Bill Gunderson’s Daily Market Observations-Wed. 10/2/19

Wed. 10/2/19=DJIA -490 NASDAQ -124 U.S. 10yr=1.60%
The market reels again from weak ISM Manufacturing Index report yesterday
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 futures began the day at about (-150). Then the market opened, and it slid even further. It would seem that many “weaker” market participants are buying into the “Recession” fears. They have bought into these fears many times over the last few years and they have been wrong, every time.
After just one bad report, I am not buying into the recession fears just yet. I still feel very strongly that both the Fed and the current sitting President will pull out all-of-the-stops to keep the economy going up until next year’s big election. I would also need to see more than just one weak report before I start spelling R-E-C-E-S-S-I-O-N.
On Thursday we get the ISM Services report. This report will be more important than usual. Services is more representative of the consumer, who wields much more power in the economy than manufacturing. We also will get the weekly initial jobless claims report on tomorrow. Weakness in the jobs picture would be a very big concern. The DJIA is nearing its 200-day moving average. I think that it will hold.
I did not see any major technical breakdowns in leading stocks and indexes today. They look oversold here. I had several stocks like Charter Communications-CHTR-that were positive for the day. My small hedge, PSQ, also had a good day.

Trading: I sat on my thumbs today, I did not do any buying or selling.

Tweets: I sent out tweets on the financial sector. COR, IMPUY, EPV, DEA, CHTR, BABA, AMZN, AMT, AKAM, ACAD, and SPY.

Once again, here is the news that the market is selling off on.

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.

Stocks sink as manufacturing data shows real U.S. recession concerns
• The Dow and S&P 500 suffered their worst beatings in more than a month after the latest data from the Institute of Supply Management showed U.S. factory activity shrank to its weakest level since June 2009.
• Pres. Trump naturally blamed the Fed and the strong U.S. dollar for the September swoon, but others point to escalating trade disputes around the globe.
• "We could see a continued deterioration in manufacturing," says Invesco chief global market strategist Kristina Hooper. "Given the September number, a 10-year low... we could move lower from here. And that, to me, is the reality of continuing with the trade wars. It will impact the U.S."
• Today's 1.2% decline in the S&P 500 sent the benchmark index below its 50-day moving average (2,948) on a closing basis, and all 11 S&P industry sectors finished lower, led by the cyclical industrials (-2.4%), materials (-2.3%), energy (-2.3%) and financials (-2.1%) groups.
• Safe-haven plays caught a bid, lifting U.S. Treasury prices and pulling yields down from early highs, with the two-year yield dropping 6 bps to 1.56% and the 10-year yield shedding 3 bps to 1.64%.
• U.S. WTI November crude oil erased early gains to settle -0.8% at $53.62/bbl.

Stocks extend decline amid recession fears
• Markets are still on edge after data that showed U.S. factory activity shrinking in September to its weakest level since 2009, ratcheting up fears that the U.S.-China trade war is hobbling the world's largest economy.
• The print saw the Dow drop nearly 350 points yesterday - with another 116-point loss likely at the open - as stocks flashed red overnight across Europe and Asia.
• Wall Street's next focus is this morning's ADP private payrolls report, which will give further clues about the labor market and broader economy ahead of the government's monthly jobs report on Friday.

Global markets suffer on disappointing U.S. manufacturing data
• Japan -0.49%.
• Hong Kong -0.19%.
• China closed.
• India closed.
• London -1.65%.
• Paris -1.60%.
• Frankfurt -1.33%.

Atlanta Fed trims Q3 GDPNow model to 1.8%
• Four days after the Atlanta Fed's Q3 GDPNow model was boosted by 0.2 percentage points to 2.1%, it falls 0.3 pp to 1.8%.
• Cites lower expectations for consumer and business spending after the ISM manufacturing PMI came in weaker than expected.

Not a bad report. We get the real report on Friday.

ADP jobs gain of 135K trails estimates
• September ADP Jobs Report: +135K vs. +152K consensus, 157K prior (revised).
• August jobs added was revised down from 195,000 to 157,000.

ISM Services coming on Thursday. Non-Farm Payroll Report coming on Friday

RISING UNEMPLOYMENT would be very concerning

I think that Trump will be forced to make a deal with China.

China has other problems that it is dealing with right now.

More unrest in Hong Kong
• The Hang Seng Index was closed for a market holiday on Tuesday, though things quickly went south during today's open, before the benchmark ended the session 0.2% lower.
• In an escalation of violence, Hong Kong police yesterday shot a teenage protester, the first to be hit by live ammunition in almost four months of unrest in the Chinese-ruled city.
• Data also showed retail sales in the Asian financial hub slumping 23% in August, marking a seventh consecutive month of decline. July's drop was 11.4%.

No more trading costs for my clients

TD Ameritrade follows Schwab in cutting online trade commissions
• Hours after Charles Schwab reduces U.S. stock, ETF, and options online trade commissions to zero, TD Ameritrade (NASDAQ:AMTD) follows suit.
• TD Ameritrade cuts commissions for its online exchange-listed stock, ETF (domestic and Canadian), and option trades from $6.95 to $0, effective Thursday, Oct. 3, 2019.
• Clients trading options will now pay 65 cents per contract with no exercise and assignment fees.
• Sees change affecting revenue by ~$220M-$240M per quarter, or ~15%-16% of net revenue based on June quarter 2019 revenue.
• "We'll have more information about our fiscal 2020 plan when we release fourth-quarter earnings later this month," TD Ameritrade CFO Steve Boyle.
• AMTD falls 0.5% in premarket trading, after closing down 26% on Tuesday; E*Trade (NASDAQ:ETFC) falls 0.7% in premarket after closing down 16% Tuesday; Schwab (NYSE:SCHW)-0.7% premarket after losing 9.7% in regular trading yesterday. Interactive Brokers (IEX:IBKR) essentially flat in the premarket after falling 9.4% yesterday.

I am bullish on the precious metals for the first time in several years.

Gold rebounds as weak U.S. manufacturing data sparks safe-haven buying
• Gold futures jump $16/oz. (GLD +0.4%), +1.1% to settle at $1,489/oz. after earlier falling to near two-month lows, as a surprise drop in the U.S. ISM manufacturing index to its lowest level since 2009 fueled safe-haven demand.
• The weaker ISM reading "shows there might be significant corrections in the economy, and traders are going back into safety right now," says Phillip Streible, senior commodities strategist at RJO Futures, adding the data "might support another Fed rate cut and as a result, metals might get a bonus move higher."
• Precious metals mining stocks are broadly higher: SBGL +6.9%, AKG +6%, DRD +5.9%, AU +5.8%, HMY +4.9%, AUY +4.7%, BTG +4.3%, HL +4.2%, IAG +3.9%, KGC +3.7%, GFI +3.1%.

Excellent report for Lennar.

Lennar EPS beats by $0.27, beats on revenue
• Lennar (NYSE:LEN): Q3 GAAP EPS of $1.59 beats by $0.27.
• Revenue of $5.86B (+3.4% Y/Y) beats by $380M.
• Shares +1.1% PM.

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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