Welcome Stockaholics to the trading week of July 16th! This past week saw the following moves in the S&P: Major Indices End of Week: Bird's Eye view of the Major Futures Markets on Friday: Economic Calendar for the Week Ahead: Sector Performance WTD, MTD, YTD: What to Watch in the Week Ahead: Monday Earnings: Bank of America, Netflix, BlackRock, JP Hunt 8:30 a.m. Retail sales (June) 8:30 a.m. Empire State manufacturing 10:00 a.m. Business inventories Tuesday Earnings: Goldman Sachs, Johnson and Johnson, UnitedHealth, Charles Schwab, Comerica, Progressive, Prologis, Cintas, CSX, United Continental, Interactive Brokers, Pinnacle Financial, Adtran 8:30 a.m. Business leaders survey 9:15 a.m. Industrial production 10:00 a.m. Federal Reserve Chairman Jerome Powell delivers monetary policy report to Senate Banking Committee 10:00 a.m. NAHB survey 4:00 p.m. TIC data Wednesday Earnings: Abbott Labs, Morgan Stanley, American Express, IBM, Alcoa, eBay, US Bancorp, Novartis, Textron, Kinder Morgan, Northern Trust, Crown Holdings, Noodles and Co, Plexus, Bancorp South Delivering Alpha conference 8:30 a.m. Housing starts 10:00 a.m. Fed Chair Powell testifies before House Finance Committee on monetary policy 2:00 p.m. Beige book Thursday Earnings: Microsoft, Blackstone, Traveler’s, Advanced Micro, Capital One, ETrade, Skechers, Intuitive Surgical, Sonoco Products, Union Pacific, Bank of NY Mellon, Nucor, AutoNation, Danaher, SAP, Taiwan Semiconductor, KeyCorp, PPG Industries, Celanese 8:30 a.m. Initial claims 8:30 a.m. Philadelphia Fed survey Friday Earnings: General Electric, Baker Hughes, Honeywell, Schlumberger, Kansas City Southern, Stanley Black and Decker, 8 a.m. St. Louis Fed President James Bullard
"Everyone Wins In A Trade War"? Stocks, Bonds, Dollar All Soar After Tariff Tantrum "No one wins a trade war" they said... Well for now, everyone is winning - US, Chinese, and European stocks are up; the dollar is stronger; and the long-bond is up... Bonds and Stocks are bid post-Trade-War-Tantrum... For now Russia is winning the trade war (if stock markets matter) Chinese Stocks love Trade Wars... European Stocks love Trade Wars (apart from Spain and Italy)... US Stocks love Trade Wars... Bloomberg offers a few explanations as to why the market seems unfazed by the trade war: 1. Investors are betting that cooler heads will prevail 2. The direct impact of tariffs is not enough to have drastic economic consequences. We are talking about 10% taxes on $200 billion imports in a $19 trillion economy. There will be winners and losers, but the aggregate impact is small 3. Political uncertainty matters less than you think. And while uncertainty soars, VIX tumbled... And then there's this - ignorance is bliss... US equities had their best week in over a month as algos BTFTWD!! Small Caps ended the week red though... S&P managed to get above 2,800... 5 opening short squeezes in a row... Wells Fargo ended the week lower and Citi unchanged but the "blockbuster" earnings this morning left bank stocks red on the day... Yet again bank stocks have collapsed relative to the market and reverted back to the slumping yield curve... An odd week for FANG stocks - lurch open on Monday morning and push to new record high - but Friday 13th spoiled the party... Despite soaring stocks, the long-end of the bond curve ended unchanged... And the yield curve collapsed to a new cycle low... The yield curve collapse is accelerating... 30Y Treasury yield ended with the lowest weekly close since January... The Dollar Index rallied solidly on the week... The Yuan slid lower on the week once again (5th week in a row) finding resistance on a rebound twice at the CNY Fix... Cryptos had another ugly week after a good start last weekend... Commodities were all lower on the week... The worst week since February for Bloomberg's Commodity Index but global stock markets don't care... And finally, there's this...
Spoiler: Weekend Reading: Renter Nation Authored by Lance Roberts via RealInvestmentAdvice.com, “The psychological factors are harder to assess. People aren’t flipping condos for sport the way they were during the bubble when mortgages were available to anyone regardless of whether they had income or assets. Yet it seems there’s a widespread desire to own assets – stocks, bonds, and real estate – regardless of price. It’s not an obviously happy mania, where people are motivated by promises of great wealth. It’s more like a need to be an asset owner in an economy that continues to hurt workers without college degrees and becomes more automated. Nevertheless, the price insensitivity of many buyers is enough to cause concern.” – John Coumarianos It is an interesting comment and John is correct. Low rates, weak economic growth, cheap and available credit, and a need for income has inflated the third bubble of this century. But when it comes to housing, as I was digging through the employment data yesterday, I stumbled across the “rental income” component which is included in national compensation. When I broke the data out into its own chart, I was a bit surprised. Let’s step back for a moment to build a bit of a framework first. While there has been much speculation about a resurgent “housing boom” in the economy, the data suggests something very different which is that housing has simply become an asset class for wealthy investors to turn into rentals. As the “Buy-to-Rent” game drives prices of homes higher, it reduces inventory and increases rental rates. This in turn prices out “first-time home buyers” who would become longer-term homeowners, hence levels of homeownership rates first seen in the 1970’s. (Also, note surging debt levels are supporting higher homeownership.) The chart below shows the number of homes that are renter-occupied versus the seasonally adjusted homeownership rate. As noted above, with owner-occupied housing at the lowest levels since the 1970’s, “renters”have become the norm. The surge in “renters” since the financial crisis, due to a variety of financial reasons, has pushed rental income to record levels of nearly $800 billion a year. Given the sharp surge in incomes, it is not surprising that multifamily home construction and “buy to rent” continues apace in the economy for now. For investors, it has become an alternative asset class with increasing asset values and income yielding well above the current 10-year Treasury rate. With roughly a quarter of the home buying cohort either unemployed or underemployed and living at home with their parents, the ability to create households has become more problematic. The remaining members of the home buying, household formation, contingent are employed but at lower ends of the pay scale and are choosing to rent due to budgetary considerations. This explains why the 12-month moving average of household formation, used to smooth very volatile data, is near its lowest levels going back to 1955. The risk to the “renter nation” bubble is a “rush for the exits” by the herd of speculative buyers turning into mass sellers. With a large contingent of homes being held for investment purposes, if there is a reversion in home prices a cycle of liquidation could quickly occur. Combine that with the onset of a recession, and/or a bear market, and the problem could well be magnified. Of course, it isn’t just the liquidation of homes that is an issue but the inability to find a large enough pool of qualified buyers to absorb the inventory. Just something to think about as you catch up on your weekend reading list. Economy & Fed The Labor Market Isn’t So Tight by Caroline Baum via MarketWatch Six Lies On Trade by Dean Baker via Real World Economics Review The Trade Deficit Isn’t A Problem, But Shows A Problem by Nathan Lewis via Forbes Trumpism, If Not Trump, Is Here To Stay by Tyler Cowen via Bloomberg Why Aren’t Wages Rising Faster by Robert Samuelson via RCM States Unprepared For Next Downturn by Mike Shedlock via Mishtalk Tax Cut Bill Triggers $437 Billion In Stock Buybacks by Matt Egan via CNN The Markets And The Fed by Scott Sumner via The Money Illusion The Orange Swan Returns by Doug Kass via Real Clear Markets Fed Could Avoid An Inverted Yield Curve, But Won’t by Brian Chappatta via Bloomberg The Must Read Quote On Social Security’s Future by Sean Williams via Motley Fool Employers Will Do Anything For Workers – Except Pay More by Michael Hiltzik via LA Times Trade Wars Are Bad by Tari Whiting via The Washington Times Markets BofA: Biggest Concern For Rest Of The Year by Tyler Durden via ZeroHedge The Corporate Bond Market Is Getting Junkier by Danielle Dimartino-Booth via Bloomberg Just One Word Of Investment Advice by Shawn Langlois via MarketWatch What The World’s Biggest Investor Things Markets Will Do by Matthew Heimer via Fortune The Goldilocks Stock Index by Dana Lyons via The Lyons Share Headwinds Vs Tailwinds by Liz Ann Sonders via Charles Schwab What’s Driving Bank Stocks by Simon Constable via WSJ Value Investing: Is Life Imitating Art by Seth Levine via The Integrating Investor Investing Lessons From Top Poker Player by Larry Swedroe via Advisor Perspectives Will Investors Know If There Is A Trade War? by Mark Decambre via MarketWatch A “Market About Nothing” by Rob Isbitts via Forbes Bear Market? What Will You Do About It by Mark Rzepczynski via Disciplined Systematic GM Views Low Unemployment Signaling A Recession by Howard Gold via MarketWatch Most Read On RIA The Myth Of Buy And Hold Investing – Part VI by L. Roberts, M. Lebowitz & J. Coumarianos Is The Fed’s New Yield Curve “Professional Grade/” by Michael Lebowitz Buffett’s Moats Are Breached by Doug Kass Some Questions On Employment & Wages by Lance Roberts Savings Lessons From A Baseball Players Contract by John Coumarianos FOMO Overrides FOLM by Lance Roberts Research / Interesting Reads Stock Markets Think US Is Winning Trade War by Wolf Richter via Wolf Street The Job Guarantee, “Make Work” & FDR by Lambert Strether via Naked Capitalism You Are So Money by Scott Bell via I Heart WallStreet The Road To Serfdom – 7 Things You Might Not Know by Jon Miltmore via FEE What Smart People Do With Their Money by Mitch Tuchman via MarketWatch How The War With Japan Started by Macromon via Global Macro Monitor Retirement Risk: Divorce by Annie Nova via USA Today/CNBC The End Of The Brexit Illusion by David Frum via The Atlantic Public Pensions: The Ultimate Ponzi Scheme by IBD The Ponzi Economy Will Lead To The Next Crisis by John Hussman via Hussman Funds “Risk comes from not knowing what you are doing.” – Warren Buffett
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Second Quarter Earnings Preview: Another 20%-plus? Posted by lplresearch Second-quarter earnings season kicks off this week, and S&P 500 companies are expected to report an eighth consecutive increase in quarterly profits. Consensus estimates are calling for a 21% year-over-year increase for the quarter, setting up a potential second-straight quarter of earnings growth higher than 20%. We expect several factors to drive this strong earnings growth: Corporate and individual tax cuts. Strong manufacturing activity. Higher oil prices, which boost energy sector profits. A weaker dollar versus the year-ago quarter, which supports overseas profits. We expect modest upside to those estimates based on historical patterns, positive S&P 500 earnings revisions during the quarter, and an above-average ratio of positive to negative pre-announcements. While escalating tensions around tariffs have dominated headlines recently, we do not expect any anticipated or implemented tariffs to meaningfully impact second-quarter earnings results. Lofty expectations for this earnings season beg the question “is this as good as it gets?”. Even if this is the pinnacle for earnings growth, we see it as a positive signal for stocks, not a reason to sell. As mentioned in the Midyear Outlook 2018: The Plot Thickens(and shown in the LPL Chart of the Day), a peak in earnings growth has not historically been a sign of imminent trouble for the U.S. economy or stocks. LPL Research Chief Investment Strategist John Lynch noted, “Historically, about four years have passed, on average, between an S&P 500 earnings growth peak and the next recession, during which stocks have produced solid gains.” We increased our S&P 500 earnings forecast for 2018—from $152.50 per share to $155—in our Midyear Outlook publication, an 18% year-over-year increase over 2017, citing strong first quarter results amid a continued solid backdrop for corporate profits. While our forecast is below the consensus estimate of $160, we prefer to be conservative due to the potential for further U.S. dollar strength, wage pressures, and tariff-related costs. Applying a target price-to-earnings ratio of 19 to this estimate gets us to our year-end fair value range of 2900-3000, or a 10-12% gain for the year (without dividends). As of July 12, the S&P 500 has returned 5.7% year-to-date. The Closer: End of Week Charts — 7/13/18 Jul 13, 2018 Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model. We also take a look at the trend in various developed market FX markets. Below is a snapshot from today’s Closer highlighting weekly intraday price charts for major equity indices and other asset classes. If you’d like to see more, start a free trial below. Can Companies Keep Up Strong Beat Rates in Q2 Earnings Season? Jul 11, 2018 One thing we’ll be watching closely this earnings season is whether companies can keep up the extraordinarily high beat rates seen over the past two quarters. Over the past two earnings seasons, even though analysts had to up their estimates quite a bit due to the Trump corporate tax cuts, companies were easily able to beat expectations. Since 1999, 62.1% of earnings reports have reported EPS that were greater than consensus expectations. As shown below, though, the last two quarters saw much higher than average beat rates. Not only have bottom line EPS beat rates been strong, but top-line revenue beat rates have been strong as well. Revenue beat rates over the last two earnings seasons were higher than any quarter since Q4 2004. The chart below takes the average of each quarter’s earnings and revenue beat rate. When looking at the strength of both the top and bottom line beat rate each earnings season, the only other two-quarter period that showed stronger beat rates than the last two quarters was back in Q4 2003 and Q1 2004. Needless to say, investors have gotten used to stronger than expected earnings reports over the last six months. If companies aren’t able to keep up the pace this season, we think the market will struggle. Years Like 2018 – Not Many! Jul 11, 2018 Calling a specific period of time “unique” is often used as a cop-out by commentators and investors, so we usually try not use the term lightly. But if a certain period of time is so unique that it has no historical precedent, you can’t fault someone for saying it. In comparing the S&P 500’s performance in 2018 to prior years, we found that there really are very few years where the market has seen a similar pattern. In other words, 2018 really is unique! To illustrate this, we ran the correlation of the closing prices of the S&P 500 so far this year to the closing prices for every other year through 7/11. We have done this type of analysis many times over the years, and usually, when we run it, the years that have the most similarity to the year in question have correlation coefficients of +0.85 or even greater than 0.90. In the analysis we ran for 2018, however, there were only two years with a correlation coefficient of more than +0.50, and five of the top ten years have correlation coefficients of less than +0.40! What Does an Inverted Yield Curve Mean? Posted by lplresearch As the yield curve continues to flatten, investors remain worried about the potential implications for the economy and markets. Why? Inverted yield curves have a perfect history of predicting economic recessions over the past 50 years, with nine of the past nine inversions followed by an eventual recession. The yield curve is a graphical representation of bond yields of similar credit quality across a range of maturities. A flattening curve, when shorter-term rates rise more quickly than longer-term rates (or fall more slowly), is often perceived as an indication that slower economic growth lies ahead. An inverted yield curve, where short-term rates are higher than long-term rates, has historically been a precursor to a recession. Last week, the difference between the 2- and 10-year Treasury yields was beneath 0.30%, marking the flattest level since ahead of the financial crisis more than 10 years ago. Here’s the catch: the yield curve isn’t inverted, and we’ve seen periods with a relatively flat yield curve that have lasted years before a recession (the mid-to-late 1990s for instance). With strong corporate profits, high confidence levels, and the benefits from fiscal policy still being felt, we do not anticipate a recession over the next 12-18 months. But what happens when the yield curve inverts? As our LPL Chart of the Day shows, even inverted yield curves don’t always equal near-term trouble for equities. According to LPL Research Senior Market Strategist, Ryan Detrick, “Here’s what you need to know: an inverted yield curve isn’t this end-all sell signal that many make it out to be. In fact, looking at the past five recessions, economic growth continued to accelerate for an average of 21 months after the yield curve inverted, and the S&P 500 Index added nearly 13% on average—rising in every instance—before a recession officially started. We aren’t ignoring this potentially troublesome sign, but it doesn’t appear to be the major warning many make it out to be.”
Stock Market Analysis Video for July 13th, 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 7.15.18 - A flat top of epic proportions Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 7.13.18- Here is also the pullback/correction levels from current prices- ...and here are the rally levels from current prices-
Stockaholics come join us on our stock market competitions for this upcoming trading week ahead!- ======================================================================================================== Stockaholics Daily Stock Pick Challenge & SPX Sentiment Poll for Monday (7/16) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (7/16-7/20) <-- click there to cast your weekly market vote and stock picks! ======================================================================================================== It would be pretty sweet to see some of you join us and participate on these! I hope you all have a fantastic weekend ahead!
Here are the most anticipated ERs for this upcoming week ahead (I'll also have the weekly earnings calendar posted in here as well once it's out) ***Check mark next to the stock symbols denotes confirmed earnings release date & time*** Monday 7.16.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 7.16.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 7.17.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 7.17.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 7.18.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 7.18.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 7.19.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 7.19.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 7.20.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 7.20.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($NFLX $BAC $MSFT $GE $BLK $GS $UNH $IBM $JNJ $CLF $JBHT $PGR $ABT $MS $ISRG $AXP $SKX $AA $CSX $URI $PM $CDMO $CMA $DPZ $GWW $NUE $BX $HON $EBAY $ASML $FHN $TSM $SLB $NEOG $MLNX $UAL $PLD $TXT $IBKR $ETFC $CTAS $FDEF $KEY $DHR) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning July 16th, 2018 <-- click there to view!
Starting to see a lot of earnings next week Will be interesting to see how names like NFLX and MSFT do, let's see if those high flying tech names will deliver once again
Amazon Prime Day starts today, a non-prime number. Tomorrow at least is 7/17, so I may wait until then just out of principle. https://www.howtogeek.com/317426/how-to-track-sales-and-price-drops-on-amazon/
Not sure if these Musk issues are TSLA (the stock) news, just watching to see which way things break. In the mean time there's this: https://www.theonion.com/elon-musk-insists-he-d-be-much-more-innovative-pedophil-1827630054
TSLA stock is all over the place recently, but people raging because he offered to go help in Thailand? Its not as if he is in need of getting his name out. We all know who he is. There are people that are actually angry, saying it was a publicity stunt and nothing more. Seriously... If this is what occupies your thoughts all day, you need new hobbies.
Yeah banks really doing great today Big drop for oil though. NFLX earnings after the bell will be interesting, could impact how tech stocks performing tomorrow
