Beyond the basics

Major Moves The European and U.S. equity markets rebounded today in anticipation of future central bank dovishness. The Federal Open Market Committee (FOMC) has signaled that it is potentially looking to cut interest rates as early as this month, and the European Central Bank (ECB) announced at its monetary policy meeting today that it expects key ECB interest rates to remain at their present levels at least through the first half of 2020.” Traders are buying large-cap stocks in anticipation that low rates could both stimulate the economy and make it cheaper for large corporations to continue funding their share buyback programs with more debt. They are also anticipating that low rates and economic expansion could spur demand for crude oil . Crude oil can be a great indicator for anticipated economic strength. Oil prices tend to climb when traders expect the economy to get stronger, and they tend to fall when traders expect the economy to get weaker. Crude oil bounced … [Read more...] about Dovish ECB Joins the FOMC to Rally Markets

Major Moves Stocks were mixed today as investors prepared for the busiest week of first quarter earnings season . By the end of the week, more than 45% of the S&P 500 will have reported their earnings and we will have a good idea for the trend of corporate performance. Risks were somewhat compounded today following news that President Trump will make another move to curtail oil exports from Iran. Currently, some oil importers like China, South Korea and Turkey have a "waiver" from the U.S. that they will not face negative consequences for doing business with Iran. President Trump plans not to renew these waivers that expire on May 2. The administration has assumed that Iran's market share can be consolidated by Saudi Arabia and other Organization of Petroleum Exporting Countries (OPEC) nations who will increase production. Clearly, the U.S. cannot dictate production levels to OPEC, but it is reasonable to assume that if Iranian exports are reduced, Saudi Arabia will want … [Read more...] about Junk Bonds Keep Dropping as Oil Spikes

Major Moves Trading was aimless during today's session as economic and earnings data came in below expectations. While there was plenty of bad news, some of the media's hand-wringing was a great example of post-hoc rationalization. This was particularly true in the energy sector. Each Wednesday, the Energy Information Administration (EIA) releases a report of oil inventories held by commercial firms in the U.S. Like most weekly reports, the data can be very "noisy," with wide swings from week to week. In a bullish oil market, we would like to see inventories fall because purchases and shipping are picking up. The weekly oil inventory report swung back hard today to show an increase of 7.1 million barrels versus a decrease of 8.6 million barrels last week. When the two data points are added together, we see a small net decrease over the past two weeks that is more likely to be an accurate reflection of the market. Most traders expected today's news after inventories were … [Read more...] about Resistance Firms Ahead of Labor Report

Major Moves After President Trump postponed the tariffs that U.S. importers would have had to pay on $200 billion of Chinese goods beginning on March 2, the S&P 500 hit a new short-term high today. However, a new tariff deadline or a schedule for meetings with Chinese President Xi were not provided by President Trump via his Twitter feed. The initial rally in U.S. equities faded through the rest of the day as interest rate-sensitive sectors like utilities and real estate declined. However, Chinese stock indexes continued to have the best day since 2015 following the trade news. As you can see in the following chart, the Shanghai Composite Index reached its full price projection based on the depth of the double bottom pattern formed in January. S&P 500 The worst performing sectors and stocks in the S&P 500 included just about anything paying a larger than average dividend yield like consumer staples, utilities and real estate investment trusts (REITs). … [Read more...] about Trade Rally Fades on Rising Uncertainty

Major Moves The U.S. stock market has had a rough two weeks. Beginning on May 22, bearish pressure started to mount as crude oil prices started falling and stocks in the energy sector began to lose ground. By the next day (May 23), the bearishness had spread throughout the market, and the major indexes started pulling back. While many of the sectors in the S&P 500 have been moving in lock step with each other during these turbulent weeks, a few have stood out for either their out-performance or their under-performance. You can see how this has played out in the hourly sector-comparison chart below, which uses the following sector-based ETFs managed by State Street Global Advisors: Technology Select Sector SPDR Fund ( XLK ) Real Estate Select Sector SPDR Fund ( XLRE ) Consumer Staples Select Sector SPDR Fund ( XLP ) Consumer Discretionary Select Sector SPDR Fund ( XLY ) Health Care Select Sector SPDR Fund ( XLV ) Materials Select Sector SPDR Fund ( … [Read more...] about Can the FOMC Combat the Impact of Tariffs?

Jack Ma - A + A (May 26): Billionaire Jack Ma’s Ant Group Co. saw profit inch up in the three months to December, despite setbacks from regulatory overhauls taming the country’s fintech industry. The Hangzhou-based company contributed 7.28 billion yuan ($1.1 billion) to Alibaba Group Holding Ltd.’s earnings, a filing showed Thursday. Based on Alibaba’s one-third stake in Ant, that translates to an estimated 22.05 billion yuan in profit for Ant’s December quarter, or an 1.3% increase from a year earlier. Ant’s earnings lag a quarter behind Alibaba’s. Ant in March declared a dividend of about 3.9 billion yuan to its backers. But shareholders -- including scores of employees -- of two entities that held 50.52% of Ant pledged to keep the dividend within the firms to “better support the company as it moves forward with its business rectification and facilitate its long term sustainable development,” a company spokesperson said in an e-mailed response. Jack Ma … [Read more...] about Jack Ma’s Ant ekes out profit rise as fintech overhaul advances

- A + A KUALA LUMPUR (May 26): Communications and Multimedia Minister Tan Sri Annuar Musa said his Ministry and the Ministry of Finance have yet to study the requests of telecommunication companies (telcos) on the shareholding structure of Digital Nasional Bhd (DNB), the special purpose vehicle set up for the nationwide rollout of the 5G network. However, he added that the government is firm on not allowing any telco having a higher stake in DNB. “We have received their request, but the government has not made any firm decision. Both Senator Tengku Datuk Seri Zafrul Tengku Abdul Aziz and I were away,” Annuar told the media in a press conference at the offical launch of YES’ 5G service on Thursday (May 26). “I will sit down with the Minister of Finance, we will look at the request and the government will give our response as soon as possible,” he added. He confirmed that the big four telcos (Celcom Axiata Bhd, DiGi Telecommunications, Maxis Bhd, U Mobile Sdn Bhd) … [Read more...] about Government firm on telcos having equal stake in Digital Nasional Bhd

Davos, Switzerland (CNN Business) When Ukrainian President Volodymyr Zelensky spoke by video to a packed room at the World Economic Forum in Davos, Switzerland, he thanked the West for its solidarity against Russia. But he also issued a warning to political leaders and business executives: Don't lose your nerve. "I would only wish you not lose this feeling of unity," he said, calling again for maximum pressure on Moscow. Three months after Russia's invasion of Ukraine, leaders from Europe and the United States emphasize that they remain committed to sticking with unprecedented sanctions in an attempt to force President Vladimir Putin to pull its troops out. But as the cost of food and fuel jumps — fanning political protests and public discontent around the world, and increasing the risk of a recession — maintaining a consensus could prove increasingly challenging. "I am very worried about what a recession in Europe would do to European resolve … [Read more...] about The West united against Russia. Will its nerve hold as prices soar?

Rajasthan Royals' captain Sanju Samson during an IPL match in 2020 (Image: BCCI, IPL) A desperate Kolkata Knight Riders (KKR) will look to bring their campaign back on track after a hat-trick of defeats when they face a beleaguered Rajasthan Royals (RR) in their Indian Premier League (IPL) clash on April 24. Big on paper, KKR, led by England’s World Cup winning skipper Eoin Morgan, have so far failed to come together as a unit and slipped to sixth in the table after starting the tournament on a high against Sunrisers Hyderabad. Facing bottom-placed Rajasthan Royals, who have been the most inconsistent team so far in the season, KKR will be desperate for a turnaround. The rise of Pat Cummins as a batsman in their 18-run defeat to CSK will provide a big boost but it can’t paper over the failure of their star batsmen, who have floundered even while chasing even modest target. The seamers too have leaked runs in the death overs. Having struggled on Chepauk’s slow surface, KKR … [Read more...] about IPL 2021 | RR vs KKR: Kolkata Knight Riders hope to revive campaign against beleaguered Rajasthan Royals

BlackRock President Rob Kapito claimed that an “entitled generation” will be shocked by how upcoming shortages in labor and raw materials will remove normal items from shelves. Kapito, 65, stated that recent inflation is going to keep having a significant impact on the global economy and will push an entire generation to deal with a wave of shortages, according to Bloomberg. “For the first time, this generation is going to go into a store and not be able to get what they want,” Kapito told the Texas Independent Producers and Royalty Owners Association at a conference Tuesday. “We have a very entitled generation that has never had to sacrifice.” BlackRock’s president warned of inflation’s dramatic effects, with an “entitled generation” now learning what it means to suffer from shortages https://t.co/HaybYqLAqE — Bloomberg (@business) March 30, 2022 Kapito described the economic situation as having “scarcity inflation” caused by the shortage of workers and … [Read more...] about ‘Put On Your Seat Belts On’: BlackRock President Warns ‘Entitled Generation’ Of Shortages Due To Inflation