It was a sloppy day in the market today, especially in the Nasdaq. Fed chairman, Jerome’s Powell’s speech was very unclear as to what the Fed is currently thinking. In addition to this, tension between us an Iran continues to escalate. The big meeting between President Trump and President Xi will occur on Friday.
safety. In addition to this, I begin a new week with 338 A+ or better Momentum stocks. I check this list every day.
Here was the mood of the market as we began a new day in the market.
Iran tensions and trade worries weigh on Global markets
• Japan -0.43%.
• Hong Kong -1.15%.
• China -0.87%.
• India +0.64%.
• London -0.20%.
• Paris -0.05%.
• Frankfurt -0.14%.
U.S. unveils “hard-hitting” Iran sanctions
• Tensions are on the rise as the Trump administration ordered new sanctions against the assets of Ayatollah Ali Khamenei and several Iranian military commanders, as well as plans to target Foreign Minister Javad Zarif later this week.
• The penalties effectively freeze the business operations of the Supreme Leader’s office, which controls a global network of private companies that some experts estimate is worth between $100B-$200B.
• “Imposing useless sanctions is the permanent closure of the path of diplomacy,” Foreign Ministry spokesman Abbas Mousavi said on Twitter.
Powell’s speech created more questions than answers.
Speech puts Powell in the spotlight
• Jerome Powell is set to speak in New York at 11 a.m. ET, just 24 hours after President Trump accused the central bank of behaving like a “stubborn child” in refusing to lower interest rates.
• Along with other Fed speeches today, Powell is likely to reiterate or intensify a recent dovish turn on interest rates, which has traders pricing in a 100% chance of a July reduction in the Fed Funds rate, and a 73.3% of two more cuts between now and the end of the year.
• There’s also the possibility the Fed chair could walk back some of the market’s dovish interpretation of last week’s FOMC meeting.
At least we know how Trump feels.
Trump continues Fed-bashing… but June looks good
• President Trump, continuing his Twitter barrage against the Federal Reserve, likens the central bank to a “stubborn child,” saying “we need rates cuts & easing to make up for what other countries are doing against us. Blew it!”
• Still, Trump says that, despite a Fed “that doesn’t know what it is doing,” “we are on course to have one of the best Months of June in U.S. history.”
• He didn’t explain how, or by what measures, June is shaping up to be one of the best months.
• The president adds that GDP could have been in “the 4’s or even 5’s” and the Dow could have been “thousands of points higher”… “if the Fed had gotten it right.”
• Last week, the Federal Open Market Committee kept policy steady at 2.25%-2.50%; the committee’s last rate move was a 25-basis point boost in December 2018.
This low interest rates environment is not good for many financials.
Brighthouse -6.9% as two downgrades cite interest rate risk
• Brighthouse Financial (NASDAQ:BHF) sinks 6.9% in premarket trading after at least two analysts downgrade the stock as declining interest rates are likely to dent earnings.
• Credit Suisse cuts BHF to underperform from neutral and slashes price target to $22 from $35.
• Sees lower interest rates reducing distributable earnings by $1.0B over the next three years and a “substantial hit” to GAAP book value from FASB accounting changes.
• Goldman Sachs cuts to sell from neutral and price target to $32 from $39.
• Sees “little to no distributable earnings from the variable annuity business.
• Quant rating Very Bullish, Sell-side average rating Hold (1 Buy, 12 Hold, 2 Underperform, 1 Sell), average price target $42.
Low interest rates, a falling dollar, and tension in the middle east is a good environment for gold, however.
Gold stocks gain as futures extend six-year highs
• Gold adds to six-year highs, on track for a fifth straight gain, as prospects of lower Federal Reserve rates and lingering geopolitical tensions between the U.S. and Iran fuel safe-haven buying; Comex gold +1.2% to $1,417.40/bbl.
• ETF investors are moving back into gold, Commerzbank analysts say, as holdings of the SPDR Gold Trust jumped 4.6% on Friday from a day earlier, its biggest one-day percentage gain since September 2008.
• Large speculators sharply increased their bullish positioning in gold futures for the fourth straight week, the Commodity Futures Trading Commission reports.
• Gold holding above the psychologically important $1,400/oz. level is a positive signal for consolidation after last week’s rally, says Carlo Alberto De Casa, chief analyst at ActivTrades.
• Gold prices have climbed nearly 8% so far this month and more than $70/oz. just over the past week.
A huge deal in the medical sector.
AbbVie poised to take out Allergan for more than $60B
• The WSJ reports that AbbVie (NYSE:ABBV) is in the final stages of a $188/share bid for Allergan (NYSE:AGN) in a transaction valued at more than $60B.
• ABBV is down 5% premarket while AGN is up 30%.
• Update: AbbVie has confirmed its bid of $188.24 per share in cash and stock, valuing the deal at ~$63B. Specifically, it will offer $120.30 in cash plus 0.8660 of an ABBV share for each AGN share.
AbbVie/Allergan deal may stoke buying in drug makers
• Premarket buying has perked up in certain pharma firms on the news of AbbVie’s $188/share bid for Allergan.
• Selected tickers: Teva Pharmaceutical Industries (NYSE:TEVA)(+4%), Endo International (NASDAQ:ENDP)(+5%), Perrigo (NYSE:PRGO)(+1%)
More worries over Facebook’s cryptocurrency plans.
House panel sets hearing on Facebook currency
• The House Financial Services Committee has set a hearing on Facebook’s (NASDAQ:FB) digital currency efforts for July 17.
• That follows closely on a Senate hearing on the same subject to be held the day before.
• The panel will convene a hearing titled “Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System” at 10 a.m. ET.
• House Financial Services Chairwoman Maxine Waters spoke quickly about the need for a hearing hours after Facebook formally unveiled its Project Libra. Waters, a Democrat, had received a letter from the panel’s ranking Republican calling on her to convene a hearing.
The “everything store” is at it again.
Amazon launches beauty store for professionals
• The beauty sector is thrown a curveball after Amazon (AMZN -0.4%) Business announces the launch of the Amazon Professional Beauty Store.
• The e-commerce giant says the beauty concept for professionals will offer stylists, barbers and estheticians a convenient, custom shopping experience with great selection.
• Some of the brands included are Wella Color Charm, RUSK, and OPI Professional.
• Names to watch off the development include Sally Beauty Holdings (SBH -8.5%), Ulta Beauty (ULTA -3.8%) and Revlon (REV -3.2%).
Sally Beauty -17% after Amazon beauty move
• The beauty store sector is being analyzed closely after Amazon swept in with a new initiative.
• Jefferies warns that almost a third of Sally Beauty Holdings’ (SBH -16.8%) business is at risk of being impacted by Amazon’s new pro beauty store concept.
• The firm doesn’t see the Amazon move as posing much of a risk for Ulta Beauty (ULTA -2.6%).
Profit-taking in Shopify. I am not selling mine.
Shopify -3% after Wedbush cut
• Wedbush lowers Shopify (NYSE:SHOP) to a Neutral rating from Outperform on a valuation call to follow a day after a similar cut by Roth Capital Partners.
• “While we continue to like Shopify’s positioning, vision, and competitive moat as it builds a strong retail operating system for merchants,” advises Wedbush analyst Ygal Arounian.
• Even with the two downgrades, the sell-side consensus rating is still Outperform.
• Shares of Shopify are down 2.73% premarket to $303.30 after shedding 4.59% yesterday
I featured WellCare (WCG) on my show today.
This report provides general information and is not an offer to buy or sell any security. It is the sole opinion of the author, Bill Gunderson. Bill is Gunderson is President of Gunderson Capital Mgt. Inc. located at 2072 Willbrook Lane, Mount Pleasant, South Carolina, 29466. (855)611-BEST.
Bill Gunderson is also the editor of the weekly Best Stocks Now Newsletter. Information in this newsletter comes from independent sources believed to be reliable, but accuracy is not guaranteed.
Bill Gunderson or Gunderson Capital Mgt. Inc. had not verified the accuracy of the information published by independent sources.