Welcome Stockaholics to the trading week of August 6th! 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: Marriott, Zillow, Softbank, HSBC, Tyson Food, Sempra Energy, SeaWorld, Weight Watchers, Hertz Global, Etsy, Newell Brands, Cardinal Health, Brighthouse Financial Tuesday Earnings: Disney, Bausch Health, Dean Foods, Wendy's, Match Group, Host Hotels, Camping World, CyberArk Software, Papa John's, Continental Resources, Emerson, Aramark, Plains All American, Snap 10:00 a.m. JOLTS 1:00 p.m. $34 billion 3-year auction 3:00 p.m. Consumer credit Wednesday Earnings: CVS Health, Michael Kors, 21st Century Fox, NY Times, Delphi Automotive, Booking Holdings, Monster Beverage, ZTO Express, IAC/Interactive, Mylan, Keurig, Liberty Media, Cinemark, Sequential Brands, Wolverine Worldwide, Roku 7:00 a.m. Mortgage applications 1:00 p.m. $26 billion 10-year auction Thursday Earnings: Adidas, Norwegian CrusieLine, Viacom, Brookfield Asset Management, Dropbox, News Corp, TrueCar, Planet Fitness, Invitation Homes, Canada Goose, Sunrun, Windstream, Air Lease 8:30 a.m. Jobless claims 8:30 a.m. PPI 10:00 a.m. Wholesale inventories 1:00 p.m. $18 billion 30-year auction Friday 8:30 a.m. CPI 2:00 p.m. Monthly budget statement
Stocks, Bonds, Dollar Gain As US Macro Plunges To 11-Month Lows Everything was going so great - Apple etc... - and then China ruined the party and payrolls disappointed... An ugly week for US macro data (tumbling to its most disappointing in 11 months) did nothing to stall hopes for economic growth... Or faith in the US plunge protection team... And, despite today's spike, yuan ended lower for the 8th week in a row (and 14th of the last 16 weeks) as China-US trade tensions escalated further... As Chinese stock cratered... European stocks were unhappy too... But USA USA USA was positive - even The Dow managed to get back to 'even'... as Trannies outperformed... It seems 'Murica is winning the trade war - or the equity algos are anyway... VIX closed the week with an 11 handle - because there's nothing to fear but fear itself (oh and currency-, trade-, and potential kinetic-war)... AAPL managed to hold on to its trillion-dollar market cap... Big week for TSLA as it squeezed higher again... but bonds faded today... Nasdaq bounced perfectly off its 50DMA... FANG Stocks ended the week lower (despite Nasdaq gains)... Treasury yields were broadly lower on the week (thanks to a heavy bid today) but 30Y ended higher (in yield)... The yield curve steepened on the week 10Y briefly topped 3.00% (China?) early in the week, before pushing back lower (note the same level on Fed day in June)... so now do we plunge back to the other end of the range? Remember, bond positioning has never been more short. The Dollar ended the week higher, but found resistance in the middle of ECB-day spike range... Turkish Lira was the week's biggest loser, puking above 5.00/USD for the first time ever... Cryptos were ugly all week... just leg down after leg down... Worst week for Bitcoin in two months, back below $8,000... Ethereum found support relative to Bitcoin once again at the 2017 year-end close... Commodities rallied today but ended the week lower overall... Finally, we note that China's stock market capitalization has slumped to its lowest relative to the world since 2014 and a critical point of support/resistance... Does this mean Trump is winning?
Spoiler: Weekend Reading: Mathematical Adjustments Don't Change Reality Authored by Lance Roberts via RealInvestmentAdvice.com, Yesterday, I discussed the mathematical adjustment to the GDP calculation that added $1 trillion to economic growth. To wit: “Where did a bulk of the change come from? A change in the calculation of “real” GDP from using 2009 dollars to 2012 dollars which boosted growth strictly from a lower rate of inflation. As noted by the BEA: “For 2012-2017, the average rate of change in the prices paid by U.S. residents, as measured by the gross domestic purchasers’ price index, was 1.2 percent, 0.1 percentage point lower than in the previously published estimates.” Of course, when you ask the average household about “real inflation,” in terms of healthcare costs, insurance, food, energy, etc., they are likely to give you quite an earful that the cost of living is substantially higher than 1.2%. Nonetheless, the chart below shows “real” GDP both pre- and post-2018 revisions.” Importantly, the entire revision is almost entirely due to a change in the inflation rate. On a nominal basis, there was virtually no real change at all. In other words, stronger economic growth came from a mathematical adjustment rather than increases in actual economic activity. The change to a lower inflation rate also boosted disposable incomes and personal consumption expenditures which also boosted the savings rate. However, what doesn’t change is economic reality. The chart below shows what we call “real DPI” or rather it is disposable incomes (which is gross income minus taxes) less spending. What we have left over after paying our bills, healthcare costs, food, tuition, etc. is what is really disposable for spending on other “stuff” or “saving.” Despite the adjusted bump in savings, consumer activity continues to remain weak. Given that roughly 70% of the economic calculation comes from personal consumption, watching consumer activity is a good leading indicator of where the economy is headed next. PCE figures also suggest the recent bump in economic growth is likely transitory. Looking back historically, GDP tends to follow PCE and not vice-versa. More importantly, weaker economic growth rates will also be met with much tougher year-over-year comparisons on corporate earnings which likely further hamper equity returns in the near term. As we summed up yesterday: “As an investor, it is important to remember that in the end corporate earnings and profits are a function of the economy and not the other way around. Historically, GDP growth and revenues have grown at roughly equivalent rates. Forget the optimism surrounding “’Trumpenomics’ and focus on longer-term economic trends which have been declining for the past 30+ years. The economic trend is a function of a growing burden of debt, increasing demographic headwinds and, very importantly, declining productivity growth. I see little to make me believe these are changing in a meaningful way.” Changing the math doesn’t change reality. Just something to think about as you catch up on your weekend reading list. Economy & Fed What The GDP Report Doesn’t Tell You by Danielle DiMartino-Booth via Linked-In Trump Tipped His Hand by Caroline Baum via MarketWatch QE Turns 10 by Stephen Roach via Project Syndicate Did Trump Actually Create An Economic Boom? by James Pethokoukis via The Week National Debt Issue About To Roar Back To Life by Maya McGuinness via CNN “Where’s Our Bailout” by Ed Kilgore via NewYork Magazine The “New Normal” … Not by Richard Rahn via The Washington Times GDP Bump Was Not Due To Trump by Jordon Weissmann via Slate US Trade Policy: Stupid & Hypocritical by Mike “Mish” Shedlock via TheMaven $100 Billion Tax Cut For The Wealthy by Tyler Durden via Zerohedge US At Risk Of Losing Trade War With China by Joseph Stiglitz via Project Syndicate GDP Report Proves Tump’s Policies Are Working by Jonathon Trugman via NY Post Socialism Rises From The Grave by Richard Ebeling via FEE The Biggest Economic Booms By President by Justin Fox via Bloomberg What Will Cause The Next Recession? by Neil Irwin via NYT Markets Morgan Stanley: It’s Different This Time by Tyler Durden via Zerohedge Cliff Hangers by Eric Cinnamond Investing Tips From Warren Buffett by Shawn Langlois via MarketWatch Hussman: Market Will Drop By 50% by Sue Chang via MarketWatch Tech Rally Getting Extended by Dana Lyons via The Lyons Share Not So Predictable by Jonathan Clements via Humble Dollar Gold Could Be In A Prolonged Tailspin by Simon Constable via Barron’s Investors May Cheer Q2 Earnings But Beware Q3 by Ryan Vlastelica via MarketWatch A 2019 Recession Is The Most Likely Outcome by Paul Kasriel via Financial Sense The Guy Betting Against Elon Musk by Mark Decambre via MarketWatch What Happened To Summer Doldrums? by Liz Ann Sonders via Charles Schwab Warning Signs Are Very Pronounced by Sven Henrich via NorthmanTrader.com Most Read On RIA The Problem With Passive by L. Roberts, M. Lebowitz & J. Coumarianos Are Market Generals Leading Us To War by Michael Lebowitz We May Be In A Topping Process by Doug Kass What Is The “Williams %R” by Lance Roberts Tariff Turbulence, Mollified Market by John Coumarianos The U.S. Household Wealth Bubble Part 2 by Jesse Colombo Was Q2-GDP Really All That Extraordinary? by Lance Roberts Research / Interesting Reads Where Are The 17,000 Cars Tesla “Produced” by Wolf Richter via Wolf Street Bank Squeeze Consumers On Savings & Rates by Patrick Hill via The Progressive Ensign $5 Trillion: Pensions Are Doomed by Tyler Durden via Zerohedge New Housing Play: Long Distance Landlord by Andrea Riquier via MarketWatch Playing For A Yield Curve Inversion by Seth Levine via The Integrating Investor Are Stock Buybacks Starving The Economy by Annie Lowrey via The Atlantic Child Care And Low-Income Households by Julia Henly via NYT Brain Gain: Why You Can’t Just Be A Savant by Darold Treffert via Scientific American Roth Or Traditional 401-k? by IBD Retiree’s Misconceptions About Finances by Dan Moisand via FA Mag Mind The Trap Door (Understanding Valuations) by John Hussman via Hussman Funds “Everything eventually reverts to the mean.” – Frank Holmes
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Typical August Trading: Don’t Expect Much from the Worst Month Just like many Augusts in the recent past, this year August also began tepidly. Yes, NASDAQ did manage a 0.46% gain today (thank you AAPL), but DJIA, S&P 500 and Russell 2000 all finished the day in the red. Today’s Fed announcement had little impact on the market as the Fed did exactly what was widely anticipated, nothing. Looking ahead to the rest of the month of August (chart above) then enjoys a solid, but brief, run lasting from ninth trading day until the thirteenth trading day. From that point through the end of the month the trend is sideways at best to lower at worst. August Preview: A Month for the Bears? Posted by lplresearch The surprise summer rally continues, as the S&P 500 Index is on pace to gain for a fourth consecutive month. In fact, should July close in the green, over the past 21 months, the S&P 500 has closed higher all but three times. Here is the catch: The calendar is something we should not ignore, as August and September are two of the weakest months historically and they are coming up next. As stated in our recently released Midyear Outlook 2018: The Plot Thickens, one of the three major themes we are looking for over the rest of this year is volatility (with fiscal policy and peaks being the other two). Right on cue, here comes the one month where “when it’s down, it’s really down.” “Maybe it’s the back-to-school blues, but since 1980, there is no month with a worse average return when it is lower than August,” explained LPL Research Senior Market Strategist Ryan Detrick. Look at the recent history of August: Iraq invaded Kuwait in 1990, 1997 and 1998 both saw big drops in August over the “Asian Contagion” and the implosion of Long-Term Capital Management (LTCM), 2010 saw a big drop as worries over the global economy spread, 2011 had the U.S. debt downgrade, and 2015 was the China currency issues and a 1,000 Dow drop. Pick a reason why, but August seems to have these big events that cause trouble. As our LPL Chart of the Day shows, August has a penchant for large drops. We continue to expect stock market gains of 10%+ when all is said and done in 2018, thanks to the benefits of fiscal policy and strong corporate profits, suitable investors may consider using any potential late summer weakness as an opportunity to add to risk. Biggest Winners on Earnings this Season Aug 3, 2018 Of the 1,516 stocks that have reported their Q2 numbers so far this earnings season, 41 have gained more than 15% on their earnings reaction days (the first trading day following the earnings report). If you owned any of these names heading into their earnings reports, your portfolio certainly got a nice boost! At the top of the list is Supervalu (SVU) with a one-day gain of 65.40% on its earnings reaction day. It just so happens that along with the release of its earnings on 7/26, United Natural Foods (UNFI) announced that it was buying SVU for $32.50. The stock closed at $19.45 on the day prior to the announcement. While SVU’s gain of 65.4% was due to a buyout announcement, Bridgepoint Education’s (BPI) one-day move of 52.90% was all earnings related. It’s nice when your stock moves 50%+ in a day, right? Rounding out the list of the five biggest winners this earnings season are the Container Store (TCS), Boingo Wireless (WIFI), and Cardtronics (CATM). All three of these stocks had one-day gains of more than 30% on their earnings reaction days. As you scroll down the list of winners, you’ll see a few names that you recognize — SodaStream (yes, it’s still around), GoPro (yes, it’s still around too), iRobot (IRBT). Given the negativity surrounding the company heading into its report this season, Tesla (TSLA) is probably the stock whose 16.19% gain surprised the most people. With 27% of its float sold short, TSLA’s gain also put a hurting on Elon Musk non-believers. Keep a constant eye on earnings season winners and losers with a Bespoke Premium membership. Our earnings coverage is off the charts! Sentiment Down, But Holding Up Relatively Well Aug 2, 2018 Between Facebook’s (FB) record plunge last week and some other high profile weakness in former leading stocks, we would have thought that individual investor sentiment would have taken a big turn for the worse this week. While bullish sentiment did decline, the drop was smaller than we were expecting. According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment dropped from 31.52% down to 29.11%, which is actually smaller than the declines we saw in each of the prior two weeks when equities were doing better! Although bullish sentiment saw just a small decline, bearish sentiment saw its largest one-week increase since the end of June, rising from 26.9% up to 32.1%. Still, that’s hardly a level that indicates much in the way of worry. Most of this week’s new bears came from off the fence, as neutral sentiment declined from 41.58% down to 38.81%. Jobless Claims Making New Records Aug 2, 2018 Jobless claims came in lower than expected this week with the seasonally adjusted headline reading rising by 1K to 218K compared to consensus forecasts of 220K. While it wasn’t a big ‘beat’ relative to expectations, let’s just put the string of recent low readings into perspective. This week was the 178th straight week of sub 300K claims (a record), the 43rd straight week at or below 250K (longest streak since 1970), and the fourth straight week of readings at or below 220K (longest streak since 1969). This week’s low reading in claims brought the four-week moving average close to a new cycle low this week as well. At 214.5k, the average is now within just 1K of a new cycle low. However, in order to break that prior low from May, we would need to see a reading next week below 211K (assuming no revisions). It’s possible, but it will be tough. Finally, the non-seasonally adjusted (NSA) reading of claims also declined this week to its lowest level for the month of July on record. At 179.5K, it’s also over 117K below the average of 297K for the current week of the year dating back to 2000. Tariffs, Tariffs, Tariffs! Aug 1, 2018 As mentioned earlier in a tweet about the ISM Manufacturing report for July, talk and concern about tariffs is just about everywhere in the manufacturing sector. In addition to the ISM Manufacturing report, we’ve also seen a major uptick in tariff conversation during the latest round of Q2 earnings conference calls. We’ve been tracking all of the conference call transcripts of companies in the S&P 500 that have reported earnings so far and with just about half of all companies reporting, the percentage of conference calls where tariffs have been brought up has more than doubled relative to Q1 (39.8% vs 16.6%). For the entire Q1 earnings season, the word “tariff” came up 290 different times in S&P 500 conference calls (in some calls, the word came up more than once), while during this earnings season, the term has already come up 609 different times. Remember, we’re only halfway through this earnings season. The table below breaks down the percentage of companies that have mentioned tariffs in their Q2 conference calls by sector. For each sector, we have also included the conference calls where the term has come up the most frequently. Three sectors have seen “tariff” mentioned in half of the conference calls (Industrials, Materials, and Consumer Staples), and all three sectors have lagged the market considerably this year. Sectors where tariffs have been least mentioned are Telecom Services, Health Care, and Real Estate. In terms of individual companies, given all the headlines Harley Davidson (HOG) created when it was targeted by the President for saying it would move production outside of the US in response to tariffs, the fact that tariffs were mentioned the most on its conference call isn’t much of a surprise. Right behind HOG, Stanley Black & Decker (SWK), and Mettler-Toledo (MTD) round out the top three. Finally, we also wanted to highlight a few excerpts from conference calls that have taken place between the close on Tuesday and the open Wednesday. Apple (AAPL) is the most notable of the six companies mentioned and gets right down to the bottom line with its statement that “Tariffs show up as a tax on the consumer…and sometimes can bring about significant risk of unintended consequences.” We couldn’t have said it better ourselves! New High For High Yield Debt Jul 31, 2018 As we’ve seen some of the highest flying stocks in the market pull back in the last couple of days, we haven’t seen much of an uptick in other market measures of risk. Since last Wednesday’s close (which was the day Facebook reported), the VIX has only risen one point from 12.29 to 13.29. That hardly signals a white-knuckle feeling on the part of investors. Similarly, the high yield market has seen virtually no reaction. Since last Wednesday, high yield spreads have actually declined slightly. Granted, most of these stocks getting hit so hard have no debt, so they don’t have much of a direct impact on the debt markets, but if investors are becoming more risk averse by lightening up on high fliers, one would think that there would at least be some sort of indirect impact. Not only has high yield been relatively unscathed, but the sector has made a new high on a total return basis over the last few days, and that’s something we haven’t been able to say since 1/26, which was also the last time the S&P 500 closed at a new high. High yield debt is just one of many internal indicators we track to gauge the underlying trend and health of the market. In our newest Bespoke Report, we discussed a variety of other indicators and what kind of signals they were giving. To read our analysis, you can start a two-week free trial to Bespoke Premium today! Q2 Earnings Rotation Jul 31, 2018 The average one-day price change of the 1,000 or so stocks that have reported earnings this season has dipped into negative territory. This means that investors are on average taking profits in stocks on the first trading day following earnings. This is in stark contrast to gains seen in reaction to earnings reports over the last few quarters. There have been major differences in price reactions to earnings by sector this season. Five sectors are seeing their stocks catch bids following earnings, while six are seeing declines. Below we show the average one-day price change in reaction to earnings for stocks by sector so far this season. As shown, Consumer Staples and Industrials stocks are averaging gains of more than 1.2%, meaning investors are snapping up shares in these sectors immediately following earnings releases. On the flip side, stocks in Telecom, Technology, Consumer Discretionary, and Financials are averaging declines on their earnings reaction days. The declines have been most prominent in Telecom and Technology, where the average stock that has reported has fallen more than 1% on its earnings reaction day. Leading up to the current earnings season, the Technology sector could do no wrong, and it was up by far more than any sector on a year-to-date basis. It’s only natural to see investors take some profits after a period of big gains, and it looks like they’re using earnings news this quarter to do just that. It has been a “sell the news” environment for Tech earnings so far this season. Earnings beat rates have had a minimal impact on the performance of stocks in reaction to earnings this season. Energy and Consumer Staples stocks are beating earnings estimates at the lowest rate, but they’re both averaging one-day gains in reaction to their earnings reports. Tech stocks are beating at a very high rate of 75.9%, but as we noted above, they’re getting sold off on the news. Sign up for our $1 New Member Special for more in-depth earnings season analysis!
Stock Market Analysis Video for August 3rd, 2018 Video from AlphaTrends Brian Shannon (VIDEO NOT YET UP!) ShadowTrader Video Weekly 8.5.18 Video from ShadowTrader Peter Reznicek (VIDEO NOT YET UP!)
Here are the current major indices pullback/correction levels from ATHs as of week ending 8.3.18- 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 (8/6) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (8/6-8/10) <-- 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 8.6.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 8.6.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 8.7.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 8.7.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 8.8.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 8.8.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 8.9.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 8.9.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 8.10.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 8.10.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($SNAP $ROKU $HEAR $DIS $DBX $CVS $TSN $TWLO $TRXC $WTW $ETSY $CAH $WB $BKNG $AAOI $NWL $LONE $OLED $SRE $JEC $BCC $SRPT $MTCH $AAXN $TEUM $SEAS $TTD $GWPH $DNR $BHC $NKTR $GOOS $ICHR $KORS $CTL $HTZ $MELI $CTB $PLUG $DDD $MAR $TA) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning August 6th, 2018 <-- click there to view!
Here are the scheduled earnings releases due out before the market open on Monday morning (8/6/18)- ($CAH $TSN $NWL $SRE $LONE $BCC $JEC $SEAS $VST $KOS $CTB $HSIC $CRNT $TA $CAPL $BID $IRWD $TWIN $SRDX $CUI $CYTR $DLHC $CFX $STFC $III $NNDM $FI $AY)
I'll be on vacation this week. Homebuilders seemed like the only thing under pressure coming into this week. And have to see how biotechs handle their resistance.
DDD reporting tomorrow. Wonder if we'll get a dip under 12, not sure about that and it's got 30% of the float shorted.
How Dare a Corporation try to get my Personal Information that is owned by Another Corporation?! https://www.wsj.com/articles/facebo...ive-you-our-users-1533564049?mod=breakingnews
have fun and enjoy marcy! thx for the heads up. i might be going away on a little mini-vaca later this month as well. i know we have a couple of our regulars away on vacation this month. seems like absent a black swan event, this market probably continues to drift higher...SPX now within striking distance of ATHs. i'm really looking forward to the school starting season next month. hopefully we'll see a return to vol. and participation as well.
