Thursday 6/20/19=DJIA +249 NASDAQ +64
It was another very good day to fill your freezer with gains before the next Bear Market hits. I hope you read my article on Seeking Alpha about my current market forecast. The market seemed to be still drunk with giddiness on dovishness by the Fed. Best Stocks Now had another very good. Best Bonds Now also had a very good day. I looked at several hundred charts during my trading day.
My biggest winner today was Adobe Systems (ADBE). I hope that you also read my comments on Adobe inside of my latest Seeking Alpha article.
I sent out tweets on the following stocks today: RUSL, SLP, ZEN, RGEN, ADBE, RACE, V, PYPL, GLD, CCL, BWX, ATRI, and AMT. ADBE was especially impressive today. I remain long in my Premier Growth Portfolios.
I also have a current article on Lululemon.
This is what has the market all fired up once again. The Bond Market, Gold, and Oil are also soaring.
- Stocks rose for the third straight session after the Federal Reserve kept rates unchanged but hinted it could ease policy in the months ahead.
- While not saying outright that a cut was ahead this year, the Fed dropped the word “patient” from its statement and said it would “act as appropriate” to sustain the economy.
- The Fed’s interest rate projections also showed close to half the FOMC members anticipated two rate cuts this year.
- U.S. Treasury yields fell sharply after the release of the directive and continued lower during Fed Chair Powell’s follow-up press conference; the two-year yield finished 9 bps lower at 1.75% after touching 1.90% at its high, and the 10-year yield fell 3 bps to 2.03% after an early high of 2.10%.
- Most S&P sectors finished higher, led by the defensive-oriented health care (+1%), utilities (+0.8%) and real estate (+0.7%) sectors, while materials (-0.5%), energy (-0.2%) and financials (-0.2%) underperformed.
- WTI crude oil settled -0.3% to $53.76/bbl.
- The S&P 500 skies to a new all-time high in early trade, lifted by central banks around the world signaling easier monetary policy; S&P and Dow both +0.9%, Nasdaq +1.1%.
- The Bank of England and Bank of Japan joined the U.S. Federal Reserve in leaving their rates unchanged overnight.
- As a result, European bourses are broadly higher, with U.K.’s FTSE +0.6%, France’s CAC +0.7% and Germany’s DAX +0.9%; in Asia, Japan’s Nikkei +0.6% and China’s Shanghai Composite +2.4%.
- U.S. Treasury yields remain near multi-year lows on expectations for lower rates, with the two-year yield down 2 bps to 1.73% and the 10-year yield 3 bps lower at 2.00%; U.S. Dollar Index -0.5% to 96.65.
- Gold gets a bid from the lower dollar and lower yields, +2.8% to 1386.80/oz. and a near six-year high.
- Still ahead: leading economic indicators
Here is what Fed Chairman Powell had to say.
- As widely expected, the FOMC keeps the Fed Funds rate steady at 2.25%-2.50%.
- The Fed removes “patient” from its statement and adds that uncertainties around the economic outlook have increased.
- “The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes,” the statement said.
- Echoing Fed Chair Jerome Powell’s comments made on June 4, the FOMC says it “will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2% objective.”
- As for projections, the Fed dot-plot reduces expected rates with the median rate at 2.4% for 2019 vs. the prior range of 2.4%-2.9% in March; 2.1%-2.6% in 2020 vs. 2.6%-3.1% prior; and 2.4%-2.6% for 2021 vs. 2.6%-3.1% prior.
- By the end of 2019, seven members of the FOMC see 2 cuts, one sees one cut and eight expect rates to be unchanged; one still sees a rate hike.
- No members see more than two rate cuts through the end of 2021.
War with Iran?
- Reacting to the downing of a U.S. drone over the Strait of Hormuz, oil prices spiked overnight, with WTI crude soaring 3.2% to $55.49/bbl.
- The U.S. maintains the RQ-4 Global Hawk was shot down by an Iranian surface-to-air missile in international airspace, though Iran’s Revolutionary Guard said it was operating over its jurisdiction.
- It’s the latest in a series of apparent Iranian-backed skirmishes in the Middle East that have stoked fears of a wider military conflict.
Gold is suddenly catching a bid
- Comex gold futures +2.7% to $1,385.60/oz., on course for their biggest one-day advance since October, surging on the combination of escalating tensions in the Middle East and the Fed’s fresh rate-cut signal yesterday.
- Futures earlier reached a peak of $1,397.70/oz., the highest since September 2013; also, silver +2.8% to $15.38/oz. and platinum +1.7% to $819.70/oz.
- Already rising in the wake of yesterday’s Fed statement, prices surged following news overnight that Iran’s Revolutionary Guard had shot down a U.S. drone it said flew over its territory.
- Precious metals equities are rallying pre-market: DRD +8.9%, CDE +6%, AU +5.1%, GFI +4.8%, SBGL +4.1%, IAG +4%, KGC +3.8%, AG +3.7%, WPM +3.3%, AEM +3.3%, GOLD +3.2%, NEM +3%, HMY +3%.
- As the Fed spreads its dovish wings, the yield on the benchmark 10-year Treasury dropped below 2% overnight for the first time since November 2016.
- The FOMC left interest rates unchanged at its monetary policy meeting on Wednesday, dropped the word “patient” from its statement and said it would “act as appropriate” to sustain the economy.
- The news is also boosting U.S. stock futures premarket, with the DJIA indicating gains of 141 points at the open and the fed funds futures pointing to a 100% chance of monetary policy easing in July.
Who will replace Draghi, a bigger dove??
- Following bombshell remarks on restarting the ECB’s bond-buying scheme, European leaders are gathering in Brussels today – for the second round of talks – on who should lead the European Commission.
- Once that’s figured out, the route will be open for choosing the next Draghi, whose current term expires on Oct. 31. Almost all of the final contenders are members of the ECB’s Governing Council and are likely to follow the largely dovish strategies of Draghi, except for perhaps Jens Weidmann, current governor of the Bundesbank.
The jobs market remains strong.
- Initial Jobless Claims -6k at 216K vs. +220K consensus, 222K prior (unrevised).
- Continuous Claims: -37K to 1.662M vs. 1.688M consensus, 1.699M prior (revised).
Good news for Airbus (EADSY)
- American Airlines (AAL +2.1%) confirms it agreed to order 50 of Airbus’ (OTCPK:EADSY -1.1%) longest-range, single aisle aircraft, making it the first major U.S. carrier to purchase the European planes since their debut Monday.
- It’s part of a strong rebound and vote of confidence in Airbus, a day after major customer IAG signed a letter of intent to buy 200 of Boeing’s 737 MAX jets that have been grounded since March.
- American says it will convert 30 of its orders for the smaller Airbus A321neo in favor of the longer-range model and order 20 additional A321XLRs.
- “It costs a little bit more for these aircraft… [but they offer]… greater utility for us in the long run,” AAL President Robert Isom says, highlighting opportunities for new routes, higher efficiency and less complexity among its fleet.
- Since Airbus announced plans for the plane on Monday, the company has tallied eight orders for more than 160 XLRs, with Air Lease Corp. placing the initial order for 27 XLRs.
I do not trust Bezos. I do not want his drones peering inside my windows!!!!!!!!!!!!!!!!!!!!!!!!!!
- Amazon (NASDAQ:AMZN) Ring may soon have a buddy in the sky.
- Called “surveillance as a service,” the company wants to use its network of delivery drones to keep watch over customers’ houses by forming a flying Neighborhood Watch scheme, according to a new patented system.
- Customers could request that Amazon’s drones visit their property hourly, daily, or weekly, while the drones would look for signs of break-ins, such as smashed windows, doors left open, and intruders lurking on people’s property.
The Senate Banking Committee already has a date on the calendar to look into Facebook’s new cryptocurrency.
- The quickly set Senate Banking Committee hearing into Facebook’s (NASDAQ:FB) new currency project illustrates the heavy political risk now facing the company, Cowen says in a quick reaction.
- The launch of Facebook’s Libra is more than a year away, but that just puts “even more pressure on Facebook to perform well at this first hearing,” writes analyst Jaret Seiberg. A poor performance “can make a difficult problem even more complicated,” he says.
- There’s just one chance to frame the debate given heavy opposition, he says.
- The firm has an Outperform rating on the stock with a $225 price target, implying 20% upside.
- Sell-side analysts rate Facebook an Outperform on average, while Seeking Alpha authors are Bullish and the stock has a Quant Rating of Neutral.
Big hit for Netflix
- Netflix (NASDAQ:NFLX) says Murder Mystery was watched by almost 31M subscribers in the biggest debut ever for a film by the streaming company.
- Netflix also landed positive coverage (Outperform, $442 PT) from Wolfe Research today, with the firm pointing to the streamer’s massive scale and a bullish take on the Disney+ impact.
- Shares of Netflix are up 1.66% premarket to $369.36.
One of the best stocks that I have ever owned! I remain long.
- Rosenblatt raises its Shopify (NYSE:SHOP) target from $295 to $395 after yesterday’s Unite conference.
- Piper maintains a Neutral rating and raises the PT from $216 to $286, saying the new fulfillment network “solves a merchant pain point” and provides another route for incremental revenue growth.
- Baird stays at Outperform and lifts the target from $269 to $360.
- The firm says the fulfillment service “should reduce customer churn and improve the value proposition across a broader range of sellers.”
- SHOP shares are up 1.2% pre-market to $330.97.
- Shopify has an Outperform average Sell Side rating.
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.