Wednesday 7/10/19=DJIA +74 NASDAQ +53
Fed Chairman, Jerome Powell was the main catalyst behind today’s move up in the market. He seemed to do an about face on his current view of the economy. He is now saying this: “Uncertainties about the outlook have increased in recent months.” The following stocks caught my eye enough to send out tweets about them: NEE, GLD, CGC, BA, AMZN, AMD, ADBE. I did a little buying today. I also sold one position.
This is where the markets were before Powell’s statement.
- Japan -0.15%.
- Hong Kong +0.31%.
- China -0.44%.
- India -0.46%.
- London -0.18%.
- Paris -0.22%.
- Frankfurt -0.33%.
Boy, did he ever!
- There weren’t any fireworks from Jerome Powell yesterday, but the Fed Chair may set off some explosives today as he begins his testimony before the House Financial Services Committee.
- Starting at 10 a.m. ET, Powell is expected to talk about slowing economic activity and increased risks, showing that the Fed is ready to cut interest rates as needed, but is likely to keep markets guessing about how soon and how deep the Fed intends to trim rates.
- The prevailing view, priced into the futures market, is for a 100% chance of a quarter point rate cut July 31.
Here was what he said:
- The 10-year Treasury rises, pushing yield down 2 basis points to 2.05%, after Federal Reserve Chair Jerome Powell signals that the FOMC is still open to cutting rates when the monetary policy-setting body meets again at the end of this month.
- “Uncertainties about the outlook have increased in recent months,” according to Powell’s prepared remarks for his appearance before the House Committee on Financial Services this morning.
- He also adds, “there is a risk that weak inflation will be even more persistent than we currently anticipate.”
- At the FOMC’s June meeting, many participants saw the case for “more accommodative monetary policy” — read, lower interest rates — strengthening.
- That uncertainties have increased since then implies the case for rate cuts is even stronger now.
- iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) falls 0.3% in premarket trading; ProShares UltraShort 20+ Year Treasury ETF (NYSEARCA:TBT) rises 1.1%.
- Dollar Index slides 0.3% to 97.23.
There was also some movement overnight between China and the U.S.
- Most base metals price rose overnight, led by nickel, which rose as much as 2.1% to $12,970 a ton in London, while Shanghai nickel jumped to 103,160 yuan ($14,985.69) per ton, notching a three-month high.
- It follows news that American and Chinese trade officials held “constructive” phone talks on Tuesday, while the U.S. government said it will also issue licenses to companies seeking to sell goods to China’s Huawei where there is no threat to national security.
More tough trade talk from Trump, however. This time it was aimed at India.
- “India has long had a field day putting Tariffs on American products,” tweeted the president this morning. “No longer acceptable!”
- Trump’s tweet came following late June’s G-20 meeting at which he and Indian Prime Minister Narendra Modi met on the sidelines to chat about trade disputes. The two agreed to a future meeting of their respective Commerce Ministers.
This is good news for the U.S. economy.
- Two solid reads on consumer spending arrived in today from the corporate world.
- PepsiCo (PEP -1.1%) CFO Hugh Johnson said the food and beverage giant doesn’t see any sign of a consumer slowdown, while General Mills (GIS -0.8%) CEO Jeff Harmening called the consumer environment quite good.
- Solid employment trends and low gas prices are attributed as helping to keep U.S. consumer spending percolating even as the multinationals like PepsiCo and General Mills face pressure on the cost side of the equation.
This is bad news for Boeing.
- Boeing (BA -0.4%) reports delivery of 239 commercial airplanes in H1 of the year, down 37% from the first six months of 2018, placing the company on track to lose its title of the world’s biggest planemaker title to rival Airbus (OTCPK:EADSY) after eight years.
- Boeing again reports no new orders for its grounded 737 MAX, as the worldwide grounding is about to enter its fifth month.
- Airbus is expected to release its orders and delivery figures later today.
This is good news for Airbus.
- Airbus (OTCPK:EADSY +0.3%) confirms its H1 aircraft deliveries climbed 28% to 389 from 309 in the prior-year period, putting it ahead of Boeing (BA +0.7%) for the first time in eight years.
- Airbus, whose deliveries typically are weighted to H2, has promised to build 880-890 aircraft this year; Boeing, which had planned to build as many as 905 airliners this year, has suspended delivery guidance because of the 737 MAX crisis.
- Airbus reported 88 net orders for H1, easily topping Boeing’s net negative total of 119 aircraft because the latter suffered more cancellations than orders during the period.
- The European company totaled 123 net H1 narrow-body orders vs. Boeing’s negative 180, while Boeing won the wide-body category with a positive 61 orders against Airbus’ negative 35 wide-bodies after cancellations.
This could be bad news for the “FAANG” stocks.
- Tech giants including Apple (AAPL +0.7%), Amazon.com (AMZN +1.8%), Facebook (FB +1.6%) and Google (GOOG +0.9%, GOOGL +0.9%) will be called to testify at next week’s House Judiciary Committee antitrust hearing.
- That follows moves by regulators to divide up the four among themselves to spread investigative power widely as the government probes public concerns into the size and power of the sector.
- And today’s news comes just two weeks after President Trump said “We should be suing Google and Facebook and perhaps we will” in an interview with Fox Business.
Where do I sign up??????
- In the push to lure customers by offering services with low fees, JPMorgan Chase’s (NYSE:JPM) You Invest Portfolio robo-adviser, with an annual fee of 0.35% of assets, puts users into an investment portfolio made up of the bank’s exchange-traded funds, CNBC reports.
- The bank is waiving fees for underlying investments.
- The ETFs that JPMorgan will use range in cost from ~2 to 50 basis points.
- Minimum investment required is $2,500.
I have been saying this for a long time.
- Even with returns of more than 30% in 2019, pot exchange-traded funds will start to fade as investors wake up to the realization that marijuana investing is boring, Daniel Straus, vice president of ETFs and financial products research at National Bank of Canada, tells Bloomberg News.
- At least nine ETFS in the U.S. and Canada invest in cannabis stocks, and two more are seeking approval to list in the U.S.
- “Typically, in a thematic area there’s only room for two, maybe three, big successes and then the law of diminishing returns kicks in,” said Bloomberg Intelligence analyst Eric Balchunas.
- The Horizons Marijuana Life Sciences Index ETF (OTC:HMLSF -1.3%), the world’s first pot ETF, pulled in more than C$100M (US$76M) just days after it started trading in Toronto in 2017; and ETFMG Alternative Harvest ETF (MJ -0.7%), added more than $200M the week after it shifted its focus from Latin American Real Estate.
- Political and regulatory risks also remain risks in the U.S. because the federal government still considers marijuana an illegal substance, even though many states legalized the substance for medical uses and 11 states allow recreational uses.
Nice payday for Paypal.
- PayPal (NASDAQ:PYPL) says it expects to report a $218M pre-tax gain, or $0.14/share, on its strategic investments in the June quarter, according to a new SEC filing.
- PYPL invested $750M in Latin American e-commerce company MercadoLibre earlier this year and claimed an $0.08/share during Q1 but projected just $0.01/share from strategic investments in Q2.