Wall St. skids, jolted by Trump's surprise tariff threat on Mexico

It was another enormous rout today, once again disproving the theory stated earlier this week that the short holiday weeks tend to be slow. But one day after President Trump threatened Mexico with a 5% tariff, trade war fears and fears of recession increased by leaps and bounds sending investors for the third day to safe T-bills and continuing to deeply invert the yield curve between the 3-month and 10-year bonds.  For the month, the Dow is down nearly 6.7%, the S&P nearly 6.6, the Nasdaq just over 7.9 percent. Adding to the mix was today’s China threat to produce a hit-list of “unreliable” foreign firms.  Today alone the Dow is down another 354 points with above average volume of just over 7.7 billion. 

Wall St. steadies after sell-off, but gains muted

For a little while there it looked like the market might come back today. But then Trump said something about trade and the Chinese said something else about trade and the whole cycle of confusion and murky information sent the index up and down all day long, down as much as 60, up as much as 90, but finally closing 43 up.  The lack of clarity has sent the three major indexes down a good 5% in May and today’s report that inflation was much weaker than previously thought  due to a sharp slowdown in demand didn’t help.  For the second day there was a flight into T-bills and, for the second day, the yield curve remained inverted.  Volume was back to below average at just over 6.2 billion. 

U.S. stocks fall as trade concerns spark growth fears

Yesterday the pundits said that trading would be light this week due to the short holiday but already on the 2^nd day that was proven false as investors flew to safe haven government bonds in the continued panic over the trade war. Tensions were further exacerbated today when, in response to Trump’s comments yesterday, China reacted with the threat of withholding major chemical resources that are used by all industries.  The increasingly heated rhetoric just reinforced fears of slowing growth and recession.  As the market fled into T-bills that pesky inversion reasserted itself, at least for the day. The Dow dropped 221 points, its second consecutive 3-digit loss, on above average volume of 7.3 billion. 

Wall St. loses early gains as trade concerns abound

On Monday Trump made the statement that he was not yet ready to deal with China and that solidified the message that this trade war was far from over and may lead to a global economic slowdown.  The market actually opened this morning over 130 points up but immediately began a decline that lasted all day to close 237 down.  It also did not help sentiment today that the strong consumer confidence numbers from last week are now said to have been gauged before the impact of the trade standoff began, thus pushing investors into greater uncertainty.  The S&P is now down nearly 5 percent from its April high and the trade-sensitive tech sector has lost over 7 percent in May.  Because of the short week, volume is expected to be light all week and today came in at just under 6.7 billion. 

Succinct Summation of Week’s Events 5.24.19 (plus Equity vs. Fixed Income: Return Patterns Since 1802)

As we close out another Memorial Day weekend, I submit the usual weekly summation, with the biggest positive being, "All things considered, this week could have been much worse than it was ... That resiliency is the biggest positive no one is talking about."  The bonus to end this holiday is another quite interesting study from the AAII which, though it states the obvious that, in the long run, equities beat fixed income every time, I'm not sure if we've ever before seen a study that takes us all the way back to 1802 to make its point.  It is really quite fascinating looking at the trends over two full centuries and seeing how relatively consistent they have been. 

The Best Advice You’ve Ever Received (and Are Willing to Pass On)

For this Sunday evening on this holiday weekend, I thought I'd pass along this entertaining and instructive compendium of tidbits on how to enjoy a good life, a good career, a good family.  There are a couple of dozen sage pearls of wisdom here that are a quick read and may actually prove useful.  Enjoy the holiday tomorrow. 

AAII: Are the Nifty 50 Still Nifty?

Since my previous post last weekend was about the AAII evaluating the 50 stocks from the 1960s and 70s that were considered gold, I thought it only appropriate to include their follow-up article to evaluate whether these same companies remain great bets 50 years later.  It appears that 29 of them may well be.  Hope everyone is enjoying the holiday weekend.

Wall St. edges higher after Trump sparks U.S.-China trade hopes

Twas another day when the president of the United States was able to change the entire direction of the market just by making the simple hopeful remark that he saw the end of the trade war “happening fast.”  Even though nothing concrete has happened and nothing is on the schedule, the comments were enough to boost the Dow 95 points.  But most experts agree that these tit-for-tat tariffs are “not a good environment for equity investors.”  The S&P has notched its third straight week of losses and the Dow 5 straight weeks, its longest losing streak in eight years.  Small caps are now following their large cap brethren in dropping in direct correlation to trade tensions.  Due to the holiday weekend, volume was at its lowest for the year at just under 5.5 billion. 

Trade tensions slam Wall St. as global growth worries mount

With it becoming increasingly obvious that the resolution of the trade war will not be coming anytime soon, the Dow once again went into a nosedive losing some 450 points before recovering the last hour to close down 286.  The other day the defensive stocks did poorly when it appeared the market was coming back.  Today the defensive sectors were the only real winners with the trade-related sectors tanking and investors moving to safe havens.  Also adding to the down mood was manufacturing data showing new orders falling for the first time in ten years.  May has been characterized by selling pressure triggered by the tit-for-tat tariffs and the downward pressure is seen continuing until the China situation is resolved. The pressure was intense enough today that for once volume was above average at 7.6 billion. 

Renewed U.S.-China trade tensions push down Wall Street

Monday, Huawei broght the market down when the restrictions on the company were announced.  Yesterday, with the restrictions eased, the market came back. Today there was a new bull in the China closet called Hikvision and reports that Trump would sanction them.  This brought the tit-for-tat jitters right back and the Dow fell 100 points again.  As today’s expert says, “The market is attempting to reset U.S. profit growth expectations in light of that.”  Qualcomm fell 10.90% when  a judge ruled that it was illegally suppressing competition and Target jumped 7.8% after beating Q1 estimates.  But the trade war will continue to be the main driving force until it’s settled.  Volume was again below average at 6.00 billion. 

Wall St. rises as Huawei reprieve boosts tech shares

Yesterday the market took a nosedive because of U.S. restrictions on the embattled Chinese company Huawei and today came back big when those restrictions were temporarily eased. Tech shares rose 1.2 percent and Huawei suppliers including Intel and Qualcomm among others all got a boost of between 1 and 5 percent.  So many companies do business with them that “Huawei cast a cloud over [all of] tech.”  The indexes are all tied so tightly to this single news story that it’s impossible to avoid these daily violent swings.  However, even with the S&P on track for its first monthly decline in a year, it’s still just 3 percent away from its all time high.  Only defensive stocks took a hit today, which always happens whenever the rest of the market is doing well.  Volume remains below average at just under 6.1 billion. 

Wall St. slides as Huawei fallout hits tech shares

Trade war jitters continue in earnest and the shoe that dropped today was Huawei.  The Dow sank over 200 points at open and almost as much just before close but then recovered to lose 84 for the session.  The newly imposed restrictions on Huawei sank the tech sector nearly 2 percent and the chip index 4 percent as the market is now realizing that the tariff increases could have “dire consequences” on demand.  (Yes, that is the whole idea.) As today’s expert noted, buying is more or less on suspension until all this deescalates.  Many investors remain on the fence and volume remains below average at 6.4 billion. 

Succinct Summation of Week’s Events 5.17.19 (plus 16 financial ratios)

Below please find the usual weekly summation, the positives being the progress in resolving the trade war, the negatives being the progress still wanting in the trade war.  The bonus this Sunday night is #19 of the Top 40 best articles from the AAII Journal, this one right up the alley of all you techies, being the 16 financial ratios for analyzing a company's strengths and weaknesses.  Hope everyone had a great weekend. 

Valuing Growth Stocks: Revisiting the Nifty 50

For your weekend reading, I submit the following article on growth stocks published this week by the AAII as #20 (printed in 1998) of the best 40 articles every published in the AAII Journal.  This one is entitled, "Valuing Growth Stocks: Revisiting the Nifty 50" featuring a list of 50 golden companies considered so solid and so reliable and so profitable that it was the ultimate buy-and-hold. You could buy these stock with "one decision" and literally hold them forever and know you will do very well.  These were stocks chosen in the 1960s and the author reexamines them in 1998 to see if they held up to expectations.  Hope everyone is having a great weekend. 

Wall St. falls as trade anxieties spike

After three consecutive gain days in which the Dow came almost within a hundred points of where things were before Monday’s big sell off, the index today lost almost another hundred points after the Chinese suggested further trade talks could be fruitless.  It was enough to negate the upbeat economic data, even the good news that the U of M sentiment index had jumped in May to its highest reading in 15 years.  Trade war jitters hit the industrials hard again with Deere, Caterpillar, 3M, Textron, General Dynamics and Fedex all pulling the S&P down.  Q1 reporting continues swimmingly with all but 40 S&P companies now having reported and 75.2 percent beating estimates.  As everyone continues to wait out the tariff jitters, volume remains below average at 6.7 billion. 

Wall St. rises for third straight day on data, earnings

For the third consecutive day there was another 3-digit rally which now puts the Dow within a hundred points of where it was before the big rout on Monday.  Today it was not better trade news that turned investors but better economic data like new homes increasing more than expected and 16,000 fewer applications for unemployment.  But trade wasn’t completely out of the picture as today’s expert notes, “the worst may be over.”  Walmart and Cisco both turned in good Q1 reports and the chip index was up 1.7 percent.  All in all, the Dow rose 214 though it was up over 300 at noon.  The forecast on Q1 earnings growth has now grown to 1.4 percent, a huge reversal from the 2.4% loss forecast at the beginning of reporting season.  Volume remains below average at just under 6.6 billion. 

Wall St. ends higher as trade worries ease

Another triple digit gain today to make up roughly half of the lost ground from Monday’s sell off after Trump reported holding off on some tariffs and Mnuchin saying trade talks would resume soon.  But though the Dow closed 115 up it started the day almost 200 down and was almost 200 up just an hour before close.  Part of the decline was due to disappointing reports such as retail sales and industrial production dropping unexpectedly.  But overall the market was more interested in the softening of the trade rhetoric.  Volume remains below average at 6.3 billion. 

Stocks bounce back as trade rhetoric cools

One day following the China retaliatory tariffs against the U.S. Trump attempted to calm the markets by characterizing the tit-for-tat as merely “a little squabble” and assuring “we have a good dialogue going.”  That was the kind of shift in rhetoric investors were waiting for and thus started another buying spree that shot the Dow up 207 points, though it had been up as much as 350 points just an hour before close.  But most financial gurus put out strong “buy” signals after yesterday’s rout which indicates that this was just a “following the herd” thing and not expected to last.  But the real truth as today’s expert points out is that “people want to believe that it’s going to end well.”  The vulnerable industrials got a good boost and the all important chip index rose 2.4 percent.  Volume was 6.6 billion, not quite up to the average but most investors are likely still in wait-and-see mode. 

Wall Street shudders as U.S.-China trade war intensifies

Today China came through on its promised retaliation against the new Trump tariffs by announcing higher tariffs on $60 billion of U.S. goods – and the market went into complete panic mode, dropping nearly 400 points right at open and then continuing to slide more than another 200 by close.  As today’s market strategist noted, this represented “an absolute breakdown of talks and everything is gone backwards.  It could be very bad” as the U.S. and China deepen this tit-for-tat war.  The major companies dealing with China all lost around 5 percent as did the overall chip index.  But with most S&P companies now reporting, Q1 continues swimmingly with 75.2% beating estimates.  The Q1 earnings growth forecast is now up to 1.3 percent.  Volume was huge at 8.24 billion. 

Succinct Summation of Week’s Events for 5.10.19 (plus Banking Stress: Bad Loan Ratios)

Below is the usual weekly summation with the positives being job openings rising 4.8% and the negative as usual being the ongoing angst of the trade war which was unexpectedly escalated this week with the new tariffs.  And despite the increase in job openings, jobless claims came in higher than expected.  The bonus this week is a handy little illustration that shows that, relative to the rest of the world, the U.S. is in pretty good shape in terms of how much bad debt our economy is carrying.  At 1.1%, our bad loan ratio is close to being the lowest in the world.  At 27% between the two of them, Italy and India are among the highest.  Hope everyone had a wonderful Mother's Day weekend.

AAII Peter Lynch book

This afternoon was the May AAII meeting of the Computerized Investing SIG at the Farmington Community Library in which our longtime colleague Taljit gave a two hour presentation on his personal investment strategy.  It was quite informative and also quite satisfying that he referenced this book by stock guru Peter Lynch that was just reprinted last week on the AAII web site.  This month, the AAII is celebrating a landmark by reprinting the top 40 articles it has ever run in its monthly magazine.  This article about Peter Lynch entitled, "Blending Conservative, Growth and Cyclical Stocks Into a Winning Strategy" ranks at #13.  There is a link here to Lynch's book.  Have a great Mother's Day. 

Wall St. snaps losing streak after Trump's upbeat trade comments

One day into the new 25% tariffs on China the market took a huge 350+ point nosedive this morning before Trump made a statement that trade talks were “constructive.”  This was apparently all investors needed to conclude (perhaps wishful thinking here) that the comments were “more political than a change in strategy” and that there was renewed hope for an eventual agreement.  Nonetheless, the move prompted a flight to low-risk assets like government bonds and likely defensive stocks.  The trend reversed right around noon and continued an upward slope for the Dow to close up 114 points.  The chip index, which had a four day run of losses, gained some ground today but still lost 5.8% for the week.  Volume was again above average at over 7.4 billion. 

Wall St. dips as investors await outcome of U.S.-China trade talks

It was another day of the market taking a plunge over China jitters, but today it was really big plunge to the tune of some 450 points by late morning.  Then Trump made the announcement of receiving a conciliatory letter from the Chinese president and that negotiators would meet at 5 p.m. Thursday to try to work out a deal, hinting an agreement was within reach.  Thus inspired market optimism and the Dow recovered all but 138 by close.  Still, there are jitters as there was no backing down from the tariff threat that would go into effect at midnight. But there was some appeasement in the general consensus that there would be resolution at some point due to the general acknowledgment that a protracted trade war would be most impractical.  Chipmakers took another hit, down 6% so far for the week, and the trade-sensitive bellwethers also all fell. It is now after midnight and the news is out that the 25% tariff has taken effect with China expressing regret and promising payback. So a deal was not made this evening, but talks continue tomorrow.  All eyes will be focused I’m sure.  (With talks continuing until Friday, is anyone else wondering why the tariff deadline was set for tonight instead of tomorrow night?)  Volume was above average at over 7.7 billion. 

Wall St. falls as investors cautious on trade; Intel slides

The market tried awfully hard today to recover from yesterday’s bath and, despite a doubtful opening down another 75 points right off, it climbed all day after that to a high of +155 until the last half hour before plunging to close at break-even after a disappointing late session report from Intel.  But prior to that final half hour, optimism again reigned with the defensive stocks doing particularly well, which is usually the case when the rest of the market is on edge, as it is now over the China situation.  426 S&P companies have now reported and Q1 continues to sharply overwhelm the dire earlier forecasts with a growth rate now at 1.2 percent.  Volume was above average at 7 billion.  But make no mistake.  Most investors are on the fence pending the outcome of the meeting with China officials on Thursday and Friday. Will Trump stay true to his threat to raise the tariffs to 25% if there is no final deal on Friday?  (Not to mention the retaliation that China has promised if that happens.) 

Wall Street slides as U.S.-China trade fears rise

Yesterday the market fell almost 500 after Trump announced his tariff threat against China but closed just 66 down because investors decided to shrug it off, that it was just a ploy for negotiation.  Today, the same investors decided this was indeed something to be concerned about and the Dow tumbled some 650 points before recovering in the final half hour to close down 473.  At least in that final 30 it came back almost 175 so maybe that will continue tomorrow (but don’t count on it.) Today’s announcement that Chinese officials will be here on Friday (the deadline) for talks did not reassure anyone but only raised more serious concerns that this will be a much longer drawn out battle than previously thought and could compromise supply chains and hamper growth.  As today’s expert explained, “Week after week, we’ve heard there has been progress and that a deal would be reached. Now the goalposts have moved. There’s been quite a shift in expectations.”  No, that doesn’t sound like the smart money any longer expects this to be resolved anytime soon and that is bad.  Of course, all the trade-sensitive stocks got hammered and the VIX shot to its highest level in three months.  The bright spot is that Q1 continues exceedingly well. With more than 4/5 of S&P companies reporting, 75% have beaten estimates and the Q1 earnings growth forecast has now risen to 1.2 percent, a dramatic reversal from the 2.5% decline predicted a month ago.  That’s 3.7% better than the naysayers believed!  Volume was quite vigorous at 7.8 billion. 

Wall St. falls as White House vows to raise China tariffs

It was a tumultuous day with the Dow taking a nearly 500 point dive right at open as the market reacted to Trump’s threat to China of raising the tariffs from 10% to 25% on Friday unless there is a definite deal by then.  But as everyone mulled  over what seemed like a drastic action, the consensus seemed to fall along the lines that it was just a negotiation ploy and that there was still high confidence that this standoff would end happily.  (Hey, if Wall Street can see through this, don’t they think the Chinese can too?)  Thus, throughout the day, the indexes gradually rose so that the final damage at close was only 66 points.  But the threat was still enough to bring down all the China-related stocks, particularly Apple and Boeing as well as the whole chip index which fell 1.7 percent.  Volume was a touch below average at just under 6.5 billion as investors go back to wait-and-see mode. 

Succinct Summation of Week’s Events 5.3.19 (plus "The Story of the Decade")

Below once again find the usual Sunday night weekly summation, the big positive being Friday's employment report coming in almost 100,000 jobs more than expected and, ironically (as is often the case) the corresponding negative is that jobless claims were expected to fall but did not.  The bonus this Sunday is the April 25th edition of the WealthTrack program, this one entitled "The Story of the Decade"in which the guest, economist Nancy Lazar, talks about the last decade of the market and why she always believed that it would be a decade of unprecedented recovery.  There is also some discussion of the so-called "Smart Funds" which should be well worth listening to.  Hope everyone had a great weekend. 

The Best Recession Ever!

Our friends at Heritage Capital Research published a missive on this past Monday that nicely documented my observations from the past couple of weeks, that the S&P companies that have thus far reported for Q1 have far surpassed the very gloomy forecasts that have dominated the financial headlines for the past couple of months until about a week ago.  But since, as of last Friday, we were only less than 20 percent into Q1 reporting, I thought it would be interesting to wait one more week to see if this HCR analysis still holds up.  What do you think?  Does it?  

Wall St. climbs as jobs data supports upbeat economic outlook

There’s nothing like a terrific jobs report to trigger another big rally, especially since everyone was expecting the job numbers to be in the toilet today.  Instead, U.S. employers added  263,000 new jobs in April blowing past expectations to a near record high finish.  The market responded accordingly with the Dow shooting straight up nearly 200 points.  Also boosting the index was the big news of Warren Buffett making a big investment in Amazon for the first time.  Four-fifths of the S&P has now reported in with 3/4^th of these beating estimates and now raising the Q1 growth forecast to nearly 1 percent. Volume was just a little below the 4-week average with just under 6.5 billion shares traded.   

Wall St. slips as energy drops, investors digest Fed comments

Given the fact that the Fed delivered exactly what investors had hoped for, it was somewhat of a surprise yesterday that there was a big sell off just because there was no announcement of rate cuts.  Would clearer heads prevail today?  Evidently not, as the market took another look at the Fed news and sold off again, the Dow dropping nearly 280 points by noon but then recovering to lose 122 at close.  At least today’s expert from Pittsburgh agreed this didn’t make sense.  “I don’t think reasonable investors are looking for a rate cut at this moment.”  But oil prices also dropped and as energy is taken as a sign of falling demand, caution set in.  It also doesn’t help that this whole middle period of the year is historically weak for equities … and thus more caution.  Over 350 S&P companies have now reported and the contraction forecast has changed to a growth forecast of just under 1 percent. This stands in stark contrast to the 2.5% contraction that had been predicted up until a few weeks ago.  Payroll data comes in tomorrow with the expectation of fewer new jobs so the sell off will likely continue.  Volume was again above average at 7.3 billion shares traded. 

Wall Street drops after Fed chair dampens rate-cut hopes

Since Apple put in a glowing Q1 report after the bell Tuesday, I suggested last night there might be a rally Wednesday morning and, indeed, based on Apple’s strength the Dow shot up about a hundred points this morning and also sent the S&P to another intraday record high.  But then investors had to get skittish again about the Fed and, even though the announcement was just what they wanted – no more rate hikes in 2019 – it seems what they really wanted was rate reductions this year.  So post-announcement, when Powell made a few perfunctory remarks to the effect that everything was holding steady so there was no need to either raise or lower rates, all the interest rate speculators began a wave of selling that sent the index down 162 points in the final hour.  Isn’t that the way it goes sometimes?  Everyone hopes the Fed will say things are fine and then when the Fed says things are fine, everyone interprets it the opposite.  Maybe tomorrow clearer heads will prevail.  Volume again was above average at 7.4 billion.