Tuesday 10/1/19=DJIA -303 NASDAQ -67 U.S. 10yr=1.64%
Schwab ROCKS the Financial Sector and the ISM Index contracts.
Minnesota Oct. 15, 16, & 17-Bill Gunderson and his team will be at the Radisson Blu-Mall of America. Call (855)611-BEST or visit our website to make an appointment.
Daily Wrap: The market started the day with a nice, out-of-the-gate 100-point gain. It turned around very quickly when the monthly ISM manufacturing index contracted for the second month in a row. This is one of the first signs in a long time of possible weakness in the economy.
Any weak economic reports will reverberate through the market as it lowers Donald Trump’s chances of another four years. It also raises the chances of a candidate like Elizabeth Warren to waltz in and put her reforms into the taxes and the economy. This scares Wall St. to death.
In addition to his bad news on the economy, which may turn out to be just a one-off, Schwab rocked the financial sector with the stunning announcement of zero cost trades. This follows Interactive Broker’s announcement of zero cost trades last week. Stock like Ameritrade and E-Trade plunged on the news. They will almost have to lower their cost considerably in order to compete.
This will obviously cut into the profit margin of many Wall Street firms. The Financial Sector took a beating today. The Biotech Sector also was beat up badly today. I saw the inverse biotech 3X ETF-LABD breakout to the upside today. This is a new development to keep your eye on. I have been predicting for quite some time the thrashing off all of the small biotechs that went public this year. Many will not be around at some point down the road.
Many Best Stocks Now had a good day, however. Maybe they were on the receiving end of some of the money flooding out of the Financials. COUP, ROKU, TSM, CYBER, V, and CSGP all had pretty good days today.
Trading: I added to one stock that I already own for new clients today. I also sold all of my shares of two stocks today. One was in the Dividend and Growth Portfolio, while the other one was the Emerging Growth Portfolio.
Tweets: I sent out tweets on the financial sector, GDX, DG, CSGP, and AAPL.
The riots in Hong Kong continue.
Luxury retail on watch amid more protests in Hong Kong
• LVMH (OTCPK:LVMHF) and Burberry (OTCPK:BURBY) trade lower on reports of protest in Hong Kong amid the National Day holiday marking the 70th anniversary of the founding of the People’s Republic of China. Hong Kong police reportedly fired tear gas and used water cannons on the protesters.
• Burberry is down 2.11% in London and LVMH is off 1.05% in Paris.
• U.S-traded names to watch for Hong Kong volatility include Tiffany (NYSE:TIF), PVH (NYSE:PVH), Ralph Lauren (NYSE:RL), Tapestry (NYSE:TPR) and Capri Holdings (NYSE:CPRI).
Here is the main reason that the market went SOUTH today.
ISM manufacturing sinks deeper into contraction zone
• September ISM Manufacturing Index: 47.8 vs. 50.0 consensus, 49.1 prior.
• Prices 49.7% vs 46.0.
• New Orders 47.3% vs 47.2.
• Employment 46.3% vs 47.4.
Here is another reason.
European PMI reports show weakness
• The final reading of Purchasing Managers Index manufacturing data for the euro zone came in at 45.7 for September. While the reading was 0.1 higher than the flash estimate, it's still the lowest level recorded for a month since October 2012.
• Germany led the manufacturing weakness in Europe with a PMI mark of 41.7 vs. 43.5% in August.
• "The downward trend in new orders, which fell the most in more than 10 years, is a particular worry, and continues to drive cutbacks in factory output, employment and prices," notes IHS Markit's Phil Smith.
This was a good report on the economy today.
Chain store sales strong in September
• Chain store sales increased 5.8% for the week ending September 28 in an acceleration from last week's pace of +5.2%, according to the latest report from Johnson Redbook.
• Chain store sales are anticipated to have gained 5.6% for the full month.
Here is why the financial sector was taken to the cleaners today. I have almost zero exposure to it.
Online brokers tumble after Schwab cuts online commissions to zero
• E*Trade (NASDAQ:ETFC) sinks 14%, TD Ameritrade (NASDAQ:AMTD) slides 14% and Charles Schwab (NYSE:SCHW) falls 6.1% after Schwab announces that it will reduce U.S. stock, ETF, and options online trade commissions from $4.95 to zero, starting Oct. 7, 2019.
• The company said there's no minimum account size to open a full-featured Schwab brokerage account.
The tentacles of Amazon continue to spread far and wide.
Amazon signs dozens of grocery leases - WSJ
• Amazon (NASDAQ:AMZN) has signed more than a dozen grocery store leases in the Los Angeles area that could open as early as the end of this year, according to WSJ sources.
• Amazon also looking at grocery spaces in the New York metro area, New Jersey, and Connecticut. The stores would each occupy about 20-40K square feet.
• Earlier this year, the WSJ reported that Amazon's new grocery push wouldn't directly compete with its acquired Whole Foods chain.
Amazon bringing Go to airports, theaters - CNBC
• Amazon (AMZN +0.5%) is in talks to bring its cashierless Go tech to OTG’s CIBO Express airport stores and Cineworld’s Regal theaters, according to CNBC sources.
• Another source says Amazon is looking into concession stand partnerships in baseball stadiums.
• The move would help Amazon expand its brick-and-mortar retail presence at a lower cost than building more of its own stores. Amazon currently has 16 branded Go stores.
• The new integrations could start installing Go tech in Q1 CY20 and have hundreds of stores in operation by the end of the year.
Amazon, Flipkart report strong festival sales
• Amazon (AMZN +0.5%) says it posted record sales of 7.50B rupees ($106M) during the first 36 hours of India's annual festive sale.
• Walmart-owned (WMT +0.4%) rival Flipkart says its first-day sales doubled Y/Y.
• Amazon said 91% of the sales came from smaller towns and cities.
• The six-day festival sales started on September 29.
What isn’t Google getting into?
Google hires former FDA head for healthcare
• Alphabet (GOOG -0.6%)(GOOGL -0.5%) hires FDA commissioner Robert Califf to lead strategy and policy for the tech giant's healthcare subsidiaries, effective in November.
• Last year, Alphabet hired David Feinberg to oversee Google Health. Feinberg has since consolidated teams including hardware and the AI-focused DeepMind.
• The Verily life sciences division functions relatively independently of Google Health, and Califf is the first to have duties spanning both Verily and Health. Califf began serving as a Verily advisor in 2017.
Good news for Paypal.
PayPal enters China
• People's Bank of China approves PayPal's (PYPL +1.1%) acquisition of a 70% equity stake in Guofubao Information Technology Co. (GoPay), which holds a payment business license in China.
• PayPal becomes the first foreign payment platform to be licensed to provide online payment services in China.
• The transaction is expected to close in Q4 2019; financial terms of the deal weren't disclosed.
• PayPal enters a market where peer-to-peer digital payments are dominated by such firms as Tencent's WeChat
• Ford is up 0.11% premarket to $9.17. The company's JV deal with Mahindra may be attracting some attention from investors.
Oppenheimer positive on Shopify
Oppenheimer positive on Shopify's AR/VR tech
• Oppenheimer updates on Shopify (NYSE:SHOP) after visiting the online retailer's Los Angeles store.
• "We think Shopify's new POS system and its AR/VR technology should increase end-market monetization trends (better conversions, higher GMV, payments, etc.), a positive for future growth trends," notes the analyst team.
• While calling the AR/VR tech a potential game winner over the long haul, Oppenheimer keeps a Perform rating in place with much of the "good news" already priced in.
I featured CoStar on my radio show today. The stock has good day.
CoStar Group eyes acquisition of hotel data firm
• CoStar Group (NASDAQ:CSGP) is in advanced talks to acquire hotel data provider STR in a deal worth as much as $400M, according to The Wall Street Journal.
• STR gathers confidential data on key hotel metrics as revenue and occupancy from more than 66,000 properties globally.
• Sources say a deal could be announced later today.