Welcome Stockaholics to the trading week of July 9th! 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: T.B.A.
'War With China' Sparks Surge In Stocks As Policy Uncertainty Hits 'Brexit' Highs Can't allow stocks to signal that starting a trade war is anything but 'making American great again'... First things first, today's actions by US, China, and Russia are not a positive and Economic Policy Uncertainty has exploded to its highest since Brexit... For now, it seems like China is suffering the most, Russia the least and US and Europe duking it out... If Small Caps are up 3% in a week when Trump unleashes $34 billion in tariffs on China, imagine how much it will be up when he brings the full weight of his planned $500 billion tariffs... S&P and Nasdaq best day since June 1st. Futures show the craziness best as we kneejerked on the US tariff hit, then tumbled when China actually responded, then was panic bid again on rising unemployment rate and disappointing earnings growth, then tumbled into the close on a big MOC for sale... Of course, it was a big fucking short-squeeze again..."most shorted" stocks up 4.5% from Monday's low open...the biggest 2-day short-squeeze in a month. And all you have to do is look at the bond market to know stocks are a farce... The S&P 500's monthly pattern continues to hold... The last two days are the biggest jump for the S&P in 2 months! h/t @NorthmanTrader And in case you're wondering what the driver of that is - it's a cyclical short-squeeze... The big banks surged early after trade war started but ended ugly... Of course, FANG stocks were panic bid the last two days back into the green for the week... While 2Y yields ended the week marginally higher, the rest of the curve fell notably (despite surging stocks)... 10Y yield close today was the lowest since May 29th's plunge (and lowest weekly yield close since April)... Which sent 2s30s to 37bps at its intraday lows - a new low since August 2007 10s30s tested single-digits... The Dollar Index suffered its biggest weekly loss since March, erasing all the post-Fed/ECB spike gains... Emerging Markets FX had their best week since February!!?? Because trade wars are great for developing nations... Offshore Yuan's freefall stalled as PBOC intervened midweek... (but this was the 4th weekly decline in a row - 10th week of last 12) Crytpos managed to end the week positive (for a change) - best week for Bitcoin in 3 months Ugly week for copper as PMs and crude were relatively unchanged on the week... Copper has plunged to its lowest since July 2017... Even CNBC anchors said "it's curious to me that stocks are up so much on this, the first day of the trade war."
Spoiler: Weekend Reading: The Japanification Of America Continues Authored by Lance Roberts via RealInvestmentAdvice.com, Last week, I discussed the ongoing debt issue in the U.S. with respect to the recent CBO report and the trajectory of debt growth over the next 30-years. The fiscal issues facing the U.S. are nothing new and have been a frequent discussion on this site. More importantly, I have discussed these issues directly with members of Congress, and especially with Congressman Kevin Brady, Chairman of the House Ways and Means Committee, who agree with my concerns yet have been unable, and unwilling, to tackle the “tough” issues. While conservatives in Congress talk a great game of fiscal responsibility, the reality is there is little “will” to actually be “fiscally responsible.” While the country today is more politically divided than at just about any other point in history, “spending money” is the one thing that all members of Congress willingly agree to. As I discussed previously, this is the same path Japan took previously. “Debt is a retardant to organic economic growth as it diverts dollars from productive investment to debt service. The problems that face Japan are similar to what we are currently witnessing in the U.S.: A decline in savings rates to extremely low levels which depletes productive investments An aging demographic that is top heavy and increasingly drawing on social benefits. A heavily indebted economy with debt/GDP ratios above 100%. A decline in exports due to a weak global economic environment. Slowing domestic economic growth rates. An underemployed younger demographic. An inelastic supply-demand curve Weak industrial production Dependence on productivity increases to offset reduced employment The lynchpin to Japan, and the U.S., remains demographics and interest rates. As the aging population grows becoming a net drag on “savings,” the dependency on the “social welfare net” will continue to expand. The “pension problem” is only the tip of the iceberg.” “Japan, like the U.S., is caught in an on-going “liquidity trap” where maintaining ultra-low interest rates are the key to sustaining an economic pulse. The unintended consequence of such actions, as we are witnessing in the U.S. currently, is the ongoing battle with deflationary pressures. The lower interest rates go – the less economic return that can be generated. An ultra-low interest rate environment, contrary to mainstream thought, has a negative impact on making productive investments and risk begins to outweigh the potential return.” I was reminded of this previous discussion this past week when Tyler Durden discussed a new bill in Japan limiting overtime work to 99-hours a month to cure “Death by Overwork.” “Recently released government data revealed that Japan’s jobless rate touched 2.2% in May, the lowest level in 26 years. And as Japan’s working-age population dwindles, job openings have outpaced the number of workers available to fill them: As a reference, two months ago, there were 160 job offers available for every 100 workers seeking a job.” What got my attention was the similarity to an issue that has stumped economists over the last couple of years – surging job openings that go unfilled. We can restate quote above to apply to the U.S.: “Recently released government data revealed the U.S. jobless rate touched 3.8% in June, the lowest level in 48 years. And as Japan’s working-age population dwindles, job openings have outpaced the number of workers available to fill them: As a reference, two months ago, the ratio of offers to unemployed hit the highest level of this century.” Employment growth has essentially done little more than to absorb population growth over the last several years but has begun to deteriorate over the last few years. With net hires (hires less layoffs and quits) declining the ratio of job openings to hires is likely to rise further. While the surge in “job openings” has remained a conundrum for economists, the answer may not be so difficult as employers continue to report the problems with filling jobs as: unfit to do the job (too fat/unhealthy/old), lack of requisite skills (education/training), and; unwilling to accept the job for the rate of pay. This was noted in the recent FOMC minutes: “Contacts in several Districts reported difficulties finding qualified workers, and, in some cases, firms were coping with labor shortages by increasing salaries and benefits in order to attract or retain workers. Other business contacts facing labor shortages were responding by increasing training for less-qualified workers or by investing in automation.” A recent job posting revealed what we already suspected about the “new economy.” View image on Twitter Jorge Guzman@GuzmanJorge_ Compensation, $15 dollars per hour. PhD strongly preferred. 4:26 PM - Jul 3, 2018 9,221 4,976 people are talking about this Twitter Ads info and privacy While these are anecdotal examples, it potentially explains why labor force participation remains stuck at multi-decade lows as government benefits provide more income than working. Currently, social welfare makes up a record high of 22% of disposable incomes. The reality is that if the jobless rate was actually near 4%, job openings would be filled, wages would be surging for the bottom 80% of workers along with interest rates and economic growth. Instead, we see more evidence of economic stagflation than anything else. Despite many exuberant hopes of an “economic resurgence,” the vast majority of the data continues to point to a very late stage economic cycle. While I am not suggesting the U.S. actually IS Japan, I am suggesting we can look to Japan as “road map” as to the consequences of high debt levels, aging demographics, deflationary pressures and opting for “short-term fixes” rather than fiscal responsibility. Unfortunately, the Administration has chosen to follow the path of Japan which is unlikely to have a different outcome. There is no evidence that monetary interventions and government spending create organic, and sustainable, economic growth. Simply pulling forward future consumption through monetary policy continues to leave an ever-growing void in the future that must be filled. Eventually, the void will be too great to fill. There is certainly time to change our destination, but it will require a massive shift in perspective and desire to do so. With a rising number of Millennials starting to embrace socialism over capitalism, the future of the U.S. may be more like Japan than we readily wish to admit. Just something to think about as you catch up on your weekend reading list. Economy & Fed Invert Or Not Invert – That Is The Fed’s Question by Caroline Baum via MarketWatch The Millennial Socialist Are Coming by Michelle Goldberg via NYT One More Fed Hike To Inversion by Tyler Durden via Zerohedge How To Sustain The Boom by Matthew Shay via Real Clear Markets Business Want The Trade War To Stop by Rex Nutting via MarketWatch The Dollar Problem For Emerging Economies by Simon Constable via Forbes Japan Sheds Treasuries by Mike Shedlock via Mishtalk The Myth Of Corporate America’s Short-Term Thinking by Steven Rattner via NYT Not All Trade Is Equal by Kaya Forest/Sierra Rayne via American Thinker What Would A Trade War Cost The U.S. by Tom Franck via CNBC Economist Won’t Predict The Next Crash by Thorstein Polleit via Mises Institute The Real Cost Of A Trade War by Mukhisa Kituyi via Project Syndicate Trade Retaliation Is Unjust by Donald Boudreaux via American Institute For Economic Research Markets CS: Risk Appetite Index Is Near Panic by Tyler Durden via ZeroHedge Hard To Be Bearish On Stocks by Shawn Langlois via MarketWatch Stocks Still Have Some Mojo Left by Mark Hulbert via MarketWatch What’s The Deal With Brokers by Dana Lyons via The Lyons Share Implicit Dangers Of Passive Investing by Derek Bergen via Value Expectations Is The Flat Yield Curve A Concern? by Deutsche Bank Research Stock Buybacks Only Thing Floating The Market by Jeff Cox via CNBC Will Investors Know If There Is A Trade War? by Mark Decambre via MarketWatch Why The Next 5-Years Could Be Very Rough by Rob Isbitts via Forbes Dow Jones Needs A Reshuffle by Jonathon Trugman via New York Post The Gathering Storm by Charles Smith via OfTwoMinds Blog Most Read On RIA The Myth Of Buy And Hold Investing – Part V by L. Roberts, M. Lebowitz & J. Coumarianos Household Wealth Is A Bubble by Jesse Colombo An Unhealthy & Potentially Toxic Market by Doug Kass 2nd Half Starts With A Fumble by Lance Roberts Dump Your Stocks, Get A Plan Instead by John Coumarianos RIA Chartbook Q2-2018 by Lance Roberts Research / Interesting Reads BOJ Pulls Away The Punch Bowl by Wolf Richter via Wolf Street Corporations Taking Wages To Increase Profits by Patrick Hill via The Progressive Ensign Big Tech Is A Big Problem by Ken Rogoff via Project Syndicate Economic Boom? Is All Well? by Jeffry Bartash via MarketWatch Media’s Coverage Of Retirement Savings Is Terrible by Andrew Biggs via Forbes Buy High/Sell Low With Index Funds by Rob Arnott via Research Affiliates Hurry Up And Get A Divorce by Jim Tankersley via NYT Will Public Unions Survive The Janus Decision by Michael Busler via Real Clear Markets 4-Habits Of The Millionaires Next Door by Molly Triffin via Acorn How Much Is Enough For Retirement by Carrie Schwab-Pomerantz via Schwab “If you have large cap, mid cap, and small cap, and the market declines, you are going to have less cap” – Martin Truax
Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2018- S&P sectors for the past week-
Typical July Trading: Strong First Half, Tepid Second Half July has gotten off to a rather typical start. After struggling much of yesterday’s trading session, the market did rally to finish the day positive, extending the first trading day of July’s bullish track record another year. Historically after the first trading day the market tends to take a bit of a breather with choppy, sideways trading from the second trading day through the seventh. This period surrounds the Fourth of July holiday where shortened trading days, road trips, BBQ’s and fireworks pull attention away from markets. Afterwards, usually around the eighth trading day of the month, markets begin to rally again. NASDAQ generally leads, contributing to its mid-year rally while Russell 2000 generally lags. From the fourteenth trading day until the end of the month the trend is lower to sideways. July Preview: Summer Bounce? Posted by lplresearch July is a month that usually doesn’t have a lot of news and many market participants are on vacation, but stocks tend to do well. “Wall Street might hit the beach, but stocks are going to work. In fact, over the past 10 years, only March has a better average return for the S&P 500 Index than July does,” explained LPL Research Senior Market Strategist Ryan Detrick. As our LPL Chart of the Day shows, on various time frames, the S&P 500 did quite well in July, as this month is known for a summer bounce. One constant each July is that second quarter earnings season kicks off. In a month without a lot of volume historically, earnings seem to have moved stocks higher in July. After S&P 500 earnings gained nearly 25% year over year in the first quarter, earnings, according to Factset, are expected to be up nearly 20% in the second quarter. Now the big wildcard with earnings is going to be how companies do factoring in the stronger U.S. dollar and any negatives regarding trade policy commentary. The good news is that all 11 sectors, via Factset, are expected to produce growth, with energy (141%), materials (33%), tech (25.5%), and financials (22%) leading the way. Other big events in the month include: monthly jobs data, inflation data, and the second quarter gross domestic product (GDP). The Atlanta Fed GDPNow forecast for growth is currently at 4.1% in the second quarter. Although there isn’t a set date, trade concerns are always lurking and could create some waves in July, but we continue to think that the benefits of fiscal policy outweigh the negatives of tariffs. To get ready for July, here is a calendar with all of the major market-moving events. Why Stocks Higher in May and June Is a Good Thing Posted by lplresearch May and June historically have tripped up stocks, which makes 2018 all the more interesting as both of those sometimes troublesome months were in the green. As LPL Research Senior Market Strategist Ryan Detrick explained, “When months that have been usually weak weren’t, that is a sign. In fact, when the S&P 500 Index has been up in both May and June, the rest of the year has been higher the past 11 times! Not to mention the full-year return has been lower only once (out of 22 times) going all the way back to 1950*.” As our LPL Chart of the Day shows, returns the rest of the year and for the full year have been quite impressive when May and June closed higher. A Sign of Better Times Ahead? Source: LPL Research, FactSet 06/29/18 Last, although we would never invest based on this, the first trading day of July has been the second-most likely day of the year to be green. In fact, this day has closed higher 72.1% of the time since 1950, with only the 21st trading session of July more likely to be green. The First Trading Day of July Likes Green An Atypical Start to July Jul 2, 2018 US equities are kicking off July on a decidedly weak note this morning, which is something investors have not been used to seeing over the years. The chart below shows the S&P 500’s historical performance on the first trading day of each month dating back to 1928. The only two months that have historically kicked off the month on a negative note are September (-0.09%) and December (-0.02%). Every other month has tended to see gains on an average basis, and the most positive of those months has been July with an average gain of 0.40%. That’s 0.16% more than the next closest month (November). In terms of consistency, July has also been, hands down, the leader with positive returns over 70% of the time. In recent history, July has also tended to follow the historical script. Over the last ten years, the first trading day of July has seen an average gain of 0.45% with positive returns in nine of the last ten years, including each of the last seven. There’s still time for the S&P to conform this year, but it’s not looking good this morning.
Stock Market Analysis Video for July 6th 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 7.8.18 - Upside breakout! Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 7.6.18- Here is also the pullback/correction levels from current prices- ...and here are the rally levels from current prices-
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 7.9.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! Monday 7.9.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Tuesday 7.10.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 7.10.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! Wednesday 7.11.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! Wednesday 7.11.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 7.12.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 7.12.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 7.13.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! Friday 7.13.18 After Market Close: Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES! NONE.
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 (7/9) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (7/9-7/13) <-- 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!
And as promised here is the most anticipated earnings calendar for this upcoming trading week ahead- ($JPM $PEP $C $HELE $WFC $DAL $SMPL $FAST $ANGO $MSM $PNC $WDFC $FRC $CBSH $SLP $AIR $EXFO $SKIS $SAR $OZRK $ASPU $VOXX $NTIC $KSHB) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning July 9th, 2018 <-- click there to view!
another morning meeting. Algorithm shorted VXX at the open again. 904 shares @ 33.36. I had to get creative with my algorithm since tradestation buying power doesn't reset overnight. Now the algorithm only daytrades, which sometimes helps when Donny tweets overnight or tariff news hits overnight.
After all of those trade tension headline, the SPX is just less than 4% from its ATH If we have a strong earnings season, I wouldn’t be surprised that we will see a new ATH next month
TLT bonds turning away right at the down trend line. prices down = rates up Still to see if prices can go below 116.
Yeah Utilities down over 3% today, which is pretty rare for a defensive sector and the market was deep in the green too Let's see if rates will go higher from here and if financials will begin to lead this market
