Thursday 31 October 2019

October settles

US equity indexes concluded October on a weak note, sp -9pts (0.3%) at 3037. Nasdaq comp' -0.1%. Dow -0.5%. The Transports settled -1.3%.

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Summary

The US President made an appearance just six minutes before the market open...


... which was enough to pull equity futures back to broadly flat by the open. However, at 9.45am the Chicago PMI printed 43.2, a deeply recessionary print, with equities turning broadly lower. Seeing equities begin to spiral, Trump resumed...


Lets get this clear, Trump is calling for US rates to be lower than Germany, with the ECB rate currently at -0.5%. Regardless, he has his scapegoat chosen... if the US economy turns ugly into/across 2020.

Further...


Whilst I can accept that impeachment chatter is spooking the market,Trump's morning tweets all reeked of an attempt to improve market sentiment, a mere day after the SPX printed a new historic high of 3050.

The afternoon saw a great deal of chop, ending the day and month on a somewhat weak note at 3037.

Volatility picked up, with the VIX settling +7.2% at 13.22. S/t outlook offers increasing equity weakness, with minimum target of sp'2911, which should equate to VIX near the key 20 threshold.
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Departing the capital of geo-political chaos

Halloween sunset


The crescent moon with Jupiter
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Wednesday 30 October 2019

Rate cut three

US equity indexes closed mostly positive, sp +9pts (0.3%) at 3046. Nasdaq comp' +0.3%. The Transports settled -1.8%.

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Summary

US equities opened in minor chop mode, and leaned a little weak ahead of the fed.

Early morning saw ADP jobs of 125k, with Q3 (first print) of 1.9%. Both are indicative of m/t economic weakening from late 2018. 


... for historical posterity.
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At 2pm, the fed cut rates for a third time by -25bps to 1.50/1.75%.


Powell danced the fine line, and it was enough for the SPX to break a new historic high for a third consecutive day of 3050. There was some subtle closing hour cooling.

Volatility remained subdued, and with equities leaning mostly upward, settled -6.6% to 12.33.
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Autumn sunshine

Next full moon is Nov'12th
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Tuesday 29 October 2019

Another historic high

US equity indexes closed on a weak note, sp -2pts (0.1%) at 3036. Nasdaq comp' -0.6%. Dow -0.1%. The Transports settled -0.2%.

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Summary

US equities opened in minor chop mode, but it didn't take long for the SPX to break a new historic high for a second consecutive day of 3047.87.


The morning saw Trump take a  swipe at Print Central. The afternoon saw some cooling, to settle fractionally weak at 3036. Volatility remained subdued, with the VIX settling +0.7% at 13.20.


Meanwhile...

Today saw CEO Muilenberg of Boeing face question from the US House...

Mistakes... many.... many mistakes

Long ago, in a different life, I actually did a semester on risk and decision making within government and private corporations. Across the last half century we've seen some truly bizarre and insane decisions. I'd especially highlight the Chernobyl nuclear disaster, and STS-51-L (Space Shuttle Challenger), both in 1986.

Boeing has lost two planes due to the insane decision to try to mitigate an unbalanced plane - the 737MAX, via a software fix.

Lets be clear, whilst an updated MCAS might make the 737MAX a safer plane, it won't resolve the hardware problem that the plane is inherently unbalanced.

The following gives a superb background overview for the 737MAX.



-
For the record, I don't care how good the MCAS system/software might be improved. The plane is still inherently unbalanced, and by definition... not safe to fly. I would imagine that Boeing and the FAA will be stupid enough to allow 737MAX to fly in 2020. 
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Departing the capital of geo-political chaos

Autumn skies in the London metropolis
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Monday 28 October 2019

Starting positive

US equity indexes mostly closed moderately higher, sp +16pts (0.6%) at 3039. Nasdaq comp' +1.0%. Dow +0.5%. The Transports settled -0.03%. Near term outlook offers broad chop ahead of the Fed.

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Summary

US equities began the last four days of October on a positive note, with the SPX breaking a new historic high at the open.

At 9.41am EDT...


Whilst the US President didn't mention the fed today, we can expect some swipes later this week, not least if the main market sees a classic 'sell the news' outcome.

Volatility remained subdued, with the VIX settling +3.6% at 13.11. S/t outlook offers a washout into early November, with FIVE downside gaps to sp'2911/2893.


Meanwhile...

The EU leadership made it official, with another delay to Jan'31st 2020. In the evening, PM Johnson pushed a vote to hold a general election.


... whilst the vote was 290/70 in favour, it was below the necessary majority (326 or higher). I would expect another vote (or more!) in the days ahead, with an election Dec'12th, with the results notably due Friday 13th. Good luck with that Johnson!
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Departing the capital of geo-political chaos

Another chilly autumnal day
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Saturday 26 October 2019

Weekend update - US equity indexes

It was a bullish week for US equity indexes, with net weekly gains ranging from +3.3% (Trans), +1.9% (Nasdaq comp'), +1.2% (SPX), +1.1% (NYSE comp'), to +0.7% (Dow).


Lets take our regular look at five of the main US indexes

sp'500


A third consecutive net weekly gain, +36pts (1.2%) to 3022. The Friday high of 3027.39 was just 0.59pts shy of the July historic high. Weekly price momentum ticked upward, and is set to turn positive next week.


Nasdaq comp'


Tech climbed for a fourth week, settling +153pts (1.9%) to 8243. Price momentum is set to turn net positive next week.


Dow


The mighty Dow was the laggard this week, but still managed a net weekly gain of 186pts (0.7%) to 26956. Price momentum is set to turn positive next week.


NYSE comp'


The master index climbed for a third week, settling +138pts (1.1%) to 13145. Price momentum turned net positive this week. Note the key high from July of 13255.


Trans


The 'old leader' - Transports, lead the way higher this week, powering upward by 347pts (3.3%) to 10855. Weekly price momentum is at levels not seen since May. Next resistance is the July high of 10876.


*special note: We're missing one index this week, as Stockcharts has not been providing data for the Russell 2000 since Oct'21st.
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Summary

All five indexes settled net higher for the week.

The Transports lead the way higher, with the Dow lagging.

More broadly, all five indexes are trading about their respective monthly key 10MA, as the m/t bullish trend is set to remain intact into early November.



Looking ahead

Another very busy week is ahead, with a truck load of earnings, econ-data, and a third rate cut from Print Central.

Earnings:



M - T, SPOT, WBA, ON, BYND, GOOGL, AKAM, NXP, RIG, XPO
T - SHOP, MA, MRK, PFE, GRUB, GM, COP, AMD, AMGN, FEYE, EA
W - GE, SNE, RCL, ADP, CME, AAPL, FB, SBUX, TWLO, LYFT, ZNGA, OLED, ETSY, WDC
T - MO, BMY, KHC, CELG, MPC, ABMD, W, PINS, X, AYX, EGO
F - BABA, ABBV, XOM, CVX, AIG, NWL, CL
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Econ-data:

M - Intl' trade
T - Case-Shiller HPI, consumer con', pending home sales
W - ADP jobs, Q3 GDP (first print), EIA Pet'

FOMC announcement (2pm): Rate cut'3 of -25bps to 1.50/1.75% can be expected. Powell will host a press conf' at 2.30pm. With the Fed balance sheet soaring back upward, I imagine he will face a great many questions from the media hacks, countering his notion that "This is not QE".

T - Weekly jobs, pers' income/outlays, Chicago PMI, EIA NG
F - Monthly jobs, PMI/ISS manu', construction

*Thursday will be Halloween and end month, price action can be expected to be more dynamic on higher volume.
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Final note

Another month is soon to wrap, leaving just one sixth left of the year. Indeed, just consider that the 2020s aren't far away now.

Here in the land of yours truly, Halloween won't see the UK exit the EU. Indeed, its still possible the UK won't ever exit. A general election is set to be announced. My guess remains that an eventual BREXIT bill will be passed, but that a 'confirmatory vote' will be tagged on. The UK populace can be expected to vote against ANY type of finalised BREXIT bill, and thus remain within the EU.

Yours... despite the name, striving for balance

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Have a good weekend
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*the next post on this page will likely appear 5pm EDT on Monday.

Friday 25 October 2019

Climbing into the weekend

US equity indexes closed broadly higher, sp +12pts (0.4%) at 3022. Nasdaq comp' +0.7%. Dow +0.6%. The Transports settled +1.7%.

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Summary

US equities opened a little weak, but saw a reversal, and battled upward into the early afternoon. The SPX printed 3027.39, a mere 0.59pts shy of the July historic high. The afternoon saw a little cooling, settling at 3022.

Volatility was subdued, with the VIX settling -7.7% at 12.65.


Dow 650k in 2069?

The Cramer... musing on Dow 650k
Baron with Ms. Quick of CNBC...



Half a century is a long time, and unless I get myself a time travelling DeLorean, I don't think I'll get to find out. 
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Thursday 24 October 2019

The Draghi legacy

US equity indexes closed moderately mixed, sp +5pts (0.2%) at 3010. Nasdaq comp' +0.8%. Dow -0.1%. The Transports settled -0.5%.

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Summary

US equities opened on a positive note, but the gains were shaky right from the open.

In early morning, yours truly noted...






... well, 14mins to be precise...


Trump took the first swipe at Print Central in some weeks. Indeed, it would seem that Trump does not realise that the Fed has already spun up the printers.
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The afternoon saw further minor chop, leaning upward into the close to settle at 3010, but notably under the opening high of 3016. Volatility remained subdued, with the VIX settling -2.1% at 13.71. S/t outlook still offers significant downside to tag/fill four gaps to 2911/2893. 


The Draghi legacy

Note the negative German and French bond yields

Today saw the President of the ECB - Mario Draghi, host his last meeting and press conf'. One of the media hacks asked about his legacy, with his response to "never give up". Whilst I can respect that sentiment, Draghi leaves behind a trail of horror.

Exhibit 'A' - Deutsche Bank (DB), monthly,


Draghi took over the ECB Nov'1st 2011, when DB opened at $32.19. Today, DB settled at $7.89.

I could highlight many other European financials, most of which have been ground to dust across the past eight years. Negative rates are a poison to the financials, and it remains the height of irony, that the institution tasked to protect the European economy, has consistently harmed it. 

Lagarde will take the helm Nov'1st 2019, with rates at -0.50% and monthly QE of €20bn. Its safe to say that in addition to requesting fiscal stimulus from various EU governments, she will cut rates toward -1.00%, and increase QE to €40/50bn by mid 2020.

I will close on the note that whilst the current mainstream media hacks continue to pander and fawn to the central banks, the financial historians of the 22nd century won't be so lenient.
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Wednesday 23 October 2019

The chop continues

US equity indexes closed mostly a little higher, sp +8pts (0.3%) at 3004. Nasdaq comp' and the Dow both settled +0.2%. The Transports settled -0.2%.

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Summary

US equities opened in minor chop mode, saw a low of 2991, and clawed to 3003 in early afternoon. With news of the Fed increasing the overnight REPO offerings from $75bn to $120, the closing hour saw a mini ramp to settle at a new intraday high of 3004.

Volatility remained subdued, with the VIX settling -3.1% at 14.01. We have four downside gaps to sp'2911/2893, and those will have to be tagged sooner, rather than later.

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Goodnight from London
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