Picks of the Day December 15, 2017.
Dow Ends 5 Day Winning Streak
While news overall seemed good, none of the major indexes managed to climb. It could be the uncertainty out and about with the tax vote looming. Even the global oil supply rising to its highest level in a year didn’t dent the price of crude. A handful of good macro numbers, too, didn’t do the trick!
The blue chip Dow closed off 0.31%, the S&P 500 tapering 0.41% and the NASDAQ slipping 0.28%. The Dow had closed at record highs in the last 4 sessions. On the S&P 500, only one sector saw gains on the day. The small-cap Russell 2000 took a spill, falling 1.2%, suffering its biggest one-day drop in over a month.
Markets are responding to economic data points but the biggest arena for movement is obviously, the tax deal. With a razor-thin majority, 51-49, a lot lies on calibrating the needs of the remaining Republican legislators sitting on the sidelines. As of now, the reforms big component parts would be a corporate tax rate of 21% and a top individual rate of 27%. Senator Marco Rubio (who was once given the moniker, “Little Marco” by Trump) is now holding out, saying that he’d vote down the current bill’s iteration if the child tax credit isn’t expanded. With Moore beaten out by the Democrat Jones in Alabama, the Republicans don’t have much wiggle room.
Two other focal points in the market were Walt Disney and Teva, companies from totally different sectors but who saw news developments bolster their stock prices. 21st Century Fox (FOXA) took off 6.5% after Walt Disney (DIS) rose 2.7%. Disney agreed to buy a huge chunk’s of Murdoch’s empire, hoping to reposition itself by capitalizing on 21st Century Fox’s digital streaming technology, and video assets. The deal is valued at $52.4 billion.
Teva, like the Greek myth about Sisyphus who pushed a boulder up a mountain flank only to see it roll down over and over again, had seemed to encounter unending problems. From its errant $40 billion purchase of Allergan’s pharmaceutical arm, to an increasingly competitive generics market in the U.S. to losing 4 key patents on its top selling MS drug, Copaxone – nothing and we mean nothing – seemed to be going right for the company. Until yesterday, that is! Teva soared 10% after announcing the following stop-gap restructuring measures: 14,000 layoffs in the next 2-years, an immediate dividend suspension, and cancellation of 2017 bonuses.
In other stock news, Valeant Pharmaceuticals (VRX) felt the wrath of J.P. Morgan after the latter downgraded the stock to underweight, VRX tumbling 11%.
Tech shares, though, were far from lackluster. Alphabet (GOOGL) rose 0.8%, Amazon (AMZN) ending up 0.9%. Twitter (TWTR), up 38.5% on the year, tacked on another 4.3% yesterday.
As for Bitcoin futures (XBTF8), it doesn’t matter what the top world economists and businessmen have to say, from Yellen, to Buffett, to Andrew Bailey, the UK’s Financial Conduct Authority chief executive, Bitcoin continues its exponential climb, meaning the bubble’s pop could be all the more disruptive. Like Yellen, Bailey didn’t mince words. “If you want to invest in bitcoin, be prepared to lose all your money.” Comparing the cryptocurrency to gambling, he noted, “If you look at what has happened this year, I would caution people … We know relatively little about what informs the price of bitcoin.”
Macro numbers, as noted, were good overall. Besides increased global crude supply, business inventories shed 0.1% in October, in keeping with market expectations. Sales at U.S. retailers saw gains of 0.8% in November. Jobless claims plunged 11,000 last week. U.S. import prices surged last month, up 0.7% for the month. The market’s early support from data that beat out the consensus fizzled, though. The U.S. PMI rose from 53.9 to 55 last month, any reading above 50 meaning growth. As for central banks, the ECB and the BoE both left rates unchanged.
Today’s Economic Diary: Today is “quadruple witching” day! That means that stock index futures, stock index options, stock options and single stock futures all expire today, meaning that we can anticipate considerable volatility in stock and derivative prices – and increased trading volumes. Be primed and ready for the turbulence, especially in the last trading hour, which is called “quadruple witching hour.” The Empire State Manufacturing Survey will be released at 8:30, industrial production numbers coming out at 9:15. The critical Baker-Hughes Rig Count will be released at 13:00.
Friday’s Hot Stocks: ORCL, HES, JBL, COST, ADBE
Have a great trading day!
|Tuesday||FOMC Meeting Begins|
|Tuesday||6:00||NFIB Small Business Optimism Index||104.2||Medium|
|Wednesday||8:30||Consumer Price Index||0.4 %||High|
|Wednesday||14:00||FOMC Meeting Announcement||High|
|Wednesday||14:30||Fed Chair Press Conference||High|
|Thursday||8:30||Jobless Claims||239 K||Medium|
|Thursday||8:30||Retail Sales||0.3 %||Medium|
|Thursday||8:30||Import and Export Prices||0.7 %||Medium|
|Thursday||10:00||Business Inventories||-0.1 %||Medium|
|Friday||8:30||Empire State Mfg Survey||-0.1||Medium|
|Friday||9:15||Industrial Production||0.3 %||Medium|
|CASY||Casey’s General Stores, Inc.||PM||Monday|
|PAY||VeriFone Systems, Inc.||PM||Tuesday|
|DVMT||Dell Technologies Inc.||AM||Thursday|
|COST||Costco Wholesale Corporation||PM||Thursday|
|ADBE||Adobe Systems Incorporated||PM||Thursday|
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