Rich Bernstein

STOCKS MIXED, AT THE MERCY OF TRADE HEADLINES

Stocks opened mixed this morning at the mercy of trade-related headlines. The Dow is currently up 70 points and the SPX is flat. The Nasdaq is down slightly The VIX Index back down just a bit to 19. Strangely enough, the utilities sectors is down by more than 1% in early trading. The materials and communications services sectors are down modestly. On the other hand, real estate, industrials and consumer discretionary sectors are up about .3%. Most commodities are trading lower today, save oil. Iron ore is down 1%, copper is down .6%. WTI crude bounced back 1% to trade at $62/barrel on a lower than expected crude inventory report. Bonds are again mixed, with corporates flat and Treasuries up. The 10-year Treasury yield fell back to 2.46%. However, look at junk bonds. The SPDR High Yield Bond ETF (JNK) is actually higher on the day, suggesting the renewed trade fight isn’t the end of the world.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

December 11, 2018

December 11, 2018

Stocks rose at the open after a report suggesting progress in negotiating some sort of de-escalation of the trade war. The Dow is currently up 37 pts and the SPX is up .45%. The best performing groups in early trading are semiconductors, biotechs and retailers. The European markets closed up about 1.6% and most of Asia was up overnight. The dollar is stronger yet again, but WTI crude oil is up around $51.60/barrel. Bonds are trading modestly higher again. For the first time in a while we’re seeing a little rally in junk bonds. In Treasuries, we’re seeing short and long yields continue to converge. That is, you’re not picking up much additional yield for investing in longer-dated notes. The 5-year and 10-year Treasury yields are sitting at 2.71% and 2.85%, respectively. So yield curve concerns are front and center.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

October 30, 2018

The major stock market averages opened sharply higher this morning (Dow +220 pts; SPX .8%). Ten of eleven sectors are in the green, led by real estate (+2%) and communications (+1.8%). In addition, semiconductors, transports, retailers, oil producers and biotechs are up nicely. Foreign stock markets are mixed today, with European indexes down about .3% but Japan’s Nikkei was up 1.4% and China’s Shanghai Composite Index rose 1%. The US dollar continues to strengthen (up 2% this month and 5% on the year) and that is putting some pressure on commodities. WTI crude oil is down slightly to trade around $66.60/barrel. Copper is still down over 20% this year. Gold is down .4% today and about 6% on the year. Bonds are trading a bit lower as yields tick upward again. The 5-year Treasury yield is back up to 2.94% and the 10-year is up around 3.10%.

All the heavy hitters are weighing in on this stock market correction. Bob Doll, Nuveen’s Chief Equity Strategist, doesn’t see the correction leading to a bear market. “It would be unlikely to have a bear market while the economy is doing well. Corrections, they can happen anytime unannounced. Bear markets are usually associated with an economic problem, i.e. recession.” Rich Bernstein is “quite shocked” that investors are so worried about peak earnings. “Peak earnings leads one to believe that a profits recession is imminent, that within a quarter or two we’re going to have negative earnings growth.” That is not a realistic expectation. He does concede that we are seeing peak earnings growth of about 24%. That rate of growth is unsustainably high and will be decelerating to about 15% next year. But that is still very good earnings growth and can help sustain further upside in the stock market.


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.

May 17, 2016

tocks opened lower this morning despite some better than expected economic data. The Dow and S&P 500 are currently down 55 pts & .2%, respectively. The defensive sectors (consumer staples, utilities) are taking it on the chin. The banks and transports, on the other hand, are in green in early trading. The dollar is slightly weaker on the day and commodities are a bit higher. The Bloomberg Commodity Index, by the way, is up 9% so far this year. WTI crude oil is trading up to $48/barrel. That’s a fresh 6-month high. Bonds are lower on the day after a higher inflation report (see below). The 5- and 10-year Treasury yields are up to 1.27% and 1.75%, respectively. The 2-year Treasury, which is more sensitive to Fed rate hike expectations, has moved up to .8% from .71% a week ago. 


*The foregoing content reflects the author's personal opinions which may not coincide with the opinions of the firm, and are subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not a guarantee of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. All investing involves risk. Asset allocation and diversification does not ensure a profit or protect against a loss. Finally, please understand that–as with other social media–if you leave a comment, it will be made public.