Tuesday 8/13/19=DJIA +382 NASDAQ +153
The market made back what it lost on Monday! Easy Go, Easy Come!
Daily Wrap: The market futures were under water all morning long. Then the market started to go positive right as the market opened, and then it exploded to the upside! The Trump administration is going to hold off on new tariffs until after the all-important holiday shopping season.
I sent out tweets on the following stocks today: CVNA, CBLK, BAX, APPN, AAPL,
Here was the mood of the market this a.m. as we started a new trading day.
- U.S. stock index futures are under pressure for yet another day as risk-off sentiment takes hold of the markets.
- Hong Kong riots are spiraling, the PBOC set the yuan weaker than the previous session and there's fears of another debt crisis in Argentina.
- The grim backdrop saw futures tied to the Dow Jones Industrial Average tick down 0.5% following the index's almost 400-point drop on Monday, while S&P 500 futures declined 0.5% and the Nasdaq fell 0.7%, respectively.
- Japan -1.11%.
- Hong Kong -2.10%.
- China -0.63%.
- India -1.73%.
- London -0.51%.
- Paris -0.59%.
- Frankfurt -0.71%.
Flatter than a pancake.
- Investors are jumping into bonds like they're a hot new commodity or even stock, with the U.S. yield curve at its flattest level since 2007.
- The 30-year Treasury rate tumbled as much as 14 basis points on Monday to close in on its record-low of 2.0882% from July 2016, while the 10-year note fell 10 basis points to 1.65%, and at one point was just 5 basis points more than two-year notes.
- The pace of the move means 1.318% - the 10-year's all-time low set three years ago - is at risk of being broken, unless the Fed maintains a hawkish stance or if Beijing unveils a stimulus package to counter trade war fallout (China's 10-year sovereign yield is also hitting 2016 lows).
B of A’s current read on the economy.
- Bank of America (BAC -2.4%) boosts the probability of a recession within the next year to 30%, amid several "flashing yellow" indicators.
- “Our official model has the probability of a recession over the next 12 months only pegged at about 20%, but our subjective call based on the slew of data and events leads us to believe it is closer to a 1-in-3 chance," Michelle Meyer, BofA's head of U.S. economics wrote in a note to clients.
- Though last month's jobs report pointed to a strong consumer, business investment was low as managers deal with new tariffs and fiscal policy uncertainty.
- Three of five economic indicators that track business cycles -- industrial production, aggregate hours worked, and auto sales -- are at levels reached immediately before previous recessions, she wrote.
- Another potential warning sign -- the yield on the 10-year Treasury fell below the yield on the three-month, but that's not as troubling as an inversion of the 2-year and 10-year yields -- which hasn't yet occurred, Meyer wrote.
Goldman chimes in.
- Goldman Sachs (GS -2.8%) CEO David Solomon admits that the U.S. economy is slowing, but doesn't see a recession looming.
- "The underlying economy is still doing okay. The chance of a recession in the near term is still relatively low," he told CNN.
- "But we have to watch what's going on with tariffs," he said.
- He doesn't think the U.S. is at a "moment of impending crisis."
- Bank of America U.S. economist Michelle Meyer increased the probability of a recession at 30% in the next year, while "bond king" Jeffrey Gundlach puts the odds at 75% for a recession before the 2020 presidential election.
- Meanwhile, investors in a search for safety, bid up the 10-year Treasury, pushing yield down 10 basis points to 1.645%, vs. all-time low of 1.318%.
CPI luke warm.
- July Consumer Price Index: +0.3% M/M vs. +0.2% consensus, +0.1% prior.
- Core CPI +0.3% M/M vs. +0.2% consensus, +0.3% prior.
- On a year-over-year basis, headline inflation is now at 1.8%, vs. 1.7% expected and 1.6% previously. Core inflation is now running 2.2% vs. 2.1% expected, and 2.1% previously.
Germany continues to slide.
- More negative economic stories are being reported across the globe as Germany's outlook worsened for a fourth month after a string of disappointing figures raised recession risks.
- The latest... ZEW said its monthly survey showed economic sentiment among investors fell to -44.1 from -24.5 in July, its lowest level since December 2011.
- In recent weeks, major companies including Continental, Lufthansa and Daimler have all slashed their outlooks in a warning that momentum might slip even further.
This guy like Salesforce.
- Stephens analyst James Rutherford advises to buy Salesforce (NYSE:CRM) shares ahead of the August 22 earnings report.
- Rutherford says CRM has been "out-of-favor," but the firm's checks "indicate strong underlying business trends."
- The analyst says Salesforce faces a headwind from worsening foreign exchange rates, which could be offset by a "strong enterprise selling season" in H2.
- Salesforce shares are down 1.8% to $140.82. The company has a Buy average Sell Side rating.
That guy likes Netflix.