economic recession

MANIC MARKET FLIPS ON TRADE HEADLINES

Stocks rallied after the Trump Administration delayed some of the new trade tariffs planned for next month. The Dow is currently up 363 pts, the SPX is up 1.3% and the Nasdaq is up almost 1.6%. Not surprisingly, the leading sectors today—consumer discretionary, industrials, tech—are viewed as having the most vulnerability to an escalating trade war. By contrast, the two sectors seen as the safest in an uncertain global trade environment—utilities and real estate—are in the red today. The VIX Index, a common gauge of fear among options traders, fell back to 17.9 from 21 yesterday. European stock markets rallied sharply on the trade tariff news as well. Asian markets, however, were down overnight on civil unrest in Hong Kong. The US dollar continues to strengthen as the Chinese yuan weakens. But better investor sentiment today is propping up commodities. WTI crude oil spiked 3% to $56.80/barrel for no good reason. Bonds are selling off after an enormous 2019 rally. The 10-year Treasury Note yield bounced back to 1.68% this morning. Since investors’ primary concerns at the moment are 1) trade war, and 2) falling interest rates, any day in which rate rise will generally evoke risk-on sentiment.


*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.

HONG KONG JITTERS

The major US stock market averages dived in early trading on continued social unrest in Hong Kong. The Dow is currently down 239 pts and the SPX is down .7%. Ten of eleven market sectors are in the red; financials & energy are the worst performing. As is typical in August, exchange trade volume is pretty low. European markets are poised to close slightly lower today. Strangely enough, most of Asia closed higher last night. Despite intensified pro-democracy protests, Hong Kong’s Hang Seng stock index fell only .4% during the session. The US dollar continued to strengthen vs. China’s yuan and that’s putting some pressure on commodities (i.e. iron ore, copper, agricultural goods). WTI crude oil is unchanged around $54.50/barrel. Bonds are once again powering ahead as yields edge lower. The iShares 20+ Year Treasury Bond ETF (TLT) is up 1.5% today (and 17% on the year). High-grade corporates are up about .4%. On the other hand, Junk bonds are down .3%.


*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.

FED DAY!

Stocks opened modestly higher this morning (Dow +27 pts; SPX +.12%). Most market sectors are higher in early trading, led by energy, tech and real estate. Consumer staples & discretionary sectors, however, are in the red. Earnings announcements continue to push around individual stocks, but the market as a whole is waiting on the outcome of today’s Federal Reserve policy meeting for some direction. The bond market is moving higher this morning, with rates dipping. The 10-year Treasury yield is back down to 2.03%. Junk bonds are also in green, perhaps because traders expect the Fed to formalize the flip to monetary easing today (see below).


*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.

DRIFTING AIMLESSLY, LOOKING FOR A CATALYST

Stocks opened mixed this morning, looking for a catalyst. The Dow is currently down 25 points and the SPX is flat. By the way, the SPX is now up 18% so far this year, trading at a P/E ratio of 17. Most investors believe the index is at fair value and so a meaningful catalyst is necessary to push it higher in the near term. Unlike yesterday, defensive sectors like utilities (+1%) and consumer staples (+.4%) are leading the way. On the other hand, energy stocks are down on oversupply concerns. OPEC decided to extend current oil production limits through March 2020 because the global economy is weakening. Tighter control of crude supply will help prop up oil prices. Today, WTI crude oil fell back to $56.90/barrel. Bonds are trading slightly higher again today as yield creep lower in anticipation of slower economic growth and expected Fed rate cuts. The 10-year Treasury yield is back down to 1.98%.


*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.

FED TO THE RESCUE

The major stock market averages opened a bit higher this morning (Dow +50 pts; SPX +.25%). This week has been one of recovery, especially after a couple of Federal Reserve officials hinted that they’d loosen monetary if necessary to keep the business cycle alive. Energy is the best performing sector in early trading, up 1.2% despite the fact that oil prices are down again. Some kind of bounce is to expected since energy has absolutely cratered over the past six weeks on oversupply concerns. Today, WTI crude oil is down .6% to trade around $51.44/barrel. Gold is now up 4% on the year as a safe-haven trade. Bonds are trading higher this morning as yields dip again. The iShares 20+ Year Treasury Bond ETF (TLT) shot up 1% today as the 10-year Treasury bond yield fell back to 2.09%. The reason for continued bond market gains is also the Fed (see below).


*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.

WHERE TO NEXT?

Stocks opened slightly lower this morning. The Dow is currently down 50 points and the SPX is down .1%. Financials (+.3%) and industrials (+.5%) are bouncing back from yesterday’s declines. On the other hand, healthcare, energy and real estate sectors are in the red. WTI crude oil fell back to $63.50/barrel in early trading. Most other commodities are down as well, partly due to a strengthening US dollar. Bonds are also trading lower as yields tick higher. The 10-year Treasury yield bounced back up to 2.49%. Only junk bonds are holding flat.


*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.

COOLER HEADS ARE PREVAILING

Stocks opened sharply higher today, recovering from last week’s dip. The Dow is currently up 265 pts and the SPX is up .9%. All eleven major market sectors are the in green, led by energy (+1.7%) and tech (+1.3%). European stock markets are poised to close roughly .5% higher, and most of Asia was up overnight. Commodities are moving with stocks. WTI crude oil climbed back to $60/barrel. Most of today’s stock rally is owed to the fact that bonds are finally selling off. Investors have fretted about the fact that Treasury bond yields have fallen back to 14-month lows, suggesting that perhaps the bull market has come to an end. In fact, today CNBC’s Bob Pisani said that the dividing line among investors is whether or not one believes an economic recession is imminent in 2020.


*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.

IT'S ALL ABOUT THE FED

Stocks opened sharply higher today (Dow +161 pts; SPX +.67%). Interest-rate sensitive sectors are moving in response to yesterday’s Fed meeting (see below). Homebuilders, REITs, and utilities are up nicely, while banks are down on the day. Commodities are mixed (gold down, copper and iron ore up). WTI crude oil is flat, hovering around $60/barrel. Bonds are sharply higher as well. The 10-year Treasury yield slipped to 2.52% after the Fed announcement. That’s a 14-month low. The yield curve flattened again; the difference between the 2-year and 10-year Treasury yields is down to 11 basis points (.11%).


*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.

FADING THE TRADE DEAL

FADING THE TRADE DEAL

Stocks gapped up at the open, only to quickly fade. The Dow is currently down 236 points, and the SPX is down 1.1%. All eleven major market sectors are lower, led by healthcare (-1.8%) and tech (-1.4%). As some type of US-China trade deal looks more likely—see below—traders are selling the news. European markets closed mixed but Asian markets rallied overnight. China’s Shanghai Composite Index is up over 20% so far this year. The US dollar is a bit stronger today, and commodities are mixed. WTI crude oil rallied back to $56.50/barrel, pretty close to the 2019 high. In fact, most commodity prices are higher this year after suffering declines late last year. Recently, President Trump has said he believes oil prices are too high and the dollar is too strong. I’m not sure why the market is reacting to these remarks, but it does feed day-to-day volatility. Bonds are trading a bit higher as yields tick lower this morning. The 10-year Treasury yield is back down to 2.73%.


*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.

RETURN OF THE FED PUT

RETURN OF THE FED PUT

RETURN OF THE FED PUT

Stocks surged at the open this morning following yesterday’s Fed meeting. The SPX is up .8% and the Nasdaq is up 1.4%. Only the Dow is lagging a bit, down 6 points. The communications services sector shot up nearly 4%. Most other sectors are in the green as well, with the notable exceptions of financials and materials. Oil prices continue to recover, with WTI crude back above $55/barrel. Copper is now up over 5% this month, signaling some optimism over a trade deal with China. Bonds, strangely enough, are uniformly higher as well. The iShares 20+Year Treasury Bond ETF (TLT) is up .8% in early trading, and the SPDR High Yield Bond ETF (JNK) is up .4%. It is rather unusual to see stocks, commodities and bonds all trading higher on the same day.


*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.

January 8, 2019

January 8, 2019

Stocks opened higher yet again today (Dow +165 pts; SPX +.45%). The financial sector is down nearly .6% and the tech sector is pretty flat. But every other sector is in the green, led by communications and energy. WTI crude oil extended its recovery from the late 2018 crash and is now trading up around $49.50/barrel. Most of the bond market is trading higher as well, meaning that interest rates are lower. Junk bonds are up over .3% in early trading (see below). High-grade corporate bonds are up about .2%. Treasury bonds are modestly lower on the day, which is what you would expect. The 5-year and 10-year Treasury yields are back up around 2.55% and 2.71%. I expect they’ll head higher from here.


*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 6, 2018

December 6, 2018

Stocks sank at the open despite better than expected economic data. For the first couple of hours, most major market sectors were down more than 3% before bouncing off the lows. This could be the correction’s capitulation flush. While the Dow was down about 770 points, it is now down 436 pts. The SPX is currently down 1.7%. The more defensive sectors (consumer staples, utilities) also dumped at the open but are trying to claw their way back. Foreign markets aren’t serving as a safe haven. European markets closed down more than 3%. Asian markets were down roughly 2% overnight. The dollar is weaker, but that’s not helping commodities, most of which are trading lower. WTI crude oil fell back to $50.60/barrel, but quickly bounced back over $51. Bonds are catching a bid as you might expect. The iShares 20+ Year Treasury Bond ETF (TLT) is up .6%. High-grade corporate bonds, which have lagged lately, are up as well today. Junk bonds continue to struggle. The 2-year and 10-year Treasury yields are down around 2.71% and 2.85%, respectively. The difference between those two yields, 14 basis points, is very small and that’s spooking equity markets. Looking back at the last two months, any volatility in rates has been greeted with fear. The market doesn’t like it when rates rise, and neither does it approve when rates fall. Both are somehow begin viewed as bad news.


*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.

February 22, 2018

As with the last two days, stocks opened higher (Dow +303 pts; SPX +.95%). If the two-day trend holds, they’ll give way late in the session. Interest rates ticked lower this morning so we’re seeing a rebound (1%+) in utilities, real estate and telecom sectors. Cyclicals are also joining the party (energy +2%, industrials +1.3%, materials 1.3%). Even the banks are up slightly. The VIX Index is hovering around 18.7 and will probably continue to fade after the recent spike. WTI crude oil is up around $62/barrel. Oil, by the way, is up about 6% over the last 3 months. Bonds are rising in price as yields come in a bit. The 5-year Treasury yield is back down to 2.65% and the 10-year is trading around 2.91%. The 10-year is very close to 3%, which could be a key psychological level. Long-time floor trader Art Cashin says, “the assumption [among traders] is once they do it, all hell will break loose [in the stock market].” So we could see some more stock volatility in the near-term depending on how quickly rates move higher.


*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.

August 8, 2017

Stocks opened lower but quickly turned around (Dow +41 pts; SPX +.28%). Banks, semiconductors, retailers and energy producers are leading the charge, whereas biotechs, gold miners and REITs are lower. European markets closed higher by about a quarter of a percent. Most of Asia has traded higher over the last couple of days despite some saber rattling by North Korea. The VIX isn’t showing any signs of panic either. Commodities are mostly higher today, but WTI crude oil is down around $48.30/barrel. Typically, negative geopolitical events result in higher oil prices, but we haven’t seen it yet. Bonds are trading modestly lower this morning. The 5-year and 10-year Treasury yields are hovering around 1.84% and 2.29%, respectively. When asked about a bond market price bubble, JP Morgan CEO Jamie Dimon said, “I wouldn’t personally buy into 10-year sovereign debt anywhere around the world.” That’s because he thinks interest rates will be moving gradually higher.


*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.

July 31, 2017

Stocks opened modestly higher this morning (Dow +72 pts; SPX flat). Banks are up .7%; defense contractors & a few other industrials are up as well. Utilities & telecoms are trading slightly higher. On the other hand, real estate, technology and consumer related sectors are lower. The VIX Index spiked 3% to 10.6 and VIX August futures are trading up around 11.5. Commodities are mixed. WTI crude oil is trading down 1% to $49.25/barrel, but that’s still near the upper end of the range we’ve seen this year. Most analysts are saying oil will remain range-bound between $40 and $50. Bonds are largely unchanged today. The 10-year Treasury yield is hovering around 2.29%. 


*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.

June 26, 2017

The major stock market averages climbed briefly at the open, but quickly turned around. The Dow is up 40 pts, the SPX is up .2% and the Nasdaq is flat. “Waffling” has become a consistent pattern throughout June, according to CNBC’s Jim Cramer. “The market can’t make up its mind.” In addition, we’re seeing huge dispersion of returns from sector to sector, and from stock to stock.  For example, healthcare is screaming higher (+6%) this month, while energy has sagged .5%. And even within the energy sector, Chevron (CVX) is up 1.3% this month but Schlumberger (SLB) is down 5%. Mr. Cramer rightly points out that “nothing is trading in unison.” The VIX Index continues to trade near record lows (below 10 today), but while the SPX looks like it is simply treading water, there is a lot going on under the hood. 


*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.