Succinct Summation of Week’s Events, July 12, 2019 (plus The Thrill of Uncertainty)

Below is the usual weekly summary, this time the positives being that, as of Friday's close, the markets are at new record highs with the Dow topping 27,000 and, after flirting with it for some time, the S&P finally closing above the all-important 3,000 threshold which has been considered a signal to investors that the future remains bullish.  And once again there is a mixed message on jobs as the issue fell into both the debit and credit columns with jobless claims falling at the same time that job openings also fell but, to be fair, both fell by very small amounts. 

The Common Traits of Billionaire Investors

For your weekend reading, I present a new offering in the world of investment newsletters -- and this one is free (except maybe you have to subscribe to U.S. News & World Report to get it; I don't know since I've been a lifelong subscriber to U.S. News.)  But it's worth a try and seems to offer some very good advice.  This sample from July 2nd is a look at "The Common Traits of Billionaire Investors."  If it looks good to you, go to the magazine's web site and see if you can get it.  (If not, I will add that U.S. News is one of the very best news weeklies out there and would be well worth subscribing to anyway.)  Enjoy the rest of this very pleasant weekend, and let's be thankful we're not in Louisiana!

Wall St. notches all-time highs on lingering rate-cut optimism

Today the market decided that Chairman Powell’s remarks before the Congress were “far more directive in terms of what the Fed is going to do” than before and between that and the S&P closing above 3,000 for the first time sent the Dow up a big 243 points.  Producer prices also showed that inflation was well under control so the focus is now shifting to Q2 reporting which begins with the big banks next week.  On Monday they had forecast a 0.1% dip in earnings, by yesterday 0.2 percent.  Today that has doubled again to 0.4% but if the last two quarters are any indication, the actual number will end up being positive rather than negative. Volume is still below average at just under 5.7 billion. 

S&P 500, Dow climb as health insurers, financials gain

All it took today was for Trump to scrap the plan to reduce drug prices and the market went soaring to new record highs, the Dow climbing 227 points and topping 27,000 for the first time.  The S&P also topped the all important benchmark of 3,000 for a while today but was not able to sustain it, something that is being taken as a big negative, a sign of investor cautiousness.  But was it really the scrapped plan that did it since, though some health insurers surged on the news, many of the drug makers dropped.  So who’s to say what triggered today’s 3-digit rally? Comments today from Chairman Powell continued to support a coming rate cut when he affirmed that the economy was still under threat by tamer factory output, tamer inflation and the trade war.  Volume continued below average at just over 6.1 billion. 

Wall Street touches new highs after comments by Fed's Powell

They were hoping that Fed Chairman Powell would NOT say that a rate cut was now off the table because of the strong June jobs report last week.  So when he used his standard phrase today to “act as appropriate,” there was a big sigh of relief on Wall Street that caused a big 200 point rally right out the gate.  It bolted the forecast for a half point rate cut from 8% on Monday to 26% today.  Of course the forecast for a ¼ point cut remains at near 100%.  The S&P reached another new record high shortly after open but all the indexes fell off some during the session for the S&P to close at 2993 and the Dow up 76 points.  Powell pointing to “broad” global weakness and the fallout from the trade war added more reassurance that cuts were on the way.  But as today’s expert so adroitly pointed out, “You’re running out of investors willing to put too much new money in without some indication that earnings will remain strong.”  Yes, earning still rule and the fun begins next week.  Pending all that, volume remains below average at just under 6.5 billion.  

S&P 500 ekes out gain though profit worries weigh

It was more or less a repeat of yesterday with the Dow dropping sharply right out the gate only to recover throughout and at least this time closing nearly even.  Besides bracing for the Fed news coming on Wednesday and hoping then for clarity on whether the rate cut will be 25-basis-points or the more desired 50, there is the repeated conviction just like Q1 that earnings will drop in Q2 when reporting starts next week.  In fact, in a single day the forecast has gone from a 0.1% drop to 0.2 percent. That’s not much but evidently enough to fray nerves and spark selling.  The German giant BASF is actually forecasting a 30% drop in profits, blamed entirely on the trade frictions with China.  As everyone awaits better news, volume remains below average at 5.7 billion. 

Wall St. drops as Apple falls, Fed eyed

It was a straight shot down right out the gate with the Dow losing almost 200 points after Apple was downgraded from “neutral” to “sell” by Rosenblatt Securities, but recovering throughout the day to close down 115.  With a strong jobs report on Friday now tempering hopes for a sharp rate cut, confusion reigns.  In one day the odds makers have reduced the chances for a ½% rate cut from 20% to 8%, though the chances for a ¼% rate cut have increased from 80% to 92%.  Investors will soon be focused on Q2 which begins next week with expectations of a 1/10% dip in profits from a year ago.  For the first day back from the long holiday week, volume was considerably below average at 5.7 billion.