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Friday: Q1 GDP

By geralt from Pixabay

Friday: Q1 GDP

by Bill McBride on 4/26/2018 07:11:00 PM

A few GDP forecasts:

From Merrill Lynch:

The data added 0.2pp to 1Q GDP tracking, bringing it up to 1.9% qoq saar heading into tomorrow’s advance release. [April 26 estimate].
emphasis added

And from the Altanta Fed: GDPNow

The final GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 2.0 percent on April 26, unchanged from April 17.[April 17 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.9% for 2018:Q1 and 3.0% for 2018:Q2. [April 20 estimate]

• At 8:30 AM ET, Gross Domestic Product, 1st quarter 2018 (Advance estimate). The consensus is that real GDP increased 2.0% annualized in Q1, down from 2.9% in Q4.

• At 9:45 AM, Chicago Purchasing Managers Index for April. The consensus is for a reading of 57.9, up from 57.4 in March.

• At 10:00 AM, University of Michigan’s Consumer sentiment index (Final for April). The consensus is for a reading of 98.0, up from 97.8.

Published at Thu, 26 Apr 2018 23:11:00 +0000

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High-profile investors bet on stocks tied to millennials: Sohn Conference

by 5688709 from Pixabay

High-profile investors bet on stocks tied to millennials: Sohn Conference

NEW YORK (Reuters) – Hedge fund managers at the high-profile 2018 Sohn Investment Conference in New York pitched stock ideas on Monday ranging from online food ordering to homebuilders that should benefit from the growing clout of the millennial generation.

John Khoury, founder and managing partner of $2.7 billion hedge fund Long Pond Capital, revealed a long position in U.S. homebuilder D.R. Horton Inc (DHI.N), which he said should see a boost as more millennials age into the first-time home buyer market.

The country’s largest homebuilder has been increasingly focused on its entry-level segment, which it told analysts in January should grow strongly over the next three years.

At least two investors, meanwhile, pitched online food ordering companies. Alexander Captain, who runs Cat Rock Capital Management, introduced Dutch company NV (TKWY.AS) while Lin Ran, who runs Half Sky Capital, pitched GrubHub Inc (GRUB.N), the parent company of Seamless. She said GrubHub averages $30 per order, and it earns 15 percent of each order, earning the roughly 15 percent, while spending growth at restaurants is outpacing spending at grocery stores.

“I like to call this chart ‘Millennials can’t cook,” Ran said, to laughter.

Millennials, a term for those born between 1981 and 1996, are expected to become the largest generation in the United States in 2019, according to estimates from Pew Research.

Jeffrey Gundlach, one of the world’s most closely-watched investors, recommended a short position in social media giant Facebook Inc (FB.O) and a long position in the SPDR S&P Oil and Gas Exploration ETF (XOP.P).

“Facebook used to be a place people felt good going to,” Gundlach said.

Facebook has come under pressure as the company acknowledged misuse of users’ data.

Investors were confident about their stock picks at a time when the broad S&P 500 .SPX has been lagging and retail clients have expressed nervousness about the durability of the stock market’s long-running gains.

Khoury, from Long Pond Capital, suggested that DR Horton had more than 60-percent upside, while Ran, from Half Sky Capital, said that GrubHub could hit $160 a share, up nearly 55 percent from its Monday afternoon trading price of $103.25.

Organizers said they were expecting as many 3,000 attendees at New York’s Lincoln Center, making Sohn one of the most high-profile investment conferences of the year.

Against a background of more volatile markets and worries that some of the biggest hedge fund managers are nursing losses this year, many in the audience focused on the smaller, better-performing investors like Oleg Nodelman.

Nodelman, founder and managing Director of EcoR1 Capital LLC, whose fund returned a reported 53 percent last year, announced a long bet on drug company Ascendis Pharma A/S (ASND.O).

Reporting by David Randall; Editing by Nick Zieminski

Published at Mon, 23 Apr 2018 17:40:14 +0000

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Chicago Fed “Index points to a moderation in economic growth in March”

A security guard walks in front of an image of the Federal Reserve in Washington, DC, U.S., March 16, 2016. REUTERS/Kevin Lamarque/File Photo

Chicago Fed “Index points to a moderation in economic growth in March”

by Bill McBride on 4/23/2018 08:36:00 AM

From the Chicago Fed: Index points to a moderation in economic growth in March

Led by slower growth in production- and employment-related indicators, the Chicago Fed National Activity Index (CFNAI) declined to +0.10 in March from +0.98 in February. Three of the four broad categories of indicators that make up the index decreased from February, but two of the four categories made positive contributions to the index in March. The index’s three-month moving average, CFNAI-MA3, decreased to +0.27 in March from +0.31 in February.
emphasis added

This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967.

Chicago Fed National Activity Index

Click on graph for larger image.

This suggests economic activity was above the historical trend in February (using the three-month average).

According to the Chicago Fed:

The index is a weighted average of 85 indicators of growth in national economic activity drawn from four broad categories of data: 1) production and income; 2) employment, unemployment, and hours; 3) personal consumption and housing; and 4) sales, orders, and inventories.

A zero value for the monthly index has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth (in standard deviation units); and positive values with above-average growth.


Published at Mon, 23 Apr 2018 12:36:00 +0000

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How did we get here: The Week Ahead

By geralt from Pixabay

How did we get here: The Week Ahead

by Bill McBride on 4/15/2018 07:27:00 PM

• At 8:30 AM ET, Retail sales for March will be released.  The consensus is for a 0.4% increase in retail sales.• Also at 8:30 AM, The New York Fed Empire State manufacturing survey for April. The consensus is for a reading of 18.2, down from 22.5.

• At 10:00 AM, The April NAHB homebuilder survey. The consensus is for a reading of  70, unchanged from 70 in March. Any number above 50 indicates that more builders view sales conditions as good than poor.

• Also at 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for February.  The consensus is for a 0.6% increase in inventories.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 18, and DOW futures are up 185 (fair value).

Oil prices were up over the last week with WTI futures at $67.14 per barrel and Brent at $72.22 per barrel.  A year ago, WTI was at $53, and Brent was at $55 – so oil prices are up about 30% year-over-year.

Here is a graph from for nationwide gasoline prices. Nationally prices are at $2.71 per gallon. A year ago prices were at $2.40 per gallon – so gasoline prices are up 31 cents per gallon year-over-year.

by Bill McBride on 4/15/2018 07:27:00 PM

Published at Sun, 15 Apr 2018 23:27:00 +0000

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Update: Predicting the Next Recession

Update: Predicting the Next Recession

by Bill McBride on 4/12/2018 11:30:00 AM

CR April 2018 Update: In 2013, I wrote a post “Predicting the Next Recession“. I repeated the post in January 2015 (and in the summer of 2015, in January 2016, in August 2016, and in April 2017) because of all the recession calls. In late 2015, the recession callers were out in force – arguing the problems in China, combined with the impact on oil producers of lower oil prices (and defaults by energy companies) – would lead to a global recession and drag the US into recession.  I didn’t think so – and I was correct.

I’ve added a few updates in italics by year.  Most of the text is from January 2013.

A few thoughts on the “next recession” … Forecasters generally have a terrible record at predicting recessions. There are many reasons for this poor performance. In 1987, economist Victor Zarnowitz wrote in “The Record and Improvability of Economic Forecasting” that there was too much reliance on trends, and he also noted that predictive failure was also due to forecasters’ incentives. Zarnowitz wrote: “predicting a general downturn is always unpopular and predicting it prematurely—ahead of others—may prove quite costly to the forecaster and his customers”.

Incentives motivate Wall Street economic forecasters to always be optimistic about the future (just like stock analysts). Of course, for the media and bloggers, there is an incentive to always be bearish, because bad news drives traffic (hence the prevalence of yellow journalism).

In addition to paying attention to incentives, we also have to be careful not to rely “heavily on the persistence of trends”. One of the reasons I focus on residential investment (especially housing starts and new home sales) is residential investment is very cyclical and is frequently the best leading indicator for the economy. UCLA’s Ed Leamer went so far as to argue that: “Housing IS the Business Cycle“. Usually residential investment leads the economy both into and out of recessions. The most recent recovery was an exception, but it was fairly easy to predict a sluggish recovery without a contribution from housing.

Since I started this blog in January 2005, I’ve been pretty lucky on calling the business cycle.  I argued no recession in 2005 and 2006, then at the beginning of 2007 I predicted a recession would start that year (made it by one month with the Great Recession starting in December 2007).  And in 2009, I argued the economy had bottomed and we’d see sluggish growth.

Finally, over the last 18 months, a number of forecasters (mostly online) have argued a recession was imminent.  I responded that I wasn’t even on “recession watch”, primarily because I thought residential investment was bottoming.

[CR 2015 Update: this was written two years ago – I’m not sure if those calling for a recession then have acknowledged their incorrect forecasts and / or changed theirs views (like ECRI and various bloggers). Clearly they were wrong.] [CR April 2017 Update: Now it has been over four years!  And yes, ECRI has admitted their recession calls were incorrect.  Not sure about the rest of the recession callers.] [CR January 2018 Update: Now it has been five years!]

Now one of my blogging goals is to see if I can get lucky again and call the next recession correctly.  Right now I’m pretty optimistic (see: The Future’s so Bright …) and I expect a pickup in growth over the next few years (2013 will be sluggish with all the austerity).

The next recession will probably be caused by one of the following (from least likely to most likely):

3) An exogenous event such as a pandemic, significant military conflict, disruption of energy supplies for any reason, a major natural disaster (meteor strike, super volcano, etc), and a number of other low probability reasons. All of these events are possible, but they are unpredictable, and the probabilities are low that they will happen in the next few years or even decades.

[CR 2016 Update: The recent recession calls are mostly based on exogenous events: the problems in China and in commodity based economies (especially oil based).  There will be some spillover to the US such as fewer exports (and an impact on oil producing regions in the US), but unless there is a related financial crisis, I think the spillover will be insufficient to cause a recession in the US.]

2) Significant policy error. This might involve premature or too rapid fiscal or monetary tightening (like the US in 1937 or eurozone in 2012).  Two examples: not reaching a fiscal agreement and going off the “fiscal cliff” probably would have led to a recession, and Congress refusing to “pay the bills” would have been a policy error that would have taken the economy into recession.  Both are off the table now, but there remains some risk of future policy errors.

Note: Usually the optimal path for reducing the deficit means avoiding a recession since a recession pushes up the deficit as revenues decline and automatic spending (unemployment insurance, etc) increases.  So usually one of the goals for fiscal policymakers is to avoid taking the economy into recession. Too much austerity too quickly is self defeating.

[CR 2017 Update: Austerity was a mistake (obvious at the time).  And it is possible that we will see serious policy mistakes from the new administration (a complete wildcard).  And it is possible the Fed could tighten too quickly. ] [CR April 2018 Update: We are seeing policy mistakes from the Trump administration on taxes, immigrations, and trade. See: When the Story Change, Be Alert. I’m watching for the impact of these policy mistakes.]

1) Most of the post-WWII recessions were caused by the Fed tightening monetary policy to slow inflation. I think this is the most likely cause of the next recession. Usually, when inflation starts to become a concern, the Fed tries to engineer a “soft landing”, and frequently the result is a recession. Since inflation is not an immediate concern, the Fed will probably stay accommodative for a few more years.

So right now I expect further growth for the next few years (all the austerity in 2013 concerns me, especially over the next couple of quarters as people adjust to higher payroll taxes, but I think we will avoid contraction). [CR 2015 Update: We avoided contraction in 2013!] I think the most likely cause of the next recession will be Fed tightening to combat inflation sometime in the future – and residential investment (housing starts, new home sales) will probably turn down well in advance of the recession. In other words, I expect the next recession to be a more normal economic downturn – and I don’t expect a recession for a few years.

[CR April 2018 Update: This was written in 2013 – and my prediction for no “recession for a few years” was correct.  This still seems correct today, so no recession in the immediate future (not in 2018). ]

Published at Thu, 12 Apr 2018 15:30:00 +0000

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Wednesday: CPI, FOMC Minutes

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Wednesday: CPI, FOMC Minutes

by Bill McBride on 4/10/2018 07:54:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Still Sideways Ahead of Key Inflation Data

Mortgage rates were roughly unchanged again today. Some lenders were slightly higher in rate, but not enough to affect the average. Underlying bond markets (which dictate rates) have been eerily calm so far this week, ostensibly with an eye on tomorrow morning’s big inflation report. [30YR FIXED – 4.5%] emphasis added

• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, The Consumer Price Index for March from the BLS. The consensus is for no change in CPI, and a 0.2% increase in core CPI.

• At 2:00 PM, FOMC Minutes for the Meeting of March 20-21, 2018

Published at Tue, 10 Apr 2018 23:54:00 +0000

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The week ahead in stocks: 5 things to watch

JPMorgan exec: Trump's rhetoric may change
JPMorgan exec: Trump’s rhetoric may change

The week ahead in stocks: 5 things to watch

1. Big banks are ready for their close-up: Stocks have gyrated wildly in the past month, mainly because of headlines about possible trade wars and not because of any real data about how companies are doing. That’s about to change.

Investors will soon find out how big banks did in the first three months of the year. They’ll also get some hints about what these financial giants expect for the remainder of 2018.

Money manager BlackRock(BLK), which owns the popular iShares family of ETFs, will report earnings on Thursday morning. And then more results come Friday morning: Jamie Dimon’s JPMorgan Chase(JPM) and scandal-ridden Wells Fargo(WFC) are the highlights. Citigroup(C) and PNC(PNC) will also release earnings Friday.

Banks won’t be the only ones reporting earnings next week. Delta(DAL), Bed Bath & Beyond(BBBY) and Rite Aid(RAD) are also due out.

Results will probably be very strong. Wall Street is predicting that earnings for the S&P 500 will rise 17% from a year ago, and the banks should do even better.

 Analysts are forecasting quarterly profit gains of about 20% from a year ago for BlackRock and Citigroup and a nearly 40% jump for JPMorgan Chase.

One reason: Ironically enough, the breakneck moves in the market are good for banks with big investment businesses. People tend to trade more in volatile markets, which boosts revenue for the financial firms. (Wells Fargo, which has less exposure to Wall Street, is expected to report just a 7% increase in profit.)

“Strip away the headlines and look beneath the surface and you’ll see financials should help lead profits higher,” said Jack Ablin, chief investment officer with Cresset Wealth Advisors.

But investors will also be looking for clues from the big banks about whether the recent market turmoil will become more of a problem.

Dimon, who typically talks to reporters and financial analysts after JPMorgan Chase reports its earnings, has already issued a stern warning to political leaders in Washington.

He wrote in his annual shareholder letter last week that “retreating from the world is not the solution, nor is burning down the current system and starting anew.”

Dimon added that “people don’t think about the challenges in their everyday lives as being Democratic or Republican issues — and our political leaders need to stop thinking that way. We need a well-performing, competent government to thrive as a nation.”

It will be interesting to see whether Dimon has anything more to say about this — and whether the heads of the other big banks will weigh in with their thoughts on the possibility of a trade war and other big geopolitical issues.

2. Zuckerberg goes to Washington:Mark Zuckerberg will testify before a joint hearing the Senate Judiciary and Commerce committees on Tuesday and then the House Energy and Commerce Committee on Wednesday.

Lawmakers have been insisting that Zuckerberg take their questions since the Cambridge Analytica scandal broke last month, raising concerns about how Facebook handles personal data. There’s a lot to talk about.

Initial reports said that the data analytics firm had improper access to the data of about 50 million users. Then Facebook said this week that up to 87 million users may have been affected. It also confirmed that it uses automated tools to scan Messenger chats for abuse. Australia also announced this week that it is launching a formal investigation into Facebook(FB).

Some think Zuckerberg’s appearance could encourage other tech CEOs, like the heads of Twitter(TWTR) and Google(GOOG), to finally testify.

3. More tariff drama ahead? The United States and China are inching closer to a trade war. President Trump threatened Thursday to impose tariffs on $100 billion more worth of goods, leading the Chinese government to warn that it is willing to take “new comprehensive measures” in response.

The back-and-forth has already been dizzying for Wall Street. The Dow swung 700 points on Thursday, and re-entered a correction on Friday. If escalations continue, the market could react strongly.

4. Inflation watch: The Labor Department will release the producer price index for March on Tuesday, and the consumer price index for March on Wednesday. The Fed will release the minutes from its March 20-21 meeting on Wednesday.

PPI and CPI are measures of inflation. Investors fear that if inflation takes off, the Federal Reserve could raise interest rates faster than it plans to. The indexes, and the details of the Fed meeting, could help investors figure out what to expect.

5. Coming this week:

Monday — CBO budget outlook

Tuesday — Equal Pay Day; Zuckerberg testifies; PPI

Wednesday — Zuckerberg testifies; Fed minutes; CPI; Bed Bath & Beyond earnings

Thursday — BlackRock, Delta, Rite Aid earnings

Friday — Citi, JPMorgan, PNC, Wells Fargo earnings

Published at Mon, 09 Apr 2018 04:57:49 +0000

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Easter Monday

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Easter Monday

by The Mole

Easter Monday is still celebrated as a national holiday in several traditionally catholic countries. Not surprisingly Spain is one of them as the Spaniards will rarely miss out on an opportunity to take a day off from work. Which means that I most likely am the only person working here in Valencia today, so let’s get this over with! 😉

The whole crypto space has turned into one big bumbling mess over the past few weeks, which is a good thing as it shakes out all the HODL monkeys and eventually bestows us with juicy entry opportunities.

So the time to strike may be drawing near in some select pairs – Ethereum may be one of them. If you look at the daily panel you see a chart that is slowly transitioning into a down trending formation.

Or at least it’s pretending to be which is where we come in. I’m not ready to strike right here right now today. However it seems to me that the sell off has been slowing down judging by that pinched hourly Bollinger. Which is promising and leaves the door open for a surprise spike higher.

What I would like to see is a push higher followed by a retest. This is where I would get long as most of the sellers would prepare for another leg lower.

Our E-mini campaign is proceeding as hoped but there has been a bit of pushback after it had advanced a little over 1R. I’m advancing my stop to break/even at this point as the current formation MUST proceed higher now or this whole thing is going to turn into a major wipe out lower.

Copper also looking pretty good as it’s gapped higher overnight and looks like it may be ready to make a run for it. I’m leaving my stop at ISL for now but will advance to break/even if it manages to breach 1R.

ZB looking awesome as well – we really nailed a perfect entry here. If you missed out on this campaign or others then get over yourself and sign up as a full member right now.

I’ve lifted my trail to 145 and plan to sacrifice a medium rare porterhouse to the market Gods assuming I can find a place that’s open today.

Now if you thought the Mole would be slacking off today just because everyone else is doing it here in Spain then you would be sadly mistaken. Plenty of new setups below the fold:


It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.

Published at Mon, 02 Apr 2018 11:29:03 +0000

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Bull Versus Bear

Bull Versus Bear

April 3, 2018

Once again we are staring down the abyss and given a decade filled with bearish disappointments it’s easy to resort to recency bias and once again expect a long reversal. And right out of the gate let me assure you that the odds probably still favor the bulls here.

BUT, and it’s a big but as you can see – the bears do have a small but real chance right now and right here to inflict some major damage. As always the Mole doesn’t make lofty claims without backing them up with a bit of technical evidence. So if you don’t mind – shall we?

Let’s start with the low hanging fruit which is the Zero which I consider the ultimate market participation indicator. Clearly the Friday session was nothing but a massive sell off and we can see ever increasing selling pressure on the right 5-min signal.

Yesterday however there were hints that buying pressure was making itself felt again, especially into the close. The E-Mini has managed to cling to its meager gains overnight and we may see a more confident push higher during today’s session.

That said, until ES 2650 is breached any rips higher IMO are nothing but short selling opportunities. The odds for conclusion may be low but the payoff could be massive.

BTW, if you’re not a Zero or Gold sub then now would be a great time to remedy this unfortunate situation. Point your browser here to get access to more in-depth market analysis and many juicy setups on a daily basis.

Okay, now that I told you the how let me show you the why.

Let me start you off with the most bullish momo chart in my current arsenal. The VIX:VXV ratio over the past few years and usually I use that one for long reversals. Except that there isn’t one right now, given that the upper BB has punched so much higher.

What I’m seeing however here is a formation that in 2015 which resembles today’s quite a bit. The main difference is that what preceded the prior one was a lot less exuberant than what we saw all the way into late 2017.

And of course that in some ways also bolsters the bearish case, but it would be foolish to discard the fact that a similar formation resulted in a massive short squeeze that lasted almost a month.

The same ratio but this time a little zoomed in and inverted, so we are looking at the VXV:VIX. The reason why I do that is that it better visualizes the type of formations I’m mostly interested in. And in this case what I am interested in are long reversal opportunities.

Do we have one right now? We sort of got one over a week ago but it was reversed this week by another dip < the lower BB. That’s pretty damn bearish if you’d ask me. Which you do by reading this I guess 😉

Published at Tue, 03 Apr 2018 12:44:10 +0000

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Schedule for Week of Apr 1, 2018

Schedule for Week of Apr 1, 2018

by Bill McBride on 3/31/2018 08:11:00 AM

The key report this week is the March employment report on Friday.

Other key indicators include the February Trade deficit, March ISM manufacturing and non-manufacturing indexes, March auto sales, and the March ADP employment report.

Fed Chair, Jerome Powell, will speak on the Economic Outlook on Friday.

—– Monday, Apr 2nd —–

10:00 AM: ISM Manufacturing Index for March. The consensus is for the ISM to be at 60.0, down from 60.8 in February.

Here is a long term graph of the ISM manufacturing index.

The PMI was at 60.8% in February, the employment index was at 59.7%, and the new orders index was at 64.2%.

10:00 AM: Construction Spending for February. The consensus is for a 0.5% increase in construction spending.

—– Tuesday, Apr 3rd —–

Vehicle Sales

All day: Light vehicle sales for March. The consensus is for light vehicle sales to be 17.0 million SAAR in March, down from 17.1 million in February (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the February sales rate.

10:00 AM: Corelogic House Price index for February.

—– Wednesday, Apr 4th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for March. This report is for private payrolls only (no government). The consensus is for 180,000 payroll jobs added in March, down from 235,000 added in February.

10:00 AM: the ISM non-Manufacturing Index for March. The consensus is for index to decrease to 59.0 from 59.5 in February.

—– Thursday, Apr 5th —–

8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 226 thousand initial claims, up from 215 thousand the previous week.

U.S. Trade Deficit

8:30 AM: Trade Balance report for February from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through December. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is for the U.S. trade deficit to be at $56.8 billion in February from $56.8 billion in January.

—– Friday, Apr 6th —–

8:30 AM: Employment Report for March. The consensus is for an increase of 167,000 non-farm payroll jobs added in March, down from the 313,000 non-farm payroll jobs added in February.

Year-over-year change employment

The consensus is for the unemployment rate to decrease to 4.0%.

This graph shows the year-over-year change in total non-farm employment since 1968.

In February the year-over-year change was 2.281 million jobs.

A key will be the change in wages.

1:30 PM: Speech by Fed Chair Jerome Powell, Economic Outlook, At the Economic Club of Chicago, Chicago, Illinois

3:00 PM: Consumer Credit from the Federal Reserve. The consensus is for consumer credit to increase $15.0 billion in February.


Published at Sat, 31 Mar 2018 12:11:00 +0000

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Dow snaps longest quarterly win streak in 20 years

Dow snaps longest quarterly win streak in 20 years

This was the quarter when investors were reminded that stocks don’t go up forever.

The euphoria that carried the market higher and higher last year came to an end during the first months of 2018.

It was an extremely turbulent quarter that featured two 1,000-point Dow plunges, powerful rallies and a growing list of fears for investors.

Despite a 309-point jump on Thursday, the Dow lost more than 2% over the three months. That snaps a nine-quarter win streak, the longest in 20 years, and marks the Dow’s worst performance since 2015. (Markets are closed on Friday for Good Friday.)

“Things were so placid in 2017. We don’t expect it to be as smooth going forward,” said Mike Loewengart, vice president of investment strategy at E*Trade.

Wall Street started the year with a boom, as the Dow crossed 25,000 and then 26,000 in the span of just seven trading days. Investors were overjoyed about President Trump’s corporate tax cuts and expectations that growth would accelerate.

But the Dow is ending the first quarter about 2,500 points, or 9%, below its all-time high on January 26. That was the Dow’s 99th record closing high since Trump’s election, and the century mark seemed just around the corner.

dow worst quarter chart


Inflation, tariffs and tech cause chaos

Just a week later, a sudden jump in wage growth raised the specter of inflation and rattled the bond market. The Dow plunged by an eerie 666 points that day.

Even though inflation has since receded as a major concern, Wall Street has been rocked by a range of other worries that seem to ebb and flow with the headlines.

Trump’s crackdown on trade, first with aluminum and steel tariffs and then with threats against China, unnerved Wall Street. Trade war fears have since eased a bit as Trump has softened his stance and hopes have risen for a resolution with Beijing.

“With tariffs, there is a lot of bark, but there’s not much bite,” said David Kelly, chief global strategist at JPMorgan Funds.

The tech world, once a reliable source of strength, has faltered. Facebook(FB) tumbled into a bear market as a data crisis consumed one of America’s most widely held companies.

Other former tech darlings like Tesla(TSLA) and Alphabet(GOOGL), the parent company of Google, have fallen sharply from their all-time highs. Even Amazon(AMZN) is under pressure, thanks to attacks from Trump.

Kelly said the pressure on tech reflects investors’ desire to avoid the most expensive areas of the stock market, just in case this slump turns into something deeper.

“People don’t want to get caught in a bubble market,” he said.

Despite the tech trouble, the Nasdaq advanced 2% for the quarter, extending its win streak to seven.


Fed fears

Wall Street has bounced from concern to concern lately. But the volatility also shows that investors are adjusting to a vastly different world from a few years ago.

Congress is stimulating the already healthy economy with a rush of spending and huge corporate tax cuts, just as the Federal Reserve is tapping the brakes on growth by raising interest rates. The collision of those powerful forces was bound to create some turbulence.

“Those are the waves,” Kelly said of the focus on inflation, tariffs and tech. “But the real issue is the rising tide of interest rates.”

Of course, it hasn’t just been Wall Street encountering an air pocket this year. Britain’s stock market has plunged 8% this year, and stocks in Germany and Ireland have tumbled 6%. Asian markets have also lost ground, including sharp falls in China and Japan.

“I’m amazed at all the doom and gloom,” Michael Block, chief strategist at Rhino Trading Partners, said in a report. “After years of whining about the lack of volatility, market players suddenly have more volatility than they can handle.”

Now what?

Despite the market turmoil, the fundamental outlook looks bright. Forecasters expect corporate profits and economic growth to accelerate, thanks in part to the help from Washington.

“GDP is growing. People have jobs. Things look pretty good overall,” Loewengart said.

That’s why some think the market is enduring a temporary storm that will clear the way for new record highs later this year.

“We were way overdue. This is a normal correction that’s part of a longer-term uptrend,” said Mary Ann Bartels, head of portfolio strategy at Merrill Lynch Wealth Management.

Merrill Lynch believes strong corporate earnings will carry the S&P 500 to 3,000 later this year, a 14% leap from today.

JPMorgan’s Kelly doesn’t see a bear market so long as the economy keeps chugging along. And he isn’t worried about a recession over the next 18 months.

But he warned that the market could encounter trouble in 2019 and 2020 as the economy slows, wages accelerate and borrowing costs rise.

Published at Thu, 29 Mar 2018 20:12:46 +0000

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Is tech wreck for Amazon and Facebook over or just beginning?

The tech rally has come to a screeching halt.

Facebook, Amazon, Apple, Netflix and Google have all helped push the market to one all-time high after another. But investors are suddenly worried about increased regulations in the wake of the Facebook/Cambridge Analytica user data scandal.

Shares of these big five techs — as well as the Nasdaq and broader market — have all fallen. But Facebook, Amazon, Netflix and Google owner Alphabet have been hit particularly hard. Each of them has plunged more than 10% in the past week and a half.

Is it an overreaction?

Analysts expect most Big Tech companies to post strong results this quarter and for the rest of this year. Experts say that the Big Tech stocks should eventually bounce back once investors remember how strong their earnings, sales and balance sheets are. Most of these companies are loaded with cash.

Yet there are legitimate concerns about whether politics will trump fundamentals.

If there is a crackdown on how Facebook(FB), Google(GOOGL) and Twitter(TWTR) (another insanely volatile stock lately) run their businesses, advertisers could flee as a result. And Trump supposedly is considering a change in tax laws or tougher antitrust laws against Amazon, which could hurt its business.

Washington probably won’t let up. Mark Zuckerberg is coming to testify before Congress next month, and stricter internet privacy policies could come after that. That could make tech stocks risky bets for awhile.

“The fundamentals are still positive and there is global growth. This is a good buying opportunity for the longer-term investor,” said Jeff Schulze, investment strategist at ClearBridge Investments. “But this regulatory overhang will be with the FAANG stocks for the next few months.”

Wall Street is also worried about how much top tech companies weigh on the broader market. Apple(AAPL), Google, Amazon, Microsoft and Facebook accounted for more than 25% of the weighting in the S&P 500 at the end of February.

The last time tech was such a big component of the overall index was during the final stages of the tech stock mania on Wall Street nearly twenty years ago. Schulze thinks it’s unfair to compare 2018 to 1999 though.

“This is not the dot com bubble of the late 1990s where there was hot money trading themes and ideas,” he said. “Major businesses in tech now have already been developed. There are real earnings and cash flow.”

That may be true. But a company can have solid fundamentals and still be too expensive.

“These are obviously really good companies with strong business models but valuations weren’t even being discussed. It was more of a momentum move,” said Eric Kuby, chief investment officer of North Star Investment Management .

“So much money was being put into tech. This was more overdue than overdone,” Kuby said.

Kuby isn’t shunning tech necessarily though. His firm owns shares of Alphabet because he thinks it’s a relatively good value compared to Facebook, Amazon and Netflix(NFLX).

He also owns chip companies AMD(AMD) and Qualcomm(QCOM), which he thinks have been unfairly punished in the recent tech selloff.

Qualcomm in particular has been hit hard because of the drama associated with rival Broadcom’s hostile attempt to buy it. The Trump administration blocked the takeover, citing national security issues since Broadcom(AVGO) is based in Singapore.

Kuby is more bullish on stable companies that have fallen out of favor but could offer more solid returns if the market volatility continues and the broader economy loses steam as well. He likes Kraft Heinz(KHC) and drug store giants CVS(CVS) and Walgreens(WBA).

But even if the Nasdaq continues to slide, tech may not bring down the overall market. Several non-techs in the Dow, most notably Boeing(BA) and Nike(NKE), are still enjoying solid gains this year.

Older techs have thrived as well. Cisco(CSCO), Intel(INTC) and Microsoft(MSFT) are among the top Dow performers in 2018.

But one thing seems certain. It looks like volatility is here to stay and that is largely due to the fast and furious pace of headlines about the top techs. Traders are making quick bets to try and profit from the rapid moves — up and down — in these stocks.

“This is a big opportunity for day traders to profit off the movement for tech stocks on the long and short side. There has been a huge uptick in trading lately — especially for tech stocks,” said John Bartleman, president of brokerage firm TradeStation.

Published at Thu, 29 Mar 2018 04:37:57 +0000

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Dow drops 345 points as tech stocks get crushed

Tech selloff drags down US stocks
Tech selloff drags down US stocks

Dow drops 345 points as tech stocks get crushed

The wild ride on Wall Street just got crazier.

The Dow dropped 345 points, or 1.4%, on Tuesday, completely reversing a 244-point gain from early in the day. The sell-off followed Monday’s 670-point spike.

The Nasdaq plunged nearly 3% — wiping out nearly all of Monday’s huge gains for the tech sector. The Nasdaq is now up just 1.5% on the year.

Facebook(FB), Twitter(TWTR), Tesla(TSLA) and Nvidia(NVDA) all fell sharply. Netflix(NFLX) tumbled 6%, its biggest decline in two years.

“We started bleeding when large tech got hit hard,” said Art Hogan, chief market strategist at B. Riley FBR.

The tech rout began with Nvidia, which plunged 8% on concerns about the company pausing its self-driving car tests on public roads. A source told CNNMoney that the decision was not because the company believes its technology is unsafe.

Facebook lost another 5% and closed at the lowest point since July 2017. Wall Street wasn’t comforted by news that CEO Mark Zuckerberg has decided to testify before Congress about his company’s user data crisis.

As tech stocks plunged, investors poured money into the safety of government bonds Tuesday. The 10-year Treasury yield slipped to 2.77%, the lowest since early February.

But the sinking yields also narrowed the closely-watched gap between short and long-term rates, known as the yield curve.

“That has persistently been a signal of an economic slowdown,” said Hogan. “I don’t think that’s the case here.”

A “flattening” yield curve also makes it harder for banks to make money on the difference between what they lend out and pay interest on. Bank of America(BAC), Wells Fargo(WFC) and PNC(PAAAX) fell more than 2% apiece.

CNNMoney’s Fear & Greed Index, a gauge of market sentiment, dropped further into “extreme fear” territory.

Wall Street has been bouncing between fears for the past two months. It began with concerns that strong wage gains could signal a burst of inflation. As inflation worries died down, investors refocused on the risk that President Trump’s tariffs could spark a trade war. Now that trade worries have receded a bit, tech stocks have risen to the top of Wall Street’s worry list, at least for now.

No matter the cause, it’s clear that the market boom of 2017 has vanished, paving the way for a much more treacherous investing landscape this year.

–CNNMoney’s Sara O’Brien contributed to this report.

Published at Tue, 27 Mar 2018 23:20:44 +0000

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Sunday Night Futures

Sunday Night Futures

by Bill McBride on 3/25/2018 07:20:00 PM

Schedule for week of March 25, 2018

• At 8:30 AM ET Chicago Fed National Activity Index for February. This is a composite index of other data.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for March.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are up 7, and DOW futures are up 80 (fair value).

Oil prices were up over the last week with WTI futures at $65.86 per barrel and Brent at $70.50 per barrel.  A year ago, WTI was at $48, and Brent was at $51 – so oil prices are up solidly year-over-year.

Here is a graph from for nationwide gasoline prices. Nationally prices are at $2.61 per gallon. A year ago prices were at $2.29 per gallon – so gasoline prices are up 32 cents per gallon year-over-year.

Published at Sun, 25 Mar 2018 23:20:00 +0000

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Game Changer

Game Changer

March 23, 2018

Let’s not beat about the bush and call what happened during yesterday’s session as what it represents: a possible game changer. I’ve slipped in that weasly adjective as nothing in the world of trading is ever guaranteed.

However that said: Unless some miracle occurs today and the bulls drive the E-Mini back > 2750 the gist pretty much is up for the foreseeable future. Let me how you where it all went horribly wrong:

I mentioned just yesterday that a breach below the line in the sand (LITS) at 2652 would be very bad news for equity traders and exactly here we are just one day later.

No of course the bulls still have a faint chance here to pull off a backward flip and somehow turn this formation into an ugly correction the wave wankers will no doubt spend weeks debating over.

But we here at Evil Speculator don’t really care about academics, do we? All that matters to us is what lays ahead and how we can exploit it for maximum ill-gotten gain.

So here is how I see it: Going forward any long campaigns should be considered lottery tickets, which is basically the inverse of our approach for the past two years or so.

We are basically transitioning from BTDF to STFR (sell the f…g rip). You can do both of course but in either case keep your position sizing small and your stops as wide as humanly possible. Got it? GOOD!

Now gold has been gyrating its way higher and the recent gyrations suggested that it was coiling up for a move higher. Don’t beat yourself up – this was a tough entry to catch.

But what’s a lot more important here is the medium to long term perspective, which is starting to look quite bullish. So until further notice the inverse strategy applies: BTFD instead of STFR for gold and other precious metals.

Alright, now let’s get to the good stuff – volatility. You’re going to love this:

The bad news is that you probably missed the countless opportunities when I told you to load up on long term SPY puts. You only have yourself to blame as you thought 49 bucks a month is too much for high quality market analysis.

If you’re paying a steep price today then make sure you cover your six in the future and sign up for a Gold or better yet a Zero sub right now for less than a single E-Mini handle. Don’t wait – do it now! I mean it – though times are ahead and you don’t want the Mole and his crew to be trading against you, do you? 😉

Now the good news is…. well …. there are none really. But there are even worse news as my IV charts are all flashing bright red now:

I’ll throw one freebie to you leeches but then I’ll have to hand it to the pros: VIX vs. VXV – a.k.a. the IV term structure. If you don’t know what it is then don’t fret – it simply shows us a ratio of near term IV vs. more medium term IV. This is a representation of short term vs. medium risk perception.

I know – right? Your brain just froze over. Look just look at that chart and you’ll see how the Mole (which is me) is using the ratio very effectively to plot medium term turning points.

Except that it stopped working on the short side over the past year or so. And like with anything in life in the end there is always a price to be paid. And guess what – we’re all about to pay it.

What is happening right now is a yet another breach > the center line at 0.9 – which isn’t arbitrary, it delineates the approx. median of our current IVTS range (just stick with me here).

Apparently pushes > that center seem to precede downside corrections. And we just had one a month or so ago. What usually happens is a correction followed by a visit to the lower threshold in red.

And guess what – we didn’t get one. The signal dropped below the center and punched right back up.

But we are just getting warmed up – it gets even worse. If you’re not a sub then now is a good time to remedy your personal failings quickly and efficiently. No we don’t throw in a free set of steak knives, sorry 😉

Published at Fri, 23 Mar 2018 14:05:07 +0000

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Wall Street would freak out if Trump fired Mueller

Trump takes on Mueller in tweetstorm
Trump takes on Mueller in tweetstorm

Wall Street would freak out if Trump fired Mueller

Wall Street would probably flip out if President Trump tried to fire Special Counsel Robert Mueller.

Market analysts warn the stock market would drop sharply, at least at first, because trying to oust Mueller would create immeasurable uncertainty and could even ding the economy.

“That would be stepping on the rule of law and a potential constitutional crisis,” said Art Hogan, chief market strategist at B. Riley FBR.

“That’s a real difficult one to model,” he said, “but it’s sure as heck not a positive.”

Firing Mueller could also raise the odds of a blue wave in the midterm elections that would leave Democrats in charge of Congress.

Isaac Boltansky, director of policy research at Compass Point Research and Trading, said in a report that firing Mueller would represent a “dramatic escalation in political risk.”

The White House has repeatedly said Trump is not planning to fire Mueller. A spokesman repeated that stance on Monday, saying it’s “pretty clear there are no conversations or discussions about removing Mr. Mueller.”

Still, analysts cited Trump’s more aggressive stance against Mueller, as a contributing factor behind Monday’s Facebook(FB)-led market tumble. The Dow dropped 336 points.

“The drumbeat has gotten louder,” Hogan said.

Brad McMillan, chief investment officer at Commonwealth Financial Network, said Trump’s tweets about Mueller over the weekend “raised some uncertainty.”

For the first time, Trump mentioned Mueller by name in a tweet over the weekend, calling the special counsel’s investigation a “WITCH HUNT!”

His legal team also announced the hiring of Washington lawyer Joseph diGenova, an outspoken critic of the Russia investigation. “A group of FBI and DOJ people were trying to frame Donald Trump of a falsely created crime,” diGenova said on Fox News in January.

To be sure, ordering the firing of Mueller would be legally complicated and risk a challenge from within Trump’s own party.

Republican Senator Lindsey Graham told CNN’s Jake Tapper on Sunday that firing Trump would mark the “beginning of the end of his presidency. Because we are a rule-of-laws nation.”

House Speaker Paul Ryan said on Tuesday that Mueller “should be free to follow through his investigation to its completion without interference, absolutely.” And Senate Majority Leader Mitch McConnell said Mueller “should be allowed to finish his job.”

For the most part, Wall Street has shrugged off the Russia investigation. Investors have instead focused on Trump’s agenda, booming corporate earnings and strengthening economic growth.

There have been a few exceptions, though. For instance, last May, the market fell sharply on concerns about the circumstances surrounding the firing of FBI Director James Comey. That proved to be a fleeting sell-off.

Another question is how Mueller’s firing would affect the midterm elections in November. A takeover of Congress by Democrats could spook the market because of the prospect of the reversal of Trump’s tax and regulatory agenda.

The key would be whether the economy would be hurt by a political crisis. Analysts said a prolonged period of uncertainty could slow growth by hurting consumer and business confidence.

“What the market would not be fine with is a drawn-out constitutional crisis,” said Ed Mills, Washington policy analyst at Raymond James.

On the other hand, a quick resolution could be a nonevent, economically speaking.

“I believe a decline would be short-lived,” said Sam Stovall, chief investment strategist at CFRA Research. “If the fundamentals have not changed, I would tend to think it would be a buying opportunity.”

Given the great uncertainty that ousting Mueller would spark, Ed Yardeni, president of Yardeni Research, suggested the best outcome for the market would be for the investigation to continue.

“If you really have nothing to hide, then why not let the investigation move along?” he asked.

—CNN’s Nathaniel Meyersohn, Kristin Wilson and Allie Malloy contributed to this report.

Published at Tue, 20 Mar 2018 18:25:03 +0000

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Facebook fallout; Alwaleed speaks; FedEx earnings

Facebook fallout; Alwaleed speaks; FedEx earnings

sp500 tues
Click chart for in-depth premarket data.

1. Facebook drama: The social network is caught in a data privacy firestorm that shows no signs of cooling off.

Facebook(FB) admitted over the weekend that a company linked to President Donald Trump’s campaign had accessed and improperly stored a huge trove of its user data.

The controversy erupted as UK media and The New York Times reported that data analysis firm Cambridge Analytica tried to influence how Americans voted using information gleaned from millions of Facebook profiles.

Facebook stock suffered its biggest drop in four years on Monday, shedding 7%. Investors still have not heard from CEO Mark Zuckerberg or COO Sheryl Sandberg.

“What matters for this stock, at this time, are the headlines,” wrote analysts at Macquarie Capital.

Facebook is still one of the most valuable US companies, with a market cap of about $500 billion. It’s behind only Apple(AAPL), Google parent Alphabet(GOOGL), Amazon(AMZN), Microsoft(MSFT) and about even with Berkshire Hathaway(BRKA).

Its shares were poised to drop further on Tuesday.

2. Alwaleed speaks: Saudi Prince Alwaleed bin Talal has given his first interview since being caught up in an anti-corruption sweep.

The prince, who spent nearly three months locked up in Riyadh’s Ritz-Carlton, told Bloomberg that he is now looking to reshape his business empire. The billionaire and global investor said he’s likely to split the assets of Kingdom Holding, spinning off its Saudi property business. Kingdom Holding owns shares in Twitter(TWTR) and Citigroup(C), among others.

Alwaleed said he’s also hoping to reassure investors.

“I understand it’s not going to be easy at all — some people in business community will be doubtful, will say, ‘What’s going on?,'” he told Bloomberg.

3. Pound relief: The British pound strengthened 0.2% against the dollar on Tuesday, pushing the currency above $1.40.

Investors are cheering a joint legal agreement between Britain and the European Union on the terms of a transition period lasting about 21 months after Brexit takes effect in March 2019.

There is still much work to be done on hammering out the details of the transition and the UK’s future trading relationship with its biggest export market.

4. Global market overview:US stock futures were lower on Tuesday.

Most European markets advanced in early trade. Asian markets closed mixed.

On Monday, the Dow Jones industrial average and S&P 500 dropped 1.4% and the Nasdaq shed 1.8%.

Before the Bell newsletter: Key market news. In your inbox. Subscribe now!

5. Stock market movers — Oracle: Shares in Oracle(ORCL) were lower after the company reported disappointing sales.

FedEx(FDX) will release earnings after the close.


6. Coming this week:
Tuesday — FedEx(FDX) earnings
Wednesday — General Mills earnings; AT&T trial opening statements; Powell’s first press conference
Thursday — Darden, Nike(NKE) earnings

Published at Tue, 20 Mar 2018 09:53:28 +0000

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Sunday Night Futures

By PublicDomainPictures from Pixabay

Sunday Night Futures

by Bill McBride on 3/18/2018 07:37:00 PM

Schedule for Week of Mar 18, 2018Goldman: FOMC Preview

• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are down 2, and DOW futures are down 20 (fair value).

Oil prices were mixed over the last week with WTI futures at $62.16 per barrel and Brent at $66.02 per barrel.  A year ago, WTI was at $48, and Brent was at $51 – so oil prices are up solidly year-over-year.

Here is a graph from for nationwide gasoline prices. Nationally prices are at $2.54 per gallon. A year ago prices were at $2.29 per gallon – so gasoline prices are up 25 cents per gallon year-over-year.

Published at Sun, 18 Mar 2018 23:37:00 +0000

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Larry Kudlow is usually wrong

Larry Kudos is usually wrong

by Bill McBride on 3/13/2018 01:29:00 PM

With all the discussion that Larry Kudlow might be named the new director of the White House’s National Economic Council, I’ve been asked to repost a post I wrote in 2016 “Larry Kudlow is usually wrong“. On Kudlow, see from Bloomberg: Trump Says Kudlow Has ‘Very Good Chance’ at Taking Cohn’s Job and CNN Trump tells people he is selecting Larry Kudlow to replace Gary Cohn

Most of the following is a repeat of the 2016 post …

Larry Kudlow is usually wrong and frequently absurd, as an example, in June 2005 Kudlow wrote “The Housing Bears are Wrong Again” (link has been replaced) and called me (or people like me) “bubbleheads”.

Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.

I guess I was one of those “bubbleheads”!

In December 2007, he wrote: Bush Boom Continues

There’s no recession coming. The pessimistas were wrong. It’s not going to happen. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). Goldilocks is alive and well. The Bush boom is alive and well. It’s finishing up its sixth consecutive year with more to come. Yes, it’s still the greatest story never told.

Note the date of the article. The recession started in December 2007!

Note: At the beginning of 2007 I predicted a recession would start that year – made it by one month.  It seems I’m always on the opposite side from Kudlow of each forecast – and one of us has been consistently wrong.

In 2014, Kudlow claimed: “I’ve always believed the 1990s were Ronald Reagan’s third term.”

In that piece, Kudlow was rewriting his own history.  Near the beginning of Clinton’s first term, Kudlow was arguing Clinton’s policies would take the economy into a deep recession or even depression.  Kudlow was wrong then (I remember because I was on the other side of that debate), so he can’t claim he “always believed” now.  Nonsense.

Also in 2007, right before the crash during President George W. Bush’s 2nd term, Kudlow wrote: A Stock Market Vote of Confidence for Bush:

“I have long believed that stock markets are the best barometer of the health, wealth and security of a nation. And today’s stock market message is an unmistakable vote of confidence for the president.”

Well, maybe Kudlow had a point … about President Obama!

Now Larry Kudlow might be the new director of the White House’s National Economic Council. Oh my.


Published at Tue, 13 Mar 2018 17:29:00 +0000

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Dow turns lower as industrial stocks weigh

Dow turns lower as industrial stocks weigh

(Reuters) – Wall Street struggled to hold on to early gains on Monday as losses in industrial stocks including Boeing and Caterpillar more than offset gains in chipmakers and technology companies.

Many of the United States’ big manufacturers have suffered since U.S. President Donald Trump announced plans to impose tariffs on steel and aluminum imports, a move that could increase their costs while hampering sales abroad.

But the half percent fall in the Dow Jones Industrial Average followed a near 2 percent gain for New York’s main indexes on Friday after data showed sluggish wage growth in February, easing concerns the Federal Reserve might raise interest rates swiftly.

“It is a quiet day in terms of news and you still have the tariff fears kind of circling in the markets,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

Trump softened his stance last week by exempting Canada and Mexico, but negotiations are ongoing as the European Union also seeks to exempt itself from the tariffs.

The tech-heavy Nasdaq, by contrast, gained around 0.4 percent, helped in part by what traders read as further signs of official disapproval of Broadcom’s $117 billion bid for U.S. graphics chipmaker Qualcomm.

The U.S. Treasury said in a letter to Singapore-based Broadcom that it had violated a Treasury order by not giving sufficient notice to a national security panel of its plans to redomicile in the United States.

“It’s … the government coming out and saying that it is leaning towards not allowing this merger to go through,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

“This is a real change, because under the Republican administration, it is generally thought of as less regulatory, less hand-on approach to this sort of this and this is the very opposite.”

Broadcom (AVGO.O) gained 3.4 percent while shares in Qualcomm (QCOM.O) were flat.

Shares of Micron Technology (MU.O) jumped nearly 10 percent after analysts at Nomura raised their target for the stock to $100 – $41 above current rates.

Ocular (OCLR.O) jumped 27 percent after laser and optical fiber specialist Lumen Holdings said it would buy the optical components producer for $1.7 billion. Lumentum’s shares rose 7.6 percent.

Wall Street had its worst two weeks in two years last month as fears of higher wages, inflation and interest rates triggered a selloff that dragged the main indexes into correction territory.

Traders of U.S. short-term interest-rate futures, however, have reeled bets back in on the Federal Reserve delivering any more than the earlier forecast three rate hikes this year.

The S&P 500 in response is just 3 percent below record highs hit on Jan. 26 while the Nasdaq .IXIC is back to a record. By 11:51 a.m. ET, the S&P 500 .SPX was down just 0.1 percent at 2,783.96.

Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Patrick Graham

Published at Mon, 12 Mar 2018 16:40:10 +0000

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