Bill Gunderson’s Friday Sept. 20 Market Observations

Friday 9/20/19=DJIA -103 NASDAQ -59

Chinese Trade Reps Leave Early

Daily Wrap: The market was off to a decent start today and then sold off quickly after it was announced the Chinese Trade Reps left early. The Bank Repo Purchase mess continued again today. This may have also weighed on the market today.

Trading: I bought one new position in my Premier Growth Portfolio today. I also sold one stock in this portfolio.

Tweets: I was fairly quiet on Social Media today. I sent out tweets on the following stocks: MYOK, MRUS, and DRRX.

DeBlasio is out of the Presidential Race.

Futures point to slightly higher open
• The U.S. is temporarily exempting more than 400 types of Chinese products - like Christmas lights, plastic straws and printed circuit boards - from tariffs, according to documents set to be published today by the U.S. Trade Representative.
• The exemptions stem from more than 1,100 exclusion requests made by American companies and other entities, with the move keeping U.S. stock futures in the green, but not by much (up 0.2%).
• More economic stimulus? China overnight cut its new one-year benchmark lending rate for the second month in a row, taking a more accommodative stance due to the U.S.-Sino trade war.

Leading indicators unchanged in August
• August Leading Indicators: flat at 112.1 in-line with consensus, +0.4% prior (revised).
• Coincident Economic Index +0.3% to 106.4.
• Lagging Economic Index -0.3% at 108.2.

Existing home sales power past estimate in August
• August Existing Home Sales: +1.3% to 5.49M vs. 5.380M consensus and 5.420M prior.

Baltic Dry Index falls 3%
• The Baltic Dry Index shed another 2.78% in London to land at 2,131 and record its 12th straight down day.
• The BDI has ranged from 595 to 2,518 over the last 52 weeks.
• Capesize rates dragged on the index once again with a 4.13% decline, while Panamax rates were 1.92% lower. Supramax and Handysize rates were slightly higher.

He did not get his way.

Bullard explains his vote for 50-basis-point rate cut
• The outlook for slower U.S. economic growth, elevated trade policy uncertainty, manufacturing appearing to be in recession, and estimates of rising probability of recession led St. Louis Fed President James Bullard to vote for a 50-basis point in the federal funds rate at the FOMC meeting this week, he explains.
• The FOMC cut its benchmark interest rate by 25 bps on Wednesday. His was the sole vote to cut by 50 bps, while two FOMC participants voted to keep rates unchanged and seven voted for the quarter percentage point cut.
• He also points to the inverted yield curve and that U.S. government bond yields remain higher than almost every country in the G-7. In addition, inflation still remains stubbornly below the FOMC's 2% target even with a strong labor market.
• "It is prudent risk management, in my view, to cut the policy rate aggressively now and then later increase it should the downside risks not materialize," Bullard said in a statement on the St. Louis Fed website.
• "Although I disagreed with the committee’s decision to lower its target range by only 25 basis points, I remain confident that the committee will continue to monitor economic developments and respond accordingly as economic circumstances dictate," he said.

Pimco sees consumer as bright spot as U.S. economy slows
• "The consumer is the bright spot in the U.S. economy, but capex and the manufacturing sector are already in recession," said Pimco CEO Emmanuel Roman at a financial conference in New York today.
• "We see the economy slowing down," he said, adding that Pimco sees U.S. economic growth at slightly above 1% for H1 2020.
• "Obviously the big elephant in the room is the trade war with China and how it will resolve itself,” he added.
• Other issues around the world are also adding to uncertainty, among them Brexit and increasing geopolitical tensions in Saudi Arabia.
• Investors are losing out by focusing on the short-term, says Mary

Fiscal Policy Works. Why doesn’t Europe try some before it is too late?

Indian stocks surge after government cuts corporate taxes
• iShares MSCI India Index ETF (BATS:INDA) jumps 5.4% in premarket trading after India cuts its effective corporate tax to 25.17%, bringing its rate in line with Asian peers in an effort to attract investment.
• The new tax rate will be applicable from the current fiscal year which began on April 1.
• The announcement sent shares up more than 5% in Mumbai, the biggest jump in 10 years.
• In addition, the Indian rupee rose 0.5% to against the U.S. dollar.

Big day for Apple.

Apple's iPhone 11 goes on sale
• Lines are forming outside major Apple (NASDAQ:AAPL) stores across the globe as shoppers line up to score the newest models of the iPhone 11.
• As its biggest smartphone driver, JPMorgan forecasts iPhone 11 shipments to reach 184M units in 2019, with 195M shipments of the device expected in 2020.
He is bullish and he is bearish.

Netflix bull outlines bearish scenario
• Bernstein seems to be talking up and talking down Netflix (NFLX -0.2%) in the same note today.
• The firm backs its Outperform rating on Netflix and price target of $450, but lays out a scenario where shares fall sharply.
• "The Q2 miss, coupled with the upcoming Disney+ launch in the US (and Apple as well, and more to come), has come together to make investors reevaluate their confidence in Netflix’s subs and pricing growth," writes analyst Todd Juenger.
• Juenger sees a "floor price" of $230 on Netflix, which is 21% below the current share price and a tad lower than the 52-week low of $231.23. In the end, he thinks Netflix's vast content library will give it a pricing edge and keep its subscriber growth strong.

He is very bearish! This is far from the consensus on Wall St.

New bear outlines Roku's competitive pressures; ROKU -4.6%
• Pivotal Research Group starts Roku (NASDAQ:ROKU) with a Sell rating and Street-low price target of $60.
• Analyst Jeffrey Wlodarczak cites growing competition, including "big boys" like Comcast with "massive leverage," which "will likely drive the cost of OTT devices to zero."
• The analyst calls ROKU shares "dramatically overvalued" after a nearly 400% gain from a December low.
• ROKU shares are down 4.6% pre-market to $127.67. The company has a Bearish average SA Author rating.

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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