Bill Gunderson’s Daily Market Observations for Thursday 9/19/19

Thursday 9/19/19=DJIA -19 NASDAQ +14 U.S. 10yr=1.77%

Chinese Stocks Firming Up.

Minnesota Oct. 15-16-Bill will be at the Radisson Blu-Mall of America. Call (855)611-BEST or visit our website to make an appointment.

Daily Wrap: It was not a bad day for the market today. It did give up much of its morning gains, however. There has been a lot of volatility since yesterday’s Fed announcement. Things should settle down soon, however. Chinese stocks had a very good day. Many like Alibaba (BABA) are shaping up quite nicely. The following Best Stocks Now had a very good day: ENPH, SPLK, PODD, ROKU, and AMT.
Trading: I bought one new position in my Emerging Growth Portfolio today. I added to a few other positions for new clients today.
Tweets: I was fairly active on Social Media today. I sent out tweets on the following stocks: CRON, IYH, NFLX, PODD, SEDG, VMC, and ZTO

Here is what started the fireworks yesterday.

Fed goes ahead with quarter-point cut
• As widely expected, the Fed trims the federal funds target rate by 25 basis points to 1.75%-2.00%, its second rate cut in a row.
• Still sees sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2% objective are the most likely outcomes, though uncertainties to the outlook remain.
• All but three of the FOMC voters voted for the action. Dissenting were James Bullard, who preferred to cut rates by 50 basis points and Esther George and Eric Rosengren, who preferred to keep the target range unchanged.
• Stocks appear to be heading down. The Nasdaq falls 0.7%, the S&P 500 sinks 0.5%, and the Dow declines 0.4%.
• The committee still considers the labor market strong and economic activity "rising at a moderate rate." They do note that business fixed investment and exports have weakened since the July meeting.

No initial jobless claim coming for Powell.

Trump says Powell's job is safe - Fox News
• President Donald Trump said Jerome Powell's job as Federal Reserve Chairman is safe, though he's "not thrilled" with the central bank after it cut interest rates a quarter of a percentage point yesterday.
• Trump made the comments in an interview with Fox News that was taped yesterday and aired today.
• Yesterday the Fed's Federal Open Market Committee voted 7-3 to cut interest rates for the second time this year, reducing its key interest rate to 1.75%-2.00%.

I finally found a central bank that is raising rates!

Norway 'outlier' as Norges Bank ups rates again
• Unlike rival central banks, Norges Bank's executive board has decided to raise the policy rate by 0.25 bps to 1.50%. It had this to say:
• "Underlying inflation is close to the inflation target. Growth in the Norwegian economy remains solid, and capacity utilization is somewhat above a normal level. This suggests in isolation a higher policy rate. A higher policy rate may also mitigate the risk of a renewed acceleration in debt growth and house price inflation."

Bank of England keeps rate unchanged
• The Bank of England's Monetary Policy Committee keeps its key Bank Rate at 0.75% in a unanimous vote.
• Also voted unanimously to keep the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves at £10B ($12.5B).
• Also voted to maintain stock of U.K. government bond purchases, financed by the issuance of central bank reserves at £435B.

Two more good reports.

Jobless claims hold steady
• Initial Jobless Claims +2K to 208K vs. +215K consensus, 206K prior (revised).
• Continuous Claims: -13K to 1.661M vs. 1.672M consensus, 1.674M prior (revised).

Philly Fed outlook exceeds expectations
• September Philly Fed Business Outlook: +12 vs. +11 consensus, +16.8 prior.

Sanctions instead of war.

Trump orders new sanctions on Iran; crude prices continue to slide
• Crude oil prices extend yesterday's losses after Pres. Trump said he ordered the Treasury Department to "substantially increase" sanctions on Iran, although it is not yet clear what steps the president directed Treasury Secretary Mnuchin to take.
• October WTI crude -1.7% to $58.33/bbl; November Brent crude -1.1% to $63.83/bbl.
• Secretary of State Pompeo is visiting Saudi Arabia today to discuss the attack "and coordinate efforts to counter Iranian aggression in the region," according to the State Department.

Target on a roll.

Target's small-format concept seen expanding
• Bank of America Merrill Lynch keeps Target (TGT -0.8%) locked in as a top pick after taking in the retailer's presentation at GroceryShop.
• The BAML analyst team notes that Target is opening its 100th small-format store and expects to continue to open 30 annually. Target sees more room to grow in New York City beyond the current 5 Manhattan stores. Looking ahead, Target also sees small-format opportunities in Miami, Las Vegas, Atlanta, Seattle, Phoenix and Cincinnati.
• "TGT’s smaller stores have flexible formats that can take over regional grocer and sporting goods store spaces and offer more localized assortments," reads the firm's update.

Buybacks ordered up at Target
• Target (NYSE:TGT) authorized a new $5B share repurchase program.
• The new authorization to repurchase shares is expected to begin in 2020, upon the completion of the current $5B program.

A very good day for Microsoft.

Microsoft hikes dividend, launches $40B buyback
• Microsoft's (NASDAQ:MSFT) board approves the buyback plan, which represents about 4% of the company's current market value.
• The board also increased the quarterly dividend by 11% to $0.51 per share. The dividend is payable December 12 to shareholders of record on November 21.
• The company's 2019 Annual Shareholders Meeting will take place on December 4 with a webcast available here.
• Microsoft shares are up 1% after hours to $139.89.

More competition in the streaming space.

Roku slides as Comcast, Facebook add streaming wrinkles
• Roku (ROKU -12%) has slipped by double digits today as investors process the potential competition from Comcast's (CMCSA +0.4%) expansion of the Flex streaming box, and a refreshed Facebook (FB +0.4%) line of Portal devices horning in on the space.
• That could affect Roku's foothold as the leader in streaming devices.
• Comcast is including its Xfinity Flex box for free for Internet-only subscribers, getting a device into many more hands.
• Meanwhile, Facebook reported approached Netflix and Walt Disney about including their services on its Portal device, which now has a renewed focus on allowing users to watch programming together via the Facebook Watch service.

Roku reacts.

Roku rolls out new players, OS update
• Roku (NASDAQ:ROKU) has rolled out its new lineup of streaming players and an operating system upgrade as it readies for a new holiday shopping season.
• The new lineup includes seven players, including changes at each end of the lineup's price points.
• At the bottom, a new Roku Express is 10% smaller, meant to blend in to a connected television, and can be fully powered by most televisions rather than connecting to an outlet. It's on offer for an MSRP of $29.99.
• On the other end, a new Roku Ultra features an enhanced quad-core processor and dual-band high-speed wireless, with new fast channel launch and programmable personal shortcut buttons on its remote, along with 4K and HDR. It has an MSRP of $99.99.
• The lineup is filled out by the Roku Express Plus, Roku Premiere, Roku Streaming Stick Plus, Roku Streaming Stick Plus HE (Best Buy exclusive), and Roku Ultra LT (Walmart exclusive).
• Roku OS 9.2 promises new search and discovery features as well as enhanced voice functionality. It also has a redesigned 4K Spotlight channel to enhance discovery of high-resolution content.
• Shares are down 1% premarket, still weighed by yesterday's 13.7% move down.

Weed stocks look horrible!

CannTrust down 8% premarket on product return by distributor
• The Alberta Gaming, Liquor and Cannabis Commission, responsible for the wholesale distribution of cannabis in the province, has returned $1.3M of product to CannTrust (NYSE:CTST) on the heels of the company's regulatory problems. The return represents all (or substantially all) of the inventory held.

KushCo Holdings files for 500K common shares offering
• KushCo Holdings (OTCQB:KSHB) has filed a prospectus to sell 500K common shares by selling shareholders.

Another upgrade.

KLA target boosted after investor day
• Cowen maintains an Outperform rating on KLA (NASDAQ:KLAC) and raises the target from $155 to $170, saying the firm is "incrementally more positive" that KLA can meet its CY23 model with revenue of $7.25B and $15 EPS.
• KeyBanc (Overweight, $162 target) says KLAC expects new products to add $400-500M incremental annual revenue by 2023, which could drive the stock into the mid-$200 range.
• KLA shares are up 1.5% to $154.85. The company has an Outperform average Sell Side rating.

A good day for Splunk.

Raymond James praises Splunk's new pricing
• Earlier today, Splunk (NASDAQ:SPLK) announced new Data-to-Everything pricing programs, including predictive pricing, infrastructure-based pricing, and Splunk Enterprise Rapid Adoption packages, which start at a $10,000 MSRP for three to five use cases.
• Raymond James analyst Michael Turits sees the new pricing as positive with the potential to drive more data into the ecosystem from existing customers, increase new customer adoption, and soften competitive pressure.
• Splunk shares are up 2% after hours to $119.30.

Bill Gunderson

Bill Gunderson

Bill Gunderson is a wealth manager, syndicated financial talk show host, and author of the Best Stocks Now -- one of the top 10 best selling financial aps in the world.

He is a frequent guest on local and national media, including CNBC, Fox Business, Fox News, Bloomberg, Barron's, Forbes, and others.

His wealth management business caters to high net worth individuals clients all over the world. He would be happy to look at your portfolio.

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