Welcome Stockaholics to the trading week of Septebmer 17th! 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: FedEx, Oracle 8:30 a.m. Empire state manufacturing Tuesday Earnings: AutoZone, General Mills, Cracker Barrel 8:30 a.m. Business leaders survey 10:00 a.m. NAHB survey 4:00 p.m. TIC data Wednesday Earnings: Red Hat, Herman Miller 8:30 a.m. Housing starts 8:30 a.m. Current account Thursday Earnings: Micron, Darden Restaurants, Thor Industries, Steelcase 8:30 a.m. Jobless claims 8:30 a.m. Philadelphia Fed manufacturing 10:00 a.m. Existing home sales 10:00 a.m. Leading index Friday 9:45 a.m. Manufacturing PMI 9:45 a.m. Services PMI
US Stocks Rally, Shrug Off Treasury Curve Crumble, Macro Data Dump Ignore it all... Chinese stocks slipped lower once again with CHINEXT (China's tech/small cap index) tumbling the most to its lowest since August 2014... European Stocks rallied though led by Italy and Spain Trannies outperformed among the US majors while Small Caps lagged - though all closed the week higher... S&P 2900 was defended again despite the tumble on the heels of Trump's trade tariff headlines... FANG Stocks managed to hold gains on the week... Outperforming Financials once again... Tesla stock and bond prices rebounded this week, but bonds remain dramatically decoupled from stocks... High Yield bonds had a big week (best in 5 months), erasing all the losses from last week's gap down...bouncing off critical technical support Treasury yields rose across the board with the short-end rising more than the long-end... Flattening the curve notably on the week... 10Y Yield touched 3.00% briefly... The Dollar ended lower on the week... But remains rangebound... Offshore Yuan fell for the 3rd week in a row - after its brief respite - to its weakest weekly close against the dollar since May 2017... Emerging Market FX rallied broadly on the week... But Brazil and Argentina struggled... The Argentine Peso closed at a new record low... Thanks to a late-week surge, Bitcoin managed to end the week marginally higher but the rest of the crypto space was lower - but well off mid-week carnage lows... Despite a weaker dollar, commodities fail to capitalize... Copper tumbled and gold futures traded back below $1200... Finally, we note that 'hard' US macro data (i.e. not 'soft' survey data), tumbled for the 8th week in the last 9 to its most disappointing since Oct 2017...
Spoiler: Weekend Reading: A Permanent Shift To Valuations? Authored by Lance Roberts via RealInvestmentAdvice.com, One of the ongoing thesis behind a continuation of a bull market from current valuation levels is that there has been a permanent shift higher in valuations due to changes in accounting rules, propensity for share buybacks, and a greater adoption by the public of investing (aka ETF’s). This apparent shift to valuations is shown in the chart below. There are two important things to consider with respect to the chart above. The shift higher in MEDIAN valuations was a function of falling economic growth and inflationary pressures. Higher prices were facilitated by increasing levels of leverage and debt, which eroded economic growth. The chart below tracks the cumulative increase in “excess” Government spending above revenue collections. Notice the point at which nominal GDP growth stopped rising. It is also the point that valuations shifted higher. Given that economic leverage (corporate, consumer, financial, and Government debt) is at all-time records, and rising, the ability to create stronger, sustainable, economic growth (which would lead to higher rates of inflation) remains little more than a hopeful goal. The issue with the idea that valuations have had a permanent shift upward is that the assumption is based on a market anomaly form 1990-2000 which temporarily skewed valuations above the long-term medians. However, economic growth set to remain near 2% over the long-term, the average valuation ranges will most likely trend lower in the future. Ed Easterling at Crestmont Research made a great point recently in this regard: “However, as real economic growth significantly declined over the past two decades, it triggered a series of adjustments that represent the forces behind The Big Shift. Most importantly, the downshift in real economic growth disrupted the financial relationship of profits, future growth, and market value. Slower growth drives P/E downward for similar reasons that it drives EPS upward.” Of course, much of the shift upward to EPS has been a function of wage suppression, buybacks and tax cuts more than actual top-line revenue growth as I discussed just recently. Ed continues. “Therefore, since future economic growth is expected to be slower, it is only consistent that the future average for the market P/E will be lower. The new normal growth rate (i.e., slower) for the economy will drive slower overall earnings growth. Such slower growth will drive market P/E lower, just as previously higher growth supported the market’s P/E at a higher level. The inflation rate also drives the level of market P/E, but it occurs within the range driven by the growth-rate environment. Higher inflation drives P/E lower; deflation drives P/E lower. The level of P/E peaks when the inflation rate is low and stable. Thus, while the growth rate drives the level of the P/E range, the inflation rate drives the relative position of P/E within the range. Figure 6 illustrates these effects. The bar on the left illustrates the range for P/E under a historically average level of growth. The bar to its right illustrates the range for P/E under slower growth. Not only does the range downshift, the expected long-term average P/E also downshifts. This has major implications for analyzing the stock market.” “Going forward, we should expect a new paradigm. Slower growth drives the ranges for P/E lower, which will affect future assessments of fair value. Keep in mind that, had real economic growth averaged 2% instead of 3.3% over the past century, the historical average for P/E would have been near 11—not 15 or 16. In the future, the fair value for P/E when the inflation rate is low will be 13 to 15. With average inflation, expect P/E to be near 11. During periods of high inflation and significant deflation, expect the low range for P/E to be 5 to 8.” With the markets still currently trading near 30x earnings, a revaluation of markets will likely be just as painful to investors in the future as they have in the past. While this time may indeed appear to be different, it will most likely end the same as every other period in history. Just something to think about as you catch up on your weekend reading list. Economy, 2008 & Fed Overlooked Cause Of The Financial Crisis by Caroline Baum via MarketWatch I Just Don’t Understand by Scott Sumner via The Money Illusion Further Tax Cuts, Further Fiscal Irresponsibility by Committee For A Responsible Federal Budget The Real Cost Of The 2008 Financial Crisis by John Cassidy via The New Yorker The Recovery Threw The Middle Class Under The Bus by Nelson Schwartz via NYT 6-Signs We’re Closer To A Recession Than You Think by Sean Williams via Motley Fool Secular Stagnation by Roger Farmer via Project Syndicate 10-Years Later, What’s Changed by John Stepek via MoneyWeek Economic Bump Due To Stimulus by James Macintosh via The New Yorker A Misunderstood Case Of Poverty by Kevin Williamson via National Review Who Really Creates Value In An Economy by Mariana Mazzucato via Project Syndicate A Decade Later, Is The Global System Safer by Knowledge@Wharton Markets Edwards: We Are Destined To Repeat Our Mistakes by Tyler Durden via Zerohedge GS: Warns Of Bear Market Approaching by Lu Wang via FA Mag Don’t Look At This Chart by Shawn Langlois via MarketWatch It’s Hard To Be A Contrarian These Daysby Joe Calhoun via Alhambra Partners Tepper Has Been Cutting Stock Holdings by Mark DeCambre via MarketWatch Trends Being Tested by Dana Lyons via The Lyons Share What IS Market Breadth? by Simon Constable via WSJ Horrid Facts, Stubborn Facts by Robert Seawright via Above The Market Analyst Makes Rare Call To Buy Gold by Ryan Vlastelica via MarketWatch Ominous Pattern In The S&P 500 by Michael Harris via Price Action Lab Gundlach: Stocks And Bonds Could Be Burnt Out by Robert Heubscher via Advisor Perspectives Most Read On RIA 3000 Or Bust by Lance Roberts We The People by Michael Lebowitz Employment: The Trend Matters by Lance Roberts 8-Steps To Fiscal Fitness by Richard Rosso The Bullish Bias Resounds by Doug Kass The Money Game & The Human Brain by Lance Roberts Research / Interesting Reads It’s The Fed, Not Investors To Blame For Bubbles by Frank Shostak via The Mises Institute How Long Until “All Hell” Breaks Loose” by Tyler Durden via ZeroHedge End Offshore Corporate Tax Havens by Patrick Hill via The Progressive Ensign A Great Opportunity To Lose Money Is Coming by James Mackintosh via WSJ The Result Of Jack Asset Monetary Policy by Global Macro Monitor Are Americans Ready For The Next Recession by James Koren via LA Times The Next Recession Could Be In 2019 by Upfina BLS’ Job Rejiggering Doesn’t Compute by John Crudele via NY Post Yes, It Could Happen Again by Steven Pearlstein via Washington Post Feds Haven’t Fixed The Main Problem by Charles Gasparino via New York Post The Will Be The Mother Of All Minsky Moments by John Mauldin via Mauldin Economics The Real Goldfinger: The Banker Who Broke The World by Oliver Bullough via The Guardian “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” – 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-
Hurricane Impact on Stocks Posted by lplresearch On behalf of the LPL Research team, our thoughts go out to the millions of people who will be impacted by Hurricane Florence. We’ve had many requests this week to look at how equities do around major hurricanes and, using data from the National Hurricane Center, we found that markets generally appear to have taken the catastrophes in stride. “As tragic as major hurricanes can be, they appear to have little immediate impact on equity prices,” according to Senior Market Strategist Ryan Detrick. As our LPL Chart of the Day shows, after the 15 most costly hurricanes to hit the United States, the S&P 500 has been higher six months later 13 times. Additionally, the returns going out one to six months are quite strong as well. If you are in the path of Florence, stay safe! ISM’s 14-Year High Forecasts Economic Health Posted by lplresearch The Institute for Supply Management’s (ISM) primary manufacturing gauge just posted its strongest reading in 14 years. Is that a clear signal the economic cycle still has fuel left in its tank, or could it mean the good times are coming to an end? As shown in LPL’s Chart of the Day, strong manufacturing growth has been a bellwether for overall economic health. Over its past five cycles, the U.S. economy has fallen into a recession an average of 46 months—nearly 4 years—after ISM’s U.S. Purchasing Managers’ Index (PMI) peaked. The fact that we may have hit a peak is not necessarily a cause for investor concern, and the potential for future economic and market growth remains strong in our view. Growth in manufacturing output last month was primarily driven by domestic demand. ISM’s gauge of new orders jumped the most since August 2014, while export orders fell to a 10-month low and import orders dropped to an 11-month low. “The jump in new orders is a strong sign that the impact of fiscal stimulus continues to outweigh trade concerns, a theme we’ve emphasized in multiple reports this year,” stated LPL Research Chief Investment Strategist John Lynch. “Favorable tax policy has boosted business investment and consumer spending, and we expect this combination to continue to benefit the manufacturing sector.” Some data do hint to potential weakness and pricing pressures. Details in the ISM report point to continuing supply chain disruptions, or difficulties for manufacturers in getting the supplies necessary to produce goods. Manufacturing may be especially susceptible to future weakness from trade tensions, and cooling in trade activity is already evident in the divergence between domestic and international orders. However, we believe the tailwind of fiscal stimulus will continue to overwhelm any negative impact from trade tensions and supply chain disruptions, buoying manufacturing and strong economic output through the end of this year. EM Volatility Is Normal Posted by lplresearch The MSCI Emerging Markets Index moved to a bear market last week, down more than 20% from the late January peak. Although this weakness cast many bearish headlines, here’s the catch: This type of volatility is actually quite normal. “Going back 15 years, we found that 11 times that EM pulled back at least 15% at some point during the calendar year and in six of those times, EM stocks actually gained on the year,” explained Senior Market Strategist Ryan Detrick. As our LPL Chart of the Day shows, large pullbacks are common for EM; but so is finishing the year in the green after such pullbacks. Why the S&P 500 Monthly Win Streak Could Have Bulls Smiling Posted by lplresearch After gaining 19.4% last year, the S&P 500 is once again surging in 2018—up nearly 8.0%, with the Nasdaq 14.8% and Russell 2000 11.7% up even more as of 09/06/18. Could there be even more gains in store over the coming year? We think so. With a 14-year high in manufacturing, consumer spending at its best pace in four years, contained inflation, and 20% earnings expected in 2018 and another 10% next year, the economy continues to be in very solid shape. Not to mention the S&P 500 recently broke out to new all-time highs for the first time in nearly seven months, which historically has been followed by stronger than average returns in the coming year. One more thing: A little-followed event just took place that has a solid track record for indicating potentially continued equity strength. “The S&P 500 just closed higher for the fifth consecutive month in August. Well, would you believe that the past 25 times that has happened, it was higher a year later 24 of those times?” explained Senior Market Strategist Ryan Detrick. As our LPL Chart of the Day shows, a five-month win streak may be a great signal for continued strength. Take note that this time last year, the S&P 500 was up five months in a row and many were concerned it had gone “too far too fast.” Twelve months later, it had added another 17.4%. Any Fourth Quarter Rally Could Be Underwhelming As of today’s close DJIA is up 5.1% year-to-date, S&P 500 is up 8.0% and NASDAQ is up a solid 15.5%. All three indexes are just a few percentage points below their respective all-time highs. S&P 500 and NASDAQ were at their highs in August while DJIA still has not cleared its January high. Nonetheless, DJIA, S&P 500 and NASDAQ are all well above historical average levels for this time of the year compared to past midterm years. S&P 500 and NASDAQ are also well above respective averages in all years. Comparing “All Years” (solid red line) to “All Midterm” years (solid black line) in the charts above there is a well pronounced fourth quarter rally in both whether the index was positive for the year or not. The rally is present in “Midterm” years beginning right around the start of October and begins slightly later in October in “All” years. However, the magnitude of past fourth quarter rallies in “Midterm” years is notably greater across all three indexes than in “All” years. This pattern would seem to suggest that this year’s solid, above average midterm year gains could lead to a less than spectacular fourth quarter rally. Retail Sales: The Streak Ends Sep 14, 2018 When it comes to the September Retail Sales report, it has historically been one of the worst ones relative to expectations. Based on data from our Economic Indicators Database, the headline reading has only exceeded consensus expectations five times going back to 2001. That’s less than a third of the time! This year was no exception as we saw a big miss relative to expectations on the top line and a similar miss after stripping out Autos and Gas. Our monthly update on Retail Sales, always highlights a number of key trends reflecting changing habits of the US consumer. This month’s report was no different. One interesting trend we wanted to highlight was the shift from ‘eating in’ to ‘eating out’. For several years now, we’ve seen Bars and Restaurants increase their share of total sales at the expense of Food and Beverage Stores. As shown in the chart below, though, this shift is on the verge of a major inflection point where Bars and Restaurants will overtake Food and Beverage stores in terms of their total share of retail sales. The house of tomorrow may not have a kitchen! Jobless Claims Stuck in the Sixties Sep 13, 2018 Like an aging hippie that just can’t get with the times, weekly jobless claims remain at levels not seen since the 1960s. This week’s report came in at 204K versus estimates for a reading of 210K and was the lowest weekly print since December 1969. Pretty soon we’re going to have to adjust the Y-axis lower! Weekly claims have now been at or below 300K for a record 184 straight weeks, at or below 250K for 49 straight weeks (longest streak since January 1970), and at or below 225K for ten straight weeks (longest streak since 1969). This week’s generational low in weekly claims also dragged the four-week moving average lower by 2K, from 210K down to 208K. That’s also the lowest reading for this indicator since December 1969. On a non-seasonally adjusted basis (NSA), claims dropped over 10K, falling from 172.4K down to 161.9K. For the current week of the year, that’s the lowest reading since 1969 and it’s more than 125K below the average of 289K for the current week of the year dating back to 2000. Semiconductors: Bottom of the Barrel Sep 12, 2018 With the broader market (including Technology) at or right near all-time highs, it is pretty surprising just how weak the semis have been. Just yesterday, the S&P 500 Semiconductor and Equipment industry broke back below its 200-DMA, and it is sinking further today following negative comments from Goldman and Stifel. On a relative strength basis versus the S&P 500, the group looks even weaker. Since peaking out in June, the group’s relative strength has been trending sharply lower, and it just made another new short-term low today. When looking at the various Industry Groups within the S&P 1500 and what percentage of stocks in each one are trading above their 50-DMA, none are currently weaker than the semis. For the S&P 500 as a whole, 57.8% of stocks in the index are above that level. As shown in the table below, with just 22% of stocks in the Semiconductor Industry Group trading above their 50-DMA, no other Industry Group is even close in terms of how few stocks are trading above their 50-DMA. Talk about out of favor!
Stock Market Analysis Video for September 14th, 2018 Video from AlphaTrends Brian Shannon ShadowTrader Video Weekly 9.16.18 - Is Breadth Narrowing Harrowing? Video from ShadowTrader Peter Reznicek
Here are the current major indices pullback/correction levels from ATHs as of week ending 9.14.18- 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 (9/17) <-- click there to cast your daily market vote and stock pick! Stockaholics Weekly Stock Picking Contest & SPX Sentiment Poll (9/17-9/21) <-- 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 9.17.18 Before Market Open: Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Monday 9.17.18 After Market Close: Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES! Tuesday 9.18.18 Before Market Open: Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES! Tuesday 9.18.18 After Market Close: Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES! NONE. Wednesday 9.12.18 Before Market Open: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Wednesday 9.19.18 After Market Close: Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES! Thursday 9.19.18 Before Market Open: Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES! Thursday 9.20.18 After Market Close: Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES! Friday 9.21.18 Before Market Open: Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES! NONE. Friday 9.21.18 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- ($MU $ORCL $FDX $AZO $RHT $GIS $CBRL $DRI $APOG $THO $UNFI $CPRT $MLHR $SCS $SMMT $AMRK) If you guys want to view the full earnings post please see this thread here- Most Anticipated Earnings Releases for the week beginning September 17th, 2018 <-- click there to view!
good monday morning to all. here is the pre-market thread for anyone wanting to get a quick read in before the open- <-- click there to open! hope everyone has a great trading week ahead.
Yes haha, we are really outperforming China during the so called trade war. We probably won’t see any deal until after the midterm elections in my opinion
Interesting action today. When we had trade war news recently, the dollar went up and industrial stocks went down, today the exact opposite is happening
