Friends

I half expected Fed Chair Powell to conduct his post FOMC press conference from an aircraft carrier donning a fighter jacket, while declaring “mission accomplished”. Indeed, the normalization of monetary policy has apparently been achieved – at least for now. Today, the Fed made it clear that they were done raising rates for the foreseeable future. Now, one could interpret their increased dovishness as concern that the economy is under pressure and is likely to slow as the year progresses. Whatever the case, market participants are left to decipher whether this is good for stocks (remember TINA) or is this a capitulation that spells difficult times ahead for equity investors.

As for today, stocks had been weak before the Fed statement due to President Trump’s China tariff comments, then rallied after the release of the statement, only to weaken once again in the last hour of trading. By the close, the Dow Jones Industrial Average was down 141 points to finish the day at 25,745. The S&P 500 was down 8 points to close at 2,824. Gold was up $7 to trade at $1,314 per ounce, while oil was up $1.09 to trade at $60.12 per barrel WTI. Bonds may have been the bigger story today with the 10 year Treasury note yield falling to 2.53%. Remember, the 3 month yield is 2.46%, so the yield curve is virtually flat, and getting flatter.

Another disappointing earnings report from Federal Express yesterday may be confirming a global slowdown, which would support the Fed’s more dovish stance. Anyway, the market now has the Fed firmly in a dovish stance which likely removes that headwind for stocks for some time. But, did the Fed flash an economic warning sign that would become a different headwind for stocks? Hmm.

Have a nice evening everyone.

Jim

Friends

The fifth time was a charm. After 5 tries since the 4th quarter of last year, the bulls finally penetrated the 2800 (2815 level to be exact) on the S&P, and were able hold it into the close. The economic data was mixed with consumer confidence and job openings stronger than expected, while the industrial production number was softer than expected. All this basically leads to the Fed being able to be “patient” with regards to monetary policy, but in the meantime the bulls can point to the fact that recession talk might have been premature.

As for today, by the close the Dow Jones Industrial Average was up 139 points to finish the day at 25,849. The S&P 500 was up 14 points to close at 2,822. Gold was up $6 to trade at $1,301 per ounce, while oil was down $.18 to trade at $58.43 per barrel WTI.

Despite the woes for Boeing, which weighed on the Dow, it was a good week for the bulls. Now that we have closed above 2815 on a daily and weekly basis, let’s see if the bulls have cleared a runway to the old highs of 2940 on the S&P. The FOMC meets next week, but we obviously don’t expect the Fed to change interest rates at this point. They might give us more clarity on the quantitative tightening (bond run off) program, which could add to the overall dovish tone that the Chair has exhibited recently. We’ll let you know how things play out next week. Stay tune.

Jim

Friends

10 years ago today (actually March 9^th 2009) in the midst of the great financial crisis, stocks finally bottomed after a more than 50% drop in a year and a half. At that moment it was the second more than 50% drop in the stock market in less than 10 years. I had been through the crash of October 1987 (at Merrill Lynch at the time), and the dot.com bubble bursting bear market which began in early 2000, but without a doubt the financial crisis bear market of 2008 and early 2009 was the worst period of time in my 34 years in the business. It really wasn’t about the stock market in 2008, it was more about the survival of the financial system. When liquidity disappeared, stocks were the only liquid game in town, and thus were under relentless selling pressure for months. In 2000, the dot.com craze pushed stocks to unsustainable levels. The subsequent downturn was a stock market event. But, not 2008 and 2009. Stocks were reasonably priced at the time. Unfortunately real estate was not.

This daily update was born in October of 2008. In an attempt to keep lines of communication open with our clients, at a time when no one really knew what was unfolding and what the future held, we decided that the only way to keep everyone informed and up to date on a daily basis was with an email. It would be impossible to talk to everyone every day, so this was our alternative. Well, as we found out, it became a comfort to our clients to hear from us each and every day, and though we didn’t necessarily have any answers, at least we kept them informed about what was going on. And, there was a lot going on. The Fed, Congress and the President all were grasping for answers, but solutions seemed difficult to agree upon. In the end, we got through it all and the S&P 500 is now more than 4 times higher than it was on March 9, 2009. Along the way, our clients seemed to enjoy the daily updates even when we weren’t in time of crisis, and thus I still try to write an update every day. I hope you continue to enjoy them.

As for today, stocks slumped after a surprisingly weak jobs number, but recovered most of those losses in the last hour of trading. Sure, the unemployment rate fell to 3.8% and wages continue to climb, but 20,000 new jobs was way lower than expected. Again, January’s number was way higher than expected, so averaged out the numbers seem about right.

For the day, the Dow Jones Industrial Average was down 23 points to close at 25,450. The S&P 500 was down 5 points to finish the day at 2,743. Gold was up $13 to trade at $1,300 per ounce, while oil was down $.57 to trade at $56.09 per barrel WTI.

We’ll leave it there for today. Let’s see what next week has in store for us.

Have a great weekend everyone.

Jim

Friends

Stocks continue to lose a little bit of luster as we move into March. Today’s ADP private payroll number was about as expected and estimates are for Friday’s government non-farm payroll number to show about 180,000 new jobs were created in February. But, stocks seem to be experiencing a modest buyers strike at the moment. Volatility is still somewhat muted, but the direction has had a downward slope for several days now.

By the close, the Dow Jones Industrial Average was down 133 points to finish the day at 25,673. The S&P 500 was down 18 points to close at 2,771. Gold was up $2 to trade at $1,287 per ounce, while oil was down $.34 to trade at $56.22 per barrel WTI.

As we have mentioned, it’s not a bad thing that we would take a pause after such a robust rally off the Christmas Eve low, but it is a little disconcerting that we can’t get decisively above the 2800 resistance mark on the S&P. By the way, today marks the 10 year anniversary of the intraday market low of 666 on the S&P 500. The market didn’t bottom on a closing basis until the 9th of March 2009, but the March 6th intraday low was such an ominous number, market participants will never quiet forget it. It’s really amazing that we’re whining about 2800 10 years later. I can tell you with serious conviction, that on March 6, 2009 the S&P 500 reaching 2800 seemed like a fairy tale. Memories.

Have a nice evening everyone.

Jim

Friends

This morning’s GDP release was quite a pleasant surprise. With most analysts expecting a number south of 2% for the 4th quarter of 2018, it was a bit of a stunner that we saw 2.6% growth in the quarter. Even more surprising was how business investment contributed to the strong number, as did consumer spending. Along with that surprisingly good news, we got a robust and much better than expected Chicago PMI number. So, though we do seem to be in a bit of a slowdown, and almost assuredly a slowdown in corporate earnings (after the massive increase the past two years), the bulls can hang their hat on the fact that the slowdown sure doesn’t look like a recession- at least not at this point.

Despite the good economic data, stocks slumped, perhaps partially due to the lack of a deal with the North Koreans, but more likely we simply have run up against resistance in the middle of very overbought conditions. In other words, it wouldn’t be bad if we took a breather. For the day, the Dow Jones Industrial Average was down 69 points to close at 25,915. The S&P 500 was down 7 points to close at 2,784. Gold was down $6 to trade at $1,315 per ounce, while oil was up $.25 to trade at $57.19 per barrel WTI.

Stocks have shown signs of fatigue this week. Let’s see how we close out the week tomorrow. Stay tuned.

Have a nice evening everyone.

Jim

Friends

Stocks rallied today after yesterday’s modest selloff as hopes continue to build that a trade deal with China will eventually come to fruition. This, despite the continued weakening economic data and another disastrous earnings release from a large American icon Kraft Heinz. As we have mentioned, the weakening economy will surely keep the Fed on the sidelines for a while.

For the day, the Dow Jones Industrial Average was up 181 points to close at 26,032. The S&P 500 was up 17 points to close at 2,792. Gold was up $2 to trade at $1,330 per ounce, while oil was up $.25 to trade at $57.21 per barrel WTI.

Despite the less than perfect conditions, stocks posted gains for the week, as has been the case all year long. Every time the bears think they have an upper hand, the bulls sweep the carpet right out from under them. Let’s see if the bulls can keep the bears frustrated next week.

Have a great weekend everyone.

Jim

Friends

A plethora of less than stellar economic data finally put a little damper on the nearly 7 week rally. With interest rates extremely low and the Fed now firmly on the sidelines with regards to future rate hikes, the markets are going to have to decide going forward, if bad news is bad news for stocks or not. You know the drill, bad economic news guarantees an accommodative Fed therefore insuring that monetary policy is back to being a tailwind for stocks. With low interest rates, stocks become the only game in town, despite the fact that we are entering an earnings slowdown. This will be an interesting tug of war as we move towards the spring. Is bad news good news for stocks or not? Which is more important to market participants- dovish monetary policy/low interest rates or positive earnings growth?

As for today, by the close the Dow Jones Industrial Average was down 103 points to finish the day at 25,850. The S&P 500 was down 9 points to close at 2,774. Gold was down $19 to trade at $1,328 per ounce, while oil was down $.33 to trade at $56.83 per barrel WTI.

The bears finally had something to cheer about today, but I wouldn’t go so far as to say that they have claimed the high ground just yet. It is clear that the domestic economy as well as global economies are slowing, but what is not clear is what is more important to investors. Slow economies mean accommodative central banks around the world, and for about 10 years now, stocks have been the beneficiary (most of the time). Let’s see how the week finishes out tomorrow.

Have a nice evening everyone.

Jim

Friends

Stocks tried to sell off at the opening this morning, but the bears just couldn’t muster very much enthusiasm. Word that the China trade talks are progressing, and a good earnings release from Walmart were enough to spark modest interest from the bulls and stocks moved into positive territory for the rest of the trading session. Perhaps, the bulls are sensing that things have moved into very overbought territory, leaving both combatants a bit tentative at this point.

For the day, the Dow Jones Industrial Average was up 8 points to close at 25,891. The S&P 500 was up 4 points to finish the day at 2,779. Gold was up $20 to trade at $1,342 per ounce, while oil was up $.53 to trade at $56.12 per barrel WTI.

As oversold as we were on Dec. 24^th of last year, is about as overbought as we are right now. We can work off the overbought condition one of two ways (or both actually)- price or time. A little sideways action might be what the doctor ordered for the bulls, to digest some of these early first quarter gains. Of course, the market is going to do what the market is going to do. But, as economic data continues to be mixed and corporate earnings are certainly not going to be as strong as last year, we are beginning to see P/E expansion once again, fueled by dropping interest rates (the 10 Year Treasury Note now yielding 2.64%). Moves like we saw in the 4^th quarter of last year, and the first 6 weeks of this year adds to the difficulty of predicting stocks price movements as we move further into 2019. Stay tuned, we’ll be providing the play by play.

Have a nice evening everyone.

Jim

Friends

Stocks continue to push higher despite a lukewarm earnings season, mixed economic data and the political theater that we see on a daily basis. Stress on those who sold in the 4^th quarter of 2018 is starting to build. Have they come back in, and if not will they potentially provide fuel for a further advance as the fear of missing out continues to build?

For the day, the Dow Jones Industrial Average was up 443 points to close at 25,883. The S&P 500 was up 29 points to finish the day at 2,775. Gold was up $10 to trade at $1,324 per ounce, while oil was up $1.34 to trade at $55.75 per barrel WTI.

Interestingly, today’s move did not include the likes of Amazon, Google, Netflix and Apple. Today’s advance was led by industrials and financials, which might indicate that this advance is beginning to broaden out. This has been an amazing first 6 weeks of the year, as stocks try to erase the memory of a disastrous 4^th quarter. Let’s see if the bulls can keep the pressure on the beleaguered bears next week.

Have a great weekend everyone.

Jim