Stocks rose yesterday after reports that Washington was softening its stance against Chinese telecom giant Huawei after realizing that a total ban on use of Huawei products would cripple wireless service over parts of the U.S. and would create immediate supply chain issues for other companies. It granted a 90-day cooling off period to allow …
May 20, 2019 – Economic forces are providing a slight headwind, including the pending impact of tariffs. Against this backdrop, avoid companies facing political headwinds until the pressure starts to dissipate.
Stocks finished a seesaw week to the downside on Friday in a rather listless session. With earnings season winding down, we are entering a period mid-quarter where we can expect a dearth of new economic or corporate news. What news does become available, therefore, can take on outsized meaning. With trade issues dominating the front …
May 17, 2019 – Although market volatility has risen, there isn’t a clear trend. The focus on trade may begin to dissipate as investors realize that the Chinese are the ones who have to make concessions. Delay will only hurt them. It may take time, but the U.S. economy will continue to grow in the interim.
Stocks rose yesterday for the third straight day. Combined the three sessions came close to wiping out Monday’s losses. But futures this morning are pointed lower again, and stocks are on course for their fourth straight weekly decline. After a straight-line increase of 25%, a 5% correction isn’t particularly worrisome. Of course, if it escalated …
May 15, 2019 – Yesterday’s rally looked more like a dead cat bounce than the real thing. The two events that could really generate a sharp move upward, a solution to the trade issues or a Fed rate cut, don’t appear imminent.
Although stocks staged a solid rally, a late afternoon selloff sapped any serious optimism that the gains were the start of a new move higher. It felt more like a dead cat bounce after the 600+ point decline of Monday. I’ll start today with the pessimistic side. First, valuations are high. They aren’t as inflated …
May 13, 2019 – The poor performance of the Uber offering on Friday will clearly impact pricing of future offerings. Investors want to see a path to profitability. They can’t with Uber and Lyft. On another front, a trade treaty with China no longer seems near. That means more tariffs and higher costs. Stocks will have to adjust to reflect the new reality.
Once again markets opened sharply lower on Friday but rallied in the afternoon, this time to finish with moderate gains. For the week, however, given the sudden negative turn in trade talks, stocks lost about 2% in value. In addition to the news on trade, the Uber IPO was a resounding disaster. I cannot remember …
May 10, 2019 – Although tariffs went up this morning, trade talks continue, and markets are still hopeful for a relatively quick resolution. Today’s other big story will be the IPO for Uber. The reception for that stock may be more influential to markets over the coming weeks than the trade talks.
Stocks fell sharply yesterday morning, but recovered much of their losses throughout the day as traders continued to worry whether the U.S. would raise tariffs on China. 12:01am has now passed, and the tariffs are on, at least for now. Supposedly Presidents Trump and Xi are going to have a phone call later today. The …
May 8, 2019 – Was yesterday’s decline a one-day hiccup or the start of a long awaited correction? We will learn a lot today. Without follow through to the downside, it is simply a one-day event that won’t interrupt the bull run. However, a weak market today will suggest it is time to play defense.
Stocks fell sharply yesterday posting their biggest one-day loss since January. Concerns that President Trump will enact higher tariffs on Chinese goods sent prices lower even as Chinese trade negotiators arrived in Washington in an effort to get trade negotiations back on track. Today, traders will be looking for any sign of progress. Few expect …
May 6, 2019 – Just when everything looked rosy, President Trump threatened to raise Chinese tariffs on Friday with more to come should China fail to negotiate quicker in good faith. That is likely to be taken with apprehension in equity markets and could spark a meaningful correction if the tariffs are implemented. After a 25% gain from the December lows, an orderly correction is in order.
Stocks closed up on Friday on the heels of a strong employment report and a 50-year low in unemployment. The economy continues to hum along with little inflation. But, alas, if only the economic data was the driver of stock prices. When things look like they can’t go wrong, look to Washington to throw a …
May 3, 2019 – While the economy is on track for stable solid growth with low inflation, the IPO market is starting to send signals that euphoria and complacency are settling in. That isn’t a good long-term sign
Stocks fell for the second straight session after Federal Reserve Chairman Jerome Powell noted that he saw no reason for a rate cut anytime soon. He said that the board believed the unusually low inflation numbers in the first quarter were transitory and didn’t yet warrant a cut in rates in order to stimulate more …
May 1, 2019 – With four up months under our belt, 2019 more resembles 2017 than 2018. While the pace of gains can’t be maintained, there are not big storm clouds today that suggest growth is going to die any time soon. A reflective look back at what have been the winners and losers to date can be instructive.
April finished on a mildly positive note. Earnings season has been generally upbeat but with some high profile fallen angels. Yesterday’s fallen angel was Alphabet#, whose shares declined by more than 10% after reporting lower than expected revenues and offering guidance that was less positive than expected. So far this year, stocks have risen each …
April 29, 2019 – Stocks continue to move higher amid better earnings, lower interest rates and a stable currency, a perfect environment for equity investors. The only potential fly in the ointment for now would seem to be valuation if stocks continue to rise as fast as they have for the past 3 months.
Once again, stocks set new record highs on Friday despite poor earnings reports and outlooks from Dow components Exxon Mobil# and Intel. The ideal for stocks is a combination of good earnings, low interest rates and a stable dollar. Friday’s GDP report was a surprise in two aspects. Growth of 3.2% was higher than expected …
April 26, 2019 – Technological disruption is an increasingly important part of our economic picture. Not all disruptors will succeed, and a rising stock market increases the risks of riding the wrong horse. But trying to avoid the risks by staying with the companies that are being disrupted may be an even worse approach.
Stocks were mixed yesterday as companies reacted in starkly different ways to earnings results. While Microsoft#, for instance, rocketed to a new all-time high, 3M# sank more than 10% as it fell well short of forecasts. In many ways, the current stock market and economy resemble the late 1990s. You may recall that in 1994 …
April 24, 2019 – Stocks have returned to record high ground as earnings beat expectations. But with interest rates lower than they were last September and earnings above levels at that time, stocks today appear more fairly valued than they were in late summer.
Stocks moved into record territory yesterday as both the S&P 500 and the NASDAQ Composite set new highs in the wake of generally favorable earnings reports despite a strong headwind caused by a strong dollar comparison year-over-year. Moreover, recent economic data has been positive suggesting that the slowdown that began last fall is now behind …
April 22, 2019 – As the IPO market starts to blossom, investors should be aware of the laws of supply and demand. In particular, when lock-up periods expire the supply of stocks available for sale could become a material headwind if not offset by other factors like rising earnings. Fortunately, we expect earnings growth to resume in the second quarter and to accelerate a bit for the rest of 2019.
Stocks moved higher again on Friday as two high profile IPOs, Pinterest and Zoom Video made their public debuts. But elsewhere, stocks show signs that the momentum that propelled stocks back close to their historic highs may be running out of gas just as we approach the heart of earnings season. Obviously, a major deviation …
April 17, 2019 – 5G is coming. The technological success of Huawei, a leading Chinese company connected to its government, is putting pressure on the West to take necessary steps to retain leadership. Yesterday’s settlement between Apple and Qualcomm is a step in the right direction. Alleged efforts by the Justice Department to stop the merger of Sprint and T-Mobile would be a step backwards.
Stocks were mixed yesterday dominated by weakness in the healthcare sector. As Democratic Presidential candidates start barnstorming the country and talk about radical overhauls of healthcare, investors have become spooked. While few believe we are headed for a single payer, Medicare for all solution anytime soon, significant changes could have major impact. What are the …
April 15, 2019 – Today should be quieter after a robust rally on Friday in reaction to strong bank earnings and a big energy merger. Talks out of Washington over steps to increase growth meaningfully are nothing more than political noise. But moderate growth, low interest rates and a stable dollar are a combination equity investors should enjoy.
Stocks staged a solid rally on Friday led by financials, reacting to solid earnings from JPMorgan Chase# and others, and by energy stocks, reacting to an announced takeover of Anadarko Petroleum by Chevron#. In addition, Disney#, a Dow component, made a well received presentation of its new planned over-the-top streaming channel that will begin service …
April 12, 2019 – Skeptics are always looking for imbalances but, today, they simply aren’t present. Those predicting recession over the next 1-2 years need to demonstrate how the imbalances that cause recession are going to happen. Without significant central bank or government intervention, we think world economies can move forward at a modest pace for some time to come.
Stocks were mixed yesterday. The Dow finished lower because of weakness in United Healthcare. This morning there is a lot of news to consider. Late yesterday, Disney# rolled out its new Disney+ streaming product expected to begin service on November 12th at a cost of $6.99 per month, a bit over half of what Netflix …
April 10, 2019 – Q1 earnings season gets underway tomorrow as three major banks report. It will probably be the weakest of the year, a combination of a slower economy and a strong dollar. Much of that should be priced into stocks already, but the recent sharp gains might suggest that the margin for error is pretty small. Expect a bumpy next few weeks after the nice ride in the first quarter.
Stocks fell yesterday. While the media blamed it on jitters over possible weak first quarter earnings, the more likely reason was simply profit taking. First quarter earnings season gets started tomorrow as three major banks are due to report results in the morning. The flattened yield curve and lower rates will be a headwind to …
April 8, 2019 – The arguments over income inequality, inadequate public education, and how large a role government should play in the future will be the focus of our national debate leading to the 2020 election. As the issues get more focused, markets will react if they see change coming. It is a debate that bears close watching.
Stocks continued to rise on Friday after an almost perfect employment report showed healthy growth in jobs, plus a steady rise in wages that will raise real income without threatening overall inflation. On the trade front, negotiations with China continue without an imminent conclusion. Over the weekend, Bridgewater Associates Chairman Ray Dalio was all over …
April 5, 2019 – Markets have been marching toward all-time highs once again. Whether they break through or not will depend largely on the outcome of first quarter earnings and trade negotiations with China.
Stocks closed mixed once again yesterday. While the Dow Jones Industrials posted nice gains, the S&P 500 rose just 0.2%, and the NASDAQ Composite was down slightly. Most of the leading averages have now recovered to within 2% of their all-time highs. They could all make a run to new records over the next couple …
April 3, 2019 -Markets keep rising in the absence of bad news. Chinese growth seems to have stabilized, and U.S. manufacturing and housing improvement suggest Q1 will be the slowest quarter this year. Earnings season, which starts soon, won’t be great but much of the pain has already been discounted.
Stocks continued to rally on good economic news. The Dow Jones Industrials fell but only because of a sharp drop in the price of Walgreens Boots Alliance after a very disappointing earnings report. In other headline news, Britain’s Parliament continued to reject compromise bills that would allow it to exit the EU gracefully. Now the …
April 1, 2019 – Good economic data from China and the U.K. have stocks ready to start Q2 the way they ended Q1. While Q1 earnings will probably decline, that is already recognized. As long as government interference can be kept to a minimum, the outlook for the rest of the year is pretty good.
Markets finished the first quarter strong on Friday and look to extend gains this morning. Today’s driver is a report from China showing an uptick in activity. China has been taking both monetary and fiscal actions to stimulate the economy for the past several months and now it appears the impact is beginning to flow …
March 29, 2019 – Lyft comes public today and will certainly get a rousing reception. It will be the first of what promises to be a wave of new generation IPOs. But we have seen these IPO waves before. While they are exciting to watch, they don’t always end well. Anyone who tells you where Lyft will be a decade from now is simply speculating. History suggests most of the next wave of new offerings will probably be less successful than early speculators believe.
Stocks showed modest gains overall yesterday in a somewhat mixed market. Bond yields stabilized and moved back up a bit. This provided a bit of a floor for bank stocks which have been crushed recently. Low interest rates and a flat (or inverted) yield curve are a bank’s biggest headwinds. But that doesn’t mean the …
March 27, 2019 – Stocks rallied yesterday but gave back more than half their morning gains by mid-afternoon. In other words, it was a rally without conviction as markets still worried about the impact of an inverted yield curve over the 0-5 year range.
The yields on U.S. bonds fell largely in sympathy to the sharp drop in yields overseas, mostly in Europe. German bonds up to 10 years maturity fell into negative yields. That had the effect of driving yields worldwide lower. The inversion of the U.S. yield curve between 0-5 years started a fear frenzy as soon …
March 25, 2019 – A sharp drop in interest rates and a small inversion at the short end of the yield curve spooked investors on Friday. But the 2-10 year spread remained positive, and economic data still shows no indication that inflation is near. There was reason for concern Friday but not enough to change our outlook.
Stocks fell sharply on Friday as bond yields sank and the yield curve inverted in spots causing equity investors to worry that a recession was near. To understand what was happening, we have to go back to Wednesday afternoon’s FOMC meeting statement and Chairman Jerome Powell’s post-meeting press conference. Investors had expected some incremental dovish …
March 22, 2019 – The Fed’s surprisingly dovish stance at Wednesday’s FOMC meeting has triggered a surging bond market that has led to lower rates and a much flatter yield curve, one that has even inverted in spots. The slight inversions, at least for now, should be viewed as a wobbly, horizontal line. We still expect growth to reaccelerate as 2019 progresses.
Stocks posted strong gains yesterday, a day after very dovish comments from the Federal Reserve. Interest rates tumbled across the board while the dollar strengthened after losing ground on Wednesday. This morning the 10-year Treasury yield is below 2.5%. Just a few months ago it was at 3%. Last September, the Fed strongly suggested that …
March 20, 2019 – The focus today will be on the Fed which almost certainly will leave rates unchanged. While investors want to hear from the Fed the future course of rates, Fed actions will largely be dictated by the market. With 10-year Treasuries now yielding only about 2.6%, any rate increase would create an inverted yield curve. Discussions regarding further increases will be tabled until the 10-year yield is 2.85% or higher.
Stocks started off strong yesterday but lost all their gains by session’s end as rumors flew that China was getting more obstinate in its trade talks with the U.S. There are going to be ebbs and flows to these negotiations until they come to some sort of conclusion, probably during the spring. Given recent market …
March 18, 2019 – A quiet week ahead with an FOMC meeting and FedEx earnings the likely major items. Observers will be looking for signs that Fed balance sheet liquidation will end this year. FedEx missed badly last quarter. Hopefully this quarter won’t be as bad.
Stocks rebounded last week and finished on a high note on Friday. With little political news to rile markets, stocks reacted to the continued lack of inflation and signs that the economic slowdown seems to be reaching a bottom both here and abroad. This week, the major event will be the FOMC meeting culminating in …
March 15, 2019 – The worldwide economic slowdown that began around mid-2018 seems to be ending thanks to ongoing monetary stimulus in non-U.S. markets. Near term fears of a disruptive Brexit have been alleviated. While first quarter earnings will be down, markets look ahead and the rest of the year appears brighter.
Welcome to the Ides of March. If the futures are any indication; it doesn’t appear U.S. investors are all that scared. There was little in the way of corporate or economic news yesterday that will change anyone’s view. However, this week we saw a bunch of pricing data to suggest that inflation remains MIA. The …
March 13, 2019 – A quiet market backdrop suggests a relatively calm market between now and Q1 earnings season. While there are signs of economic stabilization, earnings for the quarter will be negatively impacted by a strong dollar. It may be hard for stocks to break through near term resistance levels until after earnings are reported.
Stocks were mostly higher yesterday, although the Dow fell on the heels of further decline in the price of Boeing’s shares after the plane disaster this past weekend. On Monday, stocks rallied strongly erasing much of last week’s losses. It appears that the recent mini-correction might have been contained. But first the leading averages have …
March 11, 2019 – This past weekend marked the 19th anniversary of the dot.com peak and the 10th anniversary of the Great Recession bottom. History teaches us all about being patient and ignoring hype.
Stocks fell for the 5th straight session on Friday, although they finished well off their lows. While Dow futures point to a lower open this morning entirely because of losses in Boeing after an airline crash over the weekend involving a new Boeing jet, the market overall looks set to rally. With that said, Friday …
March 8, 2019 – Today’s employment report accentuates a string of weak economic data both here and abroad. But there is nothing to suggest any further downward acceleration over the near term. Nonetheless, markets have turned negative this week, and a correction appears likely to erase a fair chunk of the gains year to date. It is time to be defensive, not offensive, in the market until the correction runs a bit further.
Stocks fell for the fourth straight session after a gloomy European economic forecast from the ECB led to a more dovish stance by the central bank. As we have all been expecting and witnessing growth around the world, including the U.S., has slowed noticeably from its pace of just a few months ago. Part of …
March 6, 2019 – A modest deceleration in the U.S. economic growth rate shouldn’t be misconstrued as telling signs of a pending recession. Rather, we believe our rate of growth will bottom in the first half of the year leading to a better environment later in 2019. Any stock market correction coinciding with a near term deceleration should be viewed as a buying opportunity.
Stocks finished modestly lower after the worst down session in several weeks on Monday. There was nothing sinister to trigger the weakness, just some profit taking after a two-month run up. This morning’s ADP forecast of a bit over 180,000 new jobs created in February adds one more data point to a set that now …
March 1, 2019 – A lot of economic data will be coming over the next week and could be market moving. With that said, investors remain focused on China trade talks and the upcoming two-day FOMC meeting in March which could give more definition to future policy moves.
Stocks started lower yesterday but recovered most of their losses by session’s end. Two key events lie in front of us. One is the Chinese trade/tariff discussions. Yesterday both White House economic advisor Larry Kudlow and Treasury Secretary Steven Mnuchin said progress is very encouraging, and a final agreement is still in sight this spring. …
February 27, 2019 – As storm clouds fade, trade tensions ease, and Brexit gets postponed more focus will be paid to valuation. The persistent inability for inflation to rise to the Fed’s 2% goal suggests that maybe the right target number is lower than previously contemplated. If so, that would have favorable implications for equity investors.
Stocks were mixed yesterday on a day when Fed Chair Jerome Powell began two days of presentation and testimony to Congress. Today, in addition, Trade Representative Robert Lighthizer is scheduled to go before the Ways and Means Committee. He is a trade hawk and could set a tough tone through his replies specifically toward protecting …
February 25, 2019 – A temporary trade truce with China will give some boost today but given it was much anticipated, the reaction should be relatively muted. From here forward, the focus will return to earnings, and the outlook for the first half of 2019 is a bit cloudy. While some correction is possible, nothing should disturb the longer term bull market trends.
Stocks rallied once again on Friday as President Trump prepared to take off for talks with Kim Jong-Un over nuclear disarmament. The driver of Friday’s rally was comments last week from Fed officials suggesting that the Fed was now focused more on seeing inflation rise to or above its 2% target than taking rate …
February 22, 2019 – Stocks continue to rise even as economic data comes in lower than expected. The early 2019 rally has eliminated most bargains. Now we learn tax refunds are running well below last year’s levels. That almost certainly spells weaker growth in the months ahead. The ingredients for a correction are present. The actual timing is uncertain.
After persistent gains, stocks gave back some yesterday as investors finally started to focus on a steady stream of worse than expected economic news both in the U.S. and abroad. Weekly unemployment claims have begun to gradually increase. Although still low, they indicate some corporate reticence to hire and maybe even some moves to right …
