Monday 6/3/19=DJIA -238 NASDAQ -30
I began the week with 380 B+ or better ranked stocks from my database of 5,138 stocks, etf’s and mutual funds. This is a very select list. This proprietary ranking is based on a combination of value, momentum, and safety. If a valuation cannot be calculated, then it is based solely on momentum and safety. In addition to this, I begin a new week with 263 A+ or better Momentum stocks. I check this list every day.
The mood of the market as we started a new week.
- Stocks are continuing to sour following the steepest May selloff in nine years as DJIA futures begin the month down another 150 points and bonds rally, with the 10-year Treasury yield slipping a further 6 bps to 2.08%.
- Besides a protracted trade dispute with China, the Trump administration is opening several other battles, removing India from a privileged-trading program and pushing tariffs on Mexico unless it addresses the southern border.
- “Mexico is sending a big delegation to talk about the Border. Problem is, they’ve been ‘talking’ for 25 years,” Trump wrote on Twitter. “We want action, not talk. Otherwise, our companies and jobs are coming back to the USA!”
Rates plunging and bonds soaring! It looks “overdone” to me.
Crude sees a recession ahead. Is it right? Most other economic indicators indicating that the economy is just fine, however.
- U.S. crude oil closed at its lowest since mid-February, as Pres. Trump’s tariff threat against Mexico compounds concerns about global economic growth, already at risk due to the U.S.-China trade war; WTI July crude settled -5.5% to $53.30/bbl, Brent -3.6% to $64.49/bbl.
- The rout came alongside a broad retreat in riskier assets after Pres. Trump announced a plan to impose escalating tariffs on Mexican imports starting June 10.
- “This fresh tariff headline offers a ‘pile-on’ effect to an oil market that has already been seeing downside pressure from some unexpectedly large U.S. crude supply increases,” says Jim Ritterbusch, president of Ritterbusch and Associates.
Gold is catching a bid.
- Gold miners are outperforming other mining and metal names as Comex gold rallies +1.5% to settle at $1,311.10/oz., the highest finish for a most-active contract since April 10, after Pres. Trump threatened to impose tariffs on all Mexican goods imported into the U.S.
- Gold closes above its 100-day moving average for the first time since April 15, and ETFs such as GLD and GDX are higher than their 100- and 200-day MAs.
- “People are doing fear trade now and running towards gold,” says Michael Matousek, head trader at U.S. Global investors.
Gold has been a terrible performer over the last 1, 3, 5, and 10 years, however.
Data from www.BestStocksNowApp.com
Trump arrives in London.
- Ahead of his arrival in London for a three-day state visit, President Trump encouraged the U.K. to “walk away” from any negotiations with the EU if the country is unable to secure a “fair deal.”
- He also said “wouldn’t pay” the $50B so-called “divorce bill” unless the bloc backed down and talked about the “very big trade deal” that will be on offer once the country is finally free.
- Breaking with decades of political protocol, Trump expressed a preference for Boris Johnson to replace outgoing Theresa May, as well as suggesting Nigel Farage should lead Britain’s stalled Brexit talks.
Rate cuts coming?
- JPMorgan strategists catch up with market expectations that the Federal Reserve will cut interest rates twice this year.
- That’s if the U.S. imposes tariffs on imports from Mexico at the full 25%, writes JPMorgan chief U.S. economist Michael Feroli in a note to clients.
- The trade tensions between the U.S. and Mexico will challenge the Fed’s patient stance due to two countries’ strong trading ties, he said.
- “Even if a deal is quickly reached with Mexico, which seems plausible, the damage to business confidence could be lasting, with consequences that might still require a Fed response,” he wrote.
- He also reduced his economic growth projections, trimming a quarter point off his Q3 GDP forecast to 1.5%.
This news ripples through big tech stocks on Monday.
- The Justice Dept. is setting up to open an investigation into Google (GOOG, GOOGL) after it reached a deal with the Federal Trade Commission to take over antitrust scrutiny of the tech giant, Bloomberg reports.
- The FTC had set up a task force earlier this year to look at conduct of tech companies and their past mergers, in the face of criticism that lax enforcement has led to dominant players.
- Europe has led the way in antitrust cases against American firms, but now DOJ appears to be taking the mantle from the FTC in pushing for tougher enforcement.
- The WSJ had reported on the likelihood of a coming investigation of Google.
Alphabet is tanking!
The Nasdaq breaches its 200-day moving average.
- Amazon (NASDAQ:AMZN) could face heightened antitrust scrutiny under a new agreement between the government’s twin antitrust agencies that puts it under closer watch by the Federal Trade Commission, The Washington Post reports.
- The move would divvy up competition oversight of two of the country’s top tech companies, with the U.S. Justice Department having more jurisdiction over Google and paving the way for a potential investigation of the search-and-advertising giant.
Amazon is caught up in the sell-off.
So is Facebook (FB).
Will Mexico work with us or will they retaliate? My guess is: retaliate.
- Mexico’s president on Saturday hinted his country could tighten migration controls to defuse President Trump’s threat to impose tariffs and expects “good results” from talks planned in Washington this week.
- Lopez Obrador also said Mexico would not engage in any trade wars with the U.S., but noted that his government had a “plan” in case Trump did apply the tariffs, although he didn’t provide details.
The latest from China.
- Washington’s escalating trade war with Beijing has not “made America great again” and has instead “done serious harm to the U.S. economy,” according to a Chinese government white paper that said unreasonable demands led to the collapse of trade talks in May.
- The document also claimed the U.S. was an untrustworthy negotiator and that any further discussions need to be based on sincerity, mutual respect and equality.
- China doesn’t want a trade war with the U.S. but won’t shy away from one, according to Vice Commerce Minister Wang Shouwen, who said the latter’s strategy of maximum pressure and escalation can’t force concessions.
The Chinese market is attempting to consolidate.
More bad news for Boeing (BA).
- A new problem involving Boeing’s (NYSE:BA) grounded 737 MAX has been disclosed after the FAA on Sunday said that more than 300 of that troubled plane and the prior generation 737 may contain improperly manufactured parts.
- At issue is the leading-edge slat tracks – pieces on the front of the wing that move to create more lift during takeoff and landing.
- While the problem doesn’t pose an imminent accident hazard, Boeing must repair the components – which are prone to cracking – within 10 days.
Boeing’s stock continues to be very weak.
Blackstone (BX) is making a huge investment in online retail. I don’t think that Amazon is going away any time soon!
- Blackstone (NYSE:BX) is buying a network of U.S. industrial warehouses from Singapore-based GLP for $18.7B, in the largest private real-estate transaction ever.
- It’s a big bet on the continued explosion of e-commerce and delivery as global investors spend billions of dollars to acquire logistics assets.
- Blackstone outbid real-estate company Prologis (NYSE:PLD) for the 179M-square-foot portfolio, nearly doubling the size of its U.S. industrial footprint.
In the meantime, “bricks and mortar” continues to come apart, brick by brick!
- “In addition to the poor weather, we had late spring breaks, a late Easter and delayed and lower tax refunds thrown into the mix, as well,” noted Gap CEO Art Peck on the earnings conference call (transcript).
- The Gap chief also took a look within. “We also missed opportunities on our own, and we could have executed as always better across places in our brands,” he conceded.
- The sell-side stance on Gap this morning can be summarized succinctly by Citi’s “hard to find the bright spots” commentary.
Ouch! Here is an interesting ETF to keep an eye on.
Dozens and dozens of small-cap biotech stocks continue to come to market. This is not going to end well.
Keep this ETF on your watch list.