Funds

Your weekend reading for this very frigid Saturday is yet another tribute to the recently late Jack Bogle courtesy of an article a few days ago in the AAII blog, "Enhance" Index Funds. For those of you who like ETFs, this should have some valuable tips in it.  Stay warm!

Wall Street advances on Washington temporary shutdown deal

Today’s announcement from Trump that he has accepted the compromise to reopen the government was greeted with cheers as the Dow zoomed up over 300 points in the morning.  But then came mixed Q4 reports with companies like Starbucks and Colgate-Palmolive beating forecasts but then companies like Intel and DR Horton disappointing.  So the Dow went into slide mode all afternoon to finally close up 183.  There was also the sentiment dampening worries from the World Economic Forum where global business leaders expressed that they are “fed up” with Trump’s policies.  But the real damper was the reality check that, despite the deal to end the shutdown, it was only temporary with a very real likelihood that we’ll be starting all over again in three weeks.  So uncertainty still dominates and, despite the fact that the Dow and Nasdaq have enjoyed five straight weekly gains (and the S&P four until this week), it’s not enough to relieve the jitters.  At just over 7.5 billion, volume is getting closer to the 4-week average of just under 7.8 billion. 

Nasdaq boosted by chip rally, Dow, S&P 500 stall

Bad news this morning with a China trade agreement getting further away led to a spate of selling bring the Dow down about 150 points until about 1 pm.  Then a long series of positive Q4 reports from American Airlines to Textron brought the market back again to close nominally even at 22 points down.  And PG&E shareholders got a big present today when the courts cleared them of the disastrous Tubbs fire giving the stock a one-day boost of 75 percent.  As investors continue to sit on the fence awaiting more trade news and Q4 reports, volume remains below average at just under 7 billion. 

Wall Street edges higher as upbeat earnings dampened by trade, shutdown woes

The news was mostly bad all day so, even though the market opened up 300 points, it quickly declined to a hundred point loss by noon triggered this time by sentiment being dampened by the World Economic Forum where business leaders expressed a loss of confidence in Trump’s policies.  The no-end-in-sight shutdown is also putting the U.S. in danger of zero growth for Q1, making for more uncertainty and anxiety.  But Q4 reporting came in much better today with IBM, P&G, UT and Comcast all beating expectations.  So the afternoon saw a rally which left the Dow at close 171 points up.  15 percent of S&P companies have now reported with 77.6 percent beating estimates and Q4 earnings growth projected now at 14.2 percent, up 1/10^th percent from yesterday and prior estimates.  As more investors take a wait-and-see on Q4, China, and the shutdown, volume remains below average at about 6.8 billion. 

Wall Street drops as economic outlook, corporate forecasts sour

Yesterday’s 3-digit gain was all but completely wiped out by today’s only slightly less 3-digit loss as all the optimism that has driven the market in recent days evaporated and the old fears over trade, global growth, and Q4 took over again, triggered by a report that the all-encouraging China talks that had been scheduled were now canceled.  The IMF confirming growth slowdowns and China confirming its own slowdown as well as the latest Q4 reporting disappointing added to the 301 point sell off on the Dow.  12 percent of the S&P has now reported in and only about 78 percent have thus far beaten forecasts.  The shutdown has also added to the angst as one of the casualties of the Great Standoff over the Great Wall has been a dearth of data reporting on the economy.  Volume was a little below recent averages at just under 8 billion. 

Succinct Summation of Week’s Events 1.18.19 (plus Jack Bogle Pt II)

Happy MLK Day one and all and since the market was closed today please find the usual weekly summation below.  The positives included a week of gains over optimism on trade war issues, the big negative being that the longest government shutdown in history continues with no end in sight.  The bonus this week is yet another tribute to Jack Bogle published today on the Big Picture blog, this time with the catchy headline paraphrasing Shakespeare's "Julius Caesar," "We Come Not to Praise Indexing, But To ..."  Tomorrow we're back to normal winter temps for a day or two.  Enjoy it while it lasts. 

A Brutal Year

As the markets are closed Monday for MLK Day, I will wait until tomorrow before posting the weekly summation.  Meanwhile, the Sunday bonus this week is this very instructive graphic on the trends in hedge funds in the past ten years.  Hedge funds are supposed to do worse in bull markets so it's interesting to note that in 7 of the last 10 years they haven't done that badly and that in all the downtime in 2018, they still did so poorly.  A more instructive graphic would be a comparison between hedge fund and traditional actively managed mutual fund performance.  My guess is that mutual funds fared just as badly.  25 below in the morning so stay warm. 

A Few Personal Thoughts in Remembrance of John Bogle

As I mentioned briefly on Wednesday, Vanguard founder uber-guru John Bogle passed away this week at the age of 89.  To commemorate his passing, here is a fitting tribute to the man courtesy of yesterday's edition of the AAII news.  Stay warm on this bitterly cold weekend. 

Wall Street extends rally on U.S.-China trade optimism

To kick off the MLK weekend was another big rally racking up another 336 points on the Dow, triggered again by the old standby – increased optimism over a deal with China to end the trade war after a report that China would increase its U.S. imports by more than $1 trillion dollars.  The S&P is on its way to its best month in nearly two years and the losses since the Sept 20^th record close are now reduced to 8.9 percent, now above correction level.  Investors are ready to take on risk again, reflected in a 2.3 percent boost in the trade sensitive semiconductor sector.  Trade was just under 8 billion, relatively light vs the recent 4-week average of 8.4 billion indicating that some are still on the sidelines keeping their options open on the trade war. 

Wall Street advances as industrials jump on trade hopes

A third consecutive 3-digit gain as investors continue to hope for a positive resolution to the trade war, stoked by Mnuchin’s report that discussions were scheduled for lifting some or all tariffs.  The Dow bolted another 162 points and the S&P officially closed above the 50-day moving average.  Financial shares also gained for a seventh straight session.  Q4 estimates remain at 14.2 percent vs the October 1 forecast of 20.1 percent.  Both Morgan Stanley and Netflix today turned in disappointing reports.  Volume was brisk at nearly 7.2 billion but still below the unusually high 4-week average of nearly 8.6 billion.   

Upbeat bank earnings send Wall Street to one-month highs

It was yet another 3-digit gain today as, even though the forecast for Q4 remains dire, on this third day of reporting both BofA and Goldman Sachs beat estimates, the latter even recording the biggest daily percentage gain in ten years.  With this strong start and some trade hopes, the S&P has recouped almost half of its recent losses and today came very close to its 50-day moving average.  So the Dow is up another 141 and overall volume was healthy at nearly 7.5 billion though still below the 4-week average.  And RIP for Vanguard wizard John Bogle who passed away today at 89.  

Netflix, China boost Wall Street as investors shrug off Brexit vote

Despite today’s Brexit defeat, the market shrugged it off and let Netflix lead the way to another 3-digit gain.  There was also a big boost from China after sending signals that maybe their slowdown wasn’t as bad as assumed.  But after yesterday’s promising start to Q4, today it disappointed with big banks JP Morgan and Wells Fargo under-performing forecasts.  Analysts still put the S&P Q4 estimate at about 25 percent under the October forecast.  Volume was below average at just under 7 billion. 

China worries weigh on Wall Street, earnings expectations fall

It was another down trading day triggered this time from reports of China exports falling off, signaling their economy may be faltering.  The experts are still not convinced that the Chinese slowdown is real but do feel that it will show up in Q4 earnings, which are currently expected have growth of only 14.3 percent vs the October Q4 forecast of 20.1 percent.  But so far, with the first company Citigroup having reported today, Q4 is off to a good start with Citi beating profit estimates.  And despite today’s drop, the S&P has already recovered 10% of its low from Christmas Eve.  Volume was considerably below average at 6.8 billion. 

Succinct Summations for Week’s Events 1.11.14 (plus More Rude Awakenings)

It's time for the weekly summation, the biggest news being progress in the China talks, the biggest negative being the government shutdown now becoming the longest in U.S. history and with no end in sight.  As 2019 is expected to be a year of continuing the volatility we saw in 2018, perhaps even worse than 2018, this Sunday's bonus is an article discussing this volatility and steps investors can take to protect themselves.  Let's hope in the coming week that the positives continue and the negatives get resolved. 

AAII Survey: Reviewing Readers’ Predictions for 2018, Looking Ahead to 2019 – AAII Blog

As I was out of town for the first weekend of the new year I thought I'd take this second weekend to share something of interest from the AAII - a review of their members predictions for 2018 (vs how it turned out) and their new predictions for 2019.  It's mostly stuff that's already been covered over and over but maybe there'll be something useful.  Stay warm this weekend.  

Wall Street's five-day rally flickers out as earnings near

FRI  JANUARY 11, 2019 / 6:49 PM 

After dipping 200 points right out the gate, the Dow continued recovering all day long to close just barely even, investors being cautious ahead of earnings season.  The day’s recovery was attributed to continued optimism over a hoped for satisfactory end to the trade war and fewer Fed rate hikes.  Q4 was plagued by worries over trade, hikes and the slowing of global growth.  The forecast for 2019 is for S&P earnings growth of 6.4 percent vs 23.5 in 2018.  Volume was below average at 6.8 billion. 

Wall Street shrugs off Macy's, rallies for fifth session

THU  JANUARY 10, 2019 / 5:39 PM 

A fifth straight day of gains pushed the Dow up 3 digits again to end up 122.  But the index spent most of the day in negative territory losing nearly 300 points before rebounding.  Much of the negativity came from Macy’s which lost nearly 18 percent of its value in the single day on its announcement of cutting sales forecasts for the year, which also brought the entire retail sector down.  Also supplying a drag was Powell raising worries about the U.S. debt spooking the market as it was taken more as a commentary on the economy as a whole.  The 2019 forecast is now down to 6.4 percent vs 7.3 percent a week ago.  Despite the uncertainty, the China-sensitive stocks had a good day.  Volume was quite a lot lighter than the recent elevated average, coming in at just 7.3 billion shares traded. 

Wall Street extends rally as chipmakers rebound

WED  JANUARY 9, 2019 / 6:05 PM 

For the fourth straight day a near 3-digit buying spree as the Dow collected another 91 points propelled by all the China-sensitive stocks, particularly Apple, getting a big boost from progress in trade talks.  There were also reassurances from Fed minutes that showed that more policy makers were leaning against rate hikes than for them.  Another big help came from China with their pledge to purchase “a substantial amount” of U.S. product.  As today’s expert stated, “If you want to see how investors are gauging the trade talks, just look at tech.”  Where Apple goes, the market follows.  Volume was 8 billion, still under the 9 billion 4-week average. 

Apple, Facebook propel Wall Street to three-week peak

TUE  JANUARY 8, 2019 / 5:50 PM 

It was another 3-digit rally today bringing the Dow up another 256, the third consecutive up day, again spurred by hopes that a trade deal will be struck with China and helped a great deal also by Powell’s remarks taking on a more dovish tone.  But according to today’s expert (and I concur), what really happened today was investors finally looking past the headlines and paying closer attention to what they should be looking at it – the fundamentals – and seeing it’s not a bad picture.  That seems to be the way the market has been going for some time.  Headlines bring things down, then the market becomes more rational, looks at the actual facts and start buying again.  Volume remains brisk at 8 bilion but still under the 4-week average of 9 billion. 

Amazon and Netflix push Wall Street higher

MON  JANUARY 7, 2019 / 4:45 PM 

Last week’s end-of-week rally continued Monday with the resumption of China trade talks easing investor concerns and boosting the Dow another 98 points.  Friday’s rally continues to “feed on itself.” Q4 earnings are now expected to increase by 15 percent vs Q4 forecasts of 20 percent that were made at the end of Q3.  2019 profit growth is now estimated at 7 percent, vs 10 percent last quarter.  Volume was 8.1 billion. 

Succinct Summation of Week’s Events for 1.4.19

Below is the weekly summation, the big positives being Friday's dramatic recovery to what had been a disastrous week, the recovery triggered in large part by a jobs report that was a great deal better than forecast.  The bad news is that Apple is still rather badly beaten down and unemployment has risen to 3.9 percent.  As I've just returned from a weekend trip, there is no bonus this Sunday night.

Wall St. rebounds on robust jobs report, dovish Powell remarks

Fri 1-4-19

Thursday’s 660 point loss was more than recovered Friday with several factors instigating a surge of 3 percent across the board including a big boost to the FAANG stocks.  The multi-faceted advance was spearheaded by a strong jobs report and an unusually pointed message that the Fed is sensitive to investors’ concerns and is not on a predetermined course of hikes.  Ordinarily a good jobs report would just create new fears of new hikes but Powell’s statement seems to have calmed those fears.  The news of more talks with Beijing scheduled for next week also helped.  At nearly 8.7 billion shares, trading was brisk though still under the unusually brisk 4-week average of 9.1 billion. 

Wall Street plunges as factory data, Apple warning fuel slowdown fears

What an ugly start to the new year.  Any hesitancy that was shown in yesterday’s market was erased today as investors became convinced that things were heading south.  Taking overnight to reflect on Apple’s dire revenue warning, not to mention the factory activity report showing the biggest drop in ten years, it was a major selloff with the market losing more than 2 percent and Apple’s shares dropping 10 percent.  This says just one thing – investors are concerned not so much about the bad news from Apple but rather that it’s only the tip of the iceberg.  Automakers also reported weak December sales with GM down nearly 9 percent and Ford nearly 3.  And the 2-year Treasury dipped below the federal funds effective rate for the first time in 10 years.  The Dow lost 660, the Nasdaq 202 on volume of 8.1 billion shares. 

Wall Street ekes out gain, Apple cuts revenue forecast after the bell

If there’s one thing that been a no-brainer to predict lately it’s volatility and today was certainly no exception. The Dow dropped almost 300 points right out the gate and then rose and fell however choppily throughout the session in a 500 point range.  It was even so very briefly in the black around 2 pm but then dove again, only to rise just before close to a +18.  The main stimulus today was Apple dropping its Q4 forecast due to China.  This along with other reports showing declining activity in China and the euro zone made it easy to understand the indecision.  One conclusion everyone came to is that the trade war with China was taking its toll.  Q4 is now expected to come in at just under 16 percent earnings growth, roughly half of that of Q3.  Of course, that has been predicted for a long time along with the anticipated continuing slowdown into 2019.  Volume was 7.8 billion. 

How Madoff Pitched Institutions

Happy New Year!  Instead of prognostications today, I found this on Barry Ritholtz's New Year's post on the Big Picture blog and thought it more appropriate to share a brief (4 min) and humorous video from one of the intelligent investors who saw right away that Bernie Madoff was bad news and got out of his way.  Yes, something smart happening is a good way to start the new year.  The fun starts again tomorrow.